HomeMy WebLinkAboutDSD-19-063 - Middle Strasburg Trunk Sanitary Sewer-Refund Agreement RequestREPORT TO:Finance& Corporate Services Committee
DATE OF MEETING:April 15, 2019
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:Ward5
DATE OF REPORT:March 20, 2019
REPORT NO.:DSD-19-063
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 withthe developers (Kitchener Green
Developments Inc., Kitchener Green 3 Developments Inc., 2079546 Ontario Limited, Cook
(South Estates) Limited, Max Becker Enterprises (II) Limited) 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:
This project was considered by council previously, please refer to the previous consideration of
the matter section of this report for further details.
As identified in the 2018 capital forecast, the MSTSS project was 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 in order to meet
MSTSS in its entirety and thus
on February 7, 2018, the City received a development charges credit/refund application request
from the developersto advance the detailed design and construction of the MSTSS. The
developers havehad ongoing discussion with the City. Staff at thetime wasin support of this
application and to date the developer grouphadsubmitted all required information to process
their application.City council approved the execution of entering into a credit for service
agreement with thedevelopers group on April 16, 2018.
***This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994for assistance.
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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 tothe 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 thepreviously
installed portion of this trunksewer.
Through detailed design numerous issues were encountered which increased the project cost
significantly. Main components that increased the project costs were archeological,
geotechnical, environmental and species at risk and thus required additional trenchless
construction then originally planned.
Some developers that were part of the previous developers group no longer want to participate
in the agreement and thus the City received a revised request for a credit for service agreement
on February 15, 2019. The intent from the original agreement remains unchanged; however, the
parties to the agreement have changed along with the project costs have increased as
highlighted during the 2019 budget process.
Figure 1.0 Middle Strasburg Creek Trunk Sanitary Sewer EA Alignment
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The MSTSS was included in the 2014 Development Charges (DC) Background Study as a
2022/2023 project with atotal cost of $10.25 Million. As part of the 2019 budget, an additional
$5.5 Million was approved to be added to the project in 2024.
Other Considerations:
As illustrated in Figure 2.0, all 13parcels of land owned by the developers are dependent on the
MSTSSbeing completed.Included in this need for critical infrastructure is the new library and
community centre planned within the Rosenberg community.
Lastly, one furthernote is the traffic congestion on Fischer Hallman Road and the immediate
need for capacity improvements to address the issue.
1, 2 Kitchener Green 3 Developments Inc.8Big Spring Farms Limited
3Kitchener Green Developments Inc.9Activa Holdings Inc.
4B&B Kieswetter Excavating Inc.10City of Kitchener
5, 13 20795446 Ontario Limited11Activa Investments Corporation
6Stamm Investments Limited12Deerfield Homes Limited
7South Estates
Figure 2.0 Land Ownership
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Project Costs
The total cost estimate for construction is $14,000,000.00 which includesthe following:
o Engineering Fees for theproject ($1,000,000.00)
Consultant fees for inspection and contract administration
Cost for City staff including project management, tender advertisement, permit fees and
administration
o Middle Strasburg Trunk Sanitary Sewer (Huron to Bleams Rd)and related works
($11,376,287.00)including a 15% contingency
o Middle Strasburg Trunk Sanitary Sewer Region contract ($1,600,000.00)
Rd widening
The developerswill fund the project as follows:
o Prior to the award of tenders, the developers will provide either a letter of credit or cash to
commitments in relation to the works are fully secured. 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 funds.
If, after 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.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
StrategicPriority: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 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
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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 r
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 consultationwith
legal counsel for the developer.
Operating and Maintenance Costs
9Capital Forecast, Middle Strasburg Trunk
Sanitary Sewer is to be constructed in 2022-2023.Thereis no additional operating or
maintenance costs to this agreement. The developers agree that if maintenance is required prior
to June 30, 2022 the City will perform the required maintenance and bill the developers
accordingly.
COMMUNITY ENGAGEMENT:
INFORM
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.
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 StantecConsulting 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 thecost 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.
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On April 16, 2018, Council authorized the Mayor and Clerk to execute a development charge
credit/refund agreement with the developers group in relation to construction and engineering
fees associated with the Middle Strasburg Trunk Sanitary Sewer as outlined in staff report INS-
18-012.
In January 2019, as part of final budget, Council approved the increase of $5,500,000.00 to the
Middle Strasburg Trunk Sanitary Sewer account in 2024.
CONCLUSION:
The developers grouphas had ongoing discussions with City staff. At this time,the developer
grouphas submitted all the required information to process their application and staff has had
the opportunity to review the application in detail. Said developers areproposing to fund the cost
of the Middle Strasburg Trunk Sanitary Sewerand related appurtenances. Further they have
also agreed to pay anymaintenance 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 Sewerbe approved.
ACKNOWLEDGED BY: Justin Readman, General Manager, Development Services
Department
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