Saint John recommends purchase of 6 electric buses, currently being leased

Saint John councillors have approved a recommendation to adjust the capital budget pay for the lease buyout of six electric buses as the city waits for an update on federal funding.

The buses were leased last year as part of the city's on-demand flex transit service in three different areas. With the lease set to expire, the city is now adjusting budgets to buy them in light of funding hurdles.

"The original plan was that funding from the [Zero Emissions Transit Fund] from the federal government would support the purchase of these buses at the end of the lease," said Coun. Gary Sullivan.

"We're still waiting to hear back with regards to that funding and the lease is coming up."

In 2022, Saint John submitted an application to Infrastructure Canada's Zero Emission Transit Fund for more than $22 million. The city would have to contribute half of that amount and the fund would match it. 

The funding was to allow the city to purchase the leased buses outright, but two years later, the city says it's had no indication on the status of this funding and the extended lease for the buses is set to end.

Unexpected changes

A finance committee staff report says that the supplier, Damera Leasing Canada Corp., said "there is no ability to extend the lease further."

"The company that is leasing the buses to us has had a change in business practice, so they're not interested in leasing the buses to us anymore," Sullivan said.

"Anybody who's leased a car knows at the end of your lease you either purchase it or drop it off at the dealer."

Coun. Gary Sullivan says an application for federal funding has not been denied and that Infrastructure Canada is still processing it. He also says the lease is up on the buses so a decision needed to be made. (City of Saint John)

The city leased the buses for 12 months, with the option to extend the lease by six months. That extension is almost up.

The report says that when the decision was originally made to lease, there were several reasons to do so, including vehicle availability, interest rates and outside funding availability. 

"The single largest driver was the anticipation of the Zero Emission Transit Fund award allowing for an outright purchase of these vehicles. Unfortunately, to date, Saint John Transit has yet to receive a response on the successful award of the ... application," the report says.

Part of the funding included purchasing 24 zero-emission buses for the city along with charging stations, part of the transforming transit project that aims for more sustainability, among goals.

Sullivan said the lack of indication on where the funding stands affects the city's long term plans.

"I guess it slows things down a little bit," he said.

"I mean, we need to be very respectful of the taxpayer dollar. Certainly sustainable transit, whether it be electric buses, hydrogen buses, whatever it is in the future that doesn't have us throwing fossil fossil fuel into the air, will be good."

Budget needed approval

The motion approved by council will offer the city's transit commission the funding, should they decide to move forward with buying the buses.

"[The original budget] was under the assumption that the city portion of the funding would be used with other levels of government and now that's not the case," said finance commissioner Kevin Fudge.

So he said it was important to bring the motion before council right away, and the decision on whether to go forward with the option could happen as soon as the transit commission meeting June 13.

Saint John finance commissioner Kevin Fudge says the final decision on whether to purchase the buses will be up to Saint John Transit. (CBC)

Sullivan said the application for the federal funding has not been denied.

"What I understand is they're still working through their processes. But in the meanwhile, our lease is up on these buses. So we need to make a decision," he said.

"And ultimately the transit commission will make the decision on what they want to do with the buses"

If the transit commission proceeds with the purchase of the buses, the city will be buying them for $1,662,111.24, plus HST.