It’s possible the new water treatment and intake project for Parksville and Nanoose Bay could now cost $32.5 million.
That’s $3.8 million more than what was pitched before Parksville voters went to the polls in a referendum one year ago to approve $5.6 million in borrowing by the city for the project.
At the time of the referendum, city officials said the project was going to cost $28.3 million. The city’s portion, according to the city, was supposed to be $20.6 million. City operations manager Mike Squire said last week the city’s portion may now be $25.5 million (the rest is being picked up by the RDN).
Squire listed a number of factors that have driven the cost of the project up, including costs related to bylaws the city has on the books and apply to all developments, items like fire suppression, development cost charges and permit applications.
“There is always a difference between preliminary design cost estimates and the full design going out to tender,” Mayor Marc Lefebvre said in an email over the weekend in response to a number of questions from The NEWS.
“In our case it is 13 per cent, which is not uncommon by industry standards.”
Coun. Kirk Oates said he hasn’t fully accepted the explanation for the increase he has received from staff and said he still has questions about some of the budget-boosting items listed by Squire.
“Why they weren’t anticipated beforehand, I don’t know,” said Oates. “That number (13 per cent) did jump out at me. The jury is still out for me.”
Lefebvre said the budget for the project presented last year “was based on our best known information at that time. Given it has been almost a year, an overall four per cent escalation increase has been added to the entire project to account for the current economic market upturn in construction activity on Vancouver Island and the Lower Mainland.”
Other costs that have been added to the project’s budget this year that were not originally accounted for include:
• Fire Suppression (sprinklers). “Although installation of fire sprinklers is not typical in this type of application as the building is not habitable, we abide by current city bylaws the same way all developers in the city are required to do,” said the mayor.
• Development cost charges (DCCs) payable to the City of Parksville.
• DCCs payable to the Regional District of Nanaimo (RDN). “It was unknown last year what the actual charge would be or if applicable,” said Lefebvre.
• Waste discharge permit application and RDN waste discharge annual fees. “The waste stream into the sanitary sewer from the water treatment plant exceeds the threshold limit and is therefore subject to additional annual surcharge fees as a result,” said the mayor.
• Local cost factor increase for labour costs of concrete supply and install (approximately 30 per cent more on Vancouver Island, according to the city).
Construction on the intake/treatment plant project was to begin this year. Island Health’s deadline that deems all surface water (like that from Englishman River) must be treated is September, 2018.
Lefebvre said last week the city will seek more grant money from senior governments to make up the difference.
Council held its first public budget meeting on Wednesday, discussing both the 2017 city budget and the financial plan for 2017-20. It’s unclear right now if the increase to the costs of the treatment plant will affect the four per cent property tax increase currently projected for 2017.
The City of Parksville is responsible for 74 per cent of the project’s cost. It cannot increase the amount of borrowing it received approval for in last year’s referendum. The rest of the project’s costs are being picked up by the RDN through its budget for Nanoose Bay.
(See Thursday’s edition of The NEWS for more on council discussions about the 2017 budget.)