REQUEST FOR DECISION
DATE: March 6, 2017 Report No. EPW-17-006
TO: Laurie Hurst, Chief Administrative Officer
FROM: Jeff Miller, Director of Engineering and Public Works
SUBJECT:
Title
Budget Approval and Award of Construction Contract for the Project - Remediation, Esquimalt Town Square
End
RECOMMENDATION:
Recommendation
That Council:
1. Grant early budget approval of $2,813,000 for the Esquimalt Town Square Remediation Project in the 2017-2021 Financial Plan;
2. Direct Staff to prepare a bylaw to initiate the transfer of $2,813,000 from the Infrastructure and Revitalization Reserve Fund to the Capital Project Reserve Fund; and
3. Approve the awarding of the Esquimalt Town Square Remediation Project at a cost of $2,222,512.94 to Tervita.
Body
RELEVANT POLICY:
Not applicable.
STRATEGIC RELEVANCE:
Resilient and Diverse Economy - Continue with development of the Esquimalt Town Square and implementation of the remediation plan
BACKGROUND:
Over the past several years, the Township has monitored and begun the remediation process of the Esquimalt Town Square (ETS) site. The remediation is needed due to historical activities that occurred on the site. The two forms of contamination that exist are:
• Type 1
o Considered a surface contamination
o Composed of metals/chlorides/polycylic aromatic hydrocarbons (PAH)/petroleum hydrocarbons (PHC)
o Remediation works are focused on removal and disposal
o See Attached plan areas of type 1(areas A1, A2, B1,B2, C1, C2, E1, E2, and F)
• Type 2
o Located substantially below the surface contamination
o Composed of chlorides
o Remediation works will be focused on risk management and the materials will be left on site
In order to comply with the requirements of the Ministry of Environment (MOE) Certificate of Completion (CoC) process, the Township has undertaken:
• Drilling and testing of the site to determine:
o Horizontal delineation of the contamination
o Partial vertical delineation of the contamination
o That the surrounding areas are not contaminated and material can be disposed of as fill
• Preparation of remediation plan for Type 1 contamination
• Submitted and received approval from the MOE requesting:
o Acceptance of the vertical delineation results
o That the sites and the surrounding properties be issued a Wide Area Site (WAS) CoC
• Issued Notice of Migration letter to affected properties (14)
With the necessary approvals in place, the Township then proceeded with the process of retaining a contractor to carry out Type 1 remediation. Type 2 remediation will be carried out by the Consultant at the same time. The Tender for the Type 1 remediation was released on February 7, 2017. It closed on February 27, 2017. Two tenders were received.
The tender contained a weighted evaluation criterion. This criterion was:
o Methods and materials - 5 points
o Qualification and Experience - 15 points
o Adherence to schedule - 30 points
o Cost - 50 points
A summary of the two tenders received is as follows:
|
Contractor |
Cost |
Schedule |
Total Points |
|
Tervita |
$2,222,512.94 |
March 31, 2017 |
98 |
|
Quantum Murray |
$2,526,941.69 |
April 14, 2017 |
83 |
This project will also be a component of the 2017-2021 Financial Plan. Early budget approval will be required in order for work to proceed.
ISSUES:
1. Rationale for Selected Option
This project will require early budget approval for the 2017-2021 Financial Plan. Staff recommends to Council that early budget approval be given in order for this project to proceed with the redevelopment of the ETS site.
Both the Consultant and Staff have completed the review of the received tender submissions. Based on this review, it is Staff’s recommendation that the contract for remediation be awarded to Tervita.
Tervita’s tender:
o Reflected an understanding of the project in their description of the methods and materials section of the Tender;
o Detailed their extensive experience on carrying out similar projects and scope of works;
o Proposed a schedule that met the preferred completion date of March 31, 2017; and
o Was the lowest bid.
2. Organizational Implications
This project has been incorporated into the Director of Engineering and Public Works’ work plan for 2017. Resources from Engineering and Public Works will be utilized as required to assist in the undertaking of the project. There are no significant operational impacts expected due to the work.
3. Financial Implications
In order for this project to proceed, the following budget requires approval. This budget will include contractor, consultant and contingency costs as follows:
o Contractor cost = $2,222,512.94 (inclusive of GST)
o Contingency cost = $333,400 (15% contingency)
o Consultant cost = $256,600
• includes project management costs, testing, development of risk management plan, MOE and CSAP fees for CoC submission
o Total early budget approval = $2,813,000
The Township has a strong financial position which includes healthy reserve fund balances; however, significant project costs can arise unexpectedly. The costs related to the Esquimalt Town Square remediation project present a situation where the Township is unable to fully fund the costs through the Capital Projects Reserve Fund without deferring a number of other requested capital projects. Ordinarily, in these types of situations, the project costs could be funded through long term debt borrowing; however, in this instance, the timeline for project completion does not correlate with the borrowing offering through the CRD which occurs twice each fiscal year.
As an alternative, to fund the cost of the remediation project without the need to defer other capital projects, the potential exists for utilizing unused balances in other Township reserve funds. The Community Charter does permit a municipality to transfer amounts between reserve funds with certain stipulations. These conditions include: (1) the requirement that both reserve funds must be for the purpose of funding capital projects, (2) the originating reserve fund must be replenished with the full amount of the transfer plus interest that would have been received, and (3) the transfer must be authorized through the adoption of a bylaw.
The Township’s Infrastructure and Revitalization Reserve Fund was established in 2014 with the purpose of funding revitalization initiatives and replacement of long term infrastructure. At the end of 2016, this reserve fund holds a balance of $3,690,000 with annual contributions in the equivalent of a 1% tax increase (2017: $273,000) being made within the financial plan. The full amount required for the Esquimalt Town Square remediation project could be transferred from this reserve fund while also maintaining an amount to fund other projects during the replenishment period.
If the required amount were to be transferred from this fund, a five year schedule would be established to ensure the full amount is returned to the reserve fund through increased annual contributions within the financial plan
4. Sustainability & Environmental Implications
This project will see the removal and disposal of Type 1 materials to a MOE approved landfill for disposal. The removal of the Type 1 materials does not pose a concern to humans and the materials will be transported under the appropriate conditions and requirements for that type of material. Type 2 materials will be risk managed on site. The implementation of this project will see this parcel of land transformed from a brownfield site to one that will allow redevelopment and growth within the Township.
5. Communication & Engagement
When the contract is awarded, the Consultant and Bidder will be contacted. The Township will issue updates to the Township’s website and other social media forums regarding the progress of the Project. Council will also receive periodic reports updating them on the progress of the Project as required.
ALTERNATIVES:
1. That Council:
a) Grant early budget approval of $2,813,000 for the Esquimalt Town Square Remediation Project in the 2017-2021 Financial Plan;
b) Direct Staff to prepare a bylaw to initiate the transfer of $2,813,000 from the Infrastructure and Revitalization Reserve Fund to the Capital Project Reserve Fund; and
c) Approve the awarding of the Esquimalt Town Square Remediation Project at a cost of $2,222,512.94 to Tervita.
2. That Council:
a) Does not grant early budget approval of $2,813,000 to the ETS Remediation Project in the 2017-2021 Financial Plan;
b) Does not direct Staff to prepare a bylaw to initiate the transfer of $2,813,000 from the Infrastructure and Revitalization Reserve Fund to Capital Project Reserve Fund; and
c) Provide alternative direction for the Project.
3. That Council does not approve the awarding the ETS Remediation Project at a cost of $2,222,512.94 to Tervita and directs staff to provide alternatives for completion of the Project.