The bids are in for a major sewer project in St. Albert, and the lowest bidder is asking roughly half what the city had anticipated.
Shanghai Construction Group (Canada) Corporation’s successful bid was $20 million, or roughly half the $40 million council had initially approved for Project 9, a sanitary sewer line expected to kick-start development in several areas on St. Albert’s west side.
City Engineer Kate Polkovsky said when tenders were opened Nov. 29, five qualified contractors bid between $20 million and $33 million for the project. She attributed the relatively low bids to the current slow economy.
“It is a very competitive market right now,” she said. “It just depends how little profit, or none, companies want to make.”
But while the bid came in fairly low, Polkovsky said the price could increase due to the complexities of the project, which involves digging a 13-metre-deep tunnel from St. Vital Avenue downtown and along the Sturgeon River to a pump station near Sturgeon Road and Sir Winston Churchill Avenue.
“With a project of this size and scope, we are anticipating there will be things that are discovered,” she said. “It just depends if there’s anything we have to change because of what we find.”
While it’s too soon to say with any certainty when the project will be completed, Polkovsky said work is expected to begin in March 2017 and finish in October 2018.
Regardless of the reduced cost estimate, the lower-than-expected bid is not expected to have any significant effect on taxpayers. Council approved $40 million in funding for the project, with the first $10 million coming from off-site levy reserves and the remaining $30 million coming for borrowing – and anticipated to be paid back through further off-site levies.
This means essentially that while the city will pay the up-front costs for the project, it will be paid back in full as developers begin building in the areas serviced by the line.
As such, any reduction in cost will mean developers will have to spend less down the road in order to pay the city back for the project.
Mayor Nolan Crouse noted while taxpayers aren’t expected to have to pay for any portion of the project, taking on debt as a city does expose the taxpayers to a certain amount of risk – if developers don’t build quickly enough to service the debt, then taxpayers could potentially be on the hook for those costs.
“Certainly the amount of borrowing that’s going to be required is substantially less,” he said. “The risk (to the taxpayers) is substantially lower; it’s essentially been eliminated.”
But in a roundabout way, seeing this project move forward will have a long-term benefit on residential taxpayers, as it’s considered crucial in helping the city achieve its goal of having 20 per cent of total assessment values coming from commercial operations, compared to roughly 15 per cent now.
Crouse said the fact this sewage line is going forward means developers looking to build in new commercial areas can start “sharpening their pencils” and planning for development.
“This is basically good news,” he said. “Development, and any industry, needs a level of certainty, and this is certainly going to provide that certainty.”
