HomeMy WebLinkAboutINS-2022-141 - Funding Support for THEMUSEUM Grant
REPORT TO: Committee of the Whole
DATE OF MEETING: March 21, 2022
SUBMITTED BY: Qureshi, Asad, Director Facilities Management
519-741-2600 X 4424
PREPARED BY: Stewart, Lynda, Manager Projects & Energy Management
519 741 2600 X 4215
WARD(S) INVOLVED: All Wards
DATE OF REPORT: March 1, 2022
REPORT NO.: INS-2022-141
SUBJECT: Funding Support for THEMUSEUM Grant
RECOMMENDATION:
That $162,251 be allocated from the Facilities Management State of Good Repair (SOGR)
capital account to complete THEMUSEUM roof replacement in 2022; and,
That, subject to the satisfaction of the City Solicitor and Chief Financial Officer, Council
approve entering into a legal agreement with THEMUSEUM outlining the financial and
reporting terms to manage the Investing in Canada Infrastructure Program (ICIP) grant.
REPORT HIGHLIGHTS:
The purpose of this report is to seek Council direction on providing additional financial
resources and cashflow to THEMUSEUM to meet the grant requirements of the Investing in
Canada Infrastructure Program (ICIP) grant program for improvements related to the city-
owned building.
The key findings of this report are:
o The tenders received for the roof replacement exceed the resources available
within the grant award.
o The funder requires a resubmission of documents to support a revised scope of
work focused on the roof replacement only. A plan to address budget shortfall is
also required to be submitted to the funder.
o The ICIP grant program reimburses grant recipients based on paid invoices.
THEMUSEUM, as the grant recipient, is not in a financial position to cashflow this
project and has requested the City provide support to pay invoices.
o A legal agreement between the City and THEMUSEUM would be formalized for
the repayment of any cash advances, subject to the terms of the funding
agreement.
The financial implications are an additional $162,251 is needed to award the tender for roof
replacement at THEMUSEUM. This amount could be allocated from the Facilities
Management State of Good Repair (SOGR) capital account.
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Community engagement included
council meeting.
This report supports the delivery of core services.
BACKGROUND:
In 2019, THEMUSEUM in collaboration with City Facilities Management staff, applied to the
Investing in Canada Infrastructure Program (ICIP): Community Culture and Recreation stream
for a grant to undertake a roof replacement and washroom improvements. The City is
responsible for facility capital renewals of major facility components at THEMUSEUM which is a
city-owned building. This includes substructure, envelope, interior construction and finishes and
services (electrical, plumbing, elevator, HVAC, fire and life protection). Several leaks have been
repaired at this location and the roof is at the end-of-life expectancy. Similarly, the washroom
finishes are worn, and upgrades are required to improve accessibility.
Council considered report FIN 19-080 Community, Culture & Recreation Grant Application and
endorsed an application from THEMUSEUM and committed to funding support for
THEMUSEUM. This program is jointly funded by the provincial (33.3%) and federal (40%)
governments. The applicant was expected to contribute 26.67% of the total value of the project.
The application outlined a project valued at $862,187 in total - funded by $632,242 in combined
provincial and federal grants and a $229,945 contribution from the City of Kitchener.
The scope of work as applied for was budgeted in 2019, but the grant was not approved until
2021. In the intervening period, the pandemic has created significant challenges in the
construction industry resulting in significantly higher costs. To capitalize on this available funding
and complete high priority facility rehabilitation work, a different approach must be considered.
REPORT:
Project Description and Tender Results
In 2019 when this grant application was submitted, THEMUSEUM staff were eagerly preparing
for the exclusive North exhibit, starting in fall 2021 to winter
2022. To avoid disruption to this high-profile programming, the roofing project was slated for
2022-2023. At that time, the roofing consultant rated the condition of the roof as fair, showing
some signs of deterioration and requiring attention. Facilities Management arranges for regular
roof inspection as part of our due diligence. The 2021 inspection of THEMUSEUM noted
portions of the roof system had significant deterioration and the increasing potential for service
disruptions related to failures.
In addition to the roof replacement, a new raised metal walkway to access the elevator machine
room is required by TSSA legislation and elastomeric coatings need to be applied to HVAC units
to fully integrate waterproofing. Interior tarping to protect the exhibits is also required. This is a
complex undertaking due to the large atrium and mezzanine areas of THEMUSEUM.
The only access to THEMUSEUM roof is across a portion of the adjacent Conrad Centre for the
Performing Arts (CCPA). Replacement of the CCPA roof is also required, so FM and
Procurement issued a joint tender for both CCPA and THEMUSEUM which closed in February
2022.
The lowest roofing base bid received for THEMUSEUM roof was $721,600 and was
significantly over the original 2019 pre-pandemic budget of $520,000. Bidders were also asked
to provide separate prices for the walkway, elastomeric coating, and interior protection.
Including this work, and specifications and project oversight, brings the pre-tax total to
$950,365.
Grant Application Revision
The grantor (ICIP) was advised of the project coming in significantly over budget and a project
officer was consulted on options for proceeding with the project. Feedback received indicated
many other grant recipients are in a similar situation, however, there are no additional funds
available from the province or federal levels to address shortfalls. The City was told rescoping
the project and using the entire grant award, and City contributions, towards the priority roof
replacement was an acceptable approach. Furthermore, removing any reference to the
washroom renovation in the ICIP rescoped application was suggested. This would allow
THEMUSEUM to apply to future provincial or federal funding programs for a separate project
to do the washrooms. If the washrooms remain in this ICIP application, a separate project
would not be eligible for any other additional funding.
The scope change request must be approved by the ICIP grant administrator and must include
details on how the additional costs will be covered. The approval process is expected to take 3
months; however, no costs can be incurred prior to receiving approval.
Pricing
Procurement has prepared an intent to award document for the Conrad Centre portion of the
tender and discussed with the contractor the need to delay starting THEMUSEUM project. The
winning bidder has agreed to hold their tendered price for all work for 90 days, as of March 3,
2022.
If approval is not obtained from the funder within the 90 days, there are risks of price
escalation. The roofing consultant has informed us that roofing material costs are expected to
rise 20% to 25% in June 2022. That follows increases in October 2021 and February 2022 of
similar magnitude. If it must be deferred until the next roofing season, the City can expect an
overall price increase even further for materials and labour. A second mobilization and
protecting the new roof on the Conrad Centre would also be additional costs if not completed
this year.
Project Administration
THEMUSEUM submitted the grant application to the ICIP program and signed a transfer
payment agreement with the funder in September 2021. As the recipient of the grant,
THEMUSEUM is responsible for submitting progress reports and claim reports at prescribed
intervals. The claim reports are a request for reimbursement of eligible expenses, supported by
paid invoices and documentation.
During the pandemic, THEMUSEUM has been subjected to repeated shutdowns and
restrictions on attendance to comply with provincial health guidelines. This has drastically
magnitude. THEMUSEUM has requested that the city provide financial resources upfront, so
that verified invoices can be paid, and reimbursement requests submitted to the funder.
THEMUSEUM would then pay back the City, less the agreed City contribution to the project.
This proposed approach would be formalized by an agreement between the City and
THEMUSEUM and must be supported by the City Solicitor and Chief Financial Officer. The
agreement would outline the required documentation; process for submitting invoices and
proof of payment; reporting requirements; and expected repayment process and terms.
Summary
Staff support proceeding with this project in 2022, despite the submitted tenders being
overbudget, for several reasons:
The rescoped work relating to the roof project is facility infrastructure components the
City would be responsible for completing regardless of grant availability
The deteriorated condition of the roof makes this a priority
Roofing costs are expected to continue to escalate if the project is delayed
Site access and work set-up areas are very limited, so a tandem project with the Conrad
Centre achieves efficiencies
The grant officer has indicated support for this approach of rescoping the project and jointly
managing the financial obligations under the transfer payment agreement. There is also an
awareness of the time limitation of the tender pricing and the grant officer indicated a
willingness to try to expedite approval of the revised scope. An explanation of how additional
costs will be managed, without additional grant resources, is a key consideration during the
approval review. Clear direction from Council in this matter would be very beneficial.
STRATEGIC PLAN ALIGNMENT:
This report supports the delivery of core services.
FINANCIAL IMPLICATIONS:
The total cost for the Museum roofing project is projected to be $1.025M. The original project
budget which included an estimate for the washroom was $862K, resulting in a project shortfall
of $162K for the roof and the washroom project being postponed. Staff have identified $162K
from the City's State of Good Repair (SOGR) projects that could be reallocated to the project
as shown in the table below.
Total Project Costs and Proposed Funding
Construction Total, including HST $1,023,215.00
Specifications and Project Management, including HST $50,697.45
Total Project Cost including HST $1,073,912.45
Less - HST Rebate ($49,418.98)
Total Project Costs $1,024,493.47
ICIP Grant - Federal Contribution $344,875.00
ICIP Grant - Provincial Contribution $287,367.00
City Approved Contribution - 2022 Capital Budget $230,000.00
Reallocation: State of Good Repair (SOGR) $162,251.47
Total Project Funding $1,024,493.47
The reallocation of SOGR funds to the Museum Roof project will reduce the City's funding
available in 2022 to complete unplanned, reactive projects throughout the year. Funding for
SOGR capital projects will need to be reviewed, reprioritized, and potentially increased in
future budgets to effectively manage building components as they approach the end of their
useful lives.
COMMUNITY ENGAGEMENT:
INFORM
council / committee meeting.
PREVIOUS REPORTS/AUTHORITIES:
FIN 19-080 Community, Culture & Recreation Grant Application
APPROVED BY: Jonathan Lautenbach, Chief Financial Officer
Denise McGoldrick, General Manager, Infrastructure Services