Upcoming city capital projects face an uncertain future in light of rising prices and operating costs, along with limited revenue sources.
That’s the assessment from Mayor Cam Guthrie after bids for construction of the planned South End Community Centre (SECC) came in significantly over the council-approved budget of $80 million. The lowest was more than $121 million.
“This is a concerning trend that we’re seeing across many projects,” Guthrie said, referring to rising material and labour costs. “That means we have to start saying ‘no’ to things. We have to start to look for things that we can pause and come back to later.”
Guthrie explains city staff will deliver a public report to council next month detailing the SECC situation as well as the generally rising cost of capital projects.
He expressed concern about the upcoming cost of renewal efforts such as road reconstruction, as well as growth-related projects including the planned 88,000 sq. ft. new central library, which council approved at $62 million.
Both the new library and SECC were endorsed by council in the fall of 2020.
Rising costs have brought the city to “a critical point,” Guthrie said.
“We need to make decisions that are filtered through fiscal responsibility and affordability for the community,” he added. “We can’t be a city that’s future ready if the citizens cannot afford that future, so I am committed to making sure that we are looking at things through this new lens.
“It’s a needs versus wants situation that we’re in and we’re going to have to make those decisions,” the mayor continued. “I think the community will understand that.”
The 165,000-square-foot South End Community Centre, to be built off Clair Road beside Bishop Macdonell Catholic High School, just north of the Larry Pearson baseball complex, is currently set to include a 25-metre pool with eight lanes, two gyms, two ice pads, indoor walking track and five meeting rooms.
“I’m committed to getting this (SECC) project done,” Guthrie said, adding it may mean scaling it back and/or finding new revenue sources for it. “I think that’s on the table.”
Complicating the issue in Guthrie’s eyes is project funding sources. In the case of the SECC, much of the money is expected to come from development charges, whereas the new library is to be paid largely through property taxes and debt.
“You can’t shift a funding source dedicated to a specific project easily to another project when the agreement to use those funds was to go to that original project,” he explained.
Five companies were pre-qualified to bid on the SECC project. Three bids were received.
The lowest bid came from Aquicon Construction Co. Ltd. of Brampton, at $121,201,000. Mississauga’s EllisDon Corporation bid $134,754,730 for the project. In the middle was JR Certus Construction Co. Ltd. at $126,328,700.
Construction is scheduled to begin this spring, with completion slated for 2025, though public opening is anticipated in late 2024.
An important update on the South End Recreational Centre and Infrastructure/Capital projects in the city of #Guelph: pic.twitter.com/qpY53iwKo8
— Mayor Cam Guthrie (@CamGuthrie) March 11, 2022
