New $30 Billion Transit Fund: Legal Perspectives on Canada's Evolving Public Transit and Capital Projects Landscape

August 26, 2024

Written By Andrew Jeanrie, Vanessa Colton and Zakariya Chatur

On July 17, 2024, Prime Minister Justin Trudeau announced the official establishment of the Canada Public Transit Fund (CPTF). This initiative will provide $30 billion over the next 10 years and up to $3 billion annually on a permanent basis starting 2026-2027. The CPTF aims to enhance and modernize public transit infrastructure, support economic growth, contribute to climate change mitigation and reduce car dependency across the nation.

Implications for Capital Projects

The CPTF is set to significantly impact the landscape of capital projects across Canada. The CPTF will boost the planning and execution of major transit initiatives. Urban centers like Vancouver, Toronto, and Montreal are expected to be primary beneficiaries due to their extensive public transit networks and higher demand for housing density around transit hubs. This strategic approach is designed to maximize the effectiveness of the investment, ensuring projects not only expand transit infrastructure but also promote sustainable and equitable urban development.

Major Streams of Funding

The CPTF will deliver funds through three streams: (1) Metro-Region Agreements, (2) Baseline Funding and (3) Targeted Funding. Applications are now open for the Metro-Region Agreement and Baseline Funding.

1. Metro-Region Agreements

These agreements will support the long-term development of public transit in large urban areas.

• Allocation: $2 billion per year, $20 billion over 10 years.
• Beneficiaries: Canada’s largest urban areas (e.g., Greater Toronto, Metro Vancouver, Greater Montreal).
• Requirements: Expression of Interest and Integrated Regional Plans detailing 10-year public transit plans, including impacts on ridership, housing, climate change, and social equity.
• Federal Support: $20 million for planning activities between 2024 and 2026.
• Eligibility: To be eligible for Metro-Region Agreement a participating organization must be located within, adjacent to, or be responsible for planning and infrastructure within a Census Metropolitan Area, or a region spanning multiple Census Metropolitan Areas, as identified by Statistics Canada. Metro-regions may consider alternative financing such as public-private partnerships (P3s) as part of their overall funding and procurement strategies.

2. Baseline Funding

Baseline Funding aims to provide predictable, long-term funding to communities with existing transit systems.

• Allocation: $500 million per year, $5 billion over 10 years.
• Beneficiaries: Communities with existing public transit systems.
• Requirements: Expression of Interest and A Notional Allocation & Capital Plan Application
• Objective: Upgrading, replacing, or modernizing public transit infrastructure.
• Eligibility: Applications for baseline funding must be submitted by transit agencies or transit asset owners and meet the eligibility criteria. In addition to the eligibility criteria, applicants must be an eligible recipient, which include: municipal or regional government, a public sector body (such as a transit agency), a provincially or federally incorporated not-for-profit organization or charity, a provincial or territorial government, an Indigenous recipient including a Indigenous development corporation or Indigenous benefiting organization, or a private sector organization working in collaboration with an eligible public sector entity or Indigenous recipient.

3. Targeted Funding:

Targeted Funding aims to provide flexible, call specific funding to address federal priorities that meet local needs.

• Allocation: $500 million per year, $5 billion over 10 years.
• Focus Areas: Active transportation (walking and cycling infrastructure), rural and remote transit, Indigenous community transit, electrification of public transit and school buses.
• Application: Offered on a project-by-project basis.
• Eligibility: The eligibility requirements for this funding have not been made available at this time. We will provide an update of this blog once the requirements have been made available.

Legal Perspective and Additional Considerations

The CPTF necessitates significant collaboration between federal, provincial, and municipal governments to align transit planning with broader policy goals, such as housing density and environmental sustainability. Projects must comply with new regulations eliminating parking minimums and promoting high-density housing near transit lines, which may involve amending municipal zoning laws and development regulations. Transit authorities, local governments and project proponents must adhere to strict contractual agreements outlining the use of funds, project milestones, and reporting requirements to ensure transparency and accountability.

Additionally, the CPTF is intended to align with Canada’s climate goals by promoting public transit and reducing reliance on private vehicles. Improved transit access can enhance social mobility and access to essential services, particularly for underserved communities. Enhanced public transit systems are also expected to support local economies by improving access to jobs and services.

The Canada Public Transit Fund (CPTF) offers multiple avenues for legal professional to provide value to their clients, particularly in:

• Contract Negotiation and Structuring: Assisting in the drafting and negotiation of long-term agreements such as Metro-Region Agreements to ensure favorable terms and protect clients' interests.
• Regulatory Compliance: Advising on adherence to evolving land use, housing, and environmental regulations linked to transit funding.
• Alignment with Federal Priorities: Providing guidance on aligning projects with federal goals, such as enhancing housing affordability and addressing climate resilience.
• Risk Management: Identifying and managing legal risks associated with project execution and resolving potential disputes.
• Public-Private Partnerships: Structuring and advising on effective collaborations between public and private entities to ensure successful project outcomes.
• Equity and Inclusion: Ensuring compliance with requirements for equity and inclusion, as stipulated by the CPTF, to promote diverse and inclusive project impacts.

Legal expertise in these areas can significantly contribute to the successful implementation and management of transit-related projects funded by the CPTF. Bennett Jones has extensive experience in supporting major capital projects, offering comprehensive legal services tailored to the complexities of these large-scale ventures. As a multidisciplinary law firm, we are well-equipped to navigate the challenges and ensure effective execution of such transit-projects supported by the CPTF. 

Should you have any further questions or need any further information with respect to these programs, please do not hesitate to reach out to us.

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