HomeMy WebLinkAboutINS-13-102 - Doon South Sewage Facility Credit/Refund Agreement
REPORT TO:
Planning & Strategic Initiatives Committee
DATE OF MEETING:
November 18, 2013
SUBMITTED BY:
Barbara Robinson, Director of Engineering Services, 519
741 2200 Ext 7410
PREPARED BY:
Binu Korah, Manager, Development Engineering, 519 741
2200 Ext 7974
Steve Ross, Assistant City Solicitor, 519 741 2200 Ext. 7266
Ryan Hagey, Director of Financial Planning, 519-741-2200 x
7353
WARD(S) INVOLVED:
Ward 4
DATE OF REPORT:
November 6, 2013
REPORT NO.: INS-13-102
SUBJECT: Doon South Sewage Facility - Credit/Refund Agreement
Request
RECOMMENDATION:
That Council authorize the Mayor and Clerk to execute a development charges
credit/refund agreement with Monarch Corporation in respect of Monarch Corporation’s
payment of the costs of the Engineering fees and the construction of Doon South
Sewage Facility project, to the satisfaction of the City Solicitor.
BACKGROUND:
The City of Kitchener is responsible for operating and maintaining the sanitary sewer network
and pumping stations within its boundaries. The City’s 2004 and 2009 Development Charge
Background studies had identified the need to establish a new sanitary sewage pumping station
and forcemain to provide wastewater servicing for the Doon South Area.
The City has completed an Environmental Study Report (ESR) for the Doon South Sanitary
Pumping Station and Forcemain (refer Appendix A, Doon South Pumping Station and
Forcemain) in 2009. The City also completed a preliminary design report in 2010 for this project
and purchased a property close to Robert Ferrie Drive and New Dundee Road to build the
pumping station to accommodate the future growth in the Doon South area.
Monarch Corporation is initiating the development of Topper Woods south subdivision,
30T-07202, and Dodge/Kelly subdivision 30T-07204. These lands are considered as Schedule
“B” priority in the City of Kitchener Growth Management Plan.
In accordance with the Subdivision agreement clause 6.17, as set out through the OMB
process, “Doon South Sewage facility and related appurtenances shall be constructed, as
required for the development of this plan to the satisfaction of the City’s Director of Engineering
Services. It is acknowledged that these works, including design expenses, are included in the
1 - 1
City’s Development Charge By-law 2009-091, as amended, and the City shall be responsible for
100% of the cost of these works.”
REPORT:
Monarch Corporation approached the City to initiate the credit/refund agreement to construct
the “Doon South Sewage Facility, temporary forcemain and related appurtenances” to support
their development. Monarch had ongoing discussions with City staff from 2012 until now. At this
time, Monarch has submitted all required information to process their application.
A project team from various City departments was set to review the credit/refund application.
The project team members include: Ryan Hagey, Director of Financial Planning, Alain Pinard,
Director of Planning, Jim Witmer, Director of Operations, Barbara Robinson, Director of
Engineering Services, Steve Ross, Assistant City Solicitor, Brandon Sloan, Manager of Policy
Planning and Binu Korah, Manager of Development Engineering. The project team met several
times internally and with the representatives from Monarch to draft this agreement.
Project Costs
The total preliminary estimated cost of the Doon South SPS is $8.8M. This cost estimate
includes the following items:
Engineering fees ($1.15M or 15% of the project cost)
o
Consultant fees for detailed design and contract administration;
Cost for City staff including project management, tender advertisement, permit fees and
administration;
Consultant cost for geotechnical testing, hydrogeological investigation, pump tests,
material testing, etc.
Doon South Sewage Facility and related works Construction ($7.67M)
o
Doon South SPS (pumping station including emergency storage tank, dewatering, and
pumps), watermain and temporary forcemain including 20% contingency.
The developer will provide the funds in two stages:
Engineering fees ($1.15M) to be submitted to the City as soon as the credit/refund
agreement has been approved by City Council. The City will go through the normal
purchasing process to select the consultant for this project, including a contract which
will be awarded by City Council.
Construction funds ($7.67M) to be submitted to the City once the detailed design is
completed, but before the City tenders the construction work. The City will go through
the normal purchasing process to select the construction company for this project,
including a contract which will be awarded by City Council. Once the City completes the
tender process, but before the tender is awarded, the developer may be required to top
up the funds for this stage of work if the tender costs are higher than expected. If the
costs are lower than expected, the unnecessary funds will be returned to the developer
before contract award.
1 - 2
If during construction any unforeseen things happen and sufficient funds are not available in the
project to cover this cost, the developer is responsible to provide the funds required to complete
the project. The City will provide the developer 3 weeks’ notice to provide the funds.
If, after the detail design stage, prior to the tender process, the engineer’s cost estimate
exceeds the foregoing amounts by 5% of the preliminary estimated cost above, Monarch has
the ability to terminate the agreement.
Activa Holdings Inc. is also planning to develop the Stauffer Woods subdivision 30T-08203. In
order to develop this subdivision (south of Blair Creek), the Doon South SPS sewage facility and
related infrastructure has to be built in accordance with the draft plan of subdivision condition
6.13. As such Activa has shown interest to fund this project if Monarch decides not to proceed
with this project. Monarch Corporation indicated to the City's project team that they do not
require any funding from Activa Holdings Inc. to build the pumping station and related
infrastructure even though Activa is benefiting from this project. Therefore Monarch has to
implement the recommendation of the credit/refund agreement (Design and Construction
Phase) by April 2015, otherwise this agreement will be considered null and void. At that point,
the City has the option to enter a credit/refund agreement with Activa or any other developers or
the same project if necessary.
Operating and Maintenance Costs
According to the City of Kitchener’s approved 2013 Capital Forecast, the Doon South Pumping
Station and related infrastructure are scheduled to be constructed in 2019. Monarch
Corporation wishes to construct this infrastructure earlier and have agreed to bear the additional
maintenance costs as outlined below:
1) General Subdivision Infrastructure
Unless specially noted below, the developer has agreed to maintain all infrastructure within
the subdivision for 5 years instead of 2 years. As per the City of Kitchener standard
subdivision process, the City will initially accept the services and reduce the letter of credit to
15%. However, the City will only finally accept (Final Acceptance) the underground and
other related infrastructures in 2019. In 2019, all infrastructure will also have to complete a
minimum of 2 year warranty period.
Definition of General Subdivision Infrastructure: Roads including curb and gutter, sidewalks,
boulevards including sod, trees, driveway ramps, traffic signs, storm/sanitary sewers and
related appurtenances, water & related appurtenances, parks, grass cutting, infiltration
galleries and storm water management pond & related appurtenances, culverts, and any
other City structure.
2) Pumping Station Maintenance Costs:
The developer has agreed to pay the maintenance cost for the pumping station based upon
the following occupancy targets:
0-100 units : $80,000/year
100-200 units : $60,000/year
200-300 units : $40,000/year
300+ - Until 2019: $20,000/year
1 - 3
On June 30th of every year, the City will review the number of built units in Monarch
Corporations land holdings in the Doon South area. The number of units occupied as of
th
June 30 will determine the maintenance costs paid by Monarch Corporation to the City for
the whole year. There is a declining scale for these costs as new residents entering this
area will be paying sewer charges, which are used to fund the costs of sanitary
infrastructure including pumping stations.
3) Snow Clearance Costs
Monarch is planning to develop their subdivisions in three phases. These costs increase
with each phase coming on line, notwithstanding any changes in tax revenue.
Phase 1:- $13,512.80/year
Phase 2:- $8,839.20/year
Phase 3:- $4,480.56/year
The developer has agreed to pay the snow clearance cost until June 30th, 2019.
4) Watermain Costs
Watermain maintenance cost for the following ($5,000/year):
Water Valve Operating Checks
Dead End Main Flushing
Hydrant Operational Checks and Maintenance
Leak Survey
Water Quality Sampling – (actual cost of the water sampling will be determined and shall
be paid by the developer in addition to the above cost)
Staff cost
The developer has agreed to pay the watermain maintenance cost until June 30th, 2019.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
The Doon South Sewage Facility project is aligned with the City of Kitchener Strategic Plan
(refer to Strategic Plan document, Community Priorities – Development, sections 1 & 3).
Further, this project is also one of the priority projects identified in the Kitchener Growth
Management Plan, as it provides service to lands identified as Priority B.
FINANCIAL IMPLICATIONS:
Capital Costs
The capital costs for this project will be borne by the developer. In accordance with Council
Policy I-537 (Development Charges Credit/Refund Agreements), the City will reimburse the
developer through development charge credits and refunds for significant growth related capital
items that are advanced by the developer.
1 - 4
Policy I-537 allows developers to proceed with such projects and be reimbursed by the City
through crediting, in this case, the sanitary portion of the Development Charge payable upon the
issuance of the building permit.
Policy I-537 also allows for a refund of the balance on June 30 of the year it appears in the
City’s capital forecast, but only to the extent the City has met its projected development charge
revenue targets, City wide. This ensures that there are adequate funds to cover the project in
the future. For example, if the City has only reached 60% of its anticipated Development
Charge revenue, throughout the City, then the developer is only entitled to 60% of the refund in
that year. Every year subsequent to that, the developer receives a refund calculated in the
same manner. Based upon this policy, a draft agreement has been prepared by Legal Services
in cooperation with legal counsel for the developer.
Operating Costs
In addition to outlining the details of the repayment by the City of the capital cost of the pumping
station and related works as described above, the agreement contains some new features that
are in addition to the strict requirements of Policy I-537. For example, in the agreement, the
developer covenants to pay the operating and maintenance costs of the pumping station until
the item appears in the City’s capital forecast. Further, the developer will be reimbursing the
City for all estimated snow removal costs for each phase of the subdivision, once each phase is
completed, until the date the items appears in the City’s capital forecast. The developer will
also be reimbursing the City for all estimated watermain maintenance and flushing costs. The
developer has also agreed to maintain all other subdivision infrastructure until the date it
appears in the City’s capital forecast. These operating costs are not eligible for credit/refund
from the City, unlike the pumping station and related works.
COMMUNITY ENGAGEMENT:
As part of the detail design for this project, the City will conduct a Public Information Centre to
present the study findings for this project. This will provide an opportunity for the public to review
the study findings.
CONCLUSION:
Monarch Corporation had ongoing discussions with City staff from 2012 until now. At this time,
Monarch has submitted all the required information to process their application and staff has
had the opportunity to review the application in detail. Monarch Corporation is proposing to fund
the cost of the Doon South Sewage Facility and related appurtenances. Further they have also
agreed to pay the maintenance cost of the subdivision infrastructure including pumping station.
As such, staff recommend that the credit/refund agreement for the Doon South Sewage Facility
be approved.
ACKNOWLEDGED BY: Pauline Houston, DCAO,
Infrastructure Services Department
Attachments
Appendix A – Doon South Pumping Station and Forcemain
1 - 5
APPENDIXA
DoonSouthPumpingStationandForcemain
1 - 6