The recent rate of inflation, the COVID-19 pandemic, and supply and demand pressures continue to wreak havoc on the cost of doing business everywhere, including for municipalities.
The Municipality of Chatham-Kent has been forced to address a ballooning price tag to extend Keil Drive South in Chatham by borrowing from reserves again.
At Monday night's council meeting, councillors approved transferring nearly $1.9 million from the Bridges Lifecycle Reserve to finance the completion of the Keil Drive South Extension because the project doubled in cost to almost $3.73 million from the original estimate from 2019. Council also agreed the $1.9 million shortfall will be paid back with no impact to bridge capital projects. Chatham-Kent General Manager of Finance Gord Quinton told council the shortfall will be returned to reserves with a payback plan in the 2024 multi-year capital budget.
Council was told there has been a significant increase in costs for construction goods and services over the last four years.
Quinton said the move had to be made to get the project completed this year and the plan is to put the borrowed funds back into reserves right away because the high construction prices for other capital items aren't expected to go away anytime soon.
"We pay back the reserve out of our 2024 budget so the (bridge) reserve remains whole for its original purpose. But in essence that will mean we'll have to delay some other new project in the 2024 budget," said Quinton. "We'll consider all our options but we'll look at paying back right away and not over time because there's going to be other issues come up as well. Everything else on that capital list is going to be more expensive and unless there's more tax funding to that capital budget, we'll have to make some hard choices."
The municipality said the extension of Keil Drive South from its current limits just south of Bordeaux Place to Indian Creek Road West has been identified as a high priority in the Transportation Master Plan and the Municipal Capital Budget, and was approved as part of the 2020 Capital Budget.
A total of five contractors bid for the project and Clarke Construction, based out of Blenheim, was the lowest bid and won the tender.
Council recently borrowed from the same Bridges Reserve to build a new Public Works garage at 65 Creek Road in Chatham.
Chatham-Kent's Manager of Engineering Mark McFadden told CK News Today it is anticipated that construction of the Keil Drive South Extension will commence toward the end of May.
"All underground infrastructure and road construction is expected to be completed late-September, at which time Entegrus will be responsible for installation of the hydro infrastructure. Sidewalks and boulevard restoration will be completed once all utilities (hydro, gas, telecommunications) have been installed," said McFadden.
He added surface asphalt will be delayed until the Spring of 2024 to allow for any potential settlement. The roadway may be opened to the public upon completion of the road construction in September, according to McFadden. He also said intermittent lane and/or full road closures may be required to complete the utility work, and a full road closure should be expected for laying the surface asphalt.
