Municipal building over budget

By Sean Feagan, Local Journalism Initiative Reporter

The town’s municipal building project is over budget, despite cost-saving measures — some of which were conducted without the knowledge of council.
On April 15, the Town of Strathmore released the Strathmore Municipal Building Mid-Project Report. The report, ordered by town council, outlined the project’s evolution to date, including budget overruns, accounts of information being withheld from council and senior administration, and successive rounds of cost-saving measures.
The town started to look for a construction company in early 2019 after council voted in fall 2018 to go ahead with the project.
In early May 2019, the town received an estimate from Tech Cost, with a projected price tag of just over $13 million for a 30,892 sq. ft. building, including a 6,350 sq. ft. basement. However, this cost estimate was not shared with council or “key senior administration,” according to the report.
In late May 2019, PCL Construction was awarded the contract and began preparing their own construction cost estimate. In June, PCL informed the town’s project manager that “the initial building concept alone” would be between $12 to 13 million, exceeding the proposed budget of $7.5 million, funded by provincial grants. Then in July, the town allocated an additional $3.9 million to two associated projects: site work, including infrastructure renewal, and the Strathmore Commons, an effort to expand parks and link them to communities.
In response to these expanding costs, cost-saving measures were proposed, resulting in a 22,055 sq. ft. design, with an estimated cost of about $8.5 million for the building and about $3.7 million for the necessary site improvements and utilities. However, this estimate did not include soft costs (including architectural and engineering fees) or furniture, fixtures and equipment (FF&E).
To further reduce costs, a “value engineering process” was conducted by the town’s municipal building team to reduce costs, without the knowledge of council and senior administration. The result was a building “that was very different from the plans presented to council,” said Mayor Pat Fule.
However, changing the building scope and scale generated “soft costs” for redesign, architects and re-engineering, adding further budgetary strain.
“None of this new information was ever made public, and it never came to mayor and council,” said Fule. “By early 2020, council and key senior administration were finally able to discover the issues facing the project.
“Council is very upset about the increased costs for this project and with the seemingly lack of transparency as the problems grew through 2019.”
The town now has a new personnel group heading the project and instituted new direct oversight through the Committee of the Whole.
Additional funding is required to complete the project, as per the report. Some of the Strathmore Commons parks enhancements could be sacrificed, but “this measure is not being recommended,” according to the report.
Some of the costs could be allocated from the FF&E in the town’s 2020 capital budget, given that the building is now smaller. The town is also trying to reduce FF&E costs by selecting “mildly used furniture” from vacant office space in Calgary.
To finance the building, administration is recommending an additional $2.4 million be backed by council through an advance on future monies from the provincial Municipal Stability Initiative, a program that funds local infrastructure priorities.
“This is a prudent and low-cost way to fund the project that will not impact property taxes,” said Fule. “This new town hall will still not result in higher property taxes.”