City council will need to have some “difficult conversations” about setting new priorities, construction timelines, potential changes to long-discussed projects and funding in light of rising construction costs, agree Ward 6 councillors Mark MacKinnon and Dominique O’Rourke.
Their comments come on the heels of last week’s announcement that the lowest bid for the planned South End Community Centre (SECC) came in more than 50 per cent over the council-approved budget of $80 million – a project both councillors want to see move ahead in some form.
“This isn’t a local phenomenon. It’s a global phenomenon. We are going to have to take a really close look at all of our capital projects,” commented O’Rourke, noting bids for the reconstruction of a section of Speedvale Avenue recently came in similarly over budget, spurred by pandemic-related labour and material shortages. “It’s incredibly disappointing.”
City staff is expected to deliver a public report to council next month detailing the SECC situation as well as the rising cost of capital projects in general.
“While we could isolate the South End Community Centre and look at how to proceed with that, what we really need to do is look at our 10-year capital forecast and how do we position the South End Community Centre and other projects as well within the forecast given that we have to keep in mind the affordability,” said MacKinnon.
“This council, in the past seven years, has gone full throttle on city-building and development. This will give us a chance to reevaluate because I do think we need to reprioritize to make sure that we’re doing the best for the city given this global pandemic has changed everything regarding financing.”
Five companies were pre-qualified to bid on the SECC project, three bids were received. The lowest came in at $121,201,000 and the highest at $134,754,730.
As a result, the councillors agree, council may have to reconsider amenities at the SECC and other planned capital projects, the timeline for construction and funding methods.
The 165,000 sq. ft. SECC, to be built off Clair Road beside Bishop Macdonell Catholic High School, just north of the Larry Pearson baseball complex, is currently set to include a 25-metre pool with eight lanes, two gyms, two ice pads, indoor walking track and five meeting rooms.
When approved in the fall of 2020, about 85 per cent of the SECC budget was to come from development charges, with the rest picked up by taxpayers. Some borrowing was planned to cover DCs not yet collected.
“If we decide to proceed with the lowest bid coming in at $40 million higher, that’s $40 million of debt servicing we have to do until the collection of development charges catches up to where we need to be,” said MacKinnon.
“While we consider maintenance and city-building and growth as three separate pockets, the reality is we only have one debt limit, we only have one tax base, so we have to look at everything holistically to determine if we need to pause projects or cancel any projects or scale down any projects.
“That includes the South End Community Centre, includes the (new central) library and other projects.”
During the same meeting it approved the SECC, council endorsed plans for a 88,000 sq. ft. new central library off Baker Street, which council approved at $62 million. That project has not yet gone to tender.
“We know this rec centre has to be built, will be built to serve the needs of the current and future population – it’s been in the cards for 20 years, we’ve collected development charges toward it. What that looks like, when it happens, how we fund it, those are questions we need to answer,” added O’Rourke.
“I absolutely want to see the rec centre built, but it has to be affordable from a capital and an operating cost perspective.”
City council is also tentatively considering a new operations campus for city staff. The cost of that project, though not approved by council at this time, has been discussed at about $200 million.
