Peter Shokeir | [email protected]
The Municipality of Jasper may have to increase the budget for the recreation renovation project by a total of $6.4 million, to be funded by debenture.
Council received this update during its June 13 committee of the whole meeting but has yet to make a final decision on the subject.
The project budget was initially $14 million for a major renovation of the Activity Centre, Arena, and Fitness & Aquatics Centre facilities.
In May, tenders returned at a price premium well above what was expected.
This was an increase of 45 per cent for a total awarded cost of $20.4 million.
The increase is attributed to factors such as higher-than-anticipated inflation, a province-wide construction labour shortage and unique local market challenges in Jasper.
“A survey of other capital projects across Alberta, including others under WSP’s management, confirms these unfavourable market conditions are not unique to the Jasper project,” according to WSP, the project manager, in a briefing note.
“Supply chain challenges, rapidly rising interest rates, labour shortages, and material price escalation are all factors impacting global and local economic conditions.”
For the project to continue as approved, the options are to either add more funding, reduce the scope of the project or have a combination of both approaches.
Administration stated “that the work proposed in this renovation project is largely necessary and relatively urgent” and recommended funding the full scope of work.
Since the improvements are expected to last for more than 20 years, debenture financing was viewed as a suitable way to fund them, because the cost will be divided among the future generations of users who will benefit.
Borrowing $6,400,000 would result in additional annual payments of around $520,000 annually starting next year.
However, as an alternative, administration noted that council could remove the three new arena dressing rooms from the project scope and only increase the recreation renovation project budget by a total of $3.6 million.
During the meeting, Coun. Scott Wilson said he wanted to see a more detailed cost breakdown before he could approve increasing the project budget.
CAO Bill Given noted that some items, such as the elevator, could not be removed since the federal grant helping fund the project was meant to improve physical accessibility of the facility.
“So, there are some core items, that if we don’t do those, then we’re not at all meeting the intent of the federal grant,” Given said.
“There isn’t one particular element that is driving the cost. We’re seeing inflationary increases in all different sorts of components from gypsum board to wire.”
Coun. Rico Damota said having an arena with dressing rooms would help attract hockey tournaments in a highly competitive market.
He added how council previously expanded the scope of the project to have an economy of scale.
“And now we’ve gone full circle and the thing that we started off with . . . is on the chopping block because of finances, and I don’t like being here, and it’s a tough thing for me to face, but I know how important this is for the community,” Damota said.
“I think that administration, we have to trust them. They’ve gone through that whole process already, and they’re giving us the most valuable option, and as frustrating as it seems, I think the horse has already left the barn on this.”
Coun. Helen Kelleher-Empey stated they needed to know the return on this investment, noting how the arena only had one sheet of ice and needed to bring in that much more business in order to help make up the costs.
“The other thing is we don’t have a huge tax base here,” Kelleher-Empey said.
“So, I think we really have to think about what we’re doing here. From January to June, this has gone up $6.4 million. That is a lot of money that we’re putting on our community.”
After asking various other questions relating to financing and potential ways of reducing the cost, the committee moved for administration to return with the cost of items tied to grant funding, associated items outside of the grant funding and any additional scope increases that may have been suggested.
“I just feel like with that information, I could feel like I’ve done my due diligence knowing what the increase in scope is as well as what we are adding to the original grant-tied items,” said Wilson, who made the motion.
“And I know a lot of those have left the station already, but if we can get into a little bit more information . . . then I feel a bit more comfortable making a decision next week.”
Council is expected to return to this subject during its June 20 meeting.
