Loading...
HomeMy WebLinkAboutDTS-10-023 - 2010 Budget Follow-Up Report on Victoria Park LakeREPORT REPORT TO: Councillor B. Vrbanovic, Chair, and Members of the Finance and Corporate Services Committee DATE OF MEETING: January 18, 2010 SUBMITTED BY: Grant Murphy, Director Engineering Services PREPARED BY: Grant Murphy, Director Engineering Services WARD(S) INVOLVED: All DATE OF REPORT: January 14, 2010 REPORT NO.: DTS-10-023 SUBJECT: 2010 BUDGET FOLLOW-UP REPORT ON VICTORIA PARK LAKE AND STORMWATER RATE IMPLEMENTATION RECOMMENDATION: For information and direction. BACKGROUND: In 2008 the City initiated a Class Environmental Assessment Study to explore alternatives and prepare a preliminary design that addresses Victoria Park Lake’s sediment accumulation and water quality problems. The Class Environmental Assessment (EA) Study Report was received th and approved by Council on June 15 2009 (DTS Report 09-096). A cost estimate of approximately $16M (Class “C” estimate) presented to Council. As part of the 10 year (2010 to 2019) capital forecast process, staff analyzed options to implement the Class EA Study Report recommendations. However, it was determined that the Victoria Park Lake and associated upstream projects could not be included in the forecast until 2019. This was mainly due to many other funding commitments to other projects of higher priority and Council direction to minimize tax levy impacts in 2010. On November 23, 2009 Council provided further direction to staff to develop an implementation plan which would see phasing of the preferred alternative of the Victoria Park Lake Class EA Study much sooner than 2019. DTS Report 10-015 and appended budget issue paper #44 was presented to Council on January 11, 2010. The budget issue paper presents potential phasing of implementation and possible funding options available to Council for consideration. The recommended funding approach is to implement a stormwater rate and details associated with this recommendation are included in DTS Report 10-016, also presented on January 11, 2010. REPORT: As part of the 2010 budget deliberations, Council requested staff to provide further details related to the re-prioritization of projects, grant or funding applications, and implementation of a sustainable storm water rate. Specifically the following questions were raised by delegations and Council has asked staff to provide more information: ïèç 1) What other projects can be re-prioritized, freeing up existing tax funds, in order to complete the construction of the Victoria Park Lake projects? 2) Can staff resources be made available in 2010 to begin detailed engineering design work related to the Victoria Park Lake dredging and forebay construction? 3) What other funding applications can be accessed to expedite the Victoria Park Lake projects? 4) What rationale does staff provide for recommending the “tiered flat fee” method be implemented instead of the “tiered single family unit rate” method as the preferred rate stormwater rate structure? 1) Project Risk Assessment In reviewing infrastructure projects over the next two years, there are no projects from an engineering risk perspective that can be prioritized lower than Victoria Park Lake dredging. It should be said that all projects in the 2010 and 2011 represent the most urgent infrastructure work in the 10 year capital program (2010 to 2019). Nonetheless, the infrastructure projects included later in the 10 year capital program (2015 to 2019) still represent very old and deteriorated infrastructure that needs replacement. In other words, project identified in the first few years of the capital forecast represent the “worst of the worst”. It is not possible to predict failures but all these streets could be considered as a high risk of some type of infrastructure failure if not replaced. In summary, it is not recommended that other higher priority projects be deferred to initiate the design work for Victoria Park Lake until the beginning of 2011. Examples of projects or programs that were considered are listed with their associated risks: Infrastructure Replacement or Retrofit Programs Failure of sanitary sewer or watermain resulting in loss of service. Sanitary sewer back-ups into basements from any pipe collapses. Increased claims against the city for vehicle damage or personal injury claims. Performing less work of this type contributes to increasing the City’s “infrastructure deficit” by not performing work in as timely a fashion as would otherwise be done Road Rehabilitation Program The City’s current goals are to maintain a minimum pavement quality index of 7.0 out of a scale of 10. The latest available road condition assessment scores 749 of 1453 lane- kms of City streets below that condition score (representing 52% of the road network). In cases where certain roads are in more a more urgent need of rehabilitation, accelerated pavement failure will occur due to freeze-thaw deterioration in the winter season. Risk of increased claims against the city for vehicle damage or personal injury claims. Consolidated Maintenance Facility (CMF) Delaying or reducing the cost of the new on Goodrich Drive is unrealistic. The CMF project cannot be delayed as it is currently underway with design drawings being finalized and tenders in the process of being let. In addition, the project needs to be completed by March 2011, to secure the federal/provincial infrastructure funding that has been approved. ïçð It would also be difficult to reduce the project scope to free up funding for another purpose, as the budget is already quite tight. 2) Reallocation of staff resources and workload Engineering Services staff have reviewed the 2010 work plan. At any given time, staff are currently working on many engineering projects at various stages of completion. Typically designs are initiated in the early winter of any given year and depending upon the complexity and scope of the project work may extend into the following year. Staff's main tasks now are completing designs for 2010 construction. This means that staff will be focussing on delivering design work for projects in order to be tender-ready by April 2010. Further pre-design work for 2011 projects will begin shortly and this work includes, scope and risk definition, environmental assessments, engineering consultant selection, and completion of geotechnical engineering. To begin design work on Victoria Park Lake in 2010, three (3) 2011 road and sewer reconstruction projects would have to be deferred. Another wrinkle in 2010, is the infrastructure stimulus funding (ISF) that has already been awarded to the City by the provincial and federal governments. With this funding come expectations that the ISF projects will be delivered on time (March 2011) and on budget. Since August 2009, engineering staff have been working on completing a variety of projects including trenchless re-construction of sewer and watermains, stormwater management pond retrofits and a number of drainage issues across the City. ISF projects are constraining staff resourcing and provides no slack in the resource capacity plan for the Engineering Services Division. Once ISF projects near completion in March 2011, the risk of losing the federal and provincial funding source will be significantly reduced and at that point detailed design for Victoria Park Lake could begin. In summary, skilled technical, project management and management resources would have to be re-directed from other higher priority projects to address a lower priority project, Victoria Park Lake. It is management’s recommendation, due to existing workload commitments from both existing infrastructure stimulus funding as well as accelerated infrastructure renewal program that design not proceed in 2010. 3) Potential Funding Sources At the January 11, 2010 public budget meeting, delegations made suggestions on how alternative funding sources might be found and a summary of the potential funding sources are provided. The Victoria Park Lake projects would not be eligible for Green Municipal Fund program administered by the Federation of Canadian Municipalities which covers five sectors: brownfields, energy, transportation, waste and water. It includes a program of loans, usually in combination with grants, to implement capital projects with a maximum of $4M for a below- market loan and a maximum of $400,000 per grant. The objective of the water program is to “improve effluent quality from municipal wastewater treatment systems.” Municipal governments having responsibility for municipal wastewater treatment are eligible. Based on the detailed eligibility criteria the program is clearly targeting wastewater (i.e., sanitary sewage treatment) and not stormwater systems. ïçï The Community Environmental Improvement Grant Program (CEIGP) is administered through the Environmental Committee. The total amount budgeted for such grants is $11,000 and the maximum individual grant is $3,000. A project with the magnitude of the Victoria Park Lake project would require significantly more funding and would completely eliminate the benefit of the CEIGP for small scale community projects. The Park Trust Fund is funded by new developments which pay cash in lieu of dedicated parkland. The provisions of the Planning Act limit the use of such a fund “only for the acquisition of land to be used for park or other public recreation purposes, including the erection of repair of buildings and the acquisition of machinery for park or other public recreational purposes.” On that basis the Victoria Park Lake and associated improvements cannot be funded from the Park Trust Fund. Heritage properties may be eligible for funding from other sources. The entire extent of the Victoria Park property, including the lake, is located within the Heritage Conservation District designated under Part V of the Heritage Act. Kitchener has two programs; neither would be applicable to the lake itself. The Designated Heritage Property Grant Program allocates a total of approximately $30,000 per year to assist with the cost of renovating designated buildings; the maximum individual grant is $3000 for up to 50% of the renovation cost. The Heritage Property Tax Refund Program works on the basis of a partial refund of property taxes. Staff have explored funding possibilities for heritage programs of other levels of government. The Waterloo Regional Heritage Foundation has a property grant program but the project would be ineligible if considered part of the expected operating activities of the municipality. Provincial staff advise that there is no heritage funding available through the Ministry of Culture for this type of project. Similarly the Federal programs offered by the Department of Canadian Heritage, including the Cultural Spaces program, are not a match. The City’s $5M Local Environmental Action Fund (LEAF) sets out criteria for eligible projects or programs. The Victoria Park Lake project would not appear to meet several of the criteria. Namely, that the project be transformational, that it leverage other funds, and that it would not normally be funded through Kitchener’s normal municipal mandate. In regards to the Economic Development Investment Fund (EDIF) staff do not see a rationale for committing additional EDIF funding for the Victoria Park Lake project. EDIF already has made a substantial contribution to implementation of the Victoria Park master plan. It is important to tie investment of limited remaining funds into EDIF’s five official objectives of assessment, employment, residential growth, leverage and return on investment. The tie-in of lake improvements are indirect at best, and the employment generated would be temporary only. Budget Issue Paper #44 recommended that the Development Charges (D/C) reserve fund cash flow would be re-adjusted to shift $1.425M in eligible D/C funding into 2011, in order to initiate detailed design work. Staff further considered this recommendation, to determine if D/C funding could be shifted into 2010. Unfortunately, significant deficits in D/C reserve accounts in 2010 are rd being projected. On November 232009, Council directed staff to defer projects in order to limit the City’s debt exposure in this area due to uncertain economic conditions in 2010. 3) Rationale for the Stormwater Rate Implementation At the January 11, 2010 public budget meeting, delegations questioned staff’s rationale to implement the “tiered flat fee” method instead of the “tiered single family unit rate” method. In DTS report 09-042, staff agreed with the Study recommendations, including supporting the “tiered single family unit” method as preferred approach to establish a SWM rate structure. ïçî However, DTS report 10-016, staff have recommended that the “tiered flat fee” method be adopted instead. A brief summary is presented, but reference should be made to DTS Report 09-042 for more details. The “tiered single family unit” method takes into consideration the amount of impervious area (i.e. surfaces resistant to water penetration) that a citizen or business owns as opposed to the current method of apportioning stormwater funding based on property assessment values for eligible taxpayers (many properties are tax-exempt). The more impervious area a property owner has, the greater the demand on the City’s SWM system, either for flood control or water quality treatment purposes. But with this degree of precision comes at a cost related to initial programming of GIS software applications and incorporating GIS property information. There would also be ongoing administrative support (customer service) and billing costs for the program. There will retooling the existing water and gas utility billing format. There also would be a onetime implementation cost of $250,000 to upload the tiered flat rate structure in the existing water meter billing data. In comparison, the “tiered flat fee” structure is made up of four (4) tiers (single family, multi- family, non-residential, and tax-exempt non-residential) and the fee for each tier is determined based on overall impervious area contribution determined in the 2008 Study. That is, the water rate revenue distribution among the four (4) tiers matches the tiered SFU revenue distribution identified in the 2008 Study. The principle is that if a property owner was served by the local water utility through a water meter, that the amount of stormwater service being charged would be based on land parcel usage. In summary, the “tiered flat fee” method offers lower administrative costs and enabling the City to more quickly implement the solution. The method can more be effectively communicated to the public and removing many of the obstacles in obtaining buy-in from the public. In the long term, the “tiered single family unit” method could be transitioned from the “tiered flat fee” method. The rate charged would appear as a separate charge on the monthly water bill for Kitchener Utilities customers and itemized as stormwater management service. In summary, it is evident that Kitchener is falling short on many of its stormwater management practices and implementation of a stormwater fee would enable the City to make improvements to service levels. The Stormwater Management Program and Funding Review (DTS Report 09- 042) and the 2008 SWM Audit (DTS Report 09-131), have clearly identified the existing need to improve service levels in order to meet federal and provincial legislative requirements. The Victoria Lake Remediation Class Environmental Assessment Study (DTS Report 09-096) provides a tangible example of this need and puts into perspective future challenges that the City will be faced with in order to deliver a sustainable service level for stormwater management. FINANCIAL IMPLICATIONS: Staff have recommended that a stormwater utility implementation program be funded during 2010, in order to further advance the concept of having all property owners contribute financially into the stormwater management program. In the 2010 capital budget, staff have included funding of $80,000 to initiate the stormwater utility implementation program and this funding would be utilized develop a rationalized fee structure, implementation phasing and supporting policies. ïçí CONCLUSION: The completion of the Victoria Park Lake Class Environmental Assessment Study Report has established a preferred alternative for addressing the water quality issues of Victoria Park Lake. Council has directed staff to provide an implementation plan which would see completion of the preferred alternatives prior to 2019. An expedited phasing plan is presented for consideration, beginning in 2011 and construction being complete in 2015. The estimated cost for implementation ranges from $10M to $16M, but it is reiterated that without a sustainable funding source this expedited phasing plan is not achievable. As part of the 2010 budget deliberations, staff have completed additional analysis related to workload, project priorities, grant or funding applications, and the rationale for the implementation of the sustainable storm water rate. It is staff’s recommendation, due to existing workload commitments from both infrastructure stimulus funding projects as well as accelerated infrastructure renewal projects that design work for Victoria Park Lake not proceed in 2010. Staff are recommending that a service level be adopted that takes into consideration the proposed remediation and upstream SWM works, identified in the Victoria Park Lake Class EA Study Report, starting in 2011. The sustainable level of service of $9,910,590 (2007) would be adopted by the City and the recommended rate structure would be based on this service level. Staff would begin work on the stormwater utility implementation program — building on the detailed financial analysis completed in the Study. In May 2010, Council would be presented with a rate structure to implement the ten (10) year operating and capital forecast, and a rate implementation phase-in period to deliver a sustainable level of service for stormwater management which will enable the City to better protect the environment. ACKNOWLEDGED BY: Jeff Willmer, General Manager, Development and Technical Services ïçì