Financial plan amendments cost city nearly $1.5 million
Several “unforseen costs” have forced the city to crack open its existing financial plan and incorporate amendments to account for the cash.
Topping the list of four items that have to be added into the budget are the clean-up costs of the June 29 storm that pelted the city, racking up over $850,000 in damages to Nelson Hydro alone.
Factoring in the cost of the damage to the city, the bill nudges over $1 million in total costs to the City of Nelson.
Overall, the total of the four changes runs the city an extra $1.48 million. There was no discussion Monday night at the regular meeting as city council passed all amendments.
Since the Five Year Financial Plan is adopted early in a fiscal year it is common for “opportunities or changes” in what had been planned to arise as the year progresses, wrote city deputy corporate officer Joanne Caldecott in her report to council.
To allow city staff to act on opportunities or make significant changes or revisions to projects in the current year — and be in compliance with the Community Charter —approval from council is required, meaning council must approve the changes.
The process is finalized by amending the previously approved Five Year Financial Plan to include the new requests.
The windstorm that occurred on June 29 caused significant damage to areas around the city, and in particular to the transmission assets of Nelson Hydro. As a result, the cost to repair the storm damage to Nelson Hydro was estimated at $850,000.
Caldecott said the financial plan was being amended by that amount to increase the operational expense in 2015 to cover the work, with the additional cost being funded through the Hydro utility reserve fund.
“In addition to the damage to Hydro assets the city itself suffered damage in some of the parks and boulevards,” she noted in her report.
The cost of the damage elsewhere in the city was estimated at $160,000.
Although, there will be some insurance proceeds to cover the clean-up cost of labour and equipment, city staff “is comfortable” that the cost can be absorbed by the transportation and parks budget this year and no amendment was required, Caldecott said.
“The main reason for this is that a significant portion of the clean-up was undertaken by city staff who would have already been working, albeit on different projects, resulting in primarily an opportunity cost to the city,” she explained.
In phase one of the Hall Street project during deep utility replacement work on the 300 block the contractor discovered a significant amount of unsuitable fill which needed to be replaced in order to have an acceptable road base to add pavement to, noted a city staff report to council.
The contractor removed over 2,000 cubic metres of unsuitable fill and replaced it with the appropriate structured fill. The cost of this work amounted to $155,000.
The previously unknown and unbudgeted remediation will be funded from Fortis Gas reserve, noted Caldecott.
The issue of unsuitable fill arose in another situation and ended up costing the city $225,000. Caldecott said city staff became aware of unsuitable fill in a number lots that had been sold to the public by the city.
“Although the city was not responsible for the dumping of said fill, council has decided, as the sellers of the lots, to make an agreement with the owners to remedy the situation,” she said.
As the original proceeds on the sale of the Ninth Street lots were transferred to the land sales reserve — in accordance with the Community Charter — the cost of remedying the sites were to be partially offset with the balance in that reserve.
The estimated net cost of the total remediation was $225,000.
The fourth item did not cost the city on the ledger. But the Civic Arena remediation and ramp removal completed this fall were not part of the original capital plan for 2015 and an amendment was still needed.
The original plan was to replace the Civic Arena roof, but the previously noted upgrades became more important and it was decided to postpone the roof replacement into the future and deal instead with the emergent issues identified, Caldecott said in her report.
“This change is for information only as there is no effect on the financial plan as the cost of the roof and the remediation work are budgeted at the same amount,” she wrote.
The amended 2015-2019 Five Year Financial Plan will be posted on the City’s website.