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Oshawa thumped for $6 million

City hit with hefty bill as decade-long transit battle with region ends

By Dave Flaherty/The Oshawa Express

The decade long legal battle between the city and region over transit has ended, and exactly what it has cost is now public information.

According to a city media release, Oshawa will pay $6.2 million to region to cover ‘unfunded liabilities’ spurring from the uploading of transit services to Durham in 2004.

The liabilities relate to future benefits associated with active and retired employees of the now-defunct Oshawa Transit Commission, including health care, sick leave, and WSIB costs. Pension costs were not part of the dispute.

As of Dec. 31, 2005, the unfunded liabilities were determined to be approximately $8.8 million.

Oshawa will need to make a payment of $2 million to Durham Region by April 30, which the city has already stated will come from the tax rate stabilization reserve.

Beginning in 2019, the remaining balance will be paid in 10 annual installments of $420,000, which represents a tax levy increase of 0.29 per cent.

“I’m happy that it is over, and that the legal fees will not continue for the residents,” Oshawa Mayor John Henry said of the settlement.

“Is it what I wanted? No, but it’s the best [we] could do,” Henry added.

Had an agreement not been reached in March, an arbitration hearing was scheduled on the matter for April 2.

Henry does not believe this would have gone well for the city, stating costs could have been up $13 million.

“I don’t believe we could have won,” he stated. “If you look at what could have happened, this could have been very bad for us.”

In addition to the $6.2 million settlement, the media release states the city has spent approximately $1.5 million in legal costs, funded in the city’s annual operating budget, on the matter since 2008.

The region did not include its final legal costs in a media statement.

However, a staff report released in March 2017 stated Durham Region had racked up $720,000 in legal costs up to that point, but no updates have been provided since.

The dispute between the region and city began with the creation of Durham Regional Transit.

While Ajax and Pickering chose to pay their respective liabilities at the time, these figures were much less, and Oshawa city council contended the city should not be on the line for the $8.8 million.

Nester Pidwerbecki, one of only two current councillors active at the time, along with John Neal, told The Oshawa Express there had been discussions on settling the matter but those went nowhere.

He noted there was even an offer for the city to pay off the funds over a 20-year period, interest fee, however, that notion was rejected as well.

Neal has been the most vocal critic of the situation in both regional and city council chambers over the past few years.

Around 2008, Neal recalls being told that staff and legal teams of both sides were continuing to go back and forth on the dispute.

The city passed an official resolution in 2009 stating it was not responsible for the costs.

But in 2011, Durham Region filed a lawsuit against the city, seeking payment for the liabilities.

In 2013, an attempt by Oshawa to have the case dismissed was thrown out by the Ontario Court of Appeals.

Looking back, Henry, who was not in office when the transit deal took place, says the by-law could have been “handled better in 2005 and 2006”

But he explains sometimes these disputes can go on for years and years, as the Oshawa-Durham disagreement did.

“In fairness, issues created with one council are often dealt with by others,” Henry states.