HomeMy WebLinkAboutDSD-19-275 - Dodge Drive Trunk Sanitary Sewer and Road Restoration - Credit-Refund Agreement RequestREPORT TO:Community & InfrastructureServices Committee
DATE OF MEETING:December 9, 2019
SUBMITTED BY:Hans Gross, Director of Engineering, 741-2200 ext. 7410
PREPARED BY:ChristineGoulet, ProjectManager, Development Engineering,
741-2200 ext. 7820
WARD(S) INVOLVED:Ward 4
DATE OF REPORT:November21, 2019
REPORT NO.:DSD-19-275
SUBJECT:Dodge Drive Trunk Sanitary Sewerand Road Restoration -
Credit/Refund Agreement Request
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RECOMMENDATION: That Council authorize the Mayor and Clerkto execute a
development charges credit/refund agreement with Activa Holdings Inc.in respect
toActiva Holdings payment forthe costs of the engineering fees and construction
of the Dodge Drive Trunk Sanitary Sewer and Road Restorationproject, to the
satisfaction of the City Solicitor.
BACKGROUND:
In 2015 Activa Holdings Inc. receivedplan of subdivision approvals to permit a residential
subdivision for lands to the northeast corner of New DundeeRoad and Reidel Drive,
extending to Dodge Drive.In 2017 a supplemental agreement was approved including a
conditionthat sanitary servicing constraints, most importantly the construction of a new
sanitary sewer, be addressed prior to occupancy permits being granted for multiple
stages.
In 2017 the Dodge Drive sanitary sewer was defined as a “trunk” sewer and therefore
qualified to be included in theCity’s 2019 Development Charges Background Study.
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REPORT:
The detailed design and construction of the Dodge Drive Trunk Sanitary Sewer and Road
Restorationis scheduled for 2027 and 2028 respectively,as per the capital budget. Activa
wishes to build out the Stauffer Woodssubdivision earlierand thus on August 30, 2019
the City received a development charges credit/refundapplication request from Activa to
advance the detailed design and construction of the infrastructure.Activa has had
ongoing discussion with the City, staff at this time isinsupport 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, Legal, and Finance. All
internal stakeholders and members of the project team are in favour of the proposal.
Project Costs
The total preliminary cost estimate of the Dodge DriveTrunkSanitary Seweris
$6,254,000.00in accordance with the 2019 DC BackgroundStudy. The cost estimate
includes the following:
o Engineering Fees ($816,000.00 or 13% of the project cost)
Consultant fees for detailed design, tendering and contract administration,
Cost for City staff including project management, tender advertisement, permit
fees and administration,
o Dodge Drive Trunk Sanitary Sewer and Road Restoration($5,438,000.00)
Dodge DriveTrunk Sanitary Sewer and Road Restorationconstructionincluding
a 25% contingency.
The developer will fund the project in two stages:
o The Engineering design for this project has already been completed by a private
consultant. Per Supplementary Subdivision Agreement WR1087007, if and when the
Dodge drive sanitary sewer became a Development Charge eligible expense, the city
wouldpayall money for work or services normally paid by the Development Charge
Account. The invoicefor designfeesis tobe submitted to the City for incorporation
into the credit/refund agreement.
o Fees for the remainder of the permitting, tendering, contract administration and
inspection will be accepted bythe City after the credit/refund agreement has been
signed and prior to the City incurring the expenditure. The City will go through the
normal purchasing process to select any required services to complete thetendering,
permittingand contract administration.
o Construction fundsto 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 processto 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 tendercosts are higher than expected. If the
costs are lower than expected, the unnecessary funds will be returned to the
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developer before contract award.If the tender costs exceed the construction cost
estimate by 20%, Activa has the ability to terminate the agreement.
The developer is responsible to provide the funds required to complete the project if
during construction any unforeseen issues ariseand sufficient funds are not available in
the letter of creditto cover the costs. The City will provide the developer 3 weeks’ notice
to provide the funds.
Operating and Maintenance Costs
There will be no operating and maintenance costs as the road is existing and the only
new infrastructure is a gravity-drained sewer.If maintenance is requiredwithin the sewer,
it will be at Activa’s sole responsibility and cost until 2027.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
The recommendation of this report supports the achievement of the city’s strategic
vision through the delivery of core service.
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 allowsdevelopers to proceed with such projects and be reimbursed by the
City through crediting, in this case, the sanitaryand roadportionof 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
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.
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COMMUNITY ENGAGEMENT:
NFORM – This report has been posted to the City’s website with theagenda in advance
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of the council / committee meeting.
CONSULT – Residents will be surveyed to ask about their interest in a municipal
watermain as a local improvement. Notification will also be provided to the public in
advance of construction activities.
PREVIOUS CONSIDERATION OF THIS MATTER:
2019 Development Charges Background Study
CONCLUSION:
Activa Holdings Inc.has had ongoing discussions with City staff from 2017 until now. At
this time, Activahas 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 Dodge DriveTrunkSanitary Sewer and Road
Restoration. Assuch, staff recommendsthat the credit/refund agreement for the Dodge
Drive Trunk Sanitary Sewerbe approved.
ACKNOWLEDGED BY: Justin Readman, General Manager,Development Services.
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