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HomeMy WebLinkAboutCAO-006-23Staff Report If this information is required in an alternate accessible format, please contact the Accessibility Coordinator at 905-623-3379 ext. 2131. Report To: Joint Committees Date of Meeting: February 27, 2023 Report Number: CAO-006-23 Submitted By: Trevor Pinn, Deputy CAO/Treasurer George Acorn, Director of Community Services Reviewed By: Mary-Anne Dempster, CAO Resolution#: JC-037-23 File Number: By-law Number: Report Subject: Update on Proposed South Bowmanville Recreation Centre Recommendations: 1.That Report CAO-006-23 and any related delegations or communication items, be received; 2.That Staff pause the South Bowmanville Recreation Centre project due to significant cost escalation; and 3.That Staff expedite the development of our Parks, Recreation and Culture Master Plans to inform how best to utilize the previously approved debenture to enhance the recreation and culture offerings available in Clarington; and 4.That Staff be directed to prepare a design and costing proposal to create an outdoor refrigerated skating surface (trail and/or pad) with a budget not to exceed $20 million of the funds earmarked for the South Bowmanville Recreation Complex 5.That a central skating location be explored first, with a Western (Courtice) and Eastern (Newcastle/Orono) to be considered based on budgetary feasibility; and 6.That the changes in the project scope be funded by the previously approved debenture and development charges for the South Bowmanville Recreation Centre; and 7.That all interested parties listed in Report CAO-006-23 and any delegations be advised of Council’s decision. Municipality of Clarington Page 2 Report CAO-006-23 Report Overview In 2019, Council was presented with a comprehensive plan to build a facility that included a twin pad arena, indoor walking track, gymnasium, programming space and a library, among other features. The estimated price tag was roughly $48 million. The concept was then revisited and in 2022 Council approved the framework for financing for the South Bowmanville Recreation Centre, excluding the library, programming space, and adding the aquatic facility. The revised version carried a $61 million cost estimate. Council directed staff to move ahead, and funds were debentured to begin the work. Due to rising interest rates, and construction market challenges project cost escalation continued. Hence, the Council approved project has undergone a cost review by our contracted project manager, Colliers Project Leaders, who estimated the project could now cost $134 million. Based on the above, Staff are recommending that the project be paused until the completion of our Parks and Recreation and Culture Master plans are completed to best inform what should be built based on the financing constraints. In the interim, it is being recommended that staff prepare a design and c osting proposal to create an outdoor refrigerated skating surface (trail and/or pad) in Bowmanville. With a second phase to look at the creation of outdoor skating pads in both Courtice and Newcastle/Orono. This work would be completed using the existing funding that have been approved. 1. Background Historical Staff Reports 1.1 At the January 23, 2017 General Government Committee meeting, Report CSD-001-17 was presented which introduced the Indoor Facilities Development Strategy. The Strategy addressed the need to develop a comprehensive facility development plan to identify facility needs based on the growth of the Municipality, changing demographic and evolving recreation and leisure trends. The scope of the Study was to look at needs to 2031. 2019 1.2 On October 15, 2019, Council was presented Report CSD-009-19 regarding the South Bowmanville Recreation Centre. Staff recommended approval of the program (twin pad arena, indoor walking track, gymnasium, multi-purpose community and programming space, administrative space, tourism office, and library), the $48 million budget be referred to the 2020 budget deliberations, and that Staff apply for funding through the Municipality of Clarington Page 3 Report CAO-006-23 Investing in Canada Infrastructure Program (ICIP). The second phase was proposed to be an aquatic facility including 25 metre pool tank, therapeutic pool, lifeguard office, deck storage, and changing facilities. A fitness/wellness centre including 8,000 square feet of aerobic, strength, conditioning, change rooms, assessment and storage facilities was also proposed to be included in the second phase. 1.3 Included in the 2019 report was estimated financial considerations for the project. Interest rates for the project were estimated to be between 2.7 per cent and 5.25 per cent for a 20-year debenture. Under a situation where there was no grant, the total tax levy impact for the debt repayment was anticipated to be 8.62 per cent with a first-year debt servicing of $4.3 million. 2020 1.4 As part of the 2020 Capital Budget, Council approved $4.2 million to start the design/construction of the South Bowmanville Recreation Centre. 1.5 On September 14, 2020, Report FND-031-20 Funding Approval for South Bowmanville Recreation Centre was presented to the General Government Committee. The report sought approval to debenture $50 million ove r 20 years to fund the project. This report highlighted that the ICIP grant application was not successful. 1.6 As a result of the COVID-19 pandemic, interest rates had dropped to 1.3 per cent for ten years to 1.9 per cent for 20 years. Including the library branch, 74 per cent of the project was DC eligible. The preliminary operating budget was estimated to be a net levy impact of $750,000 (not including debt servicing). 1.7 The report was referred to the 2021 Budget. 2021 1.8 Report FSD-006-21 South Bowmanville Recreation Centre Partnership Opportunity, was received by General Government Committee on February 1, 2021 as part of the budget deliberations. Committee referred the Report t o Staff to consider potential alternative locations and to propose possible components. 1.9 Report CSD-003-21 provided three options to Council, continue in the existing location; consider a Public-Private Partnership (P3); or consider an alternative location for the facility. At its May 10, 2021 meeting, General Government Committee referred Report CSD-003-21 to the fall of 2021. Staff were directed to report back on Option 3 of the Report and $25,000 was approved to fund conceptual plans and a project budget. Municipality of Clarington Page 4 Report CAO-006-23 2022 1.10 Report CSD-001-22 provided three options to Committee for consideration. The first was an expansion at the Garnet B. Rickard location for $66.1 million. The proposed expansion considered option 2, at the South Bowmanville location for $57.6 million would include twin pad, library, gymnasium, walking track. The third option was to defer the project and include the future Community Park location at Lambs Road and Concession Street as an option. Committee selected Option 2, the South Bowmanville location. 1.11 Interest rates were estimated to have increased to 2.7 per cent. 1.12 Council at its January 24, 2022 meeting referred the Report to the 2022 Budget to include a twin pad arena and a pool as part of the 2022 Budget. 1.13 At its meeting on January 31, 2022, Committee approved in the 2022 Budget the construction of a pool, twin pad arena, gymnasium and associated administrative space (excluding library, wellness centre and multi-purpose community space) to be built in a single phase and debentured at an estimated cost of $65.1 million. 1.14 A debenture was issued in June 2022 for $26.4 million, interest ranging from 3.35 per cent to 4.75 per cent, which represented $20 million for the South Bowmanville project. An additional debenture will be issued in 2023 or 2024 as required. 2. Current State of South Bowmanville Project 2.1 Following approval of the 2022 budget, the Community Services project team convened and, with the assistance of the Purchasing Division, developed a scope of work and issued an RFP for professional project management services. 2.2 In accordance with the Council Recess Procedures in the Purchasing By-law, a recommendation to award this contract to Colliers Project Leaders was approved by the Chief Administrative Officer in September 2022. 2.3 During the project planning process, Colliers and the project team were becoming concerned with the impact construction market economic factors were having on new construction in the public sector. Examples of budget cost increases were seen across Southern Ontario and a decision to obtain a current Class D costing on the proposed facility plan was made. 2.4 The approved project plan which included a twin pad arena, aquatic centre, gymnasium, and indoor walking track was submitted to A. W. Hooker Associates to prepare a costing report. The results of this exercise indicated the high-level cost estimate for the facility Municipality of Clarington Page 5 Report CAO-006-23 plan to be more than $134,000,000, significantly higher than the approved construction budget of $61,055,550. 2.5 Given the cost estimate shortfall, and the recognition of the other capital infrastructure investment needs of the Municipality, no additional funding was requested in the recently approved 2023 budget. Staff will also be undertaking a recre ation, culture, parks and open spaces master plan in 2023. This work will consider the population growth and related demographics the Municipality will be expecting in the future. This will result in a fully informed assessment of what indoor and outdoor s paces are needed, and what programs and services should go in those spaces, to be st serve the needs of our community in the upcoming decade and beyond. The approach of combining these master plans into one comprehensive document will ensure that Council has a complete picture of the needs across the municipality and the financial impacts to make informed decisions on the path forward. 3. Revised Project Plan for Council Consideration Outdoor Ice Surfaces 3.1 Recently there has been much discussion about providing outdoor ice surfaces and the benefits they provide to the community. As we have seen this year, warm weather conditions present our community volunteers the challenge of sustaining usable ice surfaces. We witnessed, during the pandemic, an increased emphasis on outdoor recreation and leisure activities. 3.2 The recommendation is to look to allocate a portion of the approved funds towards the design and construction of outdoor refrigerated ice surfaces starting with a pad and/or trail in Bowmanville. Ideally this trail would be housed on Municipal land and built to act as a tourism location. 3.3 The Town of Innisfil recently completed an outdoor staking trail, with a total cost of roughly $17,000,000 – image below: Municipality of Clarington Page 6 Report CAO-006-23 Photo credit: Town of Innisfil 3.4 Once the first location is built, the plan would be to then look to build outdoor refrigerated surfaces on the West side of Clarington (Courtice) and in a location on the East (Newcastle/Orono). 3.5 The refrigerated ice surfaces will provide a longer skating season and a better quality of ice. In addition to providing outdoor skating during the winter months, these surfaces can be used year-round for a various programs and activities. 3.6 Staff are reviewing possible locations for the ice skating surfaces with possible locations including, but not limited to: Courtice Community Complex, Clarington Fields/Indoor Soccer Facility, Bowmanville Zoo, Camp 30, Diane Hamre Recreation Complex, and Orono. 3.7 As part of the site considerations are the operating efficiencies tha t can be realized when located next to an existing facility. 4. Financial Considerations 4.1 Increasing the debt financing to increase the second tranche of debt to $114 million is not financially feasible. The impact would be new debt servicing costs of $11.3 million in the first year of the debenture. As 26 per cent of the debt is tax levy supported, there would be an increase to the tax levy of $2.9 million in the first year. That added cost represents an approximate increase of 4.3 per cent just for debt servicing. This also assumes that Development Charge collection is sufficient to fund the $8.4 million that is DC related, this has not historically been the case. A shortfall in DC collection would require other sources of financing to cover the debt repayment costs in the interim; this is similar to what occurred at the Bowmanville Indoor Soccer Centre. Municipality of Clarington Page 7 Report CAO-006-23 4.2 For debt financing, a contributor to cost escalation is the interest rate on the debt. In 2019 and 2020, the interest rates were approximately half of what the rate is currently. The increased rate contributes significantly to the overall cost of the project and is a higher burden on our debt servicing limits. 4.3 After the construction of an asset is completed, there are ongoing costs to operate, maintain and program the facility. Activities within Community Services generate user- fee revenue, as approved by Council, which offset the operating expenses for those activities, but not fully. 4.4 The location of the outdoor ice surfaces may impact operating costs through economies of scale, for example ice pads located adjacent to recreation facilities can be maintained by the existing staff at the location rather than dispatching staff to external site s and bringing equipment (or storing equipment) at external locations. 5. Concurrence This report has been reviewed by the CAO, Deputy CAO/Treasurer and the Director of Community Services who concur with the recommendations. 6. Conclusion It is respectfully recommended that Council approve the change in facility plan as recommended in this report. Specifically, to pause the building of the South Bowmanville Recreation Centre until the appropriate master plans are completed and move ahead with a design and costing plan related to the creation of an outdoor skating surface. Staff Contact: Trevor Pinn, CPA, CA, Deputy CAO/Treasurer, 905-623-3379 ext.2602 or tpinn@clarington.net. There are no interested parties to be notified of Council's decision.