The provincial government has pulled out of a deal with the Town of Bonnyville for its water pipeline leading from Cold Lake, for which it would have covered the majority of the cost.
In a special council meeting on July 23rd, mayor Gene Sobolewski and councillors received a letter from the Bonnyville water commission stating that expenses for the project had gone over budget by around $10 million.
Furthermore, the Alberta government advised the town that it would not be willing to provide additional funding beyond what they have already given — the original deal saw the province covering 90% of the pipeline’s costs.
Sources for the overage include a delayed start to the project due to awaiting approval from Alberta Environment while contractor employees were continuing to be paid, and re engineering a pipeline which ran Beaver River.
Councillors are currently discussing different options on how to cover the town’s share of the costs overruns without resorting to borrowing funds, which could run taxpayers up to at least $6 million.
In discussing the situation councillor Chad Colbourne raised the issue of the town being notified of the significant overages, which prompted extensive discussion amongst his fellow councillors.
The current plan is to lobby the province to honour their agreement, but until that happens the M.D. of Bonnyville will cover $2 million, while revenue differed from ID349 including its unexpected increase and the 2019 IMCP as well as revenue differed from the remaining grant interest from 2019 would be used to cover the cost overages, which would add up to around $8 million.
Should the province make good on it’s original promise, that would leave the town with $7 million to put towards other projects of interest.
On the provincial side there seems to have been a chain reaction that played a significant role in the current situation; around four years ago the province made changes to its approach in providing Water for Life grants by wanting to see cost escalation near the end of a project rather than at the time of incurrence.
Furthermore the project leader did not have his Alberta Transportation contract renewed as part of a massive “brain drain”, while the provincial employee the original request was submitted to suddenly retired in the midst of the project’s construction, followed shortly by the retirement of Cold Lake commission members responsible for reviewing funding scenarios and change orders.
The town received no prior notification form Alberta Transportation that they wouldn’t be receiving funding.
Interestingly the town never received a formal written response from the province regarding its funds request, only an email which said to “stop sending claims, there’s no more money” sent from a low-level bureaucrat.
MLA David Hanson has also been made aware of the situation, and it’s not the first that’s come to him.
Council closed discussion by stating that the meeting was not meant to begin discussion on how to address the overages, but to inform councillors of the situation. Administration and the mayor will be directed to lobby the province to honour their original promise.