The Town of St. Paul is facing some tough choices as the bid for upgrades to the waste water treatment plant has come in drastically higher than originally estimated.
Mirek Grzeszczuk and Jason Stusick of MPE Engineering attended the June 10 Town of St. Paul council meeting to discuss the options that are available as a result of the $5 million difference in cost.
The Town authorized debenture borrowing in the amount of $5.6 million in 2018 for the plant upgrade and obtained a grant in the amount of $5.5 through the Canada Clean Water and Wastewater Fund to cover the cost of what was then estimated to be a $11.1 million project.
The low bid for the project came in at $14.1 million, heard council on Monday night, which means the total project is pegged to cost just over $16.2 million. The original $11.1 million estimate was put together over three years ago, noted CAO Kim Heyman.
Work on the project began in 2015 with studies taking place. Funding was awarded for the project in 2018 and there is a deadline attached to the grant funds to have the project finished by March of 2020. Five contractors were prequalified for the project, and four of those submitted bids. All four bids came within a million dollars of each other, giving consultants confidence in those bids being accurate.
In their presentation to council on Monday, Grzeszczuk and Stusick noted a number of reasons the costs of the project were higher than anticipated. Tariffs on steel and aluminum were one issue, and although some of those tariffs are now gone, suppliers in Canada already have stock they've paid a higher price for, so until that stock is gone the prices will continue to reflect the higher price.
The cost of concrete is also significantly more than anticipated, along with some other structural and architectural items. It was also noted that there is more risk with the underground work that has to take place around the existing facility.
"To move the project forward, we have a few options," said Grzeszczuk.
Option 1 is to continue with the current funding in place, and apply for grant funds to help cover some of the overage. Grzeszczuk said he has already put in a request to get an extension on the March deadline for the completion of the project under the current grant.
This option would result in a$1.3 million increase for the town, above the money already committed to the project.
Option 2 would be to reapply for funding under a different stream, but that would mean the town would give up its current grant funding already in place. In the best care scenario, the town would have enough funds in its debenture for this option if the grants were successful. The funding is a federal grant, meaning the town would be up against the rest of Canada in attempting to access the grant money, said Heyman after the meeting.
"There is risk on both ends," said Grzeszczuk.
"There isn't an easy solution," added Heyman, Monday night.
Option 3 would be to reduce the scope of the project. This could involve equipment removals, but would reduce the lifespan of the project significantly and another upgrade would be needed in about 10 years. The capacity of the project would not be the same as originally planned with the reductions.
Operation costs could also increase with the reduction of certain equipment. This option would reduce costs by about $1.4 million, and possibly more when all the reductions were accounted for, according to the information presented on Monday.
Mayor Maureen Miller said she was concerned about Option 3 and felt some of the items included as possible deductions were items the town would have to purchase later on, such as thousands of dollars worth of lab equipment.
Council asked Bert Pruneau, the town's director of utilities, what his thoughts were on the issue.
"I have mixed feelings right now," acknowledged Pruneau. He noted that while he doesn't want to see some of the items taken out of the project, if it means the project can continue to move forward then he is OK with the idea.
"I don't like Option 2," stated Miller, noting the uncertainty around applying for new funds when funds have already been guaranteed. "I'm concerned about giving up the money we already have."
Talk then shifted to bringing the issue forward to MLA David Hanson and MP Shannon Stubbs, along with working towards a meeting with the ministers who are involved in the grants.
Coun. Nathan Taylor said he would like to know which direction the provincial government would like to town to go - whether they would like to see reductions made, or if they would rather the town do the project right the first time.
Meeting with ministers at this point would probably be the best option, said Grzeszczuk. It was also noted the town has already spent about $1 million on the project when considering engineering/consulting costs and studies being done.
"We have to go forward in some way," said Heyman, after the meeting, adding, "It is very upsetting to see this type of increase.
The $14.1 million bid received for the project is only guaranteed for 60 days.
Lake study
Stusick also gave a brief presentation about the water study that has been done on Upper and Lower Therien lakes. He confirmed the waste water treatment plant project is being done in a way that will improve the water quality of Upper Therien Lake.
During wet years, Upper Therien flows into Lower Therien Lake, explained Stusick. Right now, we are into a wetter period, he added. Both lakes are non-fish bearing, although Lower Therien is classified as a recreational lake.
Another reason for increased costs of the waste water treatment plant project is studies having to be done on both Upper and Lower Therien due to the water levels being higher.
Stusik said when planning the project for the waste water treatment plant, consultants followed the approach that the water body (Upper Therien) would not be further degraded, but could even improve. Over time, Upper Therien Lake will recover, said Stusick,
Miller asked if the town could be supplied with a clear update on water quality to give residents in both the town and those who live in the County of St. Paul around Lower Therien, since she has personally heard some concerns about the quality of the water being expressed.
