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HomeMy WebLinkAboutCAO-07-031 - Consolidated Maintenance Facility (CMF) - Business Case Peer ReviewKrTCx~~JR - • - Economic Development Report To: Finance and Corporate Services Committee Date of Meeting: June 18, 2007 Submitted By: Consolidated Maintenance Facility Steering Committee Prepared By: Hans Gross, Director of Project Administration & Economic Investment Ward(s~ Involved: All Date of Report: June 7, 2007 Report No.: CAO-07-031 Subject: Consolidated Maintenance Facility Business Case Peer Review RECOMMENDATION: 1. That the Consolidated Maintenance Facility (CMF) Review completed by Stantec Consulting Ltd. (Project No. 1 1 4501 1 1 2) dated May 9, 2007 be received, and further; 2. That the fee paid to Stantec Consulting Ltd. for the study be increased from $175,055.60 to $202,413.48 plus GST) as a result of scope changes approved by the Steering Committee, and further; 3. That a consultant selection process be initiated to retain a consultant at a fee not to exceed $95,000 plus GST to complete Part 2 of the Schedule C -Class EA Study which will result in the selection of a preferred model and sites) for the new CMF, and further; 4. That the following options be considered and evaluated in Part 2 of the Schedule C - Class EA study: Option 1: A one-site model on approximately 45 acres of privately owned redeveloped property within the City of Kitchener. Option 2: A one-site or two-site model through a phased development approach on approximately 23 to 40 acres of privately owned land at or adjacent to #41 and #75 Ardelt Place. This option may need to be supplemented with City-owned site(s) if sufficient area does not become available. Option 3: A three-site model on approximately 62 acres (50 useable acres) on the following City-owned properties: • Elmsdale Operations Centre (8.7 acres) • Strasburg-Huron Industrial Site (37.7 acres of which 27.7 useable) • Battler Yard Site (15.8 acres) BACKGROUND: On December 6, 2004, Council received staff report CRPS-04-218 and the Consolidated Maintenance Facility (CMF) Business Case which had been prepared by a staff team together with outside experts retained to conduct property audits, environmental audits and building audits. The report recommended the acquisition of the (former) Maple Leaf lands adjacent to the City owned industrial property in the Huron Business Park and the construction of a new CMF on those two properties. The business case recommended the development of a CMF on one (1) site being a combination of the Maple Leaf property and the City's industrial site and consisting in total of approximately 37.7 acres. On December 13, 2004, Council passed a resolution to purchase the recommended Maple Leaf site. The decision on the construction of a CMF was deferred pending the receipt of additional information requested by Council during the Business case presentation. On April 4, 2005, the Finance and Corporate Services Committee passed a resolution to delay any decision on the construction of a CMF until they received further information on a number of outstanding issues, and until a full peer review of the proposal was completed. At the same time, Councillors passed a resolution clearly supporting the concept of consolidating the City's maintenance operations into either one or two facilities. The additional information requested by Committee included: Consideration of obtaining independent advice on the business case developed by City Staff; A review of the one-site versus two-site model as well as identifying sites which may be appropriate for either model; A review of the funding mechanism being proposed for the project; A detailed review of the anticipated cost savings through the consolidation of the City's four current maintenance facilities An examination of other sources of funds such as the Federation of Canadian Municipalities Green Funds for possible inclusion in the project budget, and; A plan to build awareness about this project with the community On April 11, 2005, Council received staff report CAO-05-007 and passed a resolution to accept the recommendations contained therein, namely: 1. Given the June 2007 lease expiration date for Fleet Operations located at the Regional Transit yards on Strasburg Road, that staff be directed to immediately examine options for the possible temporary accommodation of Fleet, to ensure minimal disruption and continuation of this operation until such time as a decision is made to its permanent location, said options to include: a} discussion of the possible extension of the current lease at the Strasburg facility with the Region; b} examination of other possible arrangements which could be made between the City and the Region for accommodation of Fleet; c} exploration of alternate locations for temporary relocation of Fleet; 2. That the CAO be directed to prepare terms of reference in accordance with report CAO- 05-007 for the retention of an external consultant to complete a detailed review of the proposed new Consolidated Maintenance Facility (CMF). The review of the CMF should be approached in a similar fashion to an EA process including a detailed review of options and a public involvement component. 3. That staff be directed to review funding options for this project including the exploration of possible new funding sources from other levels of government, grant programs and or appropriate partnerships. 4. That staff be directed to prepare a full communications plan to maximize public involvement in the review of this project. On July 5, 2005, City Council passed the following resolution: "That the Terms of Reference for the Request for Expressions of Interest for the peer review of the city's proposed Consolidated Maintenance Facility (CMF}, be approved, as attached to Chief Administrator's Office report CAO-05-026" Both the CAO report and the Terms of Reference are attached to this report. On October 24, 2005, City Council passed a resolution awarding the Consolidated Maintenance Facility Review to Stantec Consulting Inc. REPORT: 1. Overview 1.1 Stantec Consulting Ltd. was awarded the assignment to complete a peer review of the CMF Business Case on October 24, 2005. 1.2 The purpose of the peer review study was to: • Validate the need for a new CMF • Determine the best model and sites for short and long-term service demands • Carry out a peer review of the CMF Business Case completed by City Staff • Undertake the peer review study through aSchedule C -Municipal Class Environmental Assessment process to ensure compliance with the provincial regulations and to ensure public participation 1.3 Stantec's final report dated May 9, 2007 consists of three (3) documents: • An Executive Summary (31 pages) • A full report (which includes an executive summary) (168 pages) • Appendices A to U (3 - 4" binders) The Executive Summary is appended to this report. The other two documents are available upon request. 2. Peer Review Assessment of the Business Case 2.1 Stantec's review confirmed that Kitchener needs to consolidate and replace the current Works Yards Facilities for the following reasons: • Commitment to vacate certain properties • Aged buildings • Inefficient and insufficient existing building space • Inefficient use of staff, vehicle /equipment and space • Inefficient operations • Insufficient existing site area to accommodate 2025 and 2040 operational /functional requirements and capacity 2.2 Stantec confirms that aone-site model CMF is more efficient and cost effective than a two-site model. Their experience indicates that aone-site facility could realize 10% efficiency gains over a multi facility operation. 2.3 To more accurately establish current and predict future operational and facility needs, Stantec completed a detailed Concept of Operations review for building and site size requirements. Kitchener's growth projections to the 2040 were considered ~a 30 year timeframe}. This activity expanded Stantec's project scope and resulted in a fee increase. The following table provides a comparison of the results. Business Case 2004 Stantec Review 2006 Site Area • One-site model 26 Ac (2036) 41-45 Ac (2040) • Two-site model ----- 50-55 Ac (2040) Total Building Area • One-site model 182,287 sf (2016) 290,000 sf (2040) • Two-site model ----- 302,000 sf (2040) 2.4 During the course of the study, no appropriate or available sites with a useable area of at least 41 Acres were identified. Only two prime industrial sites were found to be available with sufficient useable site area for atwo-site model. The study review suggests that athree-site model be considered in view of the one-site and two-site models either not being possible and / or appropriate for the available sites. 3. Evaluation of Potential Sites 3.1 One-Site Model (min. 41 useable acres) During the course of the study, no appropriate or available sites were identified. Following the completion of the study, a proposal was received by the City from a private developer indicating the potential availability of 35 to 45 acres of land together with an industrial building within the City of Kitchener. It is recommended that this site be included as an option to be evaluated in the next part of the Schedule C -Class EA study. 3.2 Two-Site Model (min. 50 useable acres) Four (4) properties, two (2) City-owned and two (2) privately owned, were combined and evaluated as six (6) options. Only one of the combinations had sufficient useable total site area to meet the new CMF requirements. The two sites are the City owned Strasburg-Huron site and the privately owned #41 and #21 Ardelt Place. In January 2005, the city received a proposal from the owner of #41 Ardelt Place for the development of a CMF on #41 and #21 Ardelt Place (area 23.28 Ac). This proposal was used in the evaluation noted above. During the latter part of the study, the owner of #41 Ardelt Place acquired #75 Ardelt Place. The total area of the three properties is 30.11 Acres. Acquisition of additional adjacent properties may be possible. It is recommended that the privately owned land at or adjacent to #41 and #75 Ardelt Place be included as an option to be evaluated in the next part of the Schedule C -Class EA Study. 3.3 Three-Site Model The evaluation of a three-site model was not within the scope of Stantec's study. However, the study states that athree-site model should be considered in the event that aone-site or two-site model is not possible. It is recommended that the following three (3) city owned properties be included as a three- site model option to be evaluated in the next part of the Schedule C -Class EA Study. The three properties are: • Elmsdale Operations Centre (8.7 Ac) • Strasburg-Huron Industrial Site (37.7 acres of which 27.7 Ac is usable) • Battler yard site (15.8 acres) 4. Cost Analysis Since the study was not able to identify aone-site model property and identified only one two- site model candidate, the capital costs developed in the study are very high level (Class C) costs. As a part of the Stantec study, very preliminary concept site layouts were developed for the city- owned Strasburg-Huron site and aprivately-owned Shirley Avenue industrial site in order to develop preliminary capital costs. The study estimates that the capital cost of constructing a CMF, excluding land costs, and based on 2006 dollars is: One-site model: $60 to $80 million Two-site model: $61 to $81 million Operating costs were not able to be developed since appropriate sites could not be identified. Operating costs will be developed as part of the evaluation of the options in Part 2 of the Schedule C -Class EA study. 5. Conclusions 5.1 The Stantec peer review study has concluded that: • There is a need to consolidate and replace the current Works Yards facilities • A one-site model is more efficient and cost effective than atwo-site model • A one-site model requires a total building area of approximately 290,000 SF on a useable site of approximately 41 to 45 acres and would require a capital investment of approximately $60 to $80 million (excluding land and in 2006 dollars) • A two-site model requires a total building area of approximately 302,000 SF on useable sites totalling approximately 50 to 55 acres and would require a capital investment of approximately $61 to $81 million (excluding land and in 2006 dollars) 5.2 The scope of the Stantec peer review study included: Identifying and analyzing specific one-site and two-site options Holding two public meetings to obtain public input Selecting the preferred alternative Filing the completed report with the Ministry of the Environment Since no feasible one-site or two-site models were identified during the study period, this part of the Schedule C-Class EA study remains incomplete. 5.3 Following the completion of Stantec's study, a proposal was received for a potential one-site option on private property which is being redeveloped within the City of Kitchener. 5.4 In addition, the private property owner of #41 Ardelt Place, from whom a proposal for a CMF was previously received by the City, has recently acquired additional adjacent property. This provides the potential for the development of a phased one-site model cif additional land can be acquired} or a two-site model using city-owned land. 5.5 In the event that the two private proposals are either not feasible or are withdrawn, athree- sitemodel should be considered consisting of: Elmsdale Operations Centre Strasburg-Huron Site Battler Yard Site 5.6 It is recommended that the City retain a consultant to undertake Part 2 of the Schedule C - Class EA study. This study will include the following tasks: Develop concept site plans and cost estimates and evaluate each of the three options described above Hold a public meeting to obtain public and agency input on the options Identify the preferred solution Hold a public meeting to obtain public and agency input on the preferred solution Complete the Part 2 study, submit for City approval and file with the Ministry of the Environment FINANCIAL IMPLICATIONS: The expanded scope of the Stantec study has resulted in an increase in the fee to be paid to Stantec, namely from $175,055.60 to $202,413.48 (plus GST). The fee increase is the result of several changes in scope to the project requested by the Project Steering Committee. The major change was the completion of the Concept of Operations document which establishes the basis for the building and site size. It is estimated that the Part 2 Study will require funding of approximately $95,000 (plus GST). A consultant selection process will begin immediately and will proceed over the summer months. Award of the contract to the selected consultant will likely take place in accordance with Section 115.5.5 of the Municipal Code which provides the Chief Administrative Officer the authority to approve tenders during the months of June, July and August. A report regarding the tender would be brought to Council at its next regular meeting. Based on information provided by the Finance Department, the current total projected budget for the CMF is $37,331,523 with an available balance to June 12, 2007 of $3,435,680. COMMUNICATIONS: Status updates of the CMF project have been provided to City staff on an on-going basis. A communications plan to generate public interest and comment will be developed as part of the Part 2 Study. CONCLUSION: The Part 2 Study is expected to be completed by the end of 2007 and is intended to result in a recommended CMF model and site(s). Hans N. Gross Director of Project Administration & Economic Investment Attachments: Report CAO-05-026 Terms of Reference Document Executive Summary, Consolidated Maintenance Facility Review