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HomeMy WebLinkAboutDTS-06-046 - Additional Funding - Joseph/Gaukel St Reconstruction1 Kd LR Development& Technical Services 6 REPORT Report To: Councillor B. Vrbanovic, Chair, and Members of the Finance and Corporate Services Committee Date of Meeting: March 27, 2006 Submitted By: Robert Shamess, P. Eng. Director of Engineering. Dan Chapman, CA Director, Financial Planning and Reporting Prepared By: Robert Shamess Dan Chapman Ward(s) Involved: 1 Bridgeport Centre and 6 West — Victoria Park Date of Report: March 17, 2006 Report No.: DTS -06 -046 Subject: ADDITIONAL FUNDING — JOSEPH /GAUKEL STREET RECONSTRUCTION RECOMMENDATION: That the following projects be deferred and the unexpended funds be transferred to the Joseph /Gaukel /Francis /Richmond /Victoria Park Entrance Project (Index Code 852406): • Guelph Street Reconstruction (Index Code 852413) • Krug Street Reconstruction (Index Code 852411) • Duke Street Reconstruction (Index Code 852345) That a total of $1,450,000 be transferred from Uncommitted Infrastructure (Index Code 852420) to the Joseph /Gaukel /Francis /Richmond /Victoria Park Entrance Project (Index Code 852406); That $3,989,365 be transferred from the Gas Capital Investment Reserve Fund to the Joseph /Gaukel /Francis /Richmond /Victoria Park Entrance Project (Index Code 852406); That $600,000 be transferred from the Asset Management Reserve Fund to the Joseph /Gaukel /Francis /Richmond /Victoria Park Entrance Project (Index Code 852406); and further That all deferred projects be re- budgeted and reassigned within the 10 year capital budget forecast. EXECUTIVE SUMMARY: Due to the extent of coal tar contamination in the Joseph Street and Gaukel Street rights of ways a significant shortfall in funding for this project exists. In order to fund the road reconstruction portion of the shortfall, Engineering Services are proposing to defer a number of projects with design issues which may not be resolved in time for 2006 construction (Guelph Street, Krug Street and Duke Street reconstructions) and transfer some additional funding from the Uncommitted Infrastructure account. In addition, it is proposed that the shortfall directly associated with Coal Tar contamination be funded through the transfer of funds from the Gas Capital Investment Reserve Fund, which has derived revenue from the City's share of Gas Utility profits to be used for the benefit of the City -wide capital program. Finally, it is proposed that the costs of land purchase not associated with the Victoria Park Entrance feature be refunded to the capital account from the Asset Management Reserve Fund. REPORT: The tender for the reconstruction of Joseph and Gaukel Streets and the construction of the Victoria Park Entrance closed March 9, 2006. The existing infrastructure on Joseph Street, Gaukel Street and Richmond Avenue has reached the end of its service life and is in need of replacement. The road structure, curbing and sidewalks are beyond regular maintenance and should be replaced at this time. Kitchener Utilities and K -W Hydro will also take this opportunity to upgrade their aging infrastructure as part of this reconstruction project. As part of the detailed design of this project and subsequent to the City taking ownership of the Canada Post Property additional boreholes were undertaken to update study findings and confirm the depth of coal tar removal to be undertaken within the road right of way. It was found that the depth was approximately 2 to 3 metres deeper than originally anticipated. As a result the cost of the project will increase. Based on the tender and the engineer's revised estimate it is anticipated that the additional cost to remove the coal tar within the right of way is approximately $4 million. In addition, approximately $600,000 was previously taken from the project budget for property purchases in the area of the entrance feature with the expectation that they would be recovered from the sale of these lands. Finally, given the complex nature of the project and the various environmental requirements that must be satisfied the overall cost of the project has increased including Contract Administration and the routine road reconstruction components. In order to provide the required funding Engineering and Finance have reviewed all funding sources for the project and are proposing the following methodology for meeting the funding shortfall; Defer Guelph Street Reconstruction This project is currently under design and was proposed to be reconstructed in 2006. During the design process it was found that a significant problem exists in trying to rectify the storm drainage issues in this area. Given the depth of the outlet for storm drainage in this area it is not possible to correct the flooding problem by conventional means. As a result the design consultants are reviewing a number of options including the construction of oversized piping and the purchase of property to construct a storm pond to be used as an outlet. Should it be necessary to purchase property it is unlikely that the City would be in a position to proceed with construction in 2006. The deferral will provide funding of $1,428,000 in 2006. Defer Krug Street Reconstruction This project is currently under design internally. The project will complete the western portion of Krug Street from Lancaster to Weber Streets. A review of the condition assessment undertaken by Engineering as part of the Capital Budget process indicates that the pavement surface is fair to good and that the watermain is also in fair to good condition. Based on these findings, the project can be deferred to create funding room of $529,427. Defer Duke Street Reconstruction The design component of this project has yet to be started and was scheduled to be assigned to an outside consultant. The proposed project was for the complete reconstruction of Duke Street from Wellington Street to Waterloo Street. Although the sanitary sewer and watermain are in need of replacement, it is anticipated that there will be issues with poor soils and other design issues related to stormwater. Each of these issues will add significant costs to both the design and construction phases. Deferring this project will free up $232,000 for other uses. Transfer $1,450,000 from Uncommitted Infrastructure This account contains triple- funding dollars which have not been allocated to projects in any particular project year and the funds recovered from favourable tenders. Funds transferred into this account must be reallocated to each of the 3 funding sources making up the total amount, water, sewer and current out of capital. This fund is used to cushion shortfalls in projects and when sufficient dollars are available to allow for the addition of one or more projects not originally budgeted in a particular year. In the past, funds have been transferred to meet shortfalls in Victoria Street and have also been used to accelerate the reconstruction of Brentwood. A transfer in this amount will essentially deplete the Uncommitted Infrastructure account of all current out of capital funding. Transfer $3,989,365 from the Gas Capital Investment Reserve Fund The costs of coal tar remediation beneath the road surface are estimated to amount to approximately $4 million. This contamination is primarily associated with the gasification of coal which occurred in the past on an adjacent site. In view of the source of contamination, it would be reasonable to fund the costs of coal tar remediation from a source associated with the Gas Utility. The Gas Capital Investment Reserve Fund contains the City's share of Gas Utility profits in excess of the target amount retained by the Utility. The fund can accommodate the proposed transfer (see attached projection) and the Fund's Council Policy Resolution permits the transfer of amounts to any City capital project. Transfer $600,000 from the Asset Management Reserve Fund Approximately $1.1 million has been expended through the Victoria Park Entrance Feature capital account to purchase adjacent properties. At the time of purchasing the properties, it was understood that any lands surplus to the project would be sold and the proceeds of the sale would be credited back to the capital project. To date, no lands have been sold and, in fact, portions of the property (e.g., parking lot) have been committed for other uses. As a result, staff proposes that an amount equivalent to the land purchases not associated with this project be credited to the capital account. This transfer is consistent with the intent of the Asset Management Reserve Fund, which exists to fund strategic property purchases as approved by Council from time to time. Impact of Proposed Deferrals or Deferral of the Joseph /Gaukel Reconstruction Where design is currently underway on those projects proposed for deferral it will be completed. All deferred projects will be re- evaluated and where appropriate re- budgeted. Upon completion of the re- evaluation the project will be reassigned within the 10 year capital forecast and will be dealt with during the 2007 budget process. With respect to the Joseph /Gaukel and Victoria Park Entrance project, a deferral of the project would result in the loss of approximately $1.2 million in Superbuild Funding which was allocated to the construction of the entrance feature. In addition deferral of the project would result in the City being unable to complete the remediation of the former Canada Post property within agreed to timelines. FINANCIAL IMPLICATIONS: The reallocation of funds from the uncommitted infrastructure may result in funding not being available for other existing projects which may, as a result of construction issues, require additional funds. This could be an issue with Victoria Street where some funding has already been allocated from Uncommitted Infrastructure. The transfer of $600,000 from the Asset Management Reserve Fund will significantly decrease the fund balance and limit the City's ability to entertain strategic land purchase opportunities until such time as other sales have replenished the fund (see attached projection). CONCLUSION: The process outlined above is a feasible method of providing funding to meet the shortfall on Joseph /Gaukel /Victoria Park Entrance and the required coal tar removal within the road right of way. ATTACHMENTS: • Appendix A — Reserve Fund Projections Robert Shamess, P. Eng. Director Engineering Services Dan Chapman, CA Director, Financial Planning and Reporting