HomeMy WebLinkAboutINS-18-012- Middle Strasburg Trunk Sanitary Sewer - Credit & Refund Agreement RequestREPORT TO: Planning &Strategic Initiatives Committee
DATE OF MEETING: April 9, 2018
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: February 6, 2018
REPORT NO.: INS-18-012
SUBJECT: Middle Strasburg Trunk Sanitary Sewer-Credit/Refund
Agreement Request
___________________________________________________________________________
RECOMMENDATION:
That Council authorize the Mayor and Clerk to execute a development charges
credit/refund agreement with the developers (Kitchener Green 3 Developments
Inc., Kitchener Green Developments Inc., Activa Holdings Inc., 2079546 Ontario
Limited, Activa Investment Corporation, South Estates Kitchener G.P. Inc., Big
Spring Farms Limited, B & B Kieswetter Excavating Inc., Deerfield Homes Ltd.) in
respect to the developers payment for the costs of the engineering fees and
construction of the Middle Strasburg Trunk Sanitary Sewer (MSTSS),in addition
the agreement will contain provisions authorizing the acceptance of lands from
the developers by the municipality on which the project will be constructed, to
the satisfaction of the City Solicitor.
BACKGROUND:
In 1998 the City of Kitchener (EA) for
the Middle Strasburg Creek Trunk Sanitary Sewer between Huron Road and Bleams
Road. The trunk sewer will service future development within a portion of the Huron
Community Plan which is bounded by Bleams Road to the north, Westmount Road to
limit to the south.
The Environmental Study Report was approved on April 17, 1998. No construction
activity occurred within 10 years on the trunk sewer after receiving approval.Therefore,
in accordance with the Municipal Class EA process, The City of Kitchener was obligated
to review the planning and design details to ensure that the project and the mitigating
measures outlined in 1998 are still valid given the current planning context and site
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conditions, by means of an Addendum to the Class EA.The City of Kitchener
completed the Addendum to the Class EA on February 28, 2003.
Activa Holdings Incorporated initiated the development of stages 8, 9 and part of stage
10 of the Huron Village Subdivision, File 30T-01201. In accordance with the Subdivision
Agreement, the Middle Strasburg Trunk Sanitary Sewer was required to be extended
from its terminus at that time to Huron Road.The City received a request from Activa
Holdings Inc. proposing that the City retain Stantec Consulting Limited as the
engineering consultant to undertake the detailed design, contract administration and
inspection for the Middle Strasburg trunk sewer project. Further to that Activa
requested to execute a credit for Service Agreement with the City of Kitchener in
respect to Activa paying the costs of the consultant fees and the construction of Middle
Strasburg Trunk Sanitary Sewer project. Council approved this in March 2008 and the
first phase of the trunk sewer was constructed.
The Region of Waterloo completed a Class C Environmental Assessment for Fischer
Hallman Road Improvements on March 2, 2016. The MOECC received multiple Part II
Order Requests in association with the Environmental Assessment. The Region of
Waterloo received notice from the Minister of Environment and Climate Change dated
-Hallman
Road (Bleams Road to Plains Road) Class EA Study and issued
e single phase.A
portion of the MSTSS, local sanitary sewer and local watermain are all within the impact
area and are required to be completed in one construction phase as per the M
order.
REPORT:
In accordance with the Kitchener Growth Management Plan and the 2014 Development
Charge Background studies, the City of Kitchener is planning to construct the north
(upstream) portion of the new Middle Strasburg Trunk Sanitary Sewer (MSTSS). This
project is illustrated in Figure 1.0. The portion of the MSTSS from Huron Village
Subdivision to the crossing of Strasburg Road and Strasburg Creek has been
constructed. Approximately 1250 m of 3100 m are completed.The new trunk sewer
will be approximately 1850 m long and will connect to the previously installed portion of
this trunk sewer.
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Figure 1.0 Middle Strasburg Creek Trunk Sanitary Sewer EA Alignment
As identified in the 2018 capital forecast, the MSTSS project is budgeted mainly in
2022-2023, with a small amount of funding in 2018 ($213,000) for the portion of the
MSTSS included as part of the Region of Waterloo tender for Fischer Hallman Road
reconstruction. As part of the 2018 final budget day discussions, Council also approved
advancing $680,000 of funding from 2022 to 2018 so the detailed design for the whole
MSTSS project could be completed .
The developers group wishes to expedite the construction of the MSTSS in its entirety
and thus on February 7, 2018, the City received a development charges credit/refund
application request from the developers to advance the detailed design and construction
of the MSTSS. The developers have had ongoing discussion with the City. Staff at this
time is in support of this application and to date the developer group has submitted all
required information to process their application.
A project team from various City departments was established to review the
credit/refund application. Project team members included Engineering, Planning, Legal,
and Finance. All members of the project team are in favour of the proposal. The
project team has met with the developers to draft the agreement.
The project is a development charge (DC) funded project and was identified in the 2014
DC Background study as shown in the table below. Values included in the 2018 budget
reflect the timing change for the portion of the MSTSS related to the Regional
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reconstruction of Fischer Hallman Road, completing detailed design in 2018, and also
incorporate inflation.
Total ProjectTimeframeTotal DC Study Reference
Estimated
Cost
1Middle Strasburg 2022-$4,707,813$9,415,626Hemson Consulting
Creek Sanitary Sewer 2023 -$4,707,813Ltd., April 2014
TrunkProject SA8, p. 196
Other Considerations:
As illustrated in Figure 2.0, all 13 parcels of land owned by the developers are
dependent on the MSTSS being completed. Of critical note is the traffic on Fischer
Hallman Road and the immediate need for capacity improvements to address the issue.
The Region is assessing if temporary signalized improvements are required including a
temporary rural widening potentially in 2019 but it would only be done if the core project
was to be deferred by four to five years. This would be nearly 100% throw-away costs
which is not a preferred option.
1, 2 Kitchener Green 3 Developments Inc. 8 Big Spring Farms Limited
3 Kitchener Green Developments Inc. 9 Activa Holdings Inc.
4 B&B Kieswetter Excavating Inc. 10 City of Kitchener
5, 13 20795446 Ontario Limited 11 Activa Investments Corporation
6 Stamm Investments Limited 12 Deerfield Homes Limited
7 South Estates
Figure 2.0 Land Ownership
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Project Costs
The total preliminary cost estimate of the project is $9,415,626.00 in accordance with
the 2014 DC Background Study. The cost estimate includes the following:
o Engineering Fees for the project ($1,228,125.00)
Consultant fees for detailed design, inspection and contract administration
Cost for City staff including project management, tender advertisement, permit
fees and administration
Consultant cost for geotechnical testing, hydrogeological investigation, etc.
o Middle Strasburg Creek Sanitary Trunk Sewer (Huron to Bleams Rd) and related
works ($8,187,500.00) including a 25% contingency
The developers will fund the project in two stages:
o Upon execution of the credit for service agreement the developers agree to pay in
full the total cost of the design work and the construction portion within the Fischer
Hallman Road right-of-way, namely $893,000.00 ($213,000+$680,000).
o Upon execution of the credit for service agreement the developers agree to deposit
an irrevocable letter of credit in the amount of $1,000,000. The letter of credit will
have an automatic renewal clause.
o Prior to the award of tenders, the amount of the letter of credit will be modified to
match the full amount of the contract price for the creditable works, so that all of the
In addition, all
property required for the construction, maintenance and ownership of the MSTSS
will be transferred to the City.
o 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 required to complete the project. The City will provide the
developer to provide the funds.
If, after the detailed design stage and tendering process, the total value for all project
works exceeds the amount agreed upon with the developers and defined in the credit
for service agreement, then the developers have the ability to terminate the agreement.
The City will retain sufficient funds to complete the design of the MSTSS as well as the
construction of the MSTSS within the Fischer Hallman Road right of way plus 20 m
downstream to the east.
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.
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Strategic Action: #51 Kitchener Growth Management Strategy 2017-2019
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
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 and Maintenance Costs
8Capital Forecast, Middle Strasburg Trunk
Sanitary Sewer is to be constructed in 2022-2023. There is no additional operating or
maintenance costs to this agreement. The developers agree if maintenance is required
prior to June 30, 2022 the City will perform the required maintenance and bill the
developers accordingly.
COMMUNITY ENGAGEMENT:
INFORM
advance of the council / committee meeting.
CONSULT The City has consulted with GRCA and the Region of Waterloo to ensure
the Part II Order issued by the MOECC is being adhered to. The public was previously
consulted with during the Environmental Assessment; the open house was on
November 13, 1996.
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PREVIOUS CONSIDERATION OF THIS MATTER:
On April 17, 1998 council approved the Environmental Study Report and it was
submitted for MOE for the 30 day review.
On March 11, 2008 council approved the retention of Stantec Consulting to complete
the detailed design and contract administration for the construction of the first phase of
the Middle Strasburg Trunk Sanitary Sewer. It further approved entering into a credit for
service agreement with Activa Holdings Inc. for the cost of the detailed design and
construction of the trunk sewer.
In January 2018 as part of final budget, Council approved the advancement of
$680,000.00 to complete the detailed design for the remaining portion of the trunk
sewer.
CONCLUSION:
The developers group has had ongoing discussions with City staff. At this time, the
developer group has submitted all the required information to process their application
and staff has had the opportunity to review the application in detail. Said developers are
proposing to fund the cost of the Middle Strasburg Trunk Sanitary Sewer and related
appurtenances. Further they have also agreed to pay any maintenance cost of the
subdivision infrastructure until such time as it appears in the capital budget. As such,
staff recommends that the credit/refund agreement for the Middle Strasburg Trunk
Sanitary Sewer be approved.
ACKNOWLEDGED BY: Justin Readman, Executive Director, Infrastructure Services.
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