Report for Transportation and Public Works Committee April 8, 2008 Meeting

Report for Transportation and Public Works Committee April 8, 2008 Meeting

North LRT - Stage 1 Qualico/EPCOR Tunnel

North LRT - Stage 1 Qualico/EPCOR Tunnel

Recommendation:
That Transportation and Public Works Committee recommend to City Council:
  1. That an agreement with Qualico Developments West Limited for the construction of a section of LRT tunnel below the Qualico/EPCOR tower in accordance with the Terms and Conditions outlined in Attachment 1 of the March 11, 2008,Transportation Department report 2008TD6171 be approved, and that the agreement be in a form acceptable to the City Manager.
  2. That the SLRT Reserve be renamed the LRT Reserve and that this reserve be made available for financing city-wide LRT Expansion.
  3. That capital profile 08-66-1672 North LRT - Stage 1 Qualico/EPCOR Tunnel be approved in the amount of $45 million (Attachment 2 of the March 11, 2008, Transportation Department report 2008TD6171) with funding from tax supported debt $35million and the LRT Reserve $10million.

Report Summary

This report describes the steps to be taken to have Qualico construct a portion of the LRT tunnel below the Qualico/EPCOR Tower for the North LRT Extension from downtown to NAIT.

Previous Council Action

At the January 30, 2008, City Council meeting, the following motion was passed.

  1. That Administration continue discussion and negotiation with stakeholders on the North LRT Extension and that a report return to Transportation and Public Works Committee on June 24, 2008.
  2. That Administration work with Qualico to minimize the cost of integrating the LRT tunnel structure into the foundation of the proposed EPCOR tower building on the Station Lands site.
  3. That Administration continue to identify property requirements and commence property acquisition on an opportunity basis.
  4. That Administration enter into negotiations with Qualico to prepare an agreement for Qualico to construct the LRT tunnel below the proposed EPCOR tower building and 101 Street, to be approved by the Transportation and Public Works Committee.

Report

  • This report responds to 2 and 4 of the above motion.
  • The North LRT alignment follows an underground easement through the Station Lands from Churchill Station to the surface on 105 Avenue west of 101 Street. This alignment follows the recommended North LRT route outlined in the North High Speed Transit Study, approved by City Council in 2005, and has been confirmed as the recommended alignment based on a review of alternatives undertaken in 2007.
  • The LRT easement was created in 1993, and was amended in 1997. The easement agreement defines the rights and responsibilities of the City and the landowner. In essence, the first party to initiate construction on the site is responsible to accommodate the second party. Incremental costs are the responsibility of the second party.
  • Qualico has announced the construction of the EPCOR tower on the Station Lands. A site plan is presented in Attachment 3. The tower includes a four-level underground parkade. Construction of the tower is scheduled to start in April, and some site preparation work has been completed. Qualico has advised that EPCOR has placed significant penalty clauses on Qualico if the opening is delayed. Therefore, construction of the LRT tunnel must have a minimal impact on the tower construction schedule.
  • Since December 2007, Qualico and the City have been working together to design an LRT tunnel that will be integrated into the foundation of the tower and parkade structure.This section of tunnel (Stage 1) will be approximately 180 meters long, within the Station Lands property, at an estimated cost of up to $45million. Construction of the LRT tunnel is scheduled to start June 2008.
  • If the LRT tunnel structure is not integrated into the foundation of the tower, the City would have to tunnel below the site. This would require a Tunnel Boring Machine and would increase the depth and length of the tunnel. The proposed MacEwan LRT Station would have to be constructed below grade. This would result in additional costs estimated at $140million.
  • Ledcor is the Construction Manager for the tower and will provide Construction Management services for Stage 1. Ledcor is familiar with both the Qualico/EPCOR tower and the North LRT project, and has the capacity to perform this work.
  • Construction of the LRT tunnel below the Qualico/EPCOR tower ensures that the North LRT alignment is protected and is the first step in implementing the North LRT extension. The next step is the approval of the Concept Plan and Transportation System Bylaw amendment in July. Preliminary engineering and property acquisition will commence following plan approval.

Land Use Impacts

  • The North LRT alignment is consistent with the Downtown North Edge Development Study and the Central MacDougall/Queen Mary Park Area Redevelopment Plan.

Budget/Financial Implications

  • The financing sources that are currently available for North LRT are tax supported debt, MSI Provincial funding and the South Light Rail Transit (SLRT) Reserve.
  • If tax supported debt is to be available as a funding source for North LRT a borrowing bylaw must be approved prior to any construction on the North LRT leg.
  • The construction of the tunnel segment as part of the EPCOR tower would be seen as the start of constructing the North LRT leg, therefore if debt was to be used for any of the North LRT,Borrowing Bylaw 14880would need to be in place prior to the construction of the EPCOR tower.
  • The tax levy impact on $45 million of tax supported debt with a borrowing term of 25 years would equate to a tax levy increase of about 0.5% which would be required in 2009 as debt repayments would begin in 2009.
  • Given the nature and size of the overall LRT project, the project is a good candidate for the use of tax supported debt.
  • The MSIallocation to the City of Edmonton is $91.8 million in 2008 and $111.2 million in 2009. Currently, $99 million has been allocated to the new South Transit Garage, this leaves $104 million of unallocated MSI for 2008 and 2009.
  • MSI is available for 2008 and 2009, however, there are other capital priorities that are being considered by City Council.

SLRT Reserve

  • The SLRT reserve was created in 2006 to reduce the financial exposure the City has on its debt for SLRT which is supported by the Federal Gas Tax program. The reserve is funded by an annual 0.25% tax levy increase which was intended to end after 10 years. The cash portion of the reserve at the end of 2007 is $5 million and is projected to be $10 million at the end of 2008. The cash from the reserve could be made available for North LRT.
  • The reserve continues to be needed to manage cash flows related to SLRT financing and for the debt repayment of the $65 million budget adjustment approved July 2007.
  • In the 2008 Federal Budget the Federal Gas Tax program was announced to be a permanent program.
  • It is recommended that the SLRT reserve become a reserve for city-wide LRT as the risk relating to specifically financing for the SLRT project is limited mainly to the 2007 SLRT budget adjustment of $65 million.
  • This work protects the investment now until the full NAIT LRT project is approved

Legal Implications

  • Pursuant to section 254 of the Municipal Government Act, R.S.A. 2000, c. M-26 (MGA) a municipality is required to have a borrowing bylaw in place before any part of the construction can start on a project, even if only part of the project is to be funded by borrowing.
  • The borrowing bylaw must be advertised after first reading and followed by a mandatory 15 day petition period. The borrowing bylaw for this project, Bylaw 14880 is scheduled to receive first reading by Council on April 16, 2008, and can receive second and third reading on May 14, 2008.

Justification of Recommendation
  1. Integrating the LRT tunnel into the Qualico/EPCOR tower structure will save approximately $140 million compared to tunneling below the site at a future date. Ledcor is the Construction Manager for the Qualico/EPCOR tower and will be starting construction in April. Qualico and Ledcor have worked with the City on the design, and have the capacity to perform the work.
  2. The SLRT reserve is required for the $65 million SLRT budget adjustment approved July 2007. To finance cash flows associated with LRT debt, it is no longer required to mitigate the risk associated with the Federal Gas Tax program as the 2008 Federal Budget made this program permanent.
  3. The City would lose the opportunity to integrate the LRT tunnel into Qualico’s construction plans if the Tunnel Construction Agreement and the approved financing are not in place by June 1, 2008.

Attachments

  1. Terms and Conditions, Construction Management Agreement for LRT Tunnel at Qualico/EPCOR Tower
  2. Proposed Capital Project Profile
    08-66-1672
  3. Site Plan

Others Approving this Report

J. Tustian, General Manager, Corporate Services Department

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