Battleford awarded the tender for its wastewater lagoon project at their town council meeting Monday, but the final cost was a bitter pill to swallow.
The winning bid from Sanburn Construction Ltd. of Battleford for the lagoon enlargement, de-sludging and upgrade came in at $7.38 million, which was some $2 million above and beyond what the town had budgeted.
The town had put in an estimate of $5.265 million in its application for grant funding that was ultimately successful in 2019. The federal government will contribute $2.1 million and the province $1.7 to the lagoon project, and it was thought the town would be in for the remaining $1.4 million.
Instead, the town will be on the hook for an additional $2 million on top of that. Town chief administrative officer John Enns-Wind tried to make sense of what had happened at council Monday.
Enns-Wind told council that the town had applied for federal funding in the grant intake in 2014, and then had applied in another intake in 2017. “My recollection is that started I think the end of November, beginning of December and then the intake closed in January, so it was very rushed,” he said.
Then the government did another intake and Enns-Wind said they had shared with municipalities that if they had already submitted an application form, to just keep it and they would review it. “So that’s what happened,” said Enns-Wind.
He also phoned to find out what was happening with the estimates, and learned that “the common trend is that almost all the bids are coming in above the budget, above the estimates. So we’re not the only ones, but it still hurts.”
There were also some items missing in their 2017 application, including the lift station as well as how much the rocks would cost. There is also another $210,000 for de-sludging, and engineering fees were not included in the original grant because it was ineligible for funding.
Despite the cost, council voted to go ahead with awarding the tender to Sanburn Construction. As for how to pay for an additional $2,033,000, town council voted to fund that amount through an internal loan from its own general fund, and have the town self-finance the borrowing by a variable interest rate for 25 years.
Alternative options were presented at the meeting: one was to raise rates immediately, which would have been an “enormous” increase according to officials, while another option was to borrow from a bank.
Council had no trouble supporting administration’s recommendation to go with the first option: to borrow from itself. Director of finance David Gillan said it was the least-expensive option and noted the town would be able to cover all its general fund reserves and still have general fund excess cash. The borrowing cost would be lower as well. As for any potential rate increase, that would not be needed for this year.
There was no question about going ahead with the lagoon expansion project this year, with councillors noting the benefits of having construction activity stimulate the local economy in the face of the COVID-19 pandemic.
Mayor Ames Leslie said going ahead with the project would make the town “more attractive for future growth”.
“By awarding this to Sanburn we keep that project local, and hopefully the sub trades will also be local,” was the comment from councillor Doug Laing.
“The sooner it gets done, the better,” said councillor Judy Pruden. “We can get on with it.
The indication at council was that Sanburn Construction Ltd. may be able to get started quickly, likely as soon as May 18.
