$35 Million Costs Confirmed in Report

GossipI was told recently that the $35 million projected capital costs  for the Central Park redevelopment had been called a “red herring.” That’s verifiably untrue.

The actual total amount shown in the final report is $35,251,965.11.

This isn’t a made up number, an inflated number or an imaginary number. It isn’t a council number, either. In fact the two council PRC representatives did not even attend those steering committee meetings that came up with that figure.

Thirty-five million dollars is what the steering committee calculated and approved themselves, working in conjunction with several consultants, planners, architects and engineers over more than a year – and at a cost to taxpayers of more than $42,000 in fees to those professionals – to come up with that total.*

The Central Park Redevelopment final report, presented to Council by the steering committee in March, 2012, shows the full projected costs on page 37.

That page is reproduced here:

Page 37

You can see that the proposed cost in the steering committee’s final report was more than $35 million plus HST. That’s fact. Read it above. You can download a PDF of the page here.

The capital budget is intended to reflect the fair market value for the construction of the project as of October, 2011. Pricing assumes competitive bidding for every aspect of the work. Unit rates in the preparation of the elemental estimate include labour, material, equipment, and subcontractors overheads and profits… HST is excluded. An escalation allowance is also excluded. A suggested amount is 0.5% per month until time of tender.

This $35 million-plus proposed cost convinced the majority of council to pursue another, more fiscally-modest route to provide the town with much-needed recreational facilities. Council recognized that we needed new facilities, but we simply could not afford $35 million, and, as the report told us several times, that the community would not support raising taxes and doubling our debt to achieve it.**

Even without the 20% contingency fees included, the total is more than $28 million.

Understanding the community’s needs for ice and water, as presented in the report, our fiscally-responsible council found an innovative solution that got the town two new, state-of-the-art rec facilities for much less than half that amount. (An Ameresco option was presented, but not supported by the steering committee; it was also $35 million – $7 million from the town and then the town was asked to borrow the $28M remaining from Ameresco at a rate higher than our debenture rate).

Inclusive of those fees, we got them for less than half of the total in the proposal. Even with the upgrades to the Eddie Bush Arena, it’s still less than half! ***

The treasurer told council that debenturing the full costs ($35 million) would raise the average homeowner’s property taxes by 10%.  That was not acceptable to council. Council met the community’s needs without raising anyone’s property taxes.

The report states that respondents and stakeholders were asked if they support funding by taxation: they responded that they would only support a much lower investment in the facilities, not the total. Here’s the quote from the report (emphasis added):

Participants were asked to comment on their support for financing the Project through municipal tax revenues. A vast majority of respondents indicated that they would be willing to pay for the development of the community recreation centre through taxes. The upper limit to the amount was generally around 50%, with the highest preferences being 20%.

Twenty percent equals about $7 million. The report also notes (emphasis added):

While some funding of the project through taxation is supported, it appears that this support is generally in favour of a combination of new municipal taxes and reallocation of taxes; with a generally desired maximum funding through the combined tax sources being about 50%

The report did not specify what “reallocation” of taxes meant – paying less for police or fire? Not repairing our roads, sewers and infrastructure? Closing down the parks? The airport? It was not clarified nor did council have a discussion on that concept.

And, the report also noted (emphasis added):

Four specific areas of priority interest/concern were defined by the stakeholders and community members… Funding for construction of the Project should not be solely derived from taxes;

Council heard this loud and clear: the community was telling us it would not support a $35 million project on taxes alone. Some respondents said they would support no more than $17.5 million (50%) funded through all forms of taxation, but most felt only $7 million (20%) from new taxes was acceptable. That was stated in the report. As was this:

Overall there is strong recognition by the public that this Project cannot likely be funded entirely by the Municipality.

But there was no federal or provincial funding available. The YMCA was unwilling to share any of the costs and told the committee that in September, 2011. That meant the total amount – more than $35 million – would have fallen on the taxpayers.****

The community groups told the organizers over and over this was not acceptable. So we needed to find a better way.

Even using all of the Collus/Powerstream dividend and not putting any of that into the Hume Street development, the remaining amount (based on what the steering committee proposed) would have been more than $20 million, or about 57% of the total. That was still higher than the maximum amount the steering committee found taxpayers and community stakeholders were willing to pay, and three times higher than the preferred 20%.

Council chose a fiscally responsible way to meet the community’s needs. We listened to both the needs and the concerns.

The town’s solution provides a new, year-round aquatic centre with a FINA-endorsed, 6-lane, 25m competition pool and a warm-water therapeutic pool (opened in July), as well as a full-sized ice pad in a new, year-round arena (opening soon), all without raising taxes or having to rely on outside funding.

The community got two new, state-of-the-art facilities for roughly $12 million, economically and efficiently meeting our residents’ needs for additional ice and water time. And building them didn’t raise property taxes or increase our debt.

Both facilities also provide safety and time for residents: local kids and adults can play and practice here in town, and not have to drive to other communities for ice or swim time.

Parents no longer have to get up well before dawn to drive their kids to a distant rink or pool in the early hours of a winter morning, risking whiteouts, rough driving conditions and bad visibility to get their kids to and from a far-away site. Our community’s children and their parents will be much safer, and will have more time to spend together at home or in play, rather than on the road.

Plus we keep the venerated and much-loved Eddie Bush arena, which will remain an arena during the winter to meet the identified ice-time needs, but will be used as a venue for different events and activities at other times of the year. Some of the ideas being discussed include trade shows, car shows, indoor sports like soccer and lacrosse, music concerts, and conventions. The EBA remains an important element in our downtown’s economic health. I have asked for a staff report on potential private sector partnerships for the times when the arena is not being used for hockey.

Let’s put this one to rest: there are easily-verifiable facts about why we made our choices. The projected costs is just one of them.

* $48,239.58 including HST.

** The total included closing the outdoor ice pad – despite community and stakeholder comments listed in the report that most felt it should stay open and onsite. The page above shows $605,000 to rebuild a new outdoor pad – at an undetermined location sometime in the undetermined future. It is unclear if this included the costs to remove the existing pad, rebuild the Curling Club’s infrastructure and install a new refrigeration unit and infrastructure at a new location. This, however, proved unnecessary with the new facilities. We retained the existing outdoor pad onsite as the community requested, and saved at least $605,000, possibly much more.

The costs included moving “four” ball diamonds (there were actually only three onsite) at a cost of $1.2 million, but that did not include the cost to purchase new land for those diamonds. It was suggested by the director of PRC they might be moved to a school in Nottawa. However, with the new facilities, two of those diamonds remain at Central Park (thus a much lower cost to relocate one – more savings – and we keep the ball diamonds in town).

The proposal also included paying the YMCA’s operating deficit over five years (not shown in the capital costs above), but included no financial contribution from the Y for the $6 million capital costs for the expansion to the Y and its pool. See last note, below.

*** Our solution didn’t need to compromise the integrity of a designated heritage building (the Curling Club) or go through the lengthy, politically sensitive, and convoluted process of de-registering a heritage property in order to make the proposed changes to it. The former Armories building is where many of our troops trained for WWI. It remains a memorial to our veterans. Many people felt it should not be structurally altered as proposed or compromise its heritage status.

Based on the committee’s shown estimate (in October 2011) , costs would rise 1.5% per year: the actual amount by September 2012 would have been $35.78 million and  $36.32 million by fall 2014.

**** There have been questions whether the Y’s current expansion – started long before council made its decision – would have allowed a full 6-lane competition pool, as the community requested, in the building’s footprint (the Y sits on town land; the NW corner of the property leased for $1 a year). If not, a second pool in another location to meet that need would have meant a revised plan at much greater cost than proposed.

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  1. Just a small correction after checking some data:

    The Amerseco proposal was $27 million. The proposal suggested the Town could borrow $20M from them (at a higher rate that the town could get by debenturing the money). Borrowing from Amerseco was part of the deal – according to the RFQ from Amerseco, the town had to commit to borrowing a “minimum ($15-$25 million)” but the presentation mentioned $20 million.

    The actual rate was not quoted – except that it was higher than what the town could get from banks. Borrowing $20 million at debenture rates would mean the average taxpayer faced an approx 5% tax increase (paying $1.4M per year for 20 years).

    The total cost over the loan period at that rate would be roughly $28M when it’s all paid. Plus, according to the presentation and the RFQ, the municipality had to come up with $7-$10 million of its own to start the project.

    Total = at least $35M. Perhaps a bit more.

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