Council to defer capital projects in lieu of Gardens overrunThursday, February 20, 2014 by: Jamie Lyle
This week, city council held a special committee meeting prior to their regularly scheduled meeting, to put forward a motion regarding the Memorial Gardens renovation project and to have a discussion about the deferral of 5.2 million dollars from the 2014 budget in order to pay for its cost overrun.
Surprisingly, the meeting saw little discussion amongst councillors who were willing to adapt the root of deferring major capital spending from the 2014 budget to pay for the Gardens.
During the meeting, Councillor George Maroosis pointed out that it would be difficult to explain to those who work within the construction industry what they should do when there is a major downturn in expenditure items, such as road repairs and sewer upgrades.
Moroosis seemed to be genuinely concerned that the spending could see a slowdown and effect the municipality’s general economy.
However, Chief Administrative Officer Jerry Knox says that he doesn't think that an economic downturn in the municipality would occur.
“What we're doing is just pushing things out,” says Knox.
“This happens on occasion when different priorities happen, you move different projects around, so really, I don't see a long term economic impact,” Knox says, adding that the dollars have been spent in the community.
Yet for years, council has maintained that cuts or slowdowns to municipal infrastructure would be disastrous and have used this argument to justify tax increases.
The reasoning is that, in the long run, the costs of repairs go up each year and that short term bandage solutions add to the long term infrastructure costs.
Council has also been weary in the past of diverting from a long term and solid infrastructure plan in order to score short term tax relief or gain political favour with voters.
The meeting highlighted numerous projects that are scheduled to be held back in the city for a few years, most notably, the intersection at Seymour and the Bypass, as the city hopes to gain partial funding from the Ontario Ministry of Transportation.
The Memorial Gardens fiasco, with its multitude of costs overruns, still has people asking many questions and there are some councillors that want to know exactly how the citizens of North Bay are to pay for the cost overruns.
Councillor Mark King was shut down by Chair of Community Services Councillor Dave Mendicino when King began questioning whether the city would be entitled to more generated revenue now that taxpayers are footing more of the bill.
King also asked if the surcharge on tickets should be increased in order to continue the financial model that the pricing was originally based upon.
King was also concerned that holding back economic activity and infrastructure upgrading could hurt the local economy in the near and long term, as a domino effect could occur throughout the community and over time, could creep up on the municipality.
“Every dollar taken away or held back on infrastructure will affect the economy and the taxpayer,” says King.
However, during the meeting, it was agreed by city officials that deferring some capital projects was best for city taxpayers.
Ironically, in doing so, this makes much of the original 2014 capital budget seem no longer applicable and could open all sorts of areas where underdevelopment and unforeseen circumstances lead to an accumulation of costs of the city.
With contractors and the city at odds over growing number of projects, such as the Gardens, Lakeshore Drive and the Steve Omischl Sports Complex, the question is if the city will be in favour of taking the lowest bids for new projects and then ask the taxpayer for more money to finish the work should the project get financially maxed out.
With council spending much of their year preparing reports, proposals and quotes to size up this year's capital budgets, much of the work that was deferred will undoubtedly come back with higher costs in the future, with everything from wages to fuel rises to get the same work done in a few years’ time.
Miles Peters of the Taxpayer's Association says the real issue that people are missing is that, with 3 percent of the Gardens revenues, there is still not enough money coming in to pay off debt that was already accumulated on the project before the cost overrun and says that, in the big scheme of things, the city and the taxpayer is paying for a vast portion of this project and seeing little revenue returned.
“I'm very disappointed,” says Peters, adding that “there is not enough money being generated and there's no way that the surcharge can accommodate the debt because the taxpayers never had that money to begin with.”
Talk of transparency or the lack thereof aside, Monday's meeting also raises concerns for many that too much discussion is being controlled at the council level as to what is going on with Gardens and exactly much money the taxpayers, who have no control over costs, are putting into the finished project.
An example of costs not yet being accounted for is the project's parking lot extension, which is currently a mud field behind the Gardens and the YMCA, with no clear costs being factored into preparing this area to become part of the existing lot, while also dealing with issues such as run off that occurs into an already strained waterway like Chippewa creek.
Concerns are also being voiced that numerous other subsystems in the building are found to be inadequate, for example, an entrance that was supposed to bring in tractor trailers for large concerts has to be corrected in order to bring in events other than hockey.
This oversight could be seen as comparable to the Steve Omischl Sports Complex situation, when adequate parking and proper lighting weren't included into the operations of three fields, which sees as many as six teams coming on and off of them during any given evening.
On another note, when asked if there were “serious repercussions” happening with regards to the Garden's overrun, CAO Jerry Knox replied, “It's a personnel issue,” who then added, “No comment.”
The cost for the Memorial Gardens renovation project, now 98 percent complete, stands at 16.2 million, with some residents thinking that, in the end, costs could run even higher.
Time, along with a final cost report, which is currently being done internally, will tell.
Council will vote on the deferral matter in 2 week’s time.