We STILL don't know what the Columbia rebuild cost
By Laurie Charlton
The City of Rossland has started another Alternative Approval Process (AAP) to obtain authority to borrow up to $4,000,000 for up to 30 years to help pay for the City’s portion of the Columbia Avenue project. (See “What’s an AAP anyways?“) The project is almost complete and has to be paid for. But what did it actually cost?
The answer, it seems, is ‘who really knows?’
Information provided by the City only serves to confuse the issue rather than give insight into the actual project costs. In her memo to Council dated June 20, 2013, CAO Cecile Arnott provided a bewildering collection of numbers that were supposed to explain the costs of the project. If anyone tries to read through the information (it’s posted on the City website), they will quickly see that there is little correlation between the numbers on different pages of the report.
It’s definitely not a report that would be expected from a very highly paid professional accountant – or CAO – or both. Many of the pages are not referenced in the report. Some pages of the report have no titles so one is not really sure what is being presented. Several of the pages are covered with hand-written notes.
That mishmash of numbers and comments must have totally confused Council and will certainly confuse anyone else who tries to make sense of the data provided. Yet, this is what has been provided to the taxpayers of Rossland as the basis on which they are to make a decision about how to finance a $4,000,000 loan.
Figures used by Ms. Arnott in her summaries are not supported by figures quoted on other pages. It’s not surprising that Council might be confused – which numbers are the right ones? Are the right numbers even included? The confusing and contradictory numbers might explain why Council took less than 10 minutes to decide to proceed. Did they simply accept Ms. Arnott’s report without question?
Ms. Arnott claims that the project is within a total budget of $5.78 million. In support of her claim, she refers to a memo provided to Council by former CAO, Victor Kumar, in May 2012 which suggests that the original budget was $5,638,018. (This is only the City’s portion of the project. No definitive statement of the Ministry of Transportation and Infrastructure’s (MOTI) portion of the cost has been provided to Council.) Added to this amount is $130,000 in 2013 to cover the cost of street furniture and other items, giving a supposed total budget of $5,768,018 – slightly less than the $5.78 million claimed by Ms. Arnott.
There’s a very big problem here. The $5,638,018 ascribed to Mr. Kumar is actually the tendered cost (including non-rebatable HST and 2011 engineering costs) before he made the so-called “negotiated deletions” from the project which amounted to $424,932. Also not included in Ms. Arnott’s professed “budget” is the $100,000 saving the City realized by the switch back to angle parking from the originally proposed parallel parking. That cost was presumably picked up by the MOTI.
No provision has been made for the cost of temporarily borrowing the money to pay for the project. The City will have to undertake temporary borrowing because approval for the long-term borrowing from the Municipal Finance Authority will likely not be obtained until mid-2014. Interest on the temporary borrowing could amount to another $100,000.
During construction, the contractor, Copcan Contracting Ltd., incurred extra costs for unforeseen problems they encountered and extra work ordered by the City. According to a document provided by Ms. Arnott, the City’s share of that extra work totaled $279,087. That cost is not included in Ms. Arnott’s “budget” although a contingency of $250,000 was included in Mr. Kumar’s report in May 2012.
Adding to the confusion about the actual cost of the project is the discrepancy among other amounts available from other sources. Invoices submitted by Copcan up to December 2012 total $6.095 million. That includes the MOTI portion. The City paid that whole amount in 2012 except for the amount held back as a builder’s lien and for deficiencies. Presumably the holdbacks were paid in 2013 because the Statement of Financial Information (SOFI) for 2012 issued by the City states that Copcan was paid $6,232,548.68 (presumably including the unrebateable HST).
If the Copcan invoices were paid by the City and the the SOFI reports the full payment to Copcan including the amounts that were the responsibility of the MOTI, why does the City not show the participation of the MOTI in the project by including the MOTI contribution as a source of funding for the project just as other sources are reported?
The 2012 audited financial statements are no help in sorting out the confusion. All capital expenditures are consolidated as one lump sum and no specific mention of the Columbia Avenue project is included in the audited statements. The audited statements do show an operating and capital fund deficit for 2012 of $3,697,439.
Engineering costs for the project are equally confusing. In June 2011, Council approved a budget of $500,000 for all engineering costs, including the MOTI portion, for a project that included both Columbia Avenue and Washington Street all the way to Kirkup Avenue. Those projected costs included all preliminary engineering, detailed designs, tendering, construction supervision and contract management. Council approved no other expenditures for engineering work on the project.
Ms. Arnott, however, claims that the City’s portion of the budgeted amount for engineering was increased to $665,263 to cover “unexpected engineering costs. No evidence is presented to support this contention. On the same page in her report, Ms. Arnott shows that the actual cost of the engineering services, including non-rebateable HST, as of December 31, 2012, was $917,741.25.
Why did engineering costs escalate so much? Did any of those extra costs have anything to do with the City’s former Building Inspector who was hired by ISL Engineering to be their representative on the project? Who authorized that huge increase in engineering costs?
Ms. Arnott claims the project was on budget. Nonsense! The project was well over half a million dollars over-budget. Similar claims were made during the construction of the Ophir Reservoir. As costs mounted, portions of the project were dropped but the original cost projection was retained. What Rossland taxpayers got in both cases was a reduced project at more than the original budgeted cost.
Why can’t we expect to get some clear, concise, complete, and accurate numbers from our overpaid CAO? Why doesn’t our complacent Council demand, on behalf of taxpayers, that such information be provided? Until they do, citizens will continue to wonder what the actual cost of the Columbia Avenue project was.
Laurie Charlton is a retired chemist who was a Rossland city councillor for 17 years between 1975 and 2011.
PLEASE NOTE that the memo from the CAO referred to in this coiumn is attached to the story in pdf form. It can be found on page 6.
