Water treatment plant $5 million more than expected

Construction of Peachland’s long-awaited water treatment plant is set to start in January – and it’s going to cost us more.

There’s a $5.2 million gap between the district’s budget of $18,820,000 and the total estimated cost of the project, which is just over $24 million. The five tender bids for construction of the new plant ranged from just over $20 million, to almost $29 million. Councillors on Tuesday decided to go with the firm Maple Reinders, in the amount of $20,598,000. Once the design details, contract administration and contingency allowance are factored in, the project comes in at $24,018,000.

Explaining the shortfall to councillors on Tuesday, Peachland Director of Operations Joe Mitchell said four years have passed since the parameters of the project were determined by the previous council in 2014.

“The construction industry is extremely busy right now and the pricing obviously reflects that. The equipment costs for items purchased from the United States have gone up significantly, and our budget was based on an estimate completed prior to the design being done. You have to set up a budget before you come up with a design so you have something to work with,” Mitchell said.

And given the budget bylaw was approved in October 2017, Mayor Cindy Fortin said the cost increase is disappointing, but the project must go ahead. Councillors voted Tuesday to amend the original borrowing bylaw for the project, reallocating $9.3 million to the Peachland Water Treatment Plant Project, and allocating $298,000 from the Water System Improvements Reserve Fund. The district was able to secure a pair of grants that have helped the project along, namely $4.9 million for the Trepanier interconnect portion, and a New Building Canada grant, totalling just over $6.9 million.

“Four years is a long time, things change, and the increase is a big change, we recognize that,” said Fortin.

“But to stop now would mean losing the project and losing the (grant) money, so we just can’t do that.”

Director of Finance Doug Pryde said the current $350 Water Improvement Parcel tax will continue to be levied until 2020. 

“Once the project is completed by the end of 2020, a new parcel tax in the amount of approximately $206 will be levied starting in 2021 for the recovery of debt servicing costs associated with the $9.3 million in borrowing for the water treatment plant.  This parcel tax will be levied for a twenty-five year period consistent with the term of the long term debt for this borrowing.”

Starting in 2021, the current $350 parcel tax will be reduced to approximately $144 to fund water capital projects identified in the District’s Water Master Plan. 

“Therefore, the two parcel taxes will still add up to $350 ($206 + $144) in 2021. The $144 estimated parcel tax will be levied indefinitely and will be amended from time to time to reflect the funding requirements of long term water capital projects identified in the District’s Water Master Plan,” he said.

Pryde added the $206 debt servicing parcel tax was originally estimated to be $94 after the grant approval for the water interconnect project and prior to the additional funding requirements for the water treatment plant. 

At the end of the day, Fortin said having clean water is the priority, as residents have stated many times over the years.

“We never want to spend the taxpayer’s money if we don’t have to. Unfortunately, we can’t delay getting this plant built,” she said.

Councillor Mike Kent agreed.

“It’s unfortunate, but it’s one of these things that can be expected, there can be setbacks sometimes when you’re moving a project forward such as this. This is a significant increase in the budgetary cost of this project, but it’s one of those things – I don’t think that abandoning it is the right move at all.”

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