Ballooning construction costs, unforeseen obstacles sends Carbonear back to the bank

By Craig Westcott

Carbonear is the latest town finding itself having to go back to the well to cover ballooning costs in public works projects.
At its public council meeting last week, council agreed to borrow more money for two projects already under construction.
Deputy Mayor Sam Slade, who chairs council’s public works committee, made the motions to borrow the funds.
The first resolution involved the additional costs incurred last year on Phase II of the upgrades to the water, sewer and storm sewer lines on Water Street. The resolution seeks approval from the Province to amend the original contract price by an additional $352,162 and for Carbonear to borrow to cover its share of the shortfall. The Town will sign a three-year term with Scotiabank with the money amortized over 10 years at a rate of 0.25 per cent over prime.
According to information provided by staff after the meeting, the increased costs are related to a number of service laterals that were not identified in the original tender documents.
“There were also delays related to the discovery of what was determined to be underground rock storm drains,” explained chief administrative officer Cynthia Davis. “Where Water Street is an older street, it is difficult to determine what is under the ground so change orders are required when there are issues identified that have to be corrected that were not identified in the drawings. That results in additional costs.”
The contractor also had to undertake some environmental remediation when contaminants were found during excavation.
The funding originally set for Phase II was set at $1,075,327 with the Town’s share being $195,029.
Slade’s next motion concerned Phase II upgrades to Adelaide Street. Councillors Chris O’Grady, Peter Snow and Malcolm Seymour all excused themselves from the vote as they each have relatives who live on Adelaide.
The reason for the motion was that when Carbonear called for tenders on Phase II of the project last year, all the bids came in well over budget and the tender had to be cancelled. Council and the Province are looking to tender the work again. That led to Slade’s resolution that because Carbonear is able to cover its share of the increased costs, it is asking the Province to amend the amount of funding set for the project, which was originally $1,620,000 and increase it by $497,914. Carbonear’s share of the cost was originally, $293,814, but that will go up proportionally if the Province approves the Town’s request.
Slade’s resolution included a request for permission to borrow its additional share from Scotiabank by means of a three-year loan amortized over 10 years at an interest rate of 0.25 per cent over prime.
Both resolutions passed without comment.

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