RECOMMENDATION:
That the staff report entitled “ 169-T-03
Jennings Gate Estates Municipal Water System-Tender Award” be received;
That the contract for Jennings Gate Estates
Municipal Water System be awarded to Kapp Contracting Ltd. for the amount of
$928,602.71 (inclusive of 7%G.S.T.) being the lowest acceptable bid received
($893,888.59 inclusive of 3% G.S.T.);
THAT tender 169-T-03 Jennings Gate Estate, Municipal
Water System be awarded to the lowest priced bidder, Kapp Contracting Inc. in
their tender amount of $928,602.71 inclusive of $80,000.00 contingency and 7%
GST ($893,888.59 inclusive of $80,000.00 contingency and 3% GST);
That the Jennings Gate Estates Municipal Water
System proceed and the total cost of the work in the estimated amount of $1,047,290 be recovered by imposing an equal fee against
each of the property owners abutting the works in accordance with Section 391
of the Municipal Act 2001;
That the cost for construction,
engineering, easements and all related administration costs at a total
estimates amount of $1,047,290 be front-ended by the Town from the Waterworks
reserve and recovered from the benefiting property owners with appropriate
interest;
That any cash compensation from the Region of York be considered as funding
contribution to the Town or property owners and the total project cost be
adjusted accordingly;
That the actual
construction cost, the easement cost, all the engineering and related
administrative and financing costs front-ended by the Town form part of the
total project cost and recovered in accordance with the requirements of Section
391 of the Municipal Act and the by-law approved by Council;
That the Jennings Gate Estates Municipal Water
System proceed and the total cost of the work in the estimated amount of $1,082,000 be1,082,000 be recovered by imposing an equal
fee against each of the property owners abutting the works in accordance with
Section 391 of the Municipal Act 2001;.
And that the actual construction cost, the easement
cost, all the engineering and related administrative and financing costs
front-ended by the Town form part of the total project cost and recovered in
accordance with the requirements of Section 391 of the Municipal Act and the
by-law approved by Council.
That the necessary Fee By-law and other
necessary documents for the Jennings Gate Estates Municipal Water System be
prepared in accordance with the requirements of Section 391 of the Municipal
Act, 2001;
That the contract with Mitchell Hatt &
Associates Inc. be extended in accordance with Purchasing By-Law 143-2000,
Section 14 (1) (c) which states “…the extension of an existing contract would
prove more cost-effective or beneficial”.
The extended contract will provide site supervision and contract
administration services for the project at an estimated cost of $50,000
That Finance Department be authorized to arrange
the necessary financing for the project;
[And report back on recovery provisions in the
proposed by-law, interest rate, etc.….]
And that the actual construction cost, the easement
cost, all the engineering and related administrative and financing costs
front-ended by the Town form part of the total project cost and recovered in
accordance with the requirements of Section 391 of the Municipal Act and the
by-law approved by Council.
PURPOSE:
The purpose of this report is to obtain Council’s
approval to proceed with the Jennings Gate Estates Municipal Water System and
recover the costs of such works in accordance with Section 391 of the Municipal
Act.
BACKGROUND:
In December 2002, the Ratepayers Association of
Jennings Gate Estates submitted an informal residents survey requesting the
Town to proceed with the design of a municipal watermain system for Jennings
Gate Estates under the Local Improvement Act (LIA). Based on the informal
survey, 51out of the 61 homeowners (84%) were in support of the watermain
request. Residents also indicated their preference for equal cost sharing per
property instead of charges based on individual frontage (Appendix A).
At its meeting of February 25, 2003, Council
approved a staff report entitled “Jennings Gate Estates Municipal Water
system”. The report recommended the hiring of an engineering consultant to
design and prepare a tender for the project. The report also indicated that
when the contract price is known, staff will advise the residents of Jennings
Gate Estates of the total estimated project cost and the amountcost to be levied
against the property owners. The residents were to be requested to
submit a formal petition whether to proceed with
construction of the work or not.
In April this year, staff retained Mitchell
Hatt & Associates Inc. to prepare the design and tender documents for the
project. Tender was called and four bids were received and opened by the Town
Clerk on September 3, 2003.
Based on the lowest, acceptable
tender price and adding all the estimated
engineering, easement and administration costs in accordance with the Local
Improvement requirements, the estimated per metre frontage cost and the
cost for each lot based on the
Local Improvement requirements was calculated and is shown in
Appendix B. Since the Local Improvement
Act has strict guidelines on the calculation of frontage charges that can be
levied, there is a wide range of costs to the property owners varying from
$11,000 to $23,000 per lot.
OPTIONS/DISCUSSION
Implementation Options
There are three options available to the Town for
undertaking the watermain and raising the cost for the work:
1. Local Improvement charges in accordance with
Ontario Regulation 119/03 made under the Municipal Act, 2001;
2. Special service charges under Section 326 of the Municipal Act,
2001; or
3. A fee under s.391 of the Municipal Act, 2001
Option 1: Local
Improvement Charges
The Town may pass a by-law to raise all or any part
of the cost of local improvement work by imposing special charges on lots
abutting on the work. Local improvement charges are assessed against owners
according to the extent of their frontage by imposing an equal charge per meter
frontage.
There are four ways in which local improvement work
may be undertaken:
1.
By a sufficient petition in favour of the work;
2.
By Council without a petition;
3.
By Council on health grounds;
4.
By Council without petition with the approval of
the Ontario Municipal Board (“OMB”)
1 In the absence of a sufficient petition in favour
of the work, a municipality may seek the approval of the OMB to protect itself
from possible petition against the work which would prevent it from undertaking
the work for at least two years.
A sufficient petition in favour of the work would
eliminate the threat that the work will have to be stopped because of a
petition against the work.
A local improvement by-law must contain an
estimated cost of the work, the owners’ share of the cost and the
municipality’s share of the cost. Any changes to the works after a by-law is
approved have to be approved by the OMB.
Before
passing a by-law to undertake the work, Council must:
1.
procure a report prepared by an engineer and
provide for the preparation of the assessment roll. Once Council adopts the
engineer’s report, it can enact a by-law authorizing the work; and
2.
give notice of its intention to pass the by-law to
the public and the owners of the lots liable to be specially charged.
After the work is completed and its exact cost is
known, a special assessment roll is prepared for imposing the charges. The
special assessment is then reviewed by a court of revision and confirmed or
modified. Homeowners who object to the proposed assessment have a right to a
hearing before the court of revision. The court has power to modify the roll
and any reductions made in the assessment to the owners will be added to the
Town’s share of the cost. If the court
of revision certifies the roll prior to the completion of the work, the
municipality will be responsible for the difference between the actual and
estimated cost.
Where the special assessment roll is certified, a
by-law passed for borrowing money or imposing special charges with respect to
the work cannot be quashed, set aside or be found invalid on the basis that it
is illegal or for any other defect in it.
Advantages re Local
Improvements
1.
Local
improvement charges amount to a tax and have a priority lien status. They can
be collected in the same manner as taxes;
2.
Allows
ratepayers an opportunity to challenge the proposed local improvement roll.
Disadvantages re Local Improvements
1.
Process: Cumbersome process
requiring the Town to give notice to the landowners of its intention to pass a
by-law to undertake the work. Prior to the charges being imposed, the Town will
have to give notice of a hearing by a court of revision (see 3 below)
respecting any objections to the proposed roll;
2.
Mandatory municipal cost: The
Town in this case will have to pay for the entire cost of fire hydrants, which
is estimated at $74,000;
3.
Changes to charges: The Town will
need to establish a court of revision to hear any objections or revisions to
the proposed local improvement roll. A notice of such hearing has to be given
to the public and landowners involved. The court of revision has power to modify the roll. Any reductions made
in the owners’ assessment are required to be added to the Town’s share of the
cost;
4.
Calculation of Charges: Applying
the legislative scheme will not result in an equal charge per lot. The Regulation
requires that owners abutting directly on the work be assessed according to the
extent of their frontage by imposing an equal special charge per meter
frontage. Reductions or increases in charges are permitted in certain cases.
For example:
(i)
reductions must be made in the
case of a corner lot that has
flankage and frontage and all or part of the work that abuts the flankage is of
no benefit to the lot;
(ii)
reductions or increases must be
made in the case of triangular or irregularly shaped lots having regard to the
situation, value and area of the lot as compared with the other lots based on a
just and equitable basis.
The Regulation does not allow a municipality to
increase the charges for regularly shaped lots. In order to impose an equal
charge on each of the 61 lots in Jennings Gate, the Town would have to increase
the charges imposed on regularly shaped lots that have a lower than average
frontage (e.g. lots 13-16, 40, 49, 55 and 56). This is not authorized under
Regulation 119/03.
Based on the lowest, acceptable
tender price and adding the estimated engineering, easement and administration
costs, the estimated per metre frontage cost and the cost for each lot based on
the Local Improvement requirements was calculated and is shown in Appendix B. Since the Local Improvement Act has strict
guidelines on the calculation of frontage charges that can be levied, there is
a wide range of costs to the property owners varying from $11,000 to $23,000
per lot.
There are a total of 61 lots in the Jennings Gate
Estates and the total chargeable frontage, based on the subdivision by-law, is
3209 metres. In accordance with the Local Improvement Act, the Town is
responsible for approximately $74,000 of the estimated cost for installation of
fire hydrants.
Option 2: A Special
Service Charge
Section 326 of the Municipal Act,
2001 allows a municipality to enact a by-law to impose a special service charge
to raise the cost of providing a water system. Such bylaw has to identify the
service, determine the costs and designate the area where the charge would
apply.
Charges are levied by by-law as a separate tax rate
on the assessed value of each rateable property in the area designated in the
by-law.
Advantages re Special Charge
1.
Special charges are a form of tax and therefore
have priority lien status. Unpaid charges could be collected by way of a tax
sale;
2.
There is no statutory appeal mechanism to challenge
the by-law (application to the courts to quash the by-law is possible, but will
not likely succeed if the legislative scheme was adhered to);
3.
Unlike local improvement charges, there is no
mandatory municipal share of the costs;
Disadvantage re
Special Charge
1.
Applying the legislative scheme will not result in
an equal charge per lot. Charges are based on assessment values. The assessment
value in the case of Jennings Gate varies considerably. For example, one of the
lots is assessed at $604,000 while another is assessed at over $1.7 million;
Option 3: Fees By-law
Section 391 of the Municipal Act,
2001 allows a municipality to pass a by-law to impose a fee for capital costs
related to sewage or water services on a class of persons that will receive a
benefit from such services. Unlike a local improvement charge or special
service charge, a fee imposed pursuant to section 391 does not have to be based
on frontage or assessed value. This provision would enable the Town to impose a
fixed charge on each of the lots in question.
A fee by-law may provide for interest charges and
other penalties for fees that are due and unpaid. Fees may be added to the tax
roll and collected in the same manner as taxes. They do not however have a
priority lien status and a tax sale is not available.
Advantages re Fees
By-law
1.
Simplified process. Council has to pass a by-law in
accordance with s.391 of the Municipal Act, 2001;
2.
Unlike local improvement charges, there is no
mandatory municipal share of the costs;
3.
A flat and equal fee could be charged on each of
the 61 lots in Jennings Gate notwithstanding that they differ in frontage, size,
or assessed value;
4.
No application can be made to the Ontario Municipal
Board on the grounds that the fee imposed is unfair or unjust;
Disadvantages re
Fees By-lawFees and charges imposed by a municipality do not
have priority lien status and a tax sale is not available for unpaid fees.
However, all other collection tools are still available to the Town. Because such
fees are added to the tax roll, any future purchasers who request a tax
certificate from the Town would be notified of such fees. In such cases, any
outstanding fees will likely be settled prior to the property being conveyed or
assumed by the new owner. Risk of non-recovery of fees would also be mitigated
depending on the number of owners who choose to pay the entire fee in a lump
sum payment.
It is understood that the majority of the residents
in Jennings Gate Estates are of the opinion that an equal fee should be imposed
on each of the 61 lots involved. If this is the primary objective and the Town
is willing to accept the risk associated with such fees not having priority
lien status as described above, then it is recommended that the Town should
proceed with Option 3 and enact a fee by-law. In all three
options, although the homeowners have to pay their share of the
project cost, they do not have to connect to
the municipal watermain, and can keep the well for drinking purposes.
Construction Tender
All
bids were issued in accordance with the purchasing by-law 143-2000. The award
is being awarded to the lowest priced bidder.
|
|
|
|
Bids closed on
|
|
|
Number picking up bid documents
|
5
|
|
Number responding to bid
|
4
|
Four companies submitted qualified
bids.
|
Companies
|
Inclusive of $80,000 contingency & 7% GST
|
Inclusive of $80,000 contingency & 3% GST
|
|
Kapp Contracting Ltd.
|
$ 928,602.71
|
$ 893,888.59
|
|
Trisan Construction
|
$1,224,910.32
|
$1,179,119.28
|
|
Power Contracting Limited
|
$1,350,513.34
|
$1,300,026.86
|
|
Hollingworth Construction*
|
$1,564,201.97
|
$1,505,727.13
|
All tenders were checked for errors and
omissions. *Hollingworth’s bid was
corrected for mathematical error. Reference checks were made
on the previous performance of Kapp Contracting Ltd. and the result was
satisfactory. Therefore, it is
recommended that the contract be awarded to the lowest priced bidder Kapp
Contracting Ltd. in the amount of $928,602.71 inclusive of $80,000.00
contingency and 7% GST ($893,888.59 inclusive of $80,000.00 contingency and 3%
GST).
Total Project Costs
Using the lowest tendered price, the estimated total project costs
are summarized below: Construction…………………………………………………………$893,890* (3% GST)
Engineering Fees (Design)…………….…………………………….$ 48,400
Engineering Fees (Inspection/Contract
admin.)……………………...$ 50,000
Easement Costs (Ontario Hydro/Private
owner)……………………..$ 20,000
Easement Admin./Registration Fees……………………………….…$ 8,000
Admin. Cost (Town staff)…………………………………………….$ 20,000
Admin. Costs (Tendering, Advertising, Notices,
etc)………………….$ 7,000
Total
Project Cost……………….$1,047,290
* Service connection from the main to property line is
included in the construction cost.There are a total of 61 lots in
the Jennings Gate Estates and the total chargeable frontage, based on the
subdivision by-law, is 3209 metres. If calculated in accordance
with the Local Improvement Act, the Town is responsible for approximately
$74,000 of the
estimated cost for installation of fire hydrants.
Implementation Options
There are three options available
to the Town for undertakingundertaking the watermain works in question and raising the
cost for theof such work:
1. Local Improvement charges in accordance with
Ontario Regulation 119/03 made under the Municipal Act, 2001;
2. Special service charges under Section 326 of
the Municipal Act, 2001; or
3. A fee under s.391 of the Municipal Act, 2001
Option
1: Local Improvement Charges
The Town may pass a by-law to raise
all or any part of the cost of local improvement work by imposing special
charges on lots abutting on the work. Local improvement charges are assessed
against owners according to the extent of their frontage by imposing an equal
charge per meter frontage.
There are four ways in which
local improvement work may be undertaken:
1.By a sufficient
petition in favour of the work;
1.By Council
without a petition;
1.By Council on
health grounds;
1.By Council
without petition with the approval of the Ontario Municipal Board (“OMB”)
A sufficient petition in favour of the work would
eliminate the threat that the work will have to be stopped because of a
petition against the work.
A local improvement bBy-law must
contain an estimated cost of the work, the owners’ share of the cost and the
municipality’s share of the cost. Any changes to the works after a bBy-law is
approved have to be approved by the OMB.
Before passing a bBy-law to undertake the work,
Council must:
1.procure a
report prepared by an engineer and provide for the preparation of the
assessment roll. Once Council adopts the engineer’s report, it can enact a bBy-law
authorizing the work; and
1.give notice of
its intention to pass the by-law to the public and the owners
of the lots liable to be specially charged.
After the work is completed and
its exact cost is known, a special assessment roll is prepared for imposing the
charges. The special assessment is then reviewed by a court of revision and
confirmed or modified. Homeowners who object to the proposed assessment have a
right to a hearing before the court of revision. The court has power to modify
the roll and any reductions made in the assessment to the owners will be added
to the Town’s share of the cost. If the
court of revision certifies the roll prior to the completion of the work, the
municipality will be responsible for the difference between the actual and
estimated cost.
Where the special assessment roll
is certified, a by-law passed for borrowing money or
imposing special charges with respect to the work cannot be quashed, set aside
or be found invalid on the basis that it is illegal or for any other defect in
it.
Advantages
re Local Improvements
1.Local
improvement charges amount to a tax and have a priority lien status. They can
be collected in the same manner as taxes;
1.Allows
ratepayers an opportunity to challenge the proposed local improvement roll.
Disadvantages re Local Improvements
1.Process: Cumbersome process
requiring the Town to give notice to the landowners of its intention to pass a
by-law to
undertake the work. Prior to the charges being imposed, the Town will have to
give notice of a hearing by a court of revision (see 3 below) respecting any
objections to the proposed roll;
1.Mandatory municipal cost: The
Town in this case will have to pay for the entire cost of fire hydrants, which
is estimated at $74,000;
1.Changes to charges: The Town will
need to establish a court of revision to hear any objections or revisions to
the proposed local improvement roll. A notice of such hearing has to be given
to the public and landowners involved. The court of revision has power to modify the roll. Any
reductions made in the owners’ assessment are required to be added to the
Town’s share of the cost;
1.Calculation of Charges: Applying the
legislative scheme will not result in an equal charge per lot. The Regulation
requires that owners abutting directly on the work be assessed according to the
extent of their frontage by imposing an equal special charge per meter
frontage. Reductions or increases in charges are permitted in certain cases.
For example:
(i)reductions must be made in the
case of a corner lot that has flankage
and frontage and all or part of the work that abuts the flankage is of no
benefit to the lot;
(i)reductions or increases must be
made in the case of triangular or irregularly shaped lots having regard to the
situation, value and area of the lot as compared with the other lots based on a
just and equitable basis.
The Regulation does not allow a
municipality to increase the charges for regularly shaped lots. In order to
impose an equal charge on each of the 61 lots in Jennings Gate, the Town would
have to increase the charges imposed on regularly shaped lots that have a lower
than average frontage (e.g. lots 13-16, 40, 49, 55 and 56). This is not
authorized under Regulation 119/03.
Option
2: A Special Service Charge
Section 326 of the Municipal Act,
2001 allows a municipality to enact a by-law to impose a special service
charge to raise the cost of providing a water system. Such bylaw has to
identify the service, determine the costs and designate the area where the
charge would apply.
Charges are levied by by-law as a
separate tax rate on the assessed value of each rateable property in the area
designated in the by-law.
Advantages
re Special Charge
1.Special charges
are a form of tax and therefore have priority lien status. Unpaid charges could
be collected by way of a tax sale;
1.There is no
statutory appeal mechanism to challenge the by-law
(application to the courts to quash the by-law is possible, but will not
likely succeed if the legislative scheme was adhered to);
1.Unlike local
improvement charges, there is no mandatory municipal share of the costs;
Disadvantage
re Special Charge
1.Applying the
legislative scheme will not result in an equal charge per lot. Charges are
based on assessment values. The assessment value in the case of Jennings Gate
varies considerably. For example, one of the lots is assessed at $604,000 while
another is assessed at over $1.7 million;
Option
3: Fees By-law
Section 391 of
the Municipal Act, 2001 allows a municipality to pass a by-law to impose a
fee for capital costs related to sewage or water services on a class of persons
that will receive a benefit from such services. Unlike a local improvement
charge or special service charge, a fee imposed pursuant to section 391 does
not have to be based on frontage or assessed value. This provision would enable
the Town to impose a fixed charge on each of the lots in question.
A fee by-law may provide
for interest charges and other penalties for fees that are due and unpaid. Fees
may be added to the tax roll and collected in the same manner as taxes. They do
not however have a priority lien status and a tax sale is not available.
Advantages
re Fees By-law
1.Simplified
process. Council has to pass a by-law in accordance with s.391 of
the Municipal Act, 2001;
1.Unlike local
improvement charges, there is no mandatory municipal share of the costs;
1.A flat and
equal fee could be charged on each of the 61 lots in Jennings Gate
notwithstanding that they differ in frontage, size, or assessed value;
1.No application
can be made to the Ontario Municipal Board on the grounds that the fee imposed
is unfair or unjust;
Disadvantages
re Fees By-law
1.Fees and
charges imposed by a municipality do not have priority lien status. A tax sale
is not available for unpaid fees.
It is understood that the
majority of the residents in Jennings Gate Estates are of the opinion that an
equal fee should be imposed on each of the 61 lots involved. If this is the
primary objective and the Town is willing to accept the risk associated with
such fees not having priority lien status as described above, then it is
recommended that the Town should proceed with Option 3 and enact a fee by-law.
Retaining of
Consultant
TDue to staff shortage, the service of
an outside engineering consultant is required to provide site supervision and
contract administration is required for this project. Since Mitchell Hatt Associates Inc. was the
consulting engineer for the design and preparation of tender documents for the
project, it is recommended that the firm be retained to provide the site
supervision and contract administration services in accordance with Purchasing
By-Law 143-2000, Section 14 (1) (c) which states “…the extension of an existing
contract would prove more cost-effective or beneficial”.
The estimated fees of $50,000
(approx. 5% of construction cost) by Mitchell Hatt Associates Inc. for
provision of site supervision and contract administration is considered
reasonable for projects of this size and nature.
Abandonment of existing wells
Some residents
have asked whether they would be allowed to retain their existing water well,
after connecting to the municipal water system, for the purposes of watering
the lawn, refilling the swimming pool etc. Staff have consulted with the
Ministry of Environment and the York Region Health Unit and have been advised that at present, there
are no Provincial Regulation/Policy or Directive requiring the residents to
abandon their wells, as long as they are not connected to the municipal water
system and are maintained and in use.
Therefore, although
staff have concerns regarding private cross connection by the property owners
(intentionally or unknowingly) and possible contamination of the municipal water system, or potential ground
water contamination from the septic tile beds, the Town or MOE cannot force the
residents to decommission their existing wells.
The estimated fees of $50,000
(approx. 5% of construction cost) by Mitchell Hatt Associates Inc. for
provision of site supervision and contract administration is considered
reasonable for projects of this size and nature.
FINANCIAL CONSIDERATIONS:
TSince the Town is required to
front-end the cost of this project in the estimated amount of $1,047,290 and
recover the cost from the local residents. The project can be funded from
Waterworks reserve and paid back with
appropriate interest (or approx. $17,170 per lot based on onetime payment, no
interest). In addition, there will be easements
required to loop the watermain on Hydro One and a privately owned land. These associated costs have been estimated
and included in the total project cost.
Residents would have the option of paying the full amount at the time of
connection or over 10 years with interest payable at the 10 Year Region of York
Debenture Interest Rate.
Region of York
Financial Mitigation
With respect to the proposed phase II trunk sanitary sewer construction on 16th
Avenue by the Region of York and its potential impact on the existing wells in Jennings Gate
Estates, the Town is currently in negotiation with ROY for cash
compensation. Any such
cash settlement will be considered as funding contribution to the Town or property owners and the total project cost will be adjusted accordingly.
ENVIRONMENTAL CONSIDERATIONS:
No adverse environmental impact is
expected since all works are located within the existing Rights-oOf-Way.
BUSINESS
UNITS CONSULTED AND AFFECTED:
The Clerks Department and the Legal
Department have been consulted, on this project and have provided
input and reviewed this reportt. The
Finance Department has reviewed and concurredred with this
report.
Should Council approve this
project, the Clerks Department
in consultation with the Legal and Finance Department will be required to
prepare and publish the
Fees
By-law with all the
terms and conditions in accordance with Section 391 of the Municipal Act 2001.
ATTACHMENTS:
Appendix ‘A’ – Letter from Ratepayers Association
Appendix ‘B’ – Frontage Charges Table
__________________________________ ________________________________
Stan Bertoia, P. Eng. Catherine M. Conrad
General Manager, Construction and Utilities Town Solicitor
Director of of Operations and Asset Management
Commissioner of Community and Fire
Services
Q:\Finance and
Administration\Finance\Purchasing\2003 File Management\Contract
Management\169-T-03 Jennings Gate Muncipal Water System\169-T-03 Award Report F
& A.doc
