Caisse bows out of Montreal light rail project

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Canadian pension fund giant Caisse de dépôt et placement du Québec is stepping away from a proposed new $10-billion light rail line in eastern Montreal after encountering seemingly insurmountable difficulties with the design of the downtown portion of the project.

Quebec and Montreal will take over leadership of the venture, the two governments said in a joint statement Monday. They vowed to push on with modified plans for the transit line, calling it essential for the quality of life of citizens and for the growth of companies in the city’s east end.

The province gave the Caisse a mandate for detailed planning of the project, known as REM de l’Est, in 2020. It was initially conceived as a 32-kilometre automated light-rail system linking the eastern and northeastern areas of Montreal Island to the downtown core. Parts of the territory covered by the proposed network are former industrial lands that have fallen into neglect and political leaders are hoping a robust transit link will breathe new life and investment into the area.

Opposition to the conception and design the Caisse proposed has been widespread, however. Urban planners and citizens charged that the section of the rail line cutting into downtown Montreal would disfigure the city because much of it would be above ground. Montreal’s regional transit authority said it would siphon ridership and revenue from existing transit networks while attracting a limited number of new clients.

“We’ve concluded that the section into downtown has to be withdrawn,” because there is no social acceptability for it, Quebec Premier François Legault said at a news conference Monday. Removing the downtown section changes the project’s financial scope for the Caisse because the pension fund was counting on that traffic into the centre of the city, he said.

“They don’t want to pursue this project any more and I understand that,” Mr. Legault said of the Caisse. “That doesn’t mean there won’t be other projects.” The government continues to work with the pension fund manager to analyze other transit line possibilities, notably in Longueuil on Montreal’s South Shore, he said.

The Caisse is seen as a pillar of Québec Inc., and chief executive Charles Emond is keen to prove it can build new infrastructure instead of just investing in existing assets. It created a special infrastructure unit in 2015 for this purpose with a unique model that sees the Caisse execute all aspects of a project, from planning to financing.

The Caisse is in the midst of construction on its first greenfield infrastructure project, another light-rail line in the Montreal area known as the Réseau Express Métropolitain (REM). Funded with contributions from the Quebec and federal governments, the first section of the 67-kilometre rail network is scheduled to open later this year.

Ending its involvement with the REM de l’Est shouldn’t hurt the Caisse in its efforts to strike other infrastructure deals, said Patric Besner, vice-president at Montreal’s Institute for Governance of Private and Public Organizations. If there had been another solution for the return on investment it was comfortable with, “I’m pretty sure that the Caisse would have found a way” to move forward, he said.

Montreal is trying to decontaminate industrial lands in the eastern section of the island, which were once heavily used by the petrochemical industry, in a bid to attract business. Almost all major petroleum refining installations there have closed and, for 40 years, Quebec’s political and business leaders have been grappling with what comes next for the area to supplement warehousing.

A defining transit link between the east end and Montreal’s city centre remains an essential piece of that puzzle, according to Michel Leblanc, president of the Chamber of Commerce of Metropolitan Montreal. “We reiterate the importance of building a piece of infrastructure that would create a fluid line right to downtown,” he said in a statement.