Council will vote Monday on a new policy that would ensure future town capital projects have a better financial cushion in the budgeting process.
Coun. Jeff Toews will be proposing that administration requires a minimum five per cent contingency to be built-in to all future capital projects in an effort to mitigate unexpected overruns; he would also like to see what can be done about imposing penalties when projects are over-budget.
Toews’ notice of motion was prompted by the $3 million cost overrun for the aquatic/curling centre project that was announced at council three weeks ago.
“I would like to see these changes made for all future projects (like the bridge) … we didn’t give ourselves enough breathing room with this one,” he said.
Mayor Ivan Brooker and councillors were infuriated to learn that the nearly $1 million cost overrun due to “unforeseeable ground conditions” was bumped up by another $2 million.
A bulk of the extra cost is a result of the opening delay caused by the need to fix the ground problem at the site. If completion is delayed three months – June 2017 from March – as expected, it will result in $950,000 for an additional site costs and operations. Around $700,000 is due to around 600 change-orders, a large portion for extra steel due to incomplete blueprints; and $350,000 for an added built-in contingency.
The Eagle reached out to project manager Tango Management, but was advised all media inquiries must be directed to the Town of Cochrane; Stantec is the project engineer.
“The schedule and budget overrun has resulted in a number of questions the town is seeking answers to and clarification on from our consultants, many of which will not be fully answered until after the project is completed,” said Suzanne Gaida, senior manager of community services for the town.
The original cost estimate for the aquatic/multi-sport complex came in under-budget by $1.4 million. This resulted in adding back in a number of items/features previously left out of the project scope, including the spray park, second floor washrooms, fitness area build-out and some of the wooden features.
Currently left out of the budget are the wooden entry feature and completion of paving of Phase 3.
Council voted unanimously at the Sept. 26 meeting to delay refinancing the existing $19 million loan for five years, 2017-2021 (adding two years onto the existing loan) until budget deliberations later this fall to determine the impact on other capital projects.
According to administration, “This funding strategy would result in no change to the other planned projects in the town’s Ten Year Financial Strategy from 2016.”
Highlighted projects include the bridge, the new RCMP station and the wastewater capacity upgrade.
It would also reduce the annual repayments to $3.8 million from $6.3 million. Additional borrowing is not required to fund the project overage.
Administration is recommending the shortfall to be covered by an additional $1 million in developer community enhancement fees, $800,000 from building permit interest income, $100,000 from the federal gas tax grant and the balance from province’s Municipal Sustainability Initiative (MSI) funding.
The result in using more MSI funding for the aquatic/multi-sport facility would mean possible delays in a future off-site levy project – a grade-separated crossing at Centre Avenue planned for 2025; more debt financing would be required to address this project.
While the Rock the Waves fundraising campaign is at $4.7 million – approaching the halfway mark to its goal of $10.6 million; the shortfall would come from MSI funding.
