Update on Auditor General’s Office 2026 Work Plan Related to City Council Request for SmartTrack Investigation

For background, the SmartTrack program's scope has decreased and changed over the past 10 years. In 2015, the then Mayor initially envisioned 13 new stations (and nine existing GO stations for 22 station stops total). City Council later approved six new stations in 2016, as recommended in a staff report following a detailed technical analysis. In 2021, the number of stations was reduced to five stations. Subsequently, due to cost pressures on the SmartTrack program, the provincial government committed $226 million in funding in June 2023 to deliver the five-station scope. In late 2024, to address additional cost pressures identified by the Province, City Council approved deferring two of the five stations. No further funding was made available by the City or provincial or federal levels of government. In considering City Council's request, the Auditor General and her staff met with the City's Transit Expansion Division, and reviewed relevant agreements, documents, and information to better understand the roles and responsibilities of the City, Province and Metrolinx for the SmartTrack program, as well as potential risks and issues. The City's Transit Expansion Division acts as a project facilitator and coordinates between all City divisions, the Toronto Transit Commission, Metrolinx, and other orders of government. Metrolinx's role in the SmartTrack program includes delivering the program by designing and building the SmartTrack stations. Typically, the City oversees a vendor and holds them accountable for service deliverables and timelines through managing an agreement with them, which could include incentives and consequences. However, Metrolinx is a Provincial agency and not a typical vendor of the City. The SmartTrack program's stations are being built on the GO Transit rail corridors owned by Metrolinx, impacting its existing GO routes / schedules / stations. As such, Metrolinx has the unique position of acting as the rail authority and can close rail lines and divert trains to build SmartTrack stations. Consequently, Metrolinx is leading the SmartTrack program as the City's delivery agent. This means Metrolinx oversees all aspects of SmartTrack from contractor procurement to deciding how best to use and manage City-provided funds. Since Metrolinx is an agency from a higher order of government, the Province of Ontario, the City sometimes has limited visibility into Metrolinx's decisions. The City's SmartTrack Main Agreement with Metrolinx does require regular reporting from Metrolinx to the Transit Expansion Division on the delivery of the program, requires Metrolinx to obtain the City's approval for any design and construction of City infrastructure, and also provides an established tiered governance structure for potential escalation, including up to the Province. However, the City must rely on its relationship with Metrolinx to address any SmartTrack delivery and schedule issues. In the Auditor General's view, she could provide the greatest value in auditing the SmartTrack program by auditing Metrolinx. The audit could examine whether any cost escalations over the past few years could have potentially been prevented through better planning and efficiencies by Metrolinx. The audit could also examine how SmartTrack program funding is used, and potentially how Metrolinx manages procurements and contracts. However, since the City does not have an audit clause in its agreement with Metrolinx and it is a provincial agency, the Toronto Auditor General does not have the authority or mandate to conduct an audit or investigation of Metrolinx. Currently, the Ontario Auditor General has the authority to conduct an audit of Metrolinx. A recommendation is included in this report to consider adding an audit clause in the agreements between the City and Metrolinx when a majority of the capital funding is being provided by the City of Toronto. Currently, the Toronto Auditor General could only examine the role of the City's Transit Expansion Division in the SmartTrack program. In the Auditor General's view, auditing the Transit Expansion Division would not adequately address the risks and potential issues of the SmartTrack program or City Council's request, as it would not be able to investigate how the funding is used, nor how Metrolinx manages procurements and contracts related to the SmartTrack program. Therefore, no changes have been made to the Auditor General's 2026 Work Plan for this request. If the City's contractual right to audit Metrolinx changes in the future, this could be reconsidered at that time.

City Council direct that Confidential Attachment 1 to this report (January 29, 2026) remain confidential in its entirety as it contains commercial information supplied in confidence to the City of Toronto, which, if disclosed, could reasonably be expected to prejudice significantly the competitive position or interfere significantly with the contractual or other negotiations of a person, group of persons, or organization, and contains information explicitly supplied in confidence to the City of Toronto by the Province of Ontario.