Councillors seek clarity on arena project spending limit

Over the course of the past few months, through the decision to put the community and recreation centre twin-pad arena out to tender for construction costs, in budget deliberations, and in regular meetings of North Bay City Council, its members have been asking staff who and what will determine the project's spending limit.

"It's worrisome that we don't have a fixed number," for the most we are willing to spend on the community centre project stated Coun. Jamie Lowery during an early March budget meeting.

It's possible some eyebrows were raised by the recent closing of the tender process for the Main Street reconstruction project that saw all bids come in over budget, each by a minimum of $1 million.

Construction companies on the arena project's pre-approved shortlist will have the opportunity to bid on the project, a process that could take as little as two months to complete. The estimated overall $51.6-million project with $43.5 million in construction costs could have nearly half its total projected costs or $25.77 million covered by the federal Green and Inclusive Community Buildings (GICB) program.

And: More on council's decision to tender new community centre

In February, the majority of council felt it was an effective way to move the project along while leaving itself a way out in the event the tenders come in too expensive for its liking.

Interim CAO John Severino responded to Lowery's question from the budget meeting. "Once we have the tender package proposal, we will review it. We're coming to council either way whether it's over or under — much the same as we do with all other projects. We would present council with options ... but certainly, ultimately, it would come to council to be awarded.

"If it came in over, there would have to be thought given by the council on how best they would like to proceed — with options."

Lowery then posed the question, "What is too much? Is one million too much? Two million? Three million?"

"We'd be speculating at this time," Severino responded in kind.

"We need a hard stop. We've got a Class A estimate," observed Lowery. "What is that number and what is the appetite of this council to spend on this rec centre?

"I'm just concerned when you get caught up in the emotion, you've done all this work and all of a sudden we're three or four million over. Then it becomes another discussion. Objectively, if you had a number that you are willing to live with — that's the number."

Severino interjected with, "That's a question for council."

How much is too much to spend on the community and recreation centre? If the tender comes back above the estimated $43.5 million construction cost, how much higher should council extend the City of North Bay financially to see the project built? Take our poll below.

On Feb. 14, the night the approval to go to tender was given, Coun. Gary Gardiner asked Severino during the committee portion of the meeting how solid the November 2022 construction cost estimate of $43.5 million was and whether the volatile construction market would affect that number in the tender process.

Severino said the estimate was prepared with a variance of plus or minus five per cent by consultants "and it is based on the best available information for local construction, their modelling with all the information they have for similar types of construction. I would not hazard to guess as to what the market will do. I think the best we can do is have the actual cost and come back to council."

If the tender "comes back higher, how much higher are we willing to go, how much higher can we go?" Gardiner asked.

"We have a 6.9 per cent construction contingency," responded Severino. "As we would with any other tender that came in higher, we would go through the project with the low bid and we would see if there were opportunities to reduce costs, we would work with the project team, not just staff but the designers to ensure that we had everything covered or there weren't things that we could remove. At that point, we would come to council with a recommendation to identify where we could have additional dollars should that project come back from tender higher than the amount we have in that envelope."

During Tuesday's regular meeting of council, Coun. Justine Mallah addressed Lowery's comment "about not knowing the maximum to which council is willing to go with the tender. I think that's a really valid point. I think a lot of people want to know that answer and I've gotten some emails.

"The tricky part with that is it really depends on what comes back and the conversations we have with the finance department and other staff," added the chair of council's community services committee. "It's also a group decision, I personally wouldn't feel comfortable putting one number forward."

See: Council votes 9-2 in favour of overall operating budget

The community and recreation centre project has been split from the main budget pending the completion of the tender process and subsequent council direction. It is in the 10-year capital plan but will have its own financing plan if approved. It has a tentative budget line of $21.8 million. The City has also proposed to use $1 million of the OLG casino revenue to pay down the eventual arena debt.

Council voted 6-5 in favour of the staff recommendation to move the community and recreation centre with twin ice surfaces — to be located at the Steve Omischl Sports Complex — to tender while stressing that the resulting financial implications of that move will ultimately decide whether or not to build.

"Affordability — I get that 50 per cent of this project could be, possibly, funded by the federal government," said Mayor Peter Chirico in advance of that February vote. "That still leaves $26 million that the taxpayer is going to be on the hook for as $16.7 million is going to come out of reserves and $9.1 million is going to be debt that we're going to have to live with.

"I'm not in support of it at this point in time. I don't think we can afford to go ahead with it," even with the federal dollars. "Do we need it? Nobody's saying that we don't. Is it the right location? Is it the right design? I'm not sure."

"The taxpayers of North Bay do not need or want to foot the bill of a community centre," said Mallah then. "Moving this project forward instead of scrapping the current plans will give staff and council more time to focus on issues, in my opinion, that really matter, like the societal issues that are most pressing and that most people we spoke with during the election wanted to talk about and solve.

"It's time to initiate the tender process. Only then will we have the most updated costs and be able to make the most informed decision. As we have already discussed, we can turn away if the numbers come back massively higher than expected. We won't know until we go there."