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His letter, which outlines an amendment of the Master Agreement between Metrolinx, the city and the TTC, comes a week before a city council meeting at which a potential tax increase will be debated to help pay for the McCowan extension, the TTC’s preferred route.

City manager Joe Pennachetti has suggested that taxes should rise 1.6%, phased in over three or four years, to cover the city’s share of construction.

According to a TTC report on Sept. 25, the McCowan alignment is estimated to cost around $2.5-billion. Toronto is expected to foot $900-million of those costs. The province’s original offer of $1.8-billion towards the Scarborough LRT has been reduced to $1.48-billion for the subway plan, and Mr. McCuaig said it’s all the province is willing to give.

“We are not prepared to spend more than this amount,” he said.

Combining Ontario’s contribution with Ottawa’s pledge of $660-million, the city is still $500-million short for a potential Scarborough route. The city is still expected to reimburse Metrolinx $85-million for the sunk costs of the now defunct Scarborough Light Rail Transit project. On top of that, it will likely have to pay millions of dollars to transit manufacturer Bombardier, with whom they re-negotiated a contract for light rail vehicles.

In the letter, Mr. McCuaig expresses that Metrolinx still believes that the LRT project would prove to be an effective and cheap solution to the rapid transit problem, but said, “Governments are the ultimate decision-makers in these matters and we must defer to the judgments that have been made.”

Because the subway extension is part of the TTC, Mr. McCuaig said in his letter that it is the responsibility of the city, not Metrolinx, to oversee the project’s budget, schedule, and overall delivery.

National Post