 | Home page |  | Text size |  | E-mail this page |
$10 million over budget New water treatment plant will require city to borrow an additional $3.8 million after bids exceed $30 million
Cody Punter
Northern News Services
Published Monday, July 22, 2013
SOMBA K'E/YELLOWKNIFE
A city councillor is criticizing a recommendation that council borrow an additional $3.8 million to help pay for Yellowknife's new water treatment plant.
Chris Greencorn, public works director, stands in front of Pumphouse No. 1, on July 19. City council will be voting on whether to approve a contract to replace the facility with a new $30-million water treatment facility during a council meeting on Monday night. - Cody Punter/NNSL photo |
Council is scheduled to vote tonight to approve the $30-million contract - approximately $10 million over budget - and to borrow the funds which will top off a $20-million loan council approved last year.
Councillor Niels Konge said council should be looking at cutting non-essential capital projects from its budget and not borrowing additional funds.
"I firmly believe that this council's priorities are wrong. We are not giving administration good solid direction," said Konge. "Our finance policies are not fiscally conservative enough for me. We can just keep borrowing, we can just keep raising user fees and we can just keep raising taxes. And, I don't agree with that," he said.
Konge added he was not surprised the project was going over budget, but said the city is still accountable for the cost.
"I'm in construction. I don't think the first number was a real number, but it's still the number that we as city hall said it was going to cost," said Konge
Chris Greencorn, public works director, said the original estimate for building the plant was $21 million, and was based on an estimate from 2006. As such, Greencorn said the estimate did not take into account increases in the cost of construction projects, which he said have been on the rise since he started working for the city in 2006.
He added the estimate was made before engineers had come up with a finished plan for the facility, and several unforeseen costs cropped up during that process. In particular, the city's decision to continue drawing water from the Yellowknife River was a leading factor.
"Staying at the river means we have to maintain that pumphouse, we have to put in pumps, we have to put in back-up generators. So there's a lot of stuff that happened in addition to the cost of construction increases."
The city will also face an additional cost of replacing the aging pipeline to Yellowknife River which is not included in the treatment plant's construction budget.
Greencorn said although the pipe replacement was originally estimated at $10 million, he said a realistic figure would be closer to $15 million.
The city was forced to build a new water treatment facility after the GNWT adopted the Canadian federal guidelines for drinking water as legislation in 2009. The city's existing water filtration plant at Pumphouse No. 1 does not meet the standards of that legislation, which required a new facility to be built.
Konge said while the city does not have a choice to build the new facility, it has the ability to cut other projects in order to keep a balanced budget.
"In your household, when there's something that you have to do - if your car breaks down and you have to fix it - do you go and borrow money to fix your car? Or do you stop going to the movies for a few weeks and
stop buying so much beer?"
Konge said the city is going ahead with a series of beautification projects at Pilot's Monument and Tin Can Hill and continues to build new parks.
"There's a whole bunch of things we're going ahead with and, in the meantime, we have to borrow money to go ahead with our core services," said Konge. "I think it's about priorities. Is our priority in the city of Yellowknife to keep spending?" asked Konge.
Mayor Mark Heyck said the city already had $5 million in carry-over, that was allocated for the water treatment plant in previous budgets, to go toward paying for the project.
He added the city will also get a GST rebate from the federal government for the project, making the actual cost $28.8 million. Heyck said that kept the amount the city will need to borrow down.
However, Konge said borrowing $3.8 million more is cause for concern.
"In the end, the taxpayer has to pay for it," he said.
Heyck, however, said the repayment of the loan would be spread out over 15 years and the costs to the taxpayer would be minimal.
"The capital budget, which we use to repay our long-term debt is in very good shape," said Heyck.
"We're not Detroit so we should be OK."
City administration will recommend the construction project be awarded to Ontario-based NAC Constructors Ltd. which submitted the lowest bid - $30,280,950. Two local companies, Det'on Cho Nahanni Construction Ltd. and Clarke Builders, also made a bid on the project.
Clem Hand, manager of corporate services and risk management, said the bid process was an invitation to tender and the city is legally obligated to award the contract to the lowest bidder.
| 
