Presentation of the report to Committee begins at the 2:22:55 mark of the meeting recording.
The report was brought back before Council at its meeting on Tuesday, September 8. Following discussion, the following motion was presented by Council and approved.
THAT Council receive Staff Report OPS.26.035, entitled "Craigleith Wastewater Treatment Plant Upgrades 30% Design Update";
THAT Council acknowledges Staff Report OPS.26.035 as a meaningful evolution in capital project reporting and a significant step toward the enhanced transparency, accountability, financial oversight, risk management, and stage-gated decision-making framework recommended by the KPMG Capital Project Delivery Review. Council supports the continued development, refinement, and application of this reporting approach for all major capital projects and future project milestones, including the Value Engineering Review and the 60% and 90% design updates to Council.
AND Council has received a 30% design update indicating that the Craigleith Wastewater Treatment Plant Upgrade Program has increased from approximately $45 million to approximately $50.2 million, and no budget increase has been approved;
AND significant portions of the project are intended to accommodate future growth, including infrastructure designed to support an ultimate build-out of approximately 5,500 wastewater units while also serving approximately 417 existing wastewater units;
AND WHERE AS Council has not yet received a comprehensive analysis distinguishing infrastructure requirements necessary to address existing asset condition, regulatory compliance, lifecycle replacement needs, operational requirements, and current service demands from those intended primarily to accommodate future growth, nor the financial implications, risks, and timing assumptions associated with those growth-related investments;
THEREFORE, Council direct staff to provide a comprehensive follow-up report, jointly prepared by Finance, Operations, and Planning and Development, alongside the Value Engineering Review, including:
a) To confirm the asset condition assessments, inspection findings, engineering analyses, field investigations, and verification methodologies used to support the need, scope, timing, and prioritization of each project component, including any regulatory, operational, lifecycle, asset replacement, or capacity-related deficiencies being addressed. The report shall also identify any legacy infrastructure deficiencies, historical design limitations, deferred maintenance considerations, or previously adopted servicing approaches contributing to the need for the proposed works;
b) To update growth, servicing, and development assumptions identifying existing, short-term, medium-term, and long-term unit allocations, anticipated growth timelines, Development Charge assumptions, collection timing risks, and confirmation that future growth projections have been validated and are not duplicated or double-counted across related wastewater infrastructure projects;
c) To provide estimated construction timelines, delivery schedules, and an assessment of phasing, modular construction, expandable infrastructure, or other staged implementation approaches that could better align capital investment with demonstrated growth and servicing needs while mitigating financial risk to existing taxpayers;
d) To provide projected debt servicing costs, annual tax levy impacts if any on existing ratepayers, wastewater rate impacts, reserve fund impacts, grant funding risks, Development Charge recovery risks, and the long-term financial implications associated with each major project component under both full-build and phased implementation scenarios;
e) To receive a component-by-component allocation of project costs identifying the estimated proportion attributable to:
i. Existing users and asset replacement requirements;
ii. Regulatory compliance and operational requirements; and
iii. Growth-related capacity expansion;
together with identification of the anticipated or potential funding source for each component, including Development Charges, user rates, reserves, debt financing and grants;
f) A business case for the Septage Receiving Station, including projected demand, user-fee assumptions, anticipated revenues, operating and lifecycle costs, return on investment, cost recovery targets, and a sensitivity analysis assessing the financial impacts of varying demand volumes, user-fee scenarios, operating cost variations, financing costs, seasonal utilization, and recreational vehicle servicing assumptions. The business case shall further identify whether the proposed fee structure achieves full cost recovery, including capital, operating, lifecycle, and financing costs, or would require an ongoing subsidy from wastewater ratepayers or taxpayers.
g) Confirmation that the project is being advanced in accordance with the governance, financial oversight, risk management, and reporting principles identified in the KPMG Capital Project Delivery Review, including:
i. Identification of the estimate class, confidence level, contingency allowances, and key assumptions supporting all current and future cost estimates;
ii. Submission of a project risk register identifying major financial, construction, growth, regulatory, procurement, funding, and schedule risks, together with mitigation measures, responsible parties, and current risk status;
iii. Defined escalation thresholds and reporting triggers for material changes in project scope, cost, schedule, contingency utilization, funding assumptions, or risk exposure;
iv. Confirmation that project scope, budget, funding strategy, growth assumptions, contingencies, and delivery approach will be f updated, and re-baselined at each major project milestone at each major project milestone, including the completion of the Value Engineering Review and future 60% and 90% design stages; Confirmation that project scope, budget, funding strategy, growth assumptions, contingencies, key assumptions, and delivery approach will be formally reassessed, updated, and re-baselined at each major project milestone
v. Project-level reporting identifying approved budget, actual expenditures, forecast final cost, contingency utilization, debt financing requirements, funding sources, and variance explanations for each major project component; and
vi. Identification of any independent cost assurance, estimate validation, peer review, value engineering, market-testing, or similar exercises undertaken to validate project scope, estimated costs, and affordability assumptions.
h) Identification, for each major project component, of:
i. The minimum infrastructure required to address existing asset condition, regulatory compliance, operational requirements, lifecycle replacement needs, and current service demands;
ii. The infrastructure intended primarily to accommodate future growth;
iii. The timing assumptions supporting each growth-related investment;
iv. The financial implications of deferring growth-related infrastructure until growth is demonstrated; and
v. The opportunities, risks, cost implications, and servicing impacts associated with a phased implementation approach that aligns infrastructure investment with demonstrated growth and available funding.
AND that given that the project and its component works remain at an early stage of design development;
Council directs staff that all cost estimates, business cases, financial analyses, projected debt requirements, tax levy and wastewater rate impacts, return on investment calculations, funding strategies, and growth assumptions provided pursuant to this motion identify the applicable estimate class, confidence level, contingency allowances, and key assumptions supporting the analysis. Such information shall be formally reviewed, updated, and re-baselined at each major project stage gate, including completion of the Value Engineering Review and future 60%, 90%, and tender-ready design milestones, to ensure Council decisionmaking is based on the most current, reliable, and evidence-based information available and in the best interests of the town with little or no impact on the existing taxpayers knowing that development charges as designed primarily to ensure that cost of future development should be not be downloaded to or borne by the existing ratepayers.
Council's discussion of the report begins at the 2:16:25 mark of the meeting recording.
