Already a $50-million project, Nanaimo’s midtown water supply work requires another $4.6 million tacked onto the bill.
The additional money, recommended at a City of Nanaimo finance committee meeting Wednesday, July 19, covers additional costs for Phase 2 of the project through 2024. Some of that work includes a longer bridge over the Millstone River to account for new information on river levels, fluctuations with the U.S. dollar, oil pricing and supply chain issues, according to city documents.
The budget for the entire project from 2021 to the end of 2024 is now $55.9 million for the water distribution infrastructure as well as ancillary work such as pedestrian improvements, sewer and storm works and contingencies.
“Typically with multi-year, large projects, we update the budget for the following year as part of our normal budgeting process and that’s presented as part of the financial planning process,” said Bill Sims, general manager of engineering and public works.
But the midtown water supply project has impacted the water reserve, the account the city stashes away to cover costs of water supply system repairs and upgrades. The city has drawn from the account to cover the project’s costs instead of borrowing the money and incurring interest charges, whereas a loan would have spread out costs over the loan term.
“With reserves this low, we’re proposing and planning for the 2024 [project] budget for an additional $4.6 million, which buys us certainty to the end of the project,” Sims said. “We now know the costs until the end of the project.”
Sims said if all the money was taken from the reserve fund, it would bring it uncomfortably close to the fund’s minimum balance.
City staff recommended the $4.6 million be covered by taking $2.1 million from the growing communities reserve fund, $2 million from the water reserves fund and $264,000 from each of the water asset management and water supply DCC funds.
Nanaimo Mayor Leonard Krog expressed doubt this will be the last ask for a funding top-up.
“I don’t wish to cast any doubt on your optimism, but … I don’t have great confidence that we won’t see some further request, potentially, down the road,” he said.
Sims said the costs for the project have been established until the end of 2024.
“We have the pipe supply secured. We’ve got fuel and contract labour and equipment all secured until the end of 2024, so this isn’t, ‘oh, we didn’t think about this, we didn’t think about that,’ we’ve thought about it all,” he said.
Sims said the water supply project was on the books to be started at a future date, but a major water main failure under Bowen Road that impacted Nanaimo Regional General Hospital’s water supply along with homes, businesses and emergency services in the area forced the project to start much earlier and a rejigging of the city’s capital planning.
“It’s actually, perhaps, a good example of why reserves are needed,” Sims said. “If we didn’t have those healthy reserves we couldn’t have accelerated a number of these projects. So, as well as shifting and delaying other projects, this is the highest risk and the highest priority.”
The $4.6-million additional funding draw was approved unanimously.
READ ALSO: Costs of City of Nanaimo’s huge water supply project increasing by $14 million
READ ALSO: Section of Bowen Road, in Nanaimo, closed due to water main break
chris.bush@nanaimobulletin.com
Like us on Facebook and follow us on Twitter