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Home My WebLink AboutOES 40/01 REPORT TO COUNCIL FROM: Everett Buntsma Director, Operations & Emergency Services DATE: December 11,2001 Gillis Paterson Director, Corporate Services & Treasurer REPORT NUMBER: OES 40-01 SUBJECT: Don Beer Arena - Expansion & Renovation File: cm 000 RECOMMENDATION: 1. That the joint report of the Operations & Emergency Services Department and the Corporate Services Department be received; 2. That Council approve the calling of a Tender for the Don Beer Expansion & Renovation Project; 3. That staff report back to Council, through the Finance & Operations Committee, at the earliest possible date in 2002 on the results of the Tender (RFP) and the financing of this project; and, - 4. That the appropriate staff of the City of Pickering be given authority to give effect thereto. ORIGIN: Correspondence from Pickering Minor Hockey Association Council Resolution #99/00 Council Resolution #121/00 Council Resolution #4/01 AUTHORITY: The Municipal Act, R. S. 0. 1990, as amended, Section 210.1 (1) FINANCIAL IMPLICATIONS: Based on the Report to Council dated Sept. 20, 2000, the total cost of the project was $3,419,000. The number was later revised to reflect an increase in construction and contingency costs based on the consultant's estimate as of March 2001. The revised total cost is $3,848,000. This revised number was reflected in the Ontario Super Build grant application dated Apri111, 2001. - With a revised project cost from the original Report to Council, the funding allocation has to be adjusted accordingly. A joint application between the City of Pickering and Participating User Group (pUG) consisting of the Pickering Minor Hockey Association and Durham West Girls Hockey Association was made to the SuperBui1d Fund in the amount of $1,174,000 leaving $2,674,000 to be paid by these two bodies, on a 50:50 basis with a maximum contribution of $1,500,000 from PUG. We have yet to receive a response from Ontario SuperBui1d. Report to Council OES 40-01 Date: December 11,2001 Subject: Don Beer Arena - Expansion & Renovation - File: COl 000 Page 2 EXECUTIVE SUMMARY: The following report is being presented at this time at the suggestion of the Chief Administrative Officer, to facilitate a timely discussion of this matter. The Don Beer Expansion & Renovation Project, Design Phase was approved through Council Resolution #121/00 in September of 2000. Staffand the project partners have now completed this stage of the Project and it is appropriate to consider the next phase. Moreover, the PUG are anticipating the opening of this facility for the 2002 - 2003 hockey season. If there is any possibility for the facility to open for the next season approval to tender the project must be considered at this time. BACKGROUND: In 2000 the Partners (Minor Hockey) presented to Council a business case and needs analysis for an additional ice pad at Don Beer Arena. Staff subsequently reviewed this information and submitted a Report to Council in September of 2000 indicating the need for an additional ice pad as per the partners report. Council subsequently approved through Resolution #121/00 the design of the Expansion & Renovation Project. Resolution #121/00, Item # 3: "That Report OES #11-00 be received by Council and that: - 1. Staff be directed to proceed with design and construction drawings for an additional indoor ice surface at Don Beer Arena; 2. Council authorize an expenditure of up to $215,000 for professional services related to the design development and construction drawings; 3. Staff be directed to provide project costing and financing at the time of the 2001 Budget deliberations; 4. Staff be authorized to meet with the Pickering Ice Rink Committee to discuss project fundraising programs with $1.5 million to be raised in less than a 10 year period by the Committee; 5. The appropriate officials of the City of Pickering be given authority to give effect thereto". In January, 2001 Council further confirmed through a Notice of Motion Resolution #4/01 that this project was the top priority project for a SuperBui1d application. Resolution #4/01: "WHEREAS the Council of the Corporation of the City of Pickering has received and considered the Government of Ontario SuperBuild Corporation Sports, Culture and Tourism Partnerships ("SCTP'') initiative Round 1 Application Guidebook (the "Guidebook''); and .- WHEREAS Council has assessed its capital priorities against the SCTP initiative Round 1 application requirements as set out in the Guidebook and intends to submit a letter of intent for qualifYing the "Don Beer Arena addition and renovation" project (the "Project'') for funding under Round 1 of the SCTP initiative; and WHEREAS Council confirms that the Municipality is compliant or in the process of gaining compliance with the new Ministry of Environment Drinking Water Protection Regulation, Ontario Regulation 459/00 made August 9, 2000 ("DWPR''); and Report to Council OES 40-01 Date: December 11, 2001 Subject: Don Beer Arena - Expansion & Renovation - File: C01000 Page 3 WHEREAS Council considers the Project to be its highest sport, recreational, cultural or tourism infrastructure priority for the Municipality; and WHEREAS Council confirms that the Municipality does not have any outstanding public health and safety issues or projects affecting its existing sport, recreational, cultural and tourism facilities; and WHEREAS Council has made this resolution on the understanding that the recitals set out herein will be relied upon by the Ontario SuperBuild Corporation in considering the Project application for funding under Round 1 of the SCTP initiative; NOW THEREFORE the Council of the Corporation of the City of Pickering hereby resolves that the Clerk is directed to submit a letter of intent to the Ontario SuperBuild Corporation respecting the qualification of the Project for funding under Round 1 of the SCTP initiative". Subsequently staff made application for approximately $1,174,000 of SuperBuild funding to offset the cost for the City and its partners. Approval of this application has, as yet, not been received but we understand information regarding the program is imminent (before December 20,2001). In the interim, the PUG have indicated that their continued support is contingent on this project opening for use for the 2002 - 2003 hockey season. - Below are two scenarios outlining the impact of financing this project both with an approved SuperBuild grant and without the approved grant. Scenario I (with SuperBuild) - as per grant application City Share Partner Share SuperBuild Share Total $1,337,000 1,337,000 1.174.000 $3,848,000 Should the City receive approval for SuperBuild funding in the amount of $1,174,000, the balance of $2,674,000 still remains to be financed by the City. The Participating User Group have indicated that they are willing to fund 50% of the balance to a maximum of $1,500,000. Originally, they anticipated these funds would be raised and forwarded to the City over the next 5 years, however, 10 years has also been mentioned. In the meantime the cost of the expansion and renovations must still be paid for presumably in 2002. Therefore the City would be temporarily financing the PUG's share of the costs of $1,337,000, together with the interest thereon, in the amount of approximately $ 1 million for a total cost of approximately $2.3 million, pending receipt of the funds. Therefore the total cost of the City will be $1,337,000, plus interest ($1.0 million) over the next five to ten years plus interest ($1 million) on the PUG funding for a total of$3,337,000 over the next five to ten years. The City's share of the Capital cost will be funded by a combination of the Reserve and debt financing. The estimated 2001 balance of the Reserve for Replacement Capital - Arena portion is estimated at $311,000 with $215,000 to be transferred to pay for the original design phase of the project as approved in the 2001 capital budget. - Therefore, the City will [mance the total cost of $2.6 million ($3.8 million less $1.2 million SuperBui1d Grant), over 10 years resulting in annual costs of approximately $353,000. If contributions from PUG average $200,000 per year then a Special Capital Levy of 1 % should pay for the balance. Scenario n (without SuperBuild) City Share $2,348,000 Report to Council OES 40-01 Date: December 11, 2001 Subject: Don Beer Arena - Expansion & Renovation - File: C01000 Page 4 - Partner Share $1.500,000 Total $3.848,000 In this scenario there is no SuperBuild funding, the PUG's share remains at a maximum of $1,500,000 and the City's share has increased to $2,348,000. The City will have to finance the entire amOlUlt resulting in annual costs of approximately $520,000 per year for 10 years. If PUG contributions average $150,000 per year then $370,000 remains to be recovered by the City resulting in a 1.5% Special Capital Levy. It is clearly understood by staff that this is a tenuous situation for the City and it's partners, however the loss of our partners, should the project be delayed further, is not an acceptable alternative for the viability of the project. Needless to say should the City not receive the grant from SuperBuild and/or lose its partners, staffwould have no option but to recommend the project not proceed. Conclusion: Therefore, in an effort to secure the partners continued involvement, staff recommend proceeding with the Tender Phase of the project immediately and will continue to pursue SuperBuild approval information. In addition to the capital cost, there are annual operating costs in the estimated amount of $825,000 (year 1 cost only) with offsetting revenues of approximately $775,000. -- The greatest concern of staff continues to be the financing and impact on Budgets and the tax levy. It should be noted that bidders will have to be advised that this project mayor may not proceed depending upon Council's final decision on the matters noted above. Moreover, prices will most likely be firm for 60 days thereby allowing for further review in the budget process. ATTACHMENTS: Not applicable Prepared IApproved I Endorsed By: .~.~ - Evere tsma Director, Operations & Emergency Services Gillis Paterson Director, Corporate Services & Treasurer EB:mld Copy: Chief Administrative Officer Director, Operations & Emgerency Services Director, Corporate Services & Treasurer Manager, Supply & Services - Recommended for the consideration of Pickering City Council