Ontario’s auditor general has recommended the province conduct an independent review of two controversial GO Transit stations, after concluding Metrolinx inappropriately recommended the province build them under pressure from the former transportation minister and the City of Toronto.

In her annual report released Wednesday, Auditor General Bonnie Lysyk concluded Metrolinx “undermined its own decision-making process and inappropriately changed its recommendations on the Kirby and Lawrence stations” in June 2016.

She also determined that over the past decade Metrolinx, the provincial Crown corporation in charge of transportation planning in the Greater Toronto and Hamilton Area, incurred about $436 million in additional costs as a result of politically motivated changes in transportation plans and shortcomings in how the agency manages light rail projects.

A provincial committee asked Lysyk in September 2017 to review the Kirby and Lawrence East stations following a Star investigation that found the ministry of transportation interfered to secure the approval of the stops, which were being advanced along with 10 other stations as part of a major GO expansion.

The proposed Kirby station is in Vaughan, in the riding formerly represented by Steven Del Duca, who was Liberal transportation minister when the stop was approved. Lawrence East in Scarborough is a key part of Mayor John Tory’s SmartTrack plan.

Initial business cases Metrolinx performed concluded that the disadvantages of both stations outweighed their benefits.

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“Metrolinx overrode that conclusion … because the minister of transportation and the City of Toronto had made it clear they wanted these stations,” Lysyk wrote in her report.

As previously reported by the Star, despite Kirby and Lawrence East initially being left off Metrolinx’s list of recommended stops, the ministry sent press releases to the agency indicating the government planned to announce their approval.

“Metrolinx’s response to the influence was to make the Kirby and Lawrence East evaluation results look better,” the auditor found. “The Metrolinx board chair and chief executive officer guided the process whereby the Metrolinx board ultimately supported the decision to add these two stations.”

The auditor determined it was in Del Duca’s power to issue a written directive telling Metrolinx to add the stations, but he didn’t do so. A written directive wouldn’t have changed the agency’s initial assessment of the stops, but it “would have demonstrated greater transparency and accountability in that it would have signalled clear ownership of the decision.”

Lysyk determined the problems with the two stations went beyond their initial approval. A revised analysis Metrolinx completed in February used new modelling assumptions that showed that Kirby and Lawrence East performed much better than in the initial business cases.

However, Lysyk determined the new analysis was predicated on a “best-case scenario” that assumed major changes to the GO system like fare integration with other transit agencies and the ability to run express trains on the lines, which may not be implemented by the time the stations are supposed to be built.

The report also raised red flags about Metrolinx’s oversight of LRT projects. Among its findings was that the “alternative finance and procurement” model the agency used to contract out the construction of the $5.8-billion Eglinton Crosstown failed to completely transfer the risk of delays and cost overruns to the private consortium building the line.

In August, Metrolinx agreed to pay the consortium, which is known as Crosslinx, a $237-million settlement in order to ensure it sticks to the project’s planned opening date of September 2021.

Although Metrolinx agreed to the payment the auditor determined the agency lacked “sufficient documentation” of Crosslinx’s claims that the government agency was partially responsible for delays.

The report also determined Metrolinx overpaid for light rail vehicles it ordered to run on Toronto-area light rail lines.

The agency agreed in 2010 to purchase 182 vehicles from Bombardier, at a time when contracts to build the LRT projects had yet to be finalized.

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Subsequent changes to the LRT projects, including city council’s decision to cancel the Scarborough light rail line and replace it with a subway extension, meant Metrolinx required fewer vehicles and didn’t need them until years later than initially thought.

After extensive negotiations with Bombardier, the agency eventually reduced its order to 76 vehicles. But it paid $19 million to manage the delivery changes with Bombardier, and the cars collectively cost $30 million more than they would have under the initial contract.

The auditor general’s recommendations included that the ministry of transportation “independently assess” whether Kirby and Lawrence East should proceed, and for Metrolinx to establish a clearer framework for how it conducts business cases of major projects.

In an interview, Metrolinx CEO Phil Verster, who took the job in October 2017, said the agency had “already improved our business case methodology” and “the additional advice” from the auditor general is being incorporated to ensure a transparent decision-making process.

Verster defended the Crosstown settlement, saying the agency would have had to pay more if it had gone through a full arbitration process, and the agreement ensures the project will be completed on time. He noted the settlement amount fell within the project’s contingency fund budget.

“This is a good outcome for passengers and for the taxpayer,” he said.

The auditor’s criticism of Metrolinx comes as the Ontario PC government is taking steps to upload ownership of the TTC subway system to province and put it under the agency’s control.

In a press conference at Queen’s Park, Transportation Minister Jeff Yurek indicated the government believes Metrolinx can be trusted with Toronto’s subway network.

“I can assure you that we will be working with Metrolinx to ensure that they are going to undertake all the recommendations of the auditor general,” he said.

“I think we’re in the perfect position to upload the TTC, and ensure that we’re building the regional network that this province needs.”

Asked if Kirby and Lawrence East will remain part of the region’s transportation plans, Yurek said the government will be reviewing all projects “to see if they are in fact what’s best for the people of the province.”

A spokesperson for Tory said city staff recommended Lawrence East as a SmartTrack stop “because they believe there is a strong case” for it.

“It is an important part of the Scarborough transit network plan,” Don Peat said, asserting that voters endorsed the mayor’s transit plans when they re-elected him in October.

Ben Spurr is a Toronto-based reporter covering transportation. Reach him by email at bspurr@thestar.ca or follow him on Twitter: @BenSpurr

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