Clarington to use debenture financing after costs for Newcastle Community Park soar over budget
Published June 28, 2022 at 12:32 pm
Clarington Council has awarded the contract to complete the rest of the Newcastle Community Park construction, a project that has already ballooned nearly $2.4 million over budget.
The skatepark was built last year and is open for business but the scope and vision of the park changed after Council received community feedback from the 2020 Outdoor Recreation Needs Assessment Study. The expanded park, located on the west side of the Diane Hamre Recreation Complex, now will include illuminated baseball, pickleball and tennis facilities along with site furnishings, plantings, and pathways.
The price to construct the rest of the park jumped dramatically, however, forcing the municipality to bump up the budget for the job and fund the difference – $2,387,646.79 – through debenture.
Basia Radomski, Clarington’s Communications Manager, said Council had little choice after the bids came in “considerably above” budget.
“This can be attributed to the fact that the construction industry is currently experiencing drastic inflation in all sectors due to material and labour shortages, supply chain issues, volatile international markets and, most importantly, the severe increase in the price of oil.”
Quality Property Services submitted the lowest bid – $3,217,520.39 – and was awarded the contract. The total funds required for this project is $3,962,646.79 (Net HST Rebate), which includes the construction cost and other costs including design, material testing, contract administration, permit fees and contingencies in the amount of $745,126.40.
Debenture financing is a tool used to fund capital projects. To issue debt for a capital work, Council must authorize the work to be debt-financed before the work starts, though the debt financing will not likely occur before 2023 as the Region of Durham has already completed their 2022 debt issuance.
Council will go ahead with the construction contract award and fund the project through eligible Development Charges Reserve Funds and the Municipal Capital Works Reserve Fund, with debenture financing available next year if needed.
insauga's Editorial Standards and Policies
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