HomeMy WebLinkAboutINS-16-007 - Ottawa Trussler Credit-Refund Agreement Request
REPORT TO: Finance & Corporate Services Committee
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DATE OF MEETING: April 11, 2016
SUBMITTED BY: Hans Gross, Director of Engineering, 741-2200 ext. 7410
PREPARED BY: Linda Cooper, Manager Development Engineering, 741-2200
ext. 7974
WARD(S) INVOLVED: Ward 5
DATE OF REPORT: January 8, 2016
REPORT NO.: INS 16-007
SUBJECT: Ottawa/Trussler Pumping Station-Credit/Refund Agreement
Request
___________________________________________________________________________
RECOMMENDATION: That Council authorize the Mayor and Clerk to execute a
development charges credit/refund agreement with Activa Holdings Inc. in
respect to Activa Holdings payment for the costs of the engineering fees and
construction of the Ottawa/Trussler Pumping station project, to the satisfaction of
the City Solicitor.
BACKGROUND:
In 2005 Activa Holdings Inc. applied for an amendment to the Official Plan for zoning
followed by plan of subdivision approvals in 2008, to permit a residential subdivision for
lands to the northeast corner of Trussler Road and Ottawa Street, extending to Highway
7/8. The lands are a logical extension of the Laurentian West Community and City
Council promoted the lands in 2009 to Priority B from priority C in the Kitchener Growth
Management Plan, with a condition that sanitary servicing constraints, most importantly
the construction of a new Sanitary Pumping Station, be addressed prior to development
approvals.
, an
Environmental Assessment was required to determine the best location for the new
pumping station along with preliminary design of the pumping station. Activa agreed to
pay the cost of the consultant to be retained by the City to complete the Environmental
Assessment study for be recovered
through a credit/refund agreement. In addition to the cost of the study, and dependant
on the outcome of the Environmental Assessment, Activa has agreed to pay for the
detailed design and construction of the sanitary pumping station, forcemain, and related
downstream gravity sewer improvements, through a second credit/refund agreement
upon the completion of the study subject to Council approval.
*** This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994 for assistance.
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REPORT:
The City is responsible for operating and maintaining the sanitary sewer networks and
pumping stations within its boundaries while the Region of Waterloo is responsible for
boundaries. In accordance with the Kitchener Growth Management Plan and the
2009/2014 Development Charge Background studies, the City of Kitchener is planning
to develop the Laurentian West Phase 3b Community and surrounding areas. In order
to support development in this area, the City was required to complete a Class EA study
to identify a location for a new sanitary pumping station, forcemain, and other related
infrastructure upgrades.
The City of Kitchener completed the Environmental Assessment in January 2014. The
detailed design and construction of the Ottawa/Trussler Pumping Station is scheduled
for 2023 as per the capital budget. Activa wishes to build out the Laurentian West
subdivision in a shorter time frame and thus on September 2, 2015 the City received a
development charges credit/refund application request from Activa to advance the
detailed design and construction of the infrastructure and pumping station.Activa has
had ongoing discussion with the City, staff at this time is in support of this application
and to date Activa has submitted all required information to process their application.
A project team from various City departments was set to review the credit/refund
application.Project team members included Engineering, Planning, Transportation,
Operations, Legal, and Finance. All internal stakeholders and members of the project
team are in favour of the proposal. The project team has met with Activa to draft the
agreement.
The Region of Waterloo is reconstructing Ottawa Street and has met with the City in
terms of this development request and has agreed to change their projects limits from
Trussler Road to Nine Pines Road (east of Fischer Hallman Road). In regards to
construction of Ottawa Street, the Region will be recommending to Regional Council in
the next Regi
approve the allocation of construction funds for Ottawa Street Reconstruction from
Trussler Road to East of Fischer Hallman Road (Nine Pines Road) for 2018 and 2019.
The forcemain design and construction along Ottawa Street would be included under
with design in 2016 and construction in 2018 and 2019. The
Ottawa/Trussler Pumping Station and associated forcemain within the plan of
subdivision would be under the Cit
construction 2017/2018.
Project Costs
The total preliminary cost estimate of the Ottawa/Trussler Pumping Station is
$4,557,776.00 in accordance with the 2014 DC Background Study. The cost estimate
includes the following:
Engineering Fees ($555,000.00 or 15% of the project cost)
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Consultant fees for detailed design and contract administration
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Cost for City staff including project management, tender advertisement, permit
fees and administration
Consultant cost for geotechnical testing, hydrogeological investigation, pump
testing, material testing, etc.
Ottawa/Trussler Pumping Station and related works ($3,700,000.00)
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Ottawa/Trussler Pumping station construction including emergency storage,
dewatering, pumps and associated forcemain, includes a 25% contingency.
Environmental Assessment ($302,776)
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Pay back for the Laurentian EA/Design Work which was previously completed
under a credit/refund agreement, this amount will be excluded from the total
amount to be provided through this agreement.
The developer will fund the project in two stages:
Engineering fees for design ($300,000) to be submitted to the City as soon as the
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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 and consultant fees for contract administration and inspection
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($3,955,000.00) 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 tendering 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.
If during construction any unforeseen issues arise and sufficient funds are not available
in the letter of credit to cover the costs, the developer is responsible to provide the funds
provide the funds.
If, after the detailed design stage and prior to the tender process, the cost
estimate exceeds the forgoing amounts by 5% of the preliminary estimated cost above,
then Activa has the ability to terminate the agreement.
Operating and Maintenance Costs
According to The City of Kitchener approved 2016 Capital Forecast, the
Ottawa/Trussler Pumping Station and related infrastructure are scheduled to be
constructed in 2023. Activa Holdings Inc. wishes to construct the infrastructure earlier
and have agreed to bear the additional maintenance costs as outline below:
1) General Subdivision Infrastructure:
The developer has agreed to maintain all infrastructures within the subdivision for 7
years instead of the standard
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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
undergrounds and other related infrastructures in 2023.In terms of street lighting
the developer will be responsible for the cost of the hydro for all street lights during
the maintenance period and until such time as the City takes ownership in 2023.
Definition of General Subdivision Infrastructure:Roads including curb and gutter,
sidewalks, boulevards including sod, trees, street lightening, driveway ramps, traffic
signs, storm/sanitary sewers and related appurtenances, water & related
appurtenances, parks, grass cutting, infiltrationgalleries and storm water
management pond andrelated appurtenances, culverts, and any other City
structure.
2) Pumping Station Maintenance Costs:
The developer has agreed to pay the maintenance cost of the pumping station
based upon the following occupancy targets:
0-100 units: $80,000/year
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100-200 units: $60,000/year
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200-300 units: $40,000/year
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300+ units: $20,000/year
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On June 30 of every year the City will review the number of built units in Laurentian
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West Phase 3b. The number of units occupied as of June 30 will determine the
maintenance costs that are required by Activa for that year based on the occupancy
targets listed above.The City will invoice Activa for the maintenance costs for that
year based on unit count. 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:
Activa 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:- $12,519.00/year (3.21km)
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Phase 2:- $37,206.00/year (6.33km)
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Phase 3:- $38,259.00/year (0.27km)
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The developer has agreed to pay the snow clearance cost until June 30th, 2023.
4) Watermain Costs:
Watermain maintenance cost for the following ($5,000/year):
Water Valve Operating Checks
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Dead End Main Flushing
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Hydrant Operational Checks and Maintenance
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Leak Survey
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Water Quality Sampling (actual cost of the water sampling will be determined
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and shall be paid by the developer in addition to the above cost)
Staff cost
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The developer has agreed to pay the watermain maintenance cost until June 30th,
2023.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
Strategic Priority:Safe and Thriving Neighbourhoods
Strategy: #3.3 Manage growth, curb urban sprawl, and foster more mixed-use
development, ensuring new development is integrated with the diversity and character
of the surrounding community.
Strategic Action: #51 Kitchener Growth Management Strategy 2015-2017
FINANCIAL IMPLICATIONS:
Capital Cost:
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.
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 permits.
Policy I-537 also allows for a refund of the balance on June 30 of the year it appears in
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 Cost:
In addition to outlining the details of the repayment by the City for 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
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of the pumping station until the item appears in the C 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
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
which includes the hydro cost for all street lighting within the
subdivision. These operating costs are not eligible for credit/refund from the City,
unlike the pumping station and related works.
COMMUNITY ENGAGEMENT:
INFORM site with the agenda in
advance of the council / committee meeting.
CONSULT The City consulted with the Waterloo Regional District School Board on
the application request in efforts to discuss timing and impacts to the school block within
the plan of subdivision. The school board remains neutral on this proposal.
The public was previously consulted and involved in the Class Environmental
Assessment process for the Ottawa/Trussler Pumping Station, two Public Information
Centres (May and September 2013) were held as part of that process along with the
report findings presented to the Environmental Committee on October 17, 2013. On
January 13, 2014 Council approved staff recommendation to file the Environmental
Study Report (ESR) with the MOE for the 30 day review period as required by the
Environmental Assessment Act.
PREVIOUS CONSIDERATION OF THIS MATTER:
In June 2012 City Council authorized the Mayor and Clerk to enter into a credit/refund
agreement with Activa Holdings Inc., for the cost to complete the Environmental
Assessment study for the Laurentian sanitary pumping station (Ottawa-Trussler area
sewage facility), forcemain, and related infrastructure. The City retained a consultant
and completed the Environmental Assessment which was filed with MOE January 2014.
CONCLUSION:
Activa Holdings Inc. has hadongoing discussions with City staff from 2013 until now. At
this time, Activa has submitted all the required information to process their application
and staff has had the opportunity to review the application in detail. Activa Holdings Inc.
is proposing to fund the cost of the Ottawa Trussler Pumping Station and related
appurtenances. Further they have also agreed to pay the maintenance cost of the
subdivision infrastructure including pumping station. As such, staff recommends that the
credit/refund agreement for the Ottawa Trussler Pumping Station be approved.
ACKNOWLEDGED BY:
Justin Readman, Executive Director, Infrastructure Services
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