The projected price of Collingwood's water treatment plant expansion has nearly doubled.
At the March 7 strategic initiatives standing committee meeting, Collingwood councillors were given a reality check on the budget for the expansion of town’s Water Treatment Plant, with an updated estimated cost of $120.9 million, up from $65 million.
“Holy guacamole,” said Collingwood Coun. Kathy Jeffery. “We need what we need and this is a big conversation. It’s a little bit scary. I’m just not sure what the impact is going to be on the town budget."
According to the project update provided by staff to councillors on Monday night, there have been some key changes to the project scope that are affecting the overall cost.
These changes include a need to increase capacity in the first phase, a requirement for enhanced interim disinfection (UV), an update to system hydraulics and water supply requirements, clarifications on engineering/construction scope and stakeholder input.
Community benefit changes also being added include adding park washrooms to the property, a sidewalk on Raglan Street and electric vehicle charging stations.
A 10 per cent contingency has also been added.
The additions will trickle down to a total project cost of $102.7 million, which, when adjusted for inflation, town treasurer Monica Quinlan explained would reach about $120.9 million.
“A large portion of this is covered by other municipalities,” said Quinlan.
The $120.9 million would be cost-shared between Collingwood ($38.3 million), the Town of the Blue Mountains ($11.1 million) and New Tecumseth ($71.5 million).
Quinlan said that much of the cost for Collingwood would be covered through development charges from new growth, and only about 15 per cent of the Collingwood cost would be paid by existing ratepayers either through reserves or a possible increase in water rates.
Quinlan said possible water rate changes will not be looked at by the town until 2025.
Director of Public Works, Engineering and Environmental Services Peggy Slama said the project and cost were both “significant.”
“We plan to present a budget that is reasonable and conservative that will come under. We are hoping these numbers are conservative,” she said. “There are a lot of unknowns when it comes to inflation and supply chain issues.”
The preliminary design of the new plant was first revealed to councillors at their July 26, 2021 council meeting, with successful bidders AECOM and Ainley and Associates Limited providing a presentation.
At that time, the estimated costs to build the plant expansion were $65 million, with construction projected to be complete by 2025/26.
Coun. Mariane McLeod asked how much funding is currently sitting in town reserves for the project.
Quinlan said the water reserve fund is currently sitting at a little more than $11 million. In the development charge reserve, Quinlan said there was an additional $7 million that could be used for water.
“I expect that to grow slightly this year as we complete our final entries,” she said.
McLeod asked if the town had room to borrow the shortfall.
“I’m looking at internal borrowing first, then we would look to external, but we certainly have room to accommodate it,” said Quinlan.
Quinlan said the town would also be exploring federal and provincial grant opportunities to help cover some of the cost.
“The number is big, that’s for sure. But I think before the designs are completed on these kinds of projects, we’re not going to know what the numbers are,” said Coun. Yvonne Hamlin. “It’s good we’ve got to this phase and are looking at how we’re going to finance it.”
Mayor Brian Saunderson said he appreciated that as things evolved, the cost of the project would also vary.
“Now that we’ve had this cold shower, is it possible moving forward that we’re going to run into other major hurdles, or is this an early, clear-eyed view of the cost of this?” asked Saunderson.
He also asked if the 10-per-cent contingency was enough.
Slama said staff and the consultant agreed that 10 per cent is a reasonable amount based on industry standard.
“We acknowledge the numbers are high and have changed significantly. Outside of the numbers that are beyond our control, the next stage of really knowing will be when we see tender prices,” said Slama.
The committee voted unanimously in favour of proceeding with the staff-recommended scope changes and to include the cost changes in the 2023 capital budget. Staff were also directed by council to communicate the additional costs with the customer municipalities.
The decision will need to be ratified at council’s next regular meeting on March 21.
To read the full staff report on the issue, click here.