Vancouver City Council |
ADMINISTRATIVE REPORT
Date: March 11th, 2003
Author/Local: Jeff Addis/7353
RTS No. 03246
CC File No. 5768Council: March 25, 2003
TO:
Vancouver City Council
FROM:
General Manager of Engineering Services
SUBJECT:
Canada - British Columbia Infrastructure Program
RECOMMENDATION
A. THAT Council approve temporary staffing and costs of $555,000 for the three year project term ($185,000 per annum), as detailed in this report, to perform design and contract administration for the Canada - British Columbia Infrastructure Program with costs to be recovered from Sewers Capital overhead loading.
B. THAT Council authorize the City Manager to enter into the Canada -British Columbia Infrastructure Program contract agreements.
COMMENTS
The General Manager of Engineering Services RECOMMENDS approval of both A and B.
POLICY
In the early 1970's, Vancouver adopted an annual program of replacing its old combined sewer system with a separated system to reduce and eventually eliminate combined sewer overflows (CSOs). This program is based on the replacement of old sewers on a life cycle basis with the goal of eliminating all CSOs by the year 2050. This commitment has been endorsed by the Province and has been legally established into the City's and GVRD's Liquid Waste Management Plan (LWMP).
PURPOSE
The purpose of this report is to provide Council with an update on the status of the City's involvement in the Canada - British Columbia Infrastructure Program and to seek approval for temporary staffing related to the program and the authority to enter into the contract agreements.
BACKGROUND
The Canada-British Columbia Infrastructure Program Agreement was signed on October 10th, 2000 and was launched on January 19th of the following year. The agreement calls for the investment of more than $800 million over six years to improve urban and rural municipal infrastructure in British Columbia.
On June 25th, 2002, it was announced that the City of Vancouver was eligible to receive $18.26M in Federal/Provincial funding for three sewer construction projects in the China Creek area of Vancouver. This funding represents 2/3 of the total project costs with the remaining 1/3 of the funding, $9.13M, to be provided by the City of Vancouver. Funding for the Vancouver share has been budgeted in the City's 2003-5 Capital Plan. The projects that were approved are as follows:
Project #5504 - China Creek/Lower Canoe Creek Basin Sewer Separation
Project #5997 - China Creek Sanitary Trunk Extension Project
Project #6064 - China Creek/Upper Canoe Creek Basin Sewer SeparationThese projects will have direct environmental benefits by reducing the sanitary component of combined sewer overflows (CSOs) at the Clark Drive outfalls. The Clark Drive CSO's are the City's largest and have been the subject of environmental studies that have shown that the discharges have a negative impact on the receiving environment. As such, the GVRD and the City have made it a priority to fast-track sewer projects that will reduce sanitary discharges to the Clark Drive Outfalls.
DISCUSSION
The terms of the Infrastructure Program require that participants complete all of the projects and submit claims for reimbursement by March 31st, 2006. The amount of sewer construction proposed for the three City projects is significant and it is important that we begin them as soon as possible in order to complete all of the work prior to the Infrastructure Program deadline. We are eager to proceed with the design work immediately and are targeting May 2003 for the commencement of construction.
To carry out the design, contract administration, and inspection work associated with the program, we are recommending that Council approve a budget of $555,000. This money would cover costs associated with temporary design and inspection staff and incremental staff salary increases. Over the three year program life, it is proposed these costs of $185,000 per annum be recovered through the overhead recovery charge applied to sewers capital spending. Use of private sector design consultants was not recommended since existing expertise and past processes have shown city staff to be very competitive with the private sector.
The regulations are clear that City related construction expenditures, such as employees of the City, City Equipment and, value added by the City to any materials, are not eligible for reimbursement under the program. As a result, any work by City crews will not be fully cost shared. Therefore, if City crews construct a portion of the work they will need to maximize their use of cost shareable components such as hired equipment, subcontractors and outside material suppliers.
Given the program regulations, funding for and the amount of work undertaken by the City will need to be greater than our one third share ($9.13M) to capture the full two thirds senior government funding. This should not be a problem for the following two reasons:
· Additional work within the China Creek basin will accelerate the separation program.
· Capital funding is available in the three year Capital Plan to undertake the base $9.13M as well as an expanded program.
For construction of the Infrastructure works we initially propose using a combination of City sewer crews and private contractors. At this time, we propose about two thirds of the work would be undertaken by City sewer crews, using hired equipment and sub-contractors, with the remainder (about $8M) contracted out to the private sector. This approach takes advantage of the experience and efficiency of City sewer construction crews and allows for bench marking between the work of the City and that of private contractors.
To ensure best overall value to the City of Vancouver, as the project proceeds, we will monitor the performance of the City and contractor, as well as the eligibility of costs under the Infrastructure Program. Based on the monitoring, the City can adjust the implementation plan as appropriate in order to achieve maximum efficiency and recoveries.
The Canada / British Columbia Infrastructure Program office has forwarded contracts to be executed for each of the awards we have received. These contracts contain details about such items as eligible costs, cost reimbursement rules, and timing of the expenditures. Accordingly, it is recommended that Council endorse the three projects and provide the City Manager with the authority to enter into these agreements on behalf of the City.
FINANCIAL IMPLICATIONS
The approval of the annual budget of $185,000 for a three-year term to fund temporary design, inspection staff and incremental staff salary increases would not require additional operating or capital budget funding. This is because at the existing overhead rate and the projected capital work activity levels, sufficient capital overhead contribution will be generated to fund the project overhead costs.
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