Facing loss of Alberta funding, halt of planned Calgary Green Line could cost $2.1B

Calgary city council has voted to end work on Calgary's first phase of its long-sought $6.2-billion Green Line light rail transit project at a cost of at least $2.1 billion.

At a Tuesday meeting, city officials told councillors that includes more than $1.3 billion that has already been spent on land acquisition, utility work and new rail vehicles, and at least another $850 million to deal with the costs and risks of winding down the project.

Councillors in favour of halting the line as currently planned said they couldn't keep it alive without provincial funding. 

Alberta Transportation Minister Devin Dreeshen penned a letter to Mayor Jyoti Gondek in early September saying the province would pull its $1.53 billion in funding from the $6.2-billion project if the city didn't rejig the line's route and extend it farther south.

David Duckworth, the city's chief administrative officer, said Tuesday that pausing work to wait months for other alignment proposals is "untenable" at this stage in the process, and the city can't afford to take on the risks.

He said Dreeshen's announcement earlier this month left the city no other option but to bring work to a halt.

More than 1,000 staff and contractors would be off the job by the end of the year, although some construction work would need to stretch into 2025.

Dreeshen has declined to say whether the province would backstop liabilities for delayed or cancelled contracts, but reiterated that he is working to get alternative proposals from an independent engineering firm.

"We will continue to collaborate with the City of Calgary and our federal partners to ensure an orderly transition from an expensive and high-risk project with extensive tunnelling to a new and longer above-ground alignment that will benefit many more Calgarians," he said in a Monday statement.

Gondek said Tuesday the province's decision pulled "the pin on the Green Line as we know it." 

She said with any new alignment proposals from the province, there will need to be new design work, procurement and funding agreements.

"There is an order of government that needs to take responsibility for their action, and there's another order of government, which is ours, that needs to do the right thing, which is to wind this project down — although it's not what any of us wanted to do," she said.

Coun. Sonya Sharp pitched an unsuccessful motion to pause the wind-down to come up with a new project plan along with the province and federal government.

"I don't believe that winding down this project is financially responsible," she said, adding that doing so will probably "kill it forever."

City officials said a pause would incur up to $30 million per month in costs.

Council approved an updated, shortened line in July, with an added $700 million in costs to municipal coffers.

As of September, among other changes, Dreeshen wanted expensive downtown tunnelling off the table.

Gondek has said such proposals have been studied and rejected, and subsequent meetings with Premier Danielle Smith's United Conservative Party government didn't move the two parties to a compromise.

The premier has called the Green Line "the incredible shrinking project" and said it needs a complete rethink to be more cost-effective.

Speaking on her radio call-in show Saturday, Smith said she wants more direct political oversight of mega projects.

"I'd be looking to be quite a bit more involved than we were in the past," the premier said.

The dispute has become highly politicized, as former Calgary mayor Naheed Nenshi, who left city hall in 2021, became leader of the Opposition NDP in June.

Dreeshen has labelled the Green Line project the "Nenshi nightmare.” He has said the former mayor is responsible for mismanaging the project from the start and that it was never properly engineered.

Ahead of Tuesday's council meeting, Dreeshen shared a video on social media again criticizing the original Green Line plans as being "drawn up on a napkin."

Nenshi, in turn, has blamed Dreeshen for turning the project into a political football.

Nenshi told a Calgary Chamber of Commerce event that the province is wasting money with its "petulant, toddler decision."

"They lit $800 million on fire. Why? So they could insult me," he said

The Calgary Construction Association has said the UCP's decision undermines confidence in the reliability of government funding for major infrastructure developments across the province.

This report by The Canadian Press was first published Sept. 17, 2024.