By Dave Flaherty/The Oshawa Express
Residents reading line-by-line in the 2019 proposed budget may notice something that jumps out at them.
The budget item in question is $420,000 under “transit settlement.”
This payment to Durham Region raised some questions from councillors during the first official look at the budget on Jan. 11.
It is the first of 10 payments equalling $4.2 million as part of a settlement over unfunded liabilities tied to the uploading of transit services to Durham more than a decade ago.
That comes after an initial payment of $2 million from the city to the region last April.
While most will focus in on the dollar figure that Oshawa is parting with, to understand the entire situation, one must look back to a time before Facebook, a time before Twitter, and a time when the buses running on Oshawa’s street were a lower-tier responsibility.
A city service
In October of 1959, the Oshawa Public Utilities Commission agreed to operate bus service in the City of Oshawa.
On Jan. 2, 1960, the first buses of Oshawa Transit rolled out onto city streets, under the regulation of the PUC.
In 1996, the city took over the service and the Oshawa Transit Commission was created.
In all, the city ran its own transit service successfully for 45 years, witnessing a number of expansions of routes and fleet over that time.
The city’s major bus hub at the Oshawa Centre opened in 1992, with buses no longer meeting downtown as the central point of transit.
Many Oshawa residents may remember the ‘Bus Roadeo’ held at the Oshawa Centre in the 1970s and 1980s.
The event saw drivers navigating buses through an obstacle course.
A change of direction
Although the idea of a regional transit system had been discussed before, momentum on the concept began to gain steam in the early 2000s.
The regional chair of the time was the late Roger Anderson, who was a major proponent for the amalgamation of municipal transit services.
A committee was struck to oversee the transition, which was ratified in 2004 and came into effect on Jan. 1, 2006.
Former Oshawa city councillor Nester Pidwerbecki, who served as chair of the transition committee, told The Oshawa Express shortly after the 2018 settlement there was really no other option available at the time.
Pidwerbecki said the provincial government of the day was planning to download all transit capital expenses to local municipalities.
According to him, before that, Ontario was funding up to 75 per cent of costs to purchase new buses.
“It didn’t leave us a heck of a lot of leeway,” Pidwerbecki said.
The dispute begins
Transit services in Durham were now under regional control, but there was a big issue lingering.
Along with the services came the employees, many of whom had benefits and pension packages previously overseen by the city.
This is what became the “unfunded liability” that would later become a legal issue between the two entities.
City council of the time was of the opinion it was now the region’s problem.
The region was of a different persuasion.
Pidwerbecki said at the time there was some consideration given to the city paying the ‘unfunded liability’ over a 20-year period with no interest, but that fell through.
“There was no interest in doing it. It sat there idle,” Pidwerbecki told The Express.
And while the issue would be brought up here and there, with the city passing a resolution absolving itself of responsibility in 2009, it wouldn’t come to the attention of many city and regional residents for a few more years.
A bitter dispute
In March 2011, the Region of Durham launched an $8.9 million lawsuit against Oshawa “seeking relief under the terms of a 2004 bylaw that transferred responsibility for Oshawa’s public transit system to Durham.”
The city later asked the Ontario Court of Appeals to dismiss the case, a request denied by the court in 2013.
The lawsuit remained on the docket for the next several years, with the two sides meeting on numerous occasions in hopes of ironing out an agreement.
Ward 1 regional councillor John Neal was a constant critic of both sides’ handling of the situation.
Neal made constant requests for the legal costs for the region and city.
“I don’t know who this is being done for because nobody’s going to be the winner except for the lawyers and the law firms,” Neal stated during a regional council meeting in March 2017.
It was revealed at that time the region had spent $720,000 in legal costs so far, but updates were rare afterward.
Neal blasted what he called a lack of transparency on the status of the lawsuit from both sides.
“They’ve completely dropped the ball, and the citizens right across the region are going to pay for this boondoggle,” Neal told The Express in March 2018.
The bitter end
The two sides were scheduled to have an arbitration hearing with an independent mediator on April 2, 2018.
In March, regional council approved the creation of an ad hoc committee mandated to negotiate a settlement with the city.
The committee was composed of representatives from the region’s seven other municipalities.
A few weeks later, the city announced it would pay the region $6.2 million, $2 million upfront, and the remaining balance in 10 annual installments.
Former Oshawa Mayor John Henry said if the matter had gone to arbitration, he did not like the city’s chances, stating costs could have been up to $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.”
On top of the settlement payment, both the city and region had spent approximately $1.5 million in lawyer costs for the case,
Despite the matter being settled, it remains a sore spot for Neal to this day.
He later sought to adopt a formal policy to deal with any future legal disputes between the region and municipalities.
“This could happen to Pickering, Ajax, Clarington, and Brock. If the region thinks it’s up to them to take a city like Oshawa to court, is there going to be a policy?” he asked. “Or do we take these things as lessons learned.”
Pidwerbecki, who along with Neal, were the only councillors present for both the transit overhaul and the settlement, said the end result showed it could have been handled better.
“Obviously it says the council of the day didn’t do the job properly. They didn’t fund the liability. I have to take my share of the blame on it,” he said.