Price tag on Plessis Underpass increases again

Hey there, time traveller!
This article was published 19/01/2016 (3585 days ago), so information in it may no longer be current.

How many times can you say the price tag for the troubled Plessis Underpass is increasing? Well, at least one more time.

An administrative report to Wednesday’s executive policy committee states the price tag has gone up again, to $87.5 million – an increase of $2.1 million from the last increase reported in June.

If there’s any good news on this project, it is that the latest increase isn’t as bad as the administration was projecting back in September, when it feared the cost would be $3 million higher due to ongoing consulting costs and higher charges from Imperial Oil and Shell for the relocation of their oil lines.

The Plessis Underpass project involves widening a stretch of Plessis Road in Transcona, between Dugald Road and Pandora Avenue, and constructing an underpass under the CNR Redditt line, just north of Dugald Road.

The project has annoyed area residents, who were forced to find an alternate route to one of Transcona’s major arteries when that stretch of Plessis was closed for more than two years – from July 2013 to October 2015 – during the construction.

This project was originally budgeted at $77 million in December 2011. It ballooned to $83.8 million in March of 2015; and then to $85.4 million in June, 2015.

Costs balloon for city, but not province or feds

Ottawa and the province had agreed to cost-share on the project, each paying $25 million; leaving city hall to pay the rest.

But the deal with the other levels of government did not include greater contributions if the project cost escalated. So, the city’s share went from the original $27 million to $37.5 million, while Ottawa and the province’s share remained fixed at $25 million each.

City hall has been able to reduce its share down to $30 million, after CN Rail agreed to contribute $7.5 million for its share of the cost of the underpass.

But the railroad’s share is far less than what the administration had been repeatedly assuring councillors on the finance committee the city could expect to receive.

The administration said the project’s escalating cost would be covered by CN Rail’s contribution, which was estimated at 15 per cent of the project total eligible cost.

At the original estimate of $77 million, that would have seen CN Rail contribute $11.55 million.

But, the report to Wednesday’s EPC said the city negotiated a settlement that will see CN Rail pay $7.5 million; less than 10 per cent of the original budget and only 8.6 per cent of the current cost.

The deal with the railroad has a caveat – if the city is successful in removing or relocating the CNR Reddit line, where the underpass was built, the city will have to refund CN Rail $375,000 every year, until 2035, that the rail line is closed.

Some city hall observers said the cost increases were inevitable as the public works department was unprepared to proceed with the work.

The project had jumped the queue in the list of infrastructure, after area Coun. Russ Wyatt endorsed then-Conservative candidate Lawrence Toet in the May 2011 federal election, in exchange for Toet’s support to get federal approval and funding for the project.

Former public works director Brad Sacher described the project in June as the most difficult of his career. He unexpectedly announced his resignation in September, a few days ahead of the report predicting another increase.

The city had to negotiate with Imperial Oil and Shell for the relocation of their oil lines, as well as the rail road – which Sacher said complicated the pace of project and was a contributing factor to the escalating costs.

Sacher told the finance committee in early June that the cost increases were largely the result of the budget based on a Class 5 estimate, a very preliminary budget figure which can fluctuate in a range of 50 per cent reduction to 100 per cent increase.

 

aldo.santin@freepress.mb.ca