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Appendix "A" to Report PED17185/HUR17024

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METROLINX
Office of the President & Chief Executive Office
Phil Verster
Phi!.Verste'r@metrolin .corn
(.416) 202-590.8

November24, 2017

Chris M,urra.y
City Manager
City of Hamilton
C ty Hall, 2ncl floor, 71 Mai.ri Stfeet
.Hamilton, Ontario.
L8P 4Y5

Dear Mr,: Mrirray,

RE: Hamilton LRT O erations and Maintenance

I ahn pleased to respbn l on behalf of the Province, and M etrolihx to Hamilton City
Council s August T8, 2017 moti n r.eg.aFdihg Hamilton Street Railway {HSR) operating and
maintaining the. Ha ilto Light Rail Tran sit (LRT) system.

The March 20'l6 emorandum-of A reement:(MOA), between Metrolinx and.the City;


confirmed.,key rinciples, roles and responsi ilities fdrthe Hamilto LRT roject;. vyhi.ch.is
expected to be. complete y 2024. The MOA identified Alternati e Financing and
Procure ent .(AFP) using Design-Build-Finance-Op rate-Maintain (DBFOM)
as the anticipated deliver model forthe:project The DBFOM model imeans the .successful
consortium (project Co) responsi le for designing an 'building-the roject, is;aIso-
responsible for operating and maintaining it for.the, 3,0 year concession period.

This-approac ensure that ProjectCo' considers all he a spScts of pe rrbrma nee including that
bf-operations anil maintenance assets, .and>. iri so doing', i provides a strong inc nti e for
high quality design, hjgh quality'construction, an also for cost effective and efficient long
ter erfor ance..

Metroiihx-.ahd the Province have devoted significant tim and-.effort -tb conSidfer.a'nd .assess"
the Implications of changin the delivery mo el at this stage of the-project, hile ensuring
alue for bhe , a propriate r sktransfer' n co mit e projecttimellpes-are maintain . I
believe that fe bying operations from the. rocurement an assigning the to HSR is not in

97 -Ffonr-Street-West 416.874;5900
Tpr6ntp,.ON MS'J 4E6 metrolinx,-com
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the City s interestfor the following reasQns;

It increases the project s complexity and creates interface, risks bet een ProjectCo
an HSR, w ich will imply a com ercial risk.tp HS E?. Should such, interface .risks not
be resolved during the delivery of the contract, the im lemen atio of ser ices will
be affected and HSR ill incur costs nd liabilities for such delays;.
It can result in.higher operatin costs .due to-the lack of competiti e, .te sion
compare with the DBFOM model where bi ers ro idpa, long term fixed price,
for operations';

It can result in delays in the p ocu.re rt]ent of appr'oxiifiately4 to 5 mont s s-jt


requires a ne.w Request for Qu'alificatio.nsfRFQ) to ensure an open an fait
procurement process.

Base on ese considerations, I'strongly recommend hat the pfbjeef ontinue.to be


delivered using the DBROM o el. Ho ever, jf he City l .cides it is not willing to proc ed
ith t is model, Metrolinx.is prepared to remo e operations ffom the.current procurement
and work with the City on the basis that HS will fa e on both the comm rcial arid
operatio al obligations under contract wit Me rplinx re aining as the roj ct owner.

To e specific, Pr jec Co will retain.the res onsibilities for daily and lifecycle, maintenance .as
well as fbr c pital rehabilitation of the assets, This is consistent wit the Desig'n-Build-Finahce-
Maintain (,DBFM) LRT rojects-'in.To pnto and Ottawa.

The City wjl! e- ully responsible-.and.accounta le .to Metrofin to operate. he LR-T system wi h
he following, obligations:
> Sa eOperation/dnvmg of Ligh Rail Vehicles (LRVs) in.Tevenu service;
Regulation' and super ision of LRV'operatibns-thrbugh the opera ions control ce t e
(OCC);
. Re'c'ruitmentahd-seleOtion, training, certification an ongoing supervision and
scheduling of ilrivers, OCC .staff an othe , o erations staff;
egulation and super ision of all LRV movern'ents on t e mainline and to/frorn the
Operation's, Maintenance, and Storage Facility;

Cont ol of critical safety systems an authorizing access to LRT rights-of-w.ay during


operating hours;
Fare enforceme t;.

Provide customer information and assistance (including lost and found, addnessing
customer queries an com laints management);

Respond t security incidents' and emergencies, monitor passenger assistance


intercoms anl on de and real-time-CCTV, C.o.q dinate respo s s with olice, fire ahd
emergency edical servicesj and

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Provide full support and assistance to Metrolinx and Project Co. during design
de elopment and delivery phases as required where it pertains to Operations.

All commercial claims related to HSR s responsibilities as the provider of operations


under the contract.

The City will also be responsible for and carry the complete and full risk for ensuring that HSR
is capable of fulfilling the above accountabilities and has comprehensive plans to achieve
that state of readiness. Such plans must be shared with Metrolinx by no later than March
2020, given that it typically ta es 4 to 5 years to properly prepare the operational
capabilities. The City will also have to enter into an operations agreement with Metrolinx, by
March 2020, to define the roles and responsibilities of the parties, the service and
performance standards, the commercial responsibilities as well as the interface requirements
between HSR, Metrolinx and ProjectCo.

This approach is consistent with the Toronto and Ottawa LRT projects - where the local transit
agency will operate the LRT services.

Until the City formally agrees to all the provisions in this letter, Metrolinx will continue to
proceed on the assumption that the project will be delivered through a DBFOM model with
ProjectCo delivering the operations. If the City wants to change to a DBFM model with HSR
delivering the operations, I would ask that the City formally confirm agreement to all the
conditions in this letter, supported by a Council resolution, by January 24, 2018.

I appreciate the patience shown by the City and trust this response demonstrates the
commitment of the Province and Metrolinx to the LRT project and our willingness to consider
the City s requirements.

Sincerely,

Phil Vbrster
President & Chief Executive Officer

c. The Honourable Steven Del Duca, Minister, Ministry of Transportation


His Worship Fred Eisenberger, Mayor, City of Hamilton
Stephen Rhodes, Deputy Minister of Transportation
Ehren Cory, President, Infrastructure Ontario
Marni Dicker, Chief Commercial Officer and General Counsel, Infrastructure Ontario
Peter Zuk, Chief Capital Officer, Metrolinx
Gerry Chaput, Vice President, Rapid Transit, Metrolinx
Jason Thorne, General Manager, Planning and Economic Development, City of
Hamilton
Andrew Hope, Director, Hamilton LRT, Metrolinx