GUELPH – A new Wellington County roads garage in Wellington North, a new library branch in Erin, and renovations to turn a Guelph building into transitional housing are all moving forward despite being way over budget.
Wellington County council voted on July 31 to approve construction contracts totalling $31 million for the three projects, but the meeting wasn’t without resolute objections from some councillors.
Campbell Cork, Steve O’Neill and Earl Campbell voiced apprehension over the cost increases, which ranged between 40 and 82.6 per cent over budget.
The trio reiterated earlier comments made during committee meetings on July 26, when recommendations to award the contracts were first discussed.
Representatives from construction companies and architects involved with the projects placed blame for the massive increases on an erratic construction market.
One by one, the roads, social services and finance committees, and the library board, supported recommendations to award construction work for the over-budget projects.
Finance committee chair Chris White told councillors last week that “implications, whether it’s the 10-year plan, impact on reserves, or any of those things” would be discussed in detail at the Monday council meeting.
“Whether you support these projects or not … what matters most is that you’re making an informed decision,” he remarked.
“There’s no doubt in my mind that we’re going to be having a more fulsome debate.”
But the fulsome debate never materialized.
‘We have exceeded our budget’
Cork asked, perhaps rhetorically, when council would say “enough is enough” with the cost overrun on a county roads garage in Wellington North.
The cost of the garage project near Arthur has risen to $16.8 million from the $9.2 million budgeted. Local taxpayers are covering $4.82 million of the project through the county’s roads capital reserve.
“When we were thinking of this whole project, we approved a price that was, as I say, about half this one,” Cork said, adding he is feeling “a little blindsided.”
“I think we need to go back and have a look at this and reconsider it, maybe look at other alternatives.”
Campbell agreed, saying, “it should be kicked down the road, revisited and retendered next spring, and the committee should review it.”
They, along with O’Neill, voted against awarding a construction contract to Dakon Construction Ltd. for over $13 million.
The trio also voted against awarding a construction contract valued at over $9 million to Demikon Construction Ltd. for a new library branch in Erin.
The cost of a new library in a restored Erin grist mill has risen to nearly $13 million from $8 million. Local taxpayers are covering $8.63 million of the project through the county’s property reserve.
Cork, Campbell and O’Neill have all said a new garage and library are justified, but not at the current price.
“We have exceeded our budget so much on these projects,” O’Neill said on Monday, adding future construction projects need to be better scrutinized.
While the northern Wellington councillors opposed inflated spending, others spoke passionately of the new library branch, in particular.
From grist mill to modern library
During last week’s committee meetings, councillor Diane Ballantyne spoke of the positive social, environmental and economic benefits of libraries.
“We’re taking something truly significant and making something new and revolutionary out it,” said councillor Doug Breen, adding economics shouldn’t get in the way of the opportunity “to do something truly great.”
Councillor and finance committee chair Chris White said the library is a “good investment” of taxpayer dollars and went so far as to say the old grist mill is important “for the whole province, if not the nation.”
Councillor and library board chair Mary Lloyd said the current branch, contained within Erin Centre 2000, has been outgrown.
“I think that the branch has been undeserving the community over the last number of years,” she said.
On Monday, councillor Matthew Bulmer said he could support the massive cost “in the context of the investments we’ve made in other communities.”
Bulmer also noted comments made last week by councillor Jeff Duncan, who stated the number of residents served by the future branch would be “pushing into the 14,000 mark” based on future population growth.
Taxpayers’ dollars, county debt
To fund the overages for the garage and library, the county is tapping into reserves, funded by taxpayers, and going into debt to the tune of $5.8 million.
The debt will be repaid when future development charges are collected, county treasurer Ken DeHart previously explained.
Next year’s taxes, DeHart reiterated on Monday, will not be directly affected by the projects.
But that doesn’t mean there won’t be significant financial ramifications in future budgets because of council’s decision this week.
DeHart said answers are needed on how reserves will be replenished, and the subsequent impact on future budgets.
Council didn’t arrive at any answers this week before most councillors voted to approve the construction contracts, including one to Collaborative Structures Ltd. to turn 65 Delhi Street in Guelph into transitional housing.
The cost for the housing project has increased to $10.6 million from $7.6 million, but funding is a little more complex.
For one, federal tax dollars will pay for the increase with a $3.65 million grant, with some leftover for a housing regeneration reserve.
At the same time, $2.85 million is being withdrawn from that same reserve for the project.
Some of the reserve dollars come from the pockets of local taxpayers, however City of Guelph taxpayers contribute the vast majority to the reserve balance.
Council to reexamine 10-year budget forecast
Though county Warden Andy Lennox was able to vote on each project, he did not (failure to vote is deemed a negative vote).
Lennox told the Advertiser after the meeting he was preoccupied with the process.
The warden said he would have fully supported awarding the contract for the transitional housing project and voted against the library contract.
Lennox did not say whether he would have supported the garage, but acknowledged struggling with the cost.
With a majority vote required from 16 county councillors, the warden’s vote for or against any of the contracts would not have changed the outcome.
In light of the budget overages, White suggested the warden convene a special fall meeting for council to reexamine the county’s 10-year capital budget forecast.
“I think it needs to be a very fulsome discussion,” Lennox said, voicing support for the idea.
“We could choose to cut, delay or modify capital projects; we could defer payment by using debt or reserves, which simply just pushes it into the next generation; or we could raise taxes significantly and ask the people of our community to fund this new reality,” Lennox added.
Either option will require concessions county councillors aren’t used to making, he said.
“When we get to that meeting, I’m very hopeful that all of you will come and be willing to share about the trade-offs you’re prepared to make,” the warden told council.
*Update – Aug. 1: This article has been updated from an earlier version to reflect a total of $8 million originally budgeted for a new library in Erin, once a 2024 capital forecast amount is included. The new amount, updated from $5.5 million previously reported, means the project is 61 per cent over budget, not 132 per cent.