2013-03-18_Agenda Packet--Dossier de l'ordre du jour � � �
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City of Saint John
Common Council Meeting
AGENDA
Monday, March 18, 2013
6:00 pm
Council Chamber
Please use Chipman Hill entrance
S'il vous plai� utiliser I'entree Chipman Hill
Si vous avez besoin des services en francais pour une reunion de Conseil Communal, veuillez contacter le
bureau de la greffiere communale au 658-2862.
Pages
1. Call to Order- Prayer
1.1 Canadian Cancer Society Daffodil Campaign
2. Approval of Minutes
2.1 Minutes of February 28, 2013 1 - 1
2.2 Minutes of March 4, 2013 2 - 8
3. Approval of Agenda
4. Disclosures of Conflict of Interest
5. Consent Agenda
6. Members Comments
7. Proclamation
7.1 World Water Day- March 22, 2013 9 - 9
8. Delegations/ Presentations
9. Public Hearings
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10. Consideration of By-laws
10.1 Proposed Municipal Plan Amendment 700 Millidge Avenue 10 - 33
11. Submissions by Council Members
12. Business Matters - Municipat Officers
13. Committee Reports
14. Consideration of Issues Separated from Consent Agenda
15. General Correspondence
16. Supplemental Agenda
16.1 P3 - Business Case 34 - 150
16.1.1 Presentation of Business Case to Common Council 151 - 197
16.2 P3 - Case Studies 198 - 209
16.3 P3 -Water Rate Analysis 210 - 217
16.4 Highway Usage Permit (HUP) - Province of New Brunswick 218 - 244
17. Committee of the Whole
17.1 Financial Matter 10.2(4)(c) Capital Cost Agreement Peel Plaza Project 245 - 251
18. Adjournment
2
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The City of Saiut John
Seance du conseil communal
Le landi 18 mars 2013
S�llc du consei1, 18 h
Seance ordinaire
1. Ouverture de la seance, suivie de la priere
18h
1.1 Campagne de jonquil�es de la Societe canadie�ne dn cancer
2. Approbation du proces-verbal
2.1 Proces-verbal du 28 fevrier 2013
2.2 Proces-verbal du 4 rnars 20�3
3. Adoption de 1'ordre du jour
4. Divulgations de conflits d'interets
5. Questions soumises a 1'approbation du conseil
6. Commentaires pr�sentes par les membres
7. Proclamation
7.1 Journcc mondiale de 1'eau le 22 mars 2013
8. Delegations et presentations
9. Audiences publiques
10. Etude des arretes murucipaux
10.1 Projet de modification du plan municipal relatif au 70Q, avenue Millidge
11. Interventions des membres du conseil
12. Affaires municipales evoquees par les fonctionnaires municipaux
13. Rappa,rts deposes par les comites
14. Etude des sujets ecartes des questions soumises a 1'appro6ation du conseil
15. Correspondance generale
16. Ordre du jour supplementaire
16.1 P3 —Analyse de rentabilisation
16.1.1 Presentation de 1'analyse de rentabilisation au conseil comrnunal
16.2 P3 —Etudes de cas
1 b.3 P3 —Analyse des tarifs d'eau
16.4 Pez-rnis d'utilisation de 1'autoroute—Province du Nouveau-Brunswick
17. Comite plenier
17.1 Projet de Peel Plaza Analyse
18. Levee de la seance
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City of Saint John
Common Council Meeting
Monday,March 18,2013
Committee of the Whole
1. Call to Order
Si vous avez besoin des services en fran�ais pour une reunion de Conseil Communal, veuillez
contacter le bureau de la greffiere communale au 658-2862.
Each of the following items, either in whole or in part, is able to be discussed in private pursuant
to the provisions of section 10 of the Municipalities Act and Council/Committee will make a
decision(s) in that respect in Open Session:
4:00 p.m. 8t" Floor Boardroom City Hall
1.1 Approval of Minutes 10.2(4)
1.2 Legal Matter 10.2(4)(�
1.3 Financial Matter 10.2(4)(c)
1.4 Financial Matter 10.2(4)(c)
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COMMON COUNCILICONSEIL COMMUNAL
FEBRUARY 28, 20131LE 28 FEVERIER 2013
COMMON COUNCIL SPECIAL MEETING —THE CITY OF SAINT JOHN
CITY HALL— FEBRUARY 28, 2013—8:15 A.M.
Present:
Mel Norton, Mayor
Deputy Mayor Rinehart and Counciliors FaRen, Fullerton,
McAlary, Merrithew, Norton, Reardon and Strowbridge
- and -
P. Woods, City Manager; J. Nugent, City Solicitor; J. Hamilton,
Commissioner Strategic Services; C. Graham, Comptroller; K.
Clifford, Fire Chief; J. Taylor, Assistant Common Clerk and J.
Beltrandi Chown, Administrative Assistant.
7. Call To Order
Mayar Narton called the meeting to order.
1.1 PPP Canada Update
The City Manager advised that Price Waterhouse Cooper has been engaged by Council
to preparing a Safe, Clean Drinking Water program business case, which he noted
wou�d be provided to Council within the next few weeks. He expfained that the next step
in the process involves Council deciding whether to proceed with an application for the
project to PPP Canada, adding that the business case would then be assessed by PPI'
Canada to determine if it meets the requirements of the funding modef.
John McBride, CEO of PPP Canada, indicated that the private sector has always been
involved i� infrastructure projects, noting that the public-private partnership model (uP3")
improves pertormance by making the contractor responsible for the lifecycle of the
project. He explained that harnessing the discipline of private capital provides a powerful
incentive for contractors to perform better.
Referring ta a submitted presentation, Mr. McBride reviewed the method used to assess
the merits of business case, no#ing that PPP Canada only approves projects that it feels
will be successful. He added that PPP Canada would be working with the City
throughout the business case completion, the procurement process, and the drafting of
the project agreements.
Responding to questions, Mr. McBride stated that risks, such as cost overruns and time
delays, must be calculated befare an assessment can be made to determine whether a
P3 model would be the most cost effective method,
Mr. McBride suggested that not all risk should be transferred to the contractor, noting
that ideally the City would only transfer risks when the cost of daing sa is less than the
cost of the risk. He expressed the view that private com�anies will be very interested in
responding to#he Request for Proposal for the proposed project, adding that he expects
the City wauld receive many competitive bids.
On motion of Councillor Reardon
Seconded by Councillor MacKenzie
RESOLVED that the meeting of February 28, 2013 be
adjourned.
Question being taken, the motion was carried.
The Mayor declared the meeting adjourned at 9:25 a.m.
Mayor 1 maire
Assistant Common Clerk / greffier communal adjoint
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COMMON COUNCIL/CONSEIL COMMUNAL
MARCH 4, 2013/LE 4 MARS 2013
COMMON COUNCIL MEETING —THE CITY OF SAINT JOHN
CITY HALL — MARCH 4, 2013 - 6:00 P.M.
Present:
Shelley Rinehart, Deputy Mayor
Councillors Farren, Fullerton, MacKenzie, McAlary, Merrithew,
Norton, and Strowbridge
- and -
P. Woods, City Manager; J. Nugent, City Solicitor; G. Yeomans,
Commissioner of Finance and Administrative Services; K. Rice,
Deputy Commissioner Municipal Operations; J. Hamilton,
Commissioner Strategic Services ; A. Poffenroth, Deputy
Commissioner Building and Inspection Services; J. Fleming,
Police Staff Sgt.; K. Clifford, Fire Chief; J. Taylor, Assistant
Common Clerk; and J. Beltrandi Chown, Administrative Assistant.
1. Call To Order— Prayer
Deputy Mayor Rinehart called the meeting to order and Rev. Don Shephard offered the
opening prayer.
2. Approval of Minutes
2.1 Minutes of February 21, 2013
On motion of Councillor McAlary
Seconded by Councillor Strowbridge
RESOLVED that the minutes of the meeting of
Common Council, held on February 21, 2013, be approved.
Question being taken, the motion was carried.
2.2 Minutes of February 25, 2013
On motion of Councillor McAlary
Seconded by Councillor MacKenzie
RESOLVED that the minutes of the meeting of
Common Council, held on February 25, 2013, be approved.
Question being taken, the motion was carried.
3. Approval of Agenda
On motion of Councillor McAlary
Seconded by Councillor Merrithew
RESOLVED that the agenda of this meeting be
approved with the addition of item 16.5, City Manager. APC Land Transaction.
Question being taken, the motion was carried.
4. Disclosures of Conflict of Interest
5. Consent Agenda
5.1 That the Common Council resolution adopted February 11, 2013 regarding the
potential sale of a portion of City owned property, located at civic number 80 University
Avenue (Known as Gorman Arena site), be amended by deleting all references to
"Shannex RCL Limited" and replacing them with "SHX Developments Limited" with the
rest of the resolution remaining the same.
5.2 That Common Council schedule the public hearings for the rezoning and Section
39 amendment applications of Chris Scholten (835 Loch Lomond Road) and John
Charles Kilpatrick — Kilpatrick House Inc. (4207-4211 Loch Lomond Road)for Tuesday
April 2, 2013 at 7:00 p.m. in the Council Chamber, and refer the application to the
Planning Advisory Committee for a report and recommendation.
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COMMON COUNCIL/CONSEIL COMMUNAL
MARCH 4, 2013/LE 4 MARS 2013
On motion of Councillor McAlary
Seconded by Councillor Farren
RESOLVED that the recommendations set out for
each consent agenda item respectively be adopted.
Question being taken, the motion was carried.
6. Members Comments
Council members commented on various community events.
7. Proclamation
8. Delegations/Presentations
10. Consideration of By-laws
11. Submissions by Council Members
11.1 Safe, Clean Drinking Water Impact on Water Rates (Councillor Farren)
On motion of Councillor Farren
Seconded by Councillor McAlary
RESOLVED that item 11.1 Safe, Clean Drinking
Water Impact on Water Rates (Councillor Farren), be referred to the City Manager in the
event that the questions outlined in the submitted letter are not addressed by the P3
Report regarding funds allocated for replacement of aged infrastructure and pipes.
Question being taken, the motion was carried with Councillor Strowbridge
voting nay.
11.2 Outstanding Motions (Deputy Mayor Rinehart)
On motion of Councillor MacKenzie
Seconded by Councillor Merrithew
RESOLVED that Council invite a proposal from
Christopher Boudreau, CEO of Clinic Server, with respect to facilitating an open
Committee of the Whole session(s) of Council for the purpose of reviewing the
outstanding motions of Council with the goal of consolidating, reducing and prioritizing
the same alignment with 1) Council's strategic priorities; 2) True Growth 2.0; and 3) the
recently completed Quality of Work Life Study.
Question being taken, the motion was carried.
12. Business Matters - Municipal Officers
12.1 City Manager: HVAC Systems Maintenance Services — Recommendation for
Award of Standing Offer Agreement (2012-085004P)
Responding to a question, Trevor Gamblin, Manager of Facility Management, stated that
staff performs a limited amount of the inspection and repair of equipment, but that the
HVAC system maintenance requirements are beyond the capabilities and availability of
staff at this time.
On motion of Councillor McAlary
Seconded by Councillor Strowbridge
RESOLVED that as recommended by the City
Manager:
1. Common Council award RFP number 2012-085004P HVAC System
Maintenance Services to Direct Energy Business Services for estimated average
proposed annual cost of$76,850.00 plus HST at the proposed lump sum costs, hourly
rates, and percentage mark-up on materials;
2. The option for an extension of one (1) year beyond the original two (2) year
term be included in the agreement—to be exercised at the sole discretion of the City of
Saint John, upon mutual agreement with Direct Energy Business Services; and
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COMMON COUNCIL/CONSEIL COMMUNAL
MARCH 4, 2013/LE 4 MARS 2013
3. The Mayor and Common Clerk be authorized to execute the necessary
documents for standing offer agreement.
Question being taken, the motion was carried.
13. Committee Reports
13.1 Planning Advisory Committee: Street Vesting Peel Plaza
On motion of Councillor McAlary
Seconded by Councillor Merrithew
RESOLVED that Common Council assent to the
submitted photo-reduced City of Saint John, Peel Plaza, Subdivision plan that would
vest approximately 891 square metres of land as part of the Peel Plaza public street
right-of-way.
Question being taken, the motion was carried.
13.2 Planning Advisory Committee: Planning Advisory Committee Executive for
2013
On motion of Councillor Farren
Seconded by Councillor McAlary
RESOLVED that the letter dated February 20, 2013
regarding the Planning Advisory Committee Executive for 2013, be received and filed.
Question being taken, the motion was carried.
14. Consideration of Issues Separated from Consent Agenda
15. General Correspondence
15.1 NB Crafts Council — Request for Funding
On motion of Councillor Farren
Seconded by Councillor Strowbridge
RESOLVED that item 15.1 NB Crafts Council—
Request for Funding, be referred to City Manager
Question being taken, the motion was carried.
15.2 The Council of Canadians — Request to Present Regarding P3 Funding
On motion of Councillor McAlary
Seconded by Councillor Farren
RESOLVED that the Common Clerk be directed to
schedule The Council of Canadians presentation regarding P3 Funding on March 11 tn
2013 if possible and that The Council of Canadians be required to provide a written
submission in advance.
Question being taken, the motion was carried.
16. Supplemental Agenda
On motion of Councillor Farren
Seconded by Councillor McAlary
RESOLVED that supplemental agenda items 16.1
through 16.4 be lifted from the table.
Question being taken, the motion was carried.
16.1 Mayors' Governance Task Force Report (Mayor Norton)
On motion of Councillor Farren
Seconded by Councillor McAlary
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COMMON COUNCIL/CONSEIL COMMUNAL
MARCH 4, 2013/LE 4 MARS 2013
RESOLVED that Council adopt the
recommendations outlined in the submitted report and extend its sincere thanks to the
Chair, Daryl Wilson, and each of the individuals who assisted in preparing the report.
Question being taken, the motion was carried.
16.2 City Manager: Engineering Services — Millidge Avenue and Area Sanitary
Sewer Installations
On motion of Councillor McAlary
Seconded by Councillor Strowbridge
RESOLVED that as recommended by the City
Manager in the submitted report titled M& C 2013-33 Engineering Services— Millidge
Avenue and Area Sanitary Sewer Installation, Council accept the proposal from Crandall
Engineering Ltd. for engineering design and construction management services for the
Millidge Avenue and Area Sanitary Sewer Installation Project in the amount of
$362,673.50 including HST and that the Mayor and Common Clerk be authorized to
execute the appropriate documentation.
Question being taken, the motion was carried.
16.3 City Manager: Advisory Services — Partnerships NB
On motion of Councillor Norton
Seconded by Councillor Merrithew
RESOLVED that Common Council authorize the
City Manager to engage Partnerships New Brunswick as required to provide advisory
services related to the scope, business case development and procurement process for
the P3 Canada Water submission.
Question being taken, the motion was carried.
16.4 City Manager: Adjudication Services — LTD Claims
On motion of Councillor McAlary
Seconded by Councillor Norton
RESOLVED that as recommended by the City
Manager, Council engage Centric Health Rehabilitation Inc. to provide long-term
disability claims adjudication advisory services to the City of Saint John as per their
proposal of February 27, 2013 and that the Mayor and Common Clerk be authorized to
execute the appropriate documentation.
Question being taken, the motion was carried.
16.5 City Manager: APC — Land Transaction
On motion of Councillor McAlary
Seconded by Councillor Farren
RESOLVED that as recommended by the City
Manager, Council amend the resolution adopted at its meeting of February 25, 2013
pertaining to APC Lands Transaction be deleting "434225" and replacing with "that
portion of PID 434225 lying South of the railway spur identified as PID 55114219", and
further that the Option Agreement attached to the report dated February 21, 2013 be
amended to reflect the above noted.
Question being taken, the motion was carried.
(A recess was taken from 6:50 until 7:00)
17. Committee of the Whole
9. Public Hearings 7:00 P.M.
9.1 Proposed Zoning By-Law Amendment 460 Latimore Lake Rd
9.1.1 Letters of Opposition and support from public
9.1.1.1 Petition with 75 Names in Opposition Received
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COMMON COUNCIL/CONSEIL COMMUNAL
MARCH 4, 2013/LE 4 MARS 2013
9.1.2 Planning Advisory Committee Report Recommending Rezoning with
Section 39 Conditions
The Assistant Common Clerk advised that the necessary advertising was completed
with regard to amending Schedule "A", the Zoning Map of The City of Saint John, by re-
zoning a parcel of land having an area of approximately 35 hectares, located adjacent to
460 Latimore Lake Road, also identified as being a portion of PID numbers 55214332,
00334599 and 00333419, from "RF" Rural to "PQ" Pits and Quarries with letters and a
petition of opposition and a letter of support being received.
Consideration was also given to a report from the Planning Advisory Committee
submitting a copy of Planning Staff's report considered at its February 19, 2013 meeting
at which time the Committee recommended the rezoning of a parcel of land located
adjacent to 460 Latimore Lake Road as described above, with Section 39 conditions.
Ms. Hamilton reviewed the Fundy Bay Sand and Gravel Company's application and
provided a brief history.
S. Forfar, Planner, presented a three dimensional perspective of the properties in
question, and she reviewed the various phases of the proposed application and the
existing infrastructure.
The Deputy Mayor called for members of the public who have objections to the proposed
re-zoning with Odette McGrath of 31 Lackie Road; Don Leblanc, 628 Michael Crescent;
Margaret Dubee, Grandview Avenue; Sylvia Mattson, 200 Latimore Lake Road; Gordon
Dalzell, 32 Dorothea Drive; Terrance Gray, 19 Nicolle Road; and Tim McGrath, Lackie
Road raising the following concerns:
- No need for additional gravel pits as there are currently four in the area
- Air quality issues due to fine particulates in the air from the pits
- Concerns about the pits affecting the water table
- Truck traffic causing pot holes in the road
- Truck traffic posing a safety hazard for children and pedestrians
- Lack of bus, water or sewage service in the area
- Non-enforcement of regulations concerning rehabilitation of pits
- Poor re-sale value on their homes
Kimberley Wilson, 1010 Latimore Lake Road, stated that she was concerned with the
possible risks the gravel pit would pose to the quality and quantity of water to her
subdivision, noting it may require an environmental assessment to ensure her water
supply. She explained that she would not have undertaken the development of a
subdivision in the area without assurances in 2005 from the City's Planning Department
that no more pits and quarries would be allowed on Latimore Lake Road.
The Mayor called for members of the public to speak in favor of the re-zoning with Paul
Kasden, 61 Adelaide Street; Mary Hanson, 411 Latimore Lake Road and Steve Langille,
1319 Main Street in Hampton speaking in agreement with the staff report and made the
following remarks:
- That the operation would provide employment opportunities and be beneficial to
the economy in general.
- That no measurable increase in dust can be attributed to the gravel pit.
- That the road conditions cannot be attributed to the gravel pit due to the regular
amount of heavy traffic on Latimore Lake road.
- That the proposed gravel pit would be subject to more regulations than existing
gravel pits.
Mr. Langille raised the following points in response to questions from Council:
- Difficult to rehabilitate his property as it may need to be excavated in the future
- His current fleet is 13 trucks, with only two vehicles being used last year
- His fleet would likely not increase should zoning be approved
- His workforce would likely increase from four employees to 14 employees should
the zoning be approved.
- He has not received a complaint about gravel hitting a vehicle in 14 years
- He has not received a complaint regarding flooding to nearby homes
- He held a meeting with residents two years ago to discuss the proposed rezoning
On motion of Councillor Farren
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COMMON COUNCIL/CONSEIL COMMUNAL
MARCH 4, 2013/LE 4 MARS 2013
Seconded by Councillor MacKenzie
RESOLVED that the meeting time be extended
beyond 10:00 p.m. as provided for in section 3.12 of the Procedural By-law.
Question being taken, the motion was carried.
Responding to a question, Mr. Nugent stated that if the conditions are breached, Council
could revert the zoning back to the original designation by passing another zoning by-
law amendment.
Ms. Poffenroth advised that under the Zoning By-law an excavation permit can be
revoked if conditions are not met, adding that regulations regarding rehabilitation are
very specific stating that rehabilitation is required after a property is "abandoned", which
she noted is defined as 12 months after the last valid permit is issued.
On motion of Councillor Farren
Seconded by Councillor MacKenzie
RESOLVED that section 3.13 of the procedural by-
law be suspended to allow the Council meeting to extend beyond 11:00 p.m.
Question being taken, the motion was carried.
On motion of Councillor Norton
Seconded by Councillor MacKenzie
RESOLVED that the by-law entitled, "A Law to
Amend the Zoning By-Law of The City of Saint John" amending Schedule "A", the
Zoning Map of The City of Saint John, by re-zoning a parcel of land having an area of
approximately 35 hectares, located adjacent to 460 Latimore Lake Road, also identified
as being a portion of PID numbers 55214332, 00334599 and 00333419, from "RF" Rural
to "PQ" Pits and Quarries, be read a first time.
Question being taken, the motion was carried with Councillors Merrithew
and Strowbridge voting nay.
Read a first time by title, the by-law entitled "A Law to Amend the Zoning By-Law of The
City of Saint John."
On motion of Councillor Norton
Seconded by Councillor MacKenzie
RESOLVED that the by-law entitled, "A Law to
Amend the Zoning By-Law of The City of Saint John" amending Schedule "A", the
Zoning Map of The City of Saint John, by re-zoning a parcel of land having an area of
approximately 35 hectares, located adjacent to 460 Latimore Lake Road, also identified
as being a portion of PID numbers 55214332, 00334599 and 00333419, from "RF" Rural
to "PQ" Pits and Quarries, be read a second time.
Question being taken, the motion was carried with Councillors Merrithew
and Strowbridge voting nay.
Read a second time by title, the by-law entitled "A Law to Amend the Zoning By-Law of
The City of Saint John."
18. Adjournment
On motion of Councillor McAlary
Seconded by Councillor MacKenzie
RESOLVED that the meeting of March 4, 2013, be
adjourned.
Question being taken, the motion was carried.
The Mayor declared the meeting adjourned at 11:10 p.m.
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COMMON COUNCIL/CONSEIL COMMUNAL
MARCH 4, 2013/LE 4 MARS 2013
Mayor/ maire
Assistant Common Clerk/greffier communal adjoint
8
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The City of Saint John
Mayor Mel Norton
Mayor's Office
Bureau du maire PROCLAMATION
WHEREAS: the United Nations General Assembly declared
2013 as the United Nations international Year
of Water Cooperation; and (Resolution
A/RES/65/ 154)
WHEREAS: on July 28, 2010, the United Nations General
Assembly approved the Human Right to Water
and Sanitation (Resolution A/RES/64/292).
And in May 2012 the Canadian government
declared support for this human right; and
WHEREAS: 780 million people in the developing world
lack access to safe drinking water and more
than 2.5 billion do not have basic sanitation;
and
WHEREAS: the United Nations estimates that 42,000
people die every week from diseases related to
the lack of clean water and poor sanitation;
and
WHEREAS: in Canada, contamination, inadequate water
and sanitation services in First Nations
communities are a real threat to human
health and the environment.
NOW THEREFORE: I Ma or Mei Norton; �
, y
of Saint John do hereby proclaim Friday, March 22, 20 3, as
World Water Day in the City of Saint John.
In witness whereof I have set my hand and affixed th
official seal of the Mayor of the City of Saint John.
/� � - - - - --- -- - -
+ — - --- - - --- -
SAINT JOHI�t P.O. Box 1971 Saint John, NB Canada E2L�FL1 I wvwvsaintjohn.ca � C.P. 1971 Saint John, N.-B.Canada E2L 4L1
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BY-LAW NUMSER C.P. lOG- ARRETE N°C.P. 106-
A LAW TO AMEND THE ARRETE MODIFIANT L'ARRETE
MLJNICIPAL PLAN BY-LAW RELATIF AU PLAN MUNICIPAL
Be it enacted by The City of Saint Lors d'une reunion du conseil
John in Common Council convened, as communal, The City of 5aint John a edicte
follows: ce qui suit :
The Municipal Plan B}�-lav�- of The L'arrete concernant le plan
City of Saint John enacted on the 3bth day municipal de The City of Saint John
of January-,A.D. 2012 is amended by: decrete le 30 janvier 2012 est modifie par:
l. Amending Schedvle A — City 1 la modification de l'annexe A —
Structure, by redesignating a parcel of land Structure de la municipalite, afin de faire
with an area of approximately 8.5 hectares, passer la designation d'une parcelle de
located at 700 Millidge Avemie, also terrain d'une superficie d'em�iron 8,5
identified as being PID No. 55062269 and hectares, situee au 700, avenue Millidge, et
a portion of PID No. 00042036, from portant le NID 55062269 et etant aussi une
Suburban Neighbourhood Intensifrcation partie du NID 00042036, de secteur de
Area and Park and Natural Area to densification — quartier sasburbain et
Suburban Neighbourl�ood Intensifrcation secteur pat�c et aire naturelle a secteur c�e
Area classification; densrfication—quartier suburbairr ;
2 Amending Schedule B — Future 2 la modification de l'annexe B —
Land Use,by redesignating the same parcel Utilisation future des sols, afin de faire
of land from Urbcm Reserve and Park and passer la designation de la parcelle de
Natural Areas to Alajor Communitv terrain precitee de secteur reserve urbaine
Facility classification et secteur perrc et aire naturelle a secteur
etablissenaerat communautaire nsajeur;
- all as shown on the plans attached hereto -toutes les modifications sont indiquees sUr
and forming part of this by-lau-. les plans ci joints et font partie du present
arrete.
IN WITNESS WHERE�F The City of EN FOI DE QUOT, The City of 5aint John
Saint John has caused the Corporate a fait apposer son sceau communal sur le
Common Seal of the said City to be afF'ixed present arrete le 2013, avec �es
to this by-law the * day of *, A.D. 2013 signatures suivantes :
and signed by:
Mayor
Common Clerk/Greffier communal
First Reading - Premiere Iecture -
Second Reading- Deuxieme lecture -
Third Reading - Troisieme lecture -
10
• � ' � - • � � • � • � . . �
(aussi disponible en fran�ais)
Type of Application
�Municipal Plan Amendment ❑ Subdivision ❑ Similar/Compatible Use
�Zoning By-law Amendment ❑ Variance ❑ Temporary Use
❑ Amendment to Section 39 Conditions ❑ Conditional Use ❑ Change/Re-establishment oF
❑ Zoning Confirm�ation Letter ❑ Letter for Liquor Licensing Non-Conforming Use
Contact Information
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Name of Praperty Owner(if different fronn applicant) ��/,�F �iA7r-��D1{+� /�d�'�� �iL��(�
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Praperty Informatio
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Location �rZv�C�y�� , �'tsY�s" /�-f7a3t�y��� .35062269'� ua��i�n �f�2D3�o
Civic# Street PID
Existing Use of I'roperty ��--C.,�-,y�r Proposed Use of Property jGs'..�,!/Cn �� L,;�!�/�.
r�r�- P�k �
Existing Plan Designation of Property kn��dcry� �',� Proposed P1an Designation of Property��,��,i �, �,,� ��
O�L_
Existing Zoning of Property Proposed Zoning of Property ��,- �
Description of Applica#ion
Describe what you propose ta do(attach additional pages if necessary).
.�� b� �i,tT�� ,C.`l��'��t�f��
N�TE: If the applicant is NOT the owner,the Owner's signature or authorizatian(in writing)to submit this application is
reguired.
Signature of Applicant Signatur f Owner
Date �
`� Date
For Office Use Onl}•
Reviewed by 1 c•(� ��F �'+�-� Date� ��j, .2 a! 3
�Development Officer
Information Accompanying Application:
[� Letter of Intent ❑ Tentative Subdivision Plan [� Floor Plans
�Site Plan � Building Elevations ❑ Sign Drawings
[' Fee��`(X� _ ❑ Other_
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1,;�� ��3 P.O.gox 1971 SaintJohn,NB Canada E2�4L1 wwwsaintjohn.ca C.P.19715aint John.N:6.Canada E2L4L1 j``
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�r«,���� 11 SAIN'I` JOHRI
PROPQSED MUNICIPAL PLAN PROJET DE M011IF1CATION DU PLAN
AMF.NDMENT MUNICIPAL
RE: 70U MILLIDGE AVFNUE OBJET : 7U0,AVENUE MILLDGE
Public Notice is hereby given that the Common Par les presentes,un avis public est donne par lcquel
Council ofThe City-of Saint]ohn intends to consider ie conseil commtmal de The City of Saint 3ohn a
an amendment to the Municipa[ Development Plan 1'intention d'�tudier la modification du plan
which would: d'amenagement municipal comme suit :
1. Redesignate,on Schedulc A of the Plar�,a parcel of 1. Modifier la designation, � 1'annexe A du plan,
land with an area of approximatcly 8.5 hectares, d'une parcelle de terrain d'une superficie d'environ
located at 700 Millidge Avenue, aEso identified as S,5 hectares, situee au 700, avenue Millidge, ct
PID No. SSOG2269 and a portion of PID No. portant le NID 550622b9 et�tant aussi une partie du
00042036, from Suburhan Neigh6ourhood NID 0004203b.. afin de la faire passer de secteur�le
Intensification Area and Park and NaturalArea to rlensi�cation—quurtrersuburhain et secteurparc et
Sr�bur6a�Neigh6ourliood Intensi�cation Area, as aire nr�turelle a.secteur de densifrcation —yuartier
illustratcd betow; suhurbain, comme il est indiquc ci-dessous.
2. Redesignate,on Schcdule B of tl�e Plan,the samc 2.Modifier la designation,a 1'annexe B du pian,de la
parcel of land, from Urbnn Reserve and Park and parcelle de terrain prccit�e, afin de la faire passer de
1Vutural Areas to Major Community Facility_ secteur reserve urbaine et secteur parc et aire
naturelle a secteur etu6lissement communautaire
[INSERT MAP] majeur.
A public presentation of the proposed amendmet�t [INSER�;R LA CARTE]
will take place at a regular meeting of Common
Council on Monday,March l8,Z013 in lhe Council Une presentation publique du projet de modii-ication
Chamber, Lobby Level, City Hall. aura licu lars de la r�union ordinaire du conseil
communal le landi l8 mars 2013 dans [a salle du
conseil, au niveau du half d'cntr�e, a 1'hote[ de ville.
KEASON FOR CHAI�iGE: RAISON DE LA MQDIFICATION :
"I�o permit a group care facility, senior citizens Permetlre un etablissement de soins en groupe, une
aparhnents and associated activities. residcnce pour personnes ag�es et les activites
connexcs.
Writtcn objections to the proposed amendrnent may Veuillez faire part au conseil par ecrit de vos
be made to the Council,in care of the undersigned,by objections au projet de modification au plus tard le 17
April 17,2013. Enyuiries may be madc at the office avril 2013 a 1'attention du soussigne. Pour toute
of the Common Clerk or Planning and Dcvelopment, demande de renseignements, veuillez communiquer
City Hall, 15 Market Sqaare, Saint John, N.B. avec le bureau du greffier communal ou le burcau de
between the hours of 8:30 a.m. and 4:3Q p.m., 1'urbanisme et du developpcment a 1'hotel de ville au
Monday through Friday,inclusive,holidays cxcepted. 15, Market Se�uare, Sain#John,N.-B.,entre 8 h 30 et
16 h 30 du lundi au vendredi, sauf les jours f�ries.
Ifyou require l�rench services for a Common Council Si vous avez besoin des services en fran�ais pour une
meeting, please contact the office of the Common r�union de Conseil Communal, vcuillez contacter le
Clerk. bureau du greffier communal.
Jonathan Taylor,Assistant Common Clerk Jonathan Taylor, greffier cammunal adjoint
6�18-3703 648-3703
12
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SHANN � X
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February 20, 2013
Mark Reade
Pianning Department
City of Saint John
15 Market Square
PO Box 1971
SaintJohn, NB
E2L 4L1
Re: Plan Amendment and Re-Zoning,as per attached pfans
Dear Mr. Reade :
Shannex is inspired by the desire to make a difference in the lives of clien#s who choose to make their
home with us. With 25 years of experience, our service offerings have evolved to include a full
continuum of service so that we can best meet the needs of ind�viduals and their communities.We have
grown to be the largest provider of seniors' services in Eastern Canada but we have not last sight of
ensuring the service and care we pro�ide is personalized and based an the client's choice. Today we
serve over 3,].00 clients in over 20 distinct communities across New Brunswick and Nova Scotia offering
homecare, independent retirement living, memory care, special care and nursing home living aptions.
Shannex offers campus-style accommodat�on living for those in retirement. �ur focus is on providing
clients with an exceptional living experience wF�ich includes beautiful living suites, fine dining, a variety
of amenities and activities and professional, attentive staff. Clients living with us en�oy the freedom from
the responsibilities of home ownership while receiving the best care and service.
As part of this plan amendment and re-zoning application we are making to the City of Saint John
related to the property located 80 University Avenue,the following are the proposed buifdings:
Lifestyle Apartments — A five-story building that offers completely self-sufficient suites with the
conveni�nce of all the Parkland amenities and activities. Lifestyle Apartments ofFer all utilities, including
heat, hot water and electricity as well as an Interactive emergency cal! system available in every
apartment and common building area. Extra-wide doorways and spacious washrooms in every suite
along with a fully-appointed kitchen w�tF� appliances, in-suite washer and dryer, bnght hallways with
handrails and organized recreation programs. Socia! calendars with full-time coordinators on site will
never leave you wondering what to �o. With just one easy bill per month, a month-to-month lease and
no commun costs ar condo fees--it doesn't get any easier
7raditional Retirement Living — A four-storey building that offers beautiful apartments with services
specifically designed to give clients the freedom to maintain an active, healthy, independent lifestyle.
Traditional Retirement Living gives clients everything that Lifestyle Apartments offer, plus two meals per
day prepared by an in-house chef, 24-hour emergency response, weekfy linen service, weekly
housekeeping and scheduled transportation service. Clients living in Traditional Retirement Living also
have access to annual home health record update and annual wellness conference.
Shannex lncorporated
48 Lorett Lake Court, 1-Ialifax,NS B35 1B8 • T 902.454.7499 • F 902.�}53.5412
���-.Shann�x.com
14
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S H ANN � X
Special Care — A two-storey building that ofFers suites are designed to meet the needs o# those with
physical or mild cognitive challenges, with all the Parkland campus amenities and acti�ities on their
doorstep. Special Care accommodations offer everything that is available to our Traditional Retirement
Living clients plus three meals per day, medication management, assistance with daily activities,
personai laundry, health staff presence 24 hours per day, specialized recreational activities, wheelchair
accessible suites and washrooms, and same-floor access to dining room, common areas and suites.
Assistance is aiways close afi hand, should the need arise. Special Care beds are awarded by the
Department of Social Development to which Shannex has requested new licensed beds for the Saint
John region.
5pecialized Care (3B}—A one-storey bullding containing two 18-bed homes where care and service will
be provided to those with Alzheimers and Dementia. Individual suites offer comfort and privacy, each
with a full ensuite bathroom to those requiring assistance with Alzheimer's and Dementia. Shannex
Specialized Care Bed Homes will reflect the best practices in building design for individuals with
cognitive impairments. In additior� to meeting all of the requirements outlined in #he 2012 Standards
and Procedures for Adult Residential Facilities, the layout and decor achieves a warm, cozy and home
atmosphere while supporting the client's independence, wellness, safety and security. Clients and their
families will feel at ease knowing that every building is designed and constructed to a B2 standard which
means if the care and service requirements increase for the client, the building design will allow for a
range of healthcare needs. In November 2012, Shannex was awarded a bid to provide 36 Specialized
Care beds in the SaintJohn region.
Nursing Home -Shannex Nursing Homes provide clients with a new way of living in their communities.
Our philosophy of service is founded on the principle of client-directed care. Clients are able to choose
how they would like to live their lives, which is reflected in individualized care and service. Shannex
pro�ides innovative and quality sennce while maintairnng a relaxed and comfortable atmosphere where
cfients can feel at home. Clients also enjoy their own personal space, living in generously sized,
wheelchair accessible rooms, each with a private restroom. Every Shannex Nursing Home offers nursing,
medical, nutrition and pharma_ry services. Amenities such as daily recreation programs, an on-site
wellness centre for occupational and physiotherapy services, a hair salon, and a spiritual centre are also
avaifable. Nursing Home beds are awarded and ficensec! by the Department of Social Development,
should the Province award new nursing home beds where 5hannex was the successful proponent the
proposed campus layout for 80 University Avenue could accommodate this new structure
��i�: i��i �:.,�'.,e,; Fyrn�lil���:_: til _. ;1�:� �1�►��a;l� tir:' `?f�r��r���il�l!-il;:'� �'!1 Ir�lii; .,i P'!:�'±iii"ti +�t �I,�r ?. ,�e;'iy
1^ ? � ,�� , ' �e,r' �t� ';c � ' iF, ' ,�" r �.
�e.`�,'4..1i. , ., .'1`iQ `.�0. d� �%� �Q�ail� . :��if�_�nY q�.�._ �ir�,;; �'nll ki�ca'� f:i:i/;� i��'e']il.��� �' _�II.°u���b�G:`�',?i�fl.
�`:I:'�r::l`.��
J�� u �i�.a�in:�ri
"i���z°��:nc.i t;�:�i�
�i��r,n;,;: �;;c�r��;�:;t�:�9
F,.::'�.
Shannex Incorporated
48 Lo�•ett Iake Court,Halifax,NS 83S ]B8 • T 942.454.7499 • F 902.453.5412
w�u-.Shannex.com
15
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32
Property Management/PROMAN Ltd
100 Brigadoon Terrace
Saint John, NB E2K 5N5
Phone:506-643-1336
Email:wilburs@nb.sympatico.ca
February 2S,2013
Mark Reade
Planning Department
City of 5aint John
15 Market Square
PO Box 1971
Saint John, N8
E2L 4L1
Dear Mr. Reade,
As President of Property Management, I hereby authorize SHX Developments Limited to apply
for a plan amendment and re-zoning on the property owned by my company located at 700
Millidge Avenue. The use shall be for a seniors iiving development commonly referred to as
retirement living, assisted living and nursing home care.The use shail include the provision of
services{food, housekeeping,supervision, management}and care to seniors and persans in
need. As part of the authorization I am granting to SHX Developments Limited, I require copies
of a!I documentation among the parties related to the property re-zoning. If you ha�e any
ques#ions related to this authorization 1 may be reached at 506-643-1336.
Regards,
� ' �
n� �.
� C ,
Percy Wilbur
33
REPORT T� COMM4N COUNCIL
�. :4�
14 March 2013 -
City oF 5aint John
His Worship Mel Norton
and Members of Common Council
Your Worship and Councillors:
SUBJECT: P3—Business Case
Attached for Council's consideration is a Draft Business Case prepared for
submission to P3 Canada in support of the Safc Clean Drinking Water pro�-am.
The report provides a clear summary of the current status of the water infrastracture,
the need for improvements, the scope of the work rcquired and a dctailed financial
analysis of the P3 funding option compared to thc traditional tendering approach.
Please note that the financial analysis is complex and is designed to mect the P3
Canada subinission requirements. You will note for example that various values are
given for project costs depending on the type of analysis being done. Johanne Mullen
from Price Waterhouse will be present at Council on Monday to walk Council
through the business case and respond to questions.
In order to protect the financial interests of the City and ensure a robust competitive
process it is necessary that certain fnancial information remain c;onfidential at this
stage of the process. These matters will be reviewed with Council in Committee of
the Whole. Other than these particula.r items, PwC will present thc detaiis of the
report in open session.
Respectfu�ly submitted,
� � �
. atrick Woods, CGA
MANAGER
34
Disclaimer
This version of the City of Saint John's Business Case has edited sections
to preserve the integrity of a possible future procurement process and
to prevent compromising the competitiveness of future bids from
private sector partners. The decision to include an edited version of the
Business Case is consistent with Section 10.2(4) C of the New Brunswick
Municipalities Act and with practices observed for comparable
municipal and provincial infrastructure projects.
35
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Disclaimer
This Business Case(`BC)has been prepared by PricewaterhouseCoopers LLP(`PwC')for the exclusiue use of the City
of Saint John(the "City')and PPP Canada as part of PPP Canada's procurement process requirement.
The information contained herein(the `Information")has been prepared by PwCfrom material prouided by and
discussion with other parties including the City, CBCL Limited,R.V.Anderson Associates Limited,Opus International
Consultants Ltd.and OpusDaytonKnight Consultants Ltd. (together"Opus").No uerification of the Information has
been carried out by PwC or any of its respectiue agents,directors,officers or employees.
Preparation of this Business Case does not imply that PwC has in any way audited the Information.In addition the
achieuability or otherwise of the Information is not warranted or guaranteed by PwC.Actual results may be
significantly more or less favourable.
PwC and its respectiue agents,directors, of�cers and employees make no representation or warranty as to the
accuracy,reliability or completeness of the Information.PwC shall not haue any liability to any person under the law
of contract, tort and the principles of restitution or unjust enrichment or otherwise for any loss,expense or damage
which may arise from or be incurred or suffered as a result of anything contained in this Business Case or any matter
deemed to form part of this Business Case.
The information contained in this Business Case is strictly confidential and must not be copied,reproduced or used, in
whole or in part,for any purpose other than that for which it is intended.
�O 2012 PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l.,an Ontario limited liability partnership.All rights reserved.
"PwC"refers to PricewaterhouseCoopers LLP,an Ontario limited liability partnership,which is a member firm of PricewaterhouseCoopers International
Limited,each member firm of which is a separate legal entity. 37
Table of contents
Glossary.........................................................................................................................................................................................v
1. Notice to Reader.....................................................................................................................................................................1
2. Executive summary................................................................................................................................................................2
2.1 Project Description and investment decision.................................................................................................................2
2.2 Procurement decision...................................................................................................................................................4
2.3 VfM analysis..................................................................................................................................................................4
2.4 Integrated Recommendation.........................................................................................................................................5
2.5 Project funding and affordability....................................................................................................................................6
2.6 Procurement strategy....................................................................................................................................................7
2.7 Implementation Plan.....................................................................................................................................................8
3. Project description and investment decision............................................................................................................................9
3.1 Introduction...................................................................................................................................................................9
3.2 Description of the Project Sponsor..............................................................................................................................11
3.3 Strategic alignment and priority-Articulating the rationale for the project...................................................................13
3.4 Summary of needs assessment..................................................................................................................................14
3.5 Project description and scope.....................................................................................................................................16
3.6 Project objectives and benefits....................................................................................................................................19
3.7 Summary of feasibility study........................................................................................................................................20
3.8 Investment decision....................................................................................................................................................24
4. Procurement decision:defining the procurement models for the VfM analysis......................................................................26
4.1 Procurement objectives and considerations................................................................................................................26
4.2 Traditional public sector procurement approach..........................................................................................................26
4.3 Public-private partnership model.................................................................................................................................28
4.4 Market sounding methodology and summary of results...............................................................................................29
4.5 Market sounding key findings......................................................................................................................................31
4.6 Recommended procurement model for quantitative analysis.......................................................................................31
5. VfM analysis.........................................................................................................................................................................33
5.1 VfM methodology........................................................................................................................................................33
5.2 Project costs...............................................................................................................................................................34
5.3 Risk analysis and quantification..................................................................................................................................37
5.4 Financial assumptions.................................................................................................................................................39
5.5 Project financing assumptions.....................................................................................................................................39
5.6 Preliminary VfM assessment.......................................................................................................................................40
6. Integrated recommendation..................................................................................................................................................41
7. Project funding and affordability............................................................................................................................................43
7.1 Step 1: Sources of funds.............................................................................................................................................43
7.2 Step 2:Affordability and incrementality of PPP Canada Fund investment...................................................................43
8. Procurement strategy............................................................................................................................................................44
8.1 Recommended procurement process..........................................................................................................................44
8.2 Policy and procurement framework.............................................................................................................................46
8.3 Project team and governance structure.......................................................................................................................46
8.4 Project resourcing and budget.....................................................................................................................................48
8.5 Key documents...........................................................................................................................................................49
PwC 38 Business Case iii
9. Implementation plan..............................................................................................................................................................51
9.1 Project status..............................................................................................................................................................51
9.2 Approvals....................................................................................................................................................................51
9.3 Stakeholder engagement and communications...........................................................................................................51
9.4 Post-procurement contract administration...................................................................................................................52
10. Bibliography..........................................................................................................................................................................53
Appendix A—Utility budget
Appendix B—Utility audited financial statement
Appendix C—Market sounding report
Appendix D—Detailed cost report by Opus
Appendix E—VfM assumptions
Appendix F—Global risks description
Appendix G—Project risk matrix
Appendix H—Design-build timeline for the Public Sector Comparator
Appendix I— Detailed summary of the risk workshop
iv Titre du document 39 PwC
Glossary
Action Plan Action Plan for Safe, Clean Drinking Water which was adopted unanimously by Common Council on
July 19th, 2010
ASP Annual Service Payment over the 30 year analysis horizon of the Project
Business Case Business case for the Project according to the PPP Canada Business Case Development Guide
CB Conference Board of Canada
CBCL CBCL Limited
City City of Saint John, New Brunswick
Common Council City's Common Council
CPI Consumer Price Index
CR Critical
DBB Design-Bid-Build or traditional delivery model or Public Sector Comparator
DBF Design-Build-Finance
DBFOM Design-Build-Finance-Operate-Maintain
Dependent initiatives Initiatives which require implementation to obtain the full benefits anticipated from the Water Treatment
Plant
DSCR Debt service coverage ratio
EA Environmental Assessment
EIA Environmental Impact Assessment
Final Completion Completion of all work enabling the demobilization of the construction site
GCDWQ Guidelines for Canadian Drinking Water Quality
HGL Hydraulic Grade Line
HI High impact
HST Harmonized Sales Tax
HVAC Heating, ventilation and air conditioning
IRR Internal rate of return
ML Million litres
MLD Million litres per day
NCE NCE—Value Engineers
NPV Net Present Value
Opus Opus International Consultants Ltd. And OpusDaytonKnight Consultants Ltd.
PwC Q�Q Business Case v
OE Owner's engineering
O&M Operations and Maintenance
Plan Program Structuring and Implementation Plan
PPP Public-Private-Partnerships
Program Safe, Clean Drinking Water Program
Project The most urgent 18 of the 27 initiatives of the Program including the Water Treatment Plant and
components of the transmission network
Project Manager Safe, Clean Drinking Water Program project manager
Project Sponsor Public authority owner of the Project
PRV Pressure reducing valve
Public Sector Comparator Traditional procurement or Design-Bid-Build
PwC PricewaterhouseCoopers LLP
RFP Request for proposal
RFQ Request for qualification
RSR Robinson, Stafford &Rude
RVA R.V.Anderson Associates Limited
Saint John Water Saint John Sewerage and Water Utility
SCADA Supervisory Control and Data Acquisition system
SCDWP Safe, Clean Drinking Water Program
Shadow Bid Alternative procurement model, or PPP model,that is compared against the Public Sector Comparator
in the VfM analysis
SPV Special purpose vehicle—a bankruptcy remote entity created for the sole purpose of the Project
Substantial Completion Completion of the anticipated design and construction work enabling the commissioning and delivery of
the infrastructure to the City
Utility Saint John Sewerage and Water Utility
VE Value Engineering
VfM Value-for-money
WTP Water Treatment Plant
vi Titre du document 4� PwC
1. Notice to Reader
This BC presents Project costs on different bases for different purposes in various sections of the report,as described
below.
Sections 3•5 -5•4� Project cost estimates for design,construction,maintenance,operation and lifecycle are presented
in real2oio dollars and reflect the date at which the cost estimates were developed by the City and its technical advisors.
The results of the risk analysis are also presented in real dollars,because the risks were estimated as a percentage of base
costs which are in 2oio dollars.Real dollars do not include inflation.
Section 5.6 -6: The results of the value for money("VfM")analysis and the sensitivity analyses are presented as a Net
Present Value("NPV"). Because the VflVI analysis serves to compare the total cost of each procurement option over the
lifecycle of the assets,and each procurement option will reflect a different profile of future payments by the City for
design,construction,maintenance,operations and renewal,those future cash flows are discounted to produce the NPV
of costs under each option and allow for a like for like comparison.
Section�: The affordability analysis presents the future annual disbursements that would be made by the City under
the recommended procurement model.These future cash flows are shown in nominal dollars,that is,including inflation.
The following example illustrates the difference between real,nominal and present value dollars for a$ioo investment
occurring over the course of a 5-year period:
� -� . .
Annual inflation rate 2.0%
Discount rate 4.0%
. �
(A) Inflation factors 1.02 1.04 1.06 1.08 1.10
(8) Discount factor 0.96 0.92 0.89 0.85 0.82
(C) Costs in real dollars 100.00 5.00 10.00 15.00 20.00 50.00
(D) Costs in nominal dollars (C)*(A) 108.27 5.10 10.40 15.92 21.65 55.20
(E) Costs in present value (D)*(B) 92.55 4.90 9.62 14.15 18.51 45.37
The inflation and discount factors shown above are obtained as follows:
✓ (A)Inflation factor at year n: (1 + annual inf lation rate)n
✓ (B) Discount factor at year n: 1
(i+discount rate)n
PwC Q�2 Business Case 1
2. Executiue summary
The City of Saint John is the largest city in the province of New Brunswick and the second largest in the Maritime
Provinces after Halifax.The City has been diligent concerning drinking water.The Common Council has made safe,
clean,drinking water its foremost service priority.A comprehensive water system analysis led to the i999 Water
Strategy,which highlighted the need for full treatment, extensive network reconfiguration and significant upgrades to
the water transmission and distribution system,including expanded water storage capacity. Since i999,the City has
invested over$i28 million in drinking water improvements,but more e�ensive upgrades of the system of transmission
and distribution are required.The network of water mains,pressure zones and storage reservoirs has to be improved to
meet basic system parameters for reliability,hydraulic functionaliry and maintaining water quality.
Currently,three major issues are encountered with the existing water system as shown in Figure i:
Figure 1: Issues with the City water system
i The water brought to the tap of City residents is unfiltered surface water.The water coming from Spruce and Latimer Lakes,
supplying the West and East sections of the City respectively,is only coarse screened,chlorinated and fluoridated.
2 Unfiltered surface water from the current system contains significant amounts of disinfection by-products,at levels often more
than twice that prescribed by Canadian standards.The by-products,as well as the inability of the system to adequately treat
potentially harmful protozoa,such as giardia and cryptosporidium,increases the risk of health issues,including a higher risk of
cancer and other illnesses.
3 The water is highly corrosive,accelerating the damage caused to the water distribution system due to its low pH.
As a result,a key objective is to address these major issues as efficiently and as soon as possible.
2.1 �1'l���'�i _�,�fi �.��";i Wh������ ����F�} t�"��?��a����2�',Fi� �������Dt
The Safe, Clean Drinking Water Program(the"Program")is therefore being undertaken to assure safe,clean drinking
water for the City.The Program is a cornerstone initiative that will allow City residents to have access to safe,clean
drinking water.
The City has identified i8 of the 2�initiatives of the Program(the"Project")as most urgent with the core of this Project
being the WTP,as illustrated by Figure 2 below.
2 Business Case 43 PwC
Figure 2: ProjecYs elements and estimated costs
($)intentionally left blank so as not to compromise City's procurement process and financial outcome
of bids submission
. - . .
. .
1.Water treatment i.Water treatment plant("WTP")
2.Watershed improvements 2.Robertson Lake Dam
g.Transmission system ; 3.Latimer lake intakes and dam upgrades ;
improvements—raw supply 4,Supply Transmission(Lakewood Pump Station to WTP)
; 5.Transmission East(WTP to Sandbank Hill)
:..............................................................................................
4.Transmission system ; 6.Transmission East-Central(Sandbank Hill to Marsh Creek) ;
_.............................................................................................
improvements—potable ; �,Transmission Central(Marsh Creek to Metcalf Street)
8.Transmission Chesley Drive(PRV io�to RF Bridge)Z
5.Water system storage ; 9.North End Storage Reservoir
improvements ; lo.Twin Storage Reservoirs at WTP Site
6.System pumping station 11.Reversing Falls Booster Pump Station
improvements i2.Spruce Lake Pump Station Upgrade
; i3.West System Modifications
; i4.Ocean Westway Rehabilitation(Spruce Lake to Gault Road)
�.System rehabilitation :..............................................................................................
; i5.Potable Transmission East(Lakewood PS to Sandbank Hill)
:..............................................................................................
i6.East Pressure Modifications
8.East industrial system 17.Industrial Transmission New(Lakewood PS to Sandbank Hill)
:..............................................................................................
improvements ; 18.Industrial Transmission Rehab(Lakewood PS to Sandbank Hill)
Total
The decision to restrict the Project's scope to i8 initiatives out of 2�is justified by the level of dependence of each
initiative on the functionality and eff'iciency of the WTP.
In addition,design and construction costs were developed by CBCL Limited and R.V.Anderson Associates Ltd for the
City in 2oio based on a DBB procurement strategy. Opus provided an assessment of the Project costs with respect to
construction,operation and rehabilitation activities associated with the Program.
Base Project design and construction costs depicted in Figure 2 above include general conditions,contractor
overhead/profit and engineering fees. However,these costs exclude any design or construction contingencies which were
assessed separately as part of risk workshops conducted in January 2oi3.
The City of Saint John,the Common Council and all of the Project's stakeholders agree that it takes more than building a
water treatment plant to ensure safe,clean drinking water for citizens.These initiatives,including that for the WTP,are
ultimately driven by the four drivers previously discussed and are the solutions to needs identified by the Ciry.Figure 3
identifies the key Project drivers and needs.
� Costs expressed in 2010 dollars excluding contingencies and inflation
Z �ncludes Douglas Avenue and Central Spine rehabilitation
PwC 44 Business Case 3
Figure 3: Program needs and drivers
� �- . . -.
Public health Ensuring good water quality for Saint Improve water quality by providing treatment to address
John's citizens ; protozoa(giardia and cryptosporidium),address
disinfection by-products(THM and HAA's),and control
. .
corrosion within the distribution system.
Technological upgrade Rehabilitating a deficient water system Minimize leaks in water system,increase capacity to
and meeting daily water demand accommodate for 75 MLD average daily demand
......................................................................................................................................................................................................................................................................
Public safety Ensuring an adequate water supply for : Increase storage capacity from 27.3 ML to 5�.2 ML
fire protection
,
Environment conservation Instilling water usage behaviours that Increase water rates,install metering system,decrease
encourage sustainability water use
2.2 Procurement decision
It was agreed that the following procurement models would be used for the procurement options analysis and VflVI
analysis of the Project:
Design-bid-build("DBB")
Under a DBB,the City,acting as Project Sponsor,operator and rate setter,would hire a design consultant that would:
✓ Complete schematic designs,drawings and preliminary specifications in the design development phase;
✓ Draft the procurement documents including the final design and contractual requirements;
✓ Work with the project manager,employed by the City,to observe construction work,review designs, manage the
construction,manage the tender process and approve progress and payment,as well as advise the City
Public-Private Partnership("PPP")combining a design-build-finance("DBF")for the transmission
component and a design-build-finance-operate-maintain("DBFOM")for the WTP
Under a PPP,the private partner would be responsible for the design,construction,long-term financing,operations and
maintenance of the 4VTP (initiative#i)and storage reservoir at WTP Site(initiative #io).For the remaining i6
initiatives,the same private partner would be responsible for the design,construction and short term financing of the
said initiatives while the City would keep the long-term operations and maintenance responsibilities.
��� ���'����-�_�a������
The VfM analysis reflects the Procurement Options Analysis Methodology developed by PPP Canada and is composed as
follows:
✓ Estimation of Project costs
✓ Estimation of the probability and value of risks retained and transferred by the City under each procurement model
✓ Development of the financing and tax structure assumptions for the Shadow Bid
✓ Development of the assumptions for the financial analysis
4 Business Case 45 PwC
The Business Case risk analysis approach is performed in four distinct steps as follows:
i. Development of a risk matrix identifying and describing all potential risk events
2. Determination of the probability of occurrence of each risk and its related cost base
3. Allocation of each risk between the private and public sectors for each procurement model analyzed
4. Perform a Monte Carlo simulation with io,000 iterations to define a cost probability distribution for all project risks
The original DBB construction schedule provided for completion of the Project elements over a ten-year period in order
to sculpt expenditure to affordability constraints. It was determined that this model was not directly comparable to the
PPP.As a result,the construction timeline for the Public Sector Comparator and Shadow Bid are shown to be the same
as illustrated by Figure 4.
Figure 4: Project design and construction timeline according to the Shadow Bid
Design-build timeline
Contract Financial Substantial Final
start close completion completion
i i �
' ;*tUi'�',,. � '�?f7: ?c�it;'�2,�; >i)�!�::;(f�fi i
1 Aug., i Nov., i Jan., 1 Mar.,
2oi5 2oi5 2oi8 2oi8
Figure 5: Summary of risk assessment
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
The VfM is computed in NPV terms over the Project's 3o-year analysis horizon(Intentionally left blank so as not to
compromise City's procurement process and financial outcome of bids submission)in order to account for
the time value of money(i.e.a dollar today is worth more than a dollar in the future).When base costs,ancillary costs,
risks and contingencies are taken into account,the VflVI totals $3.2 million.The VfM is illustrated in Figure 6.
Figure 6: Project VfM Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
�'�F� A�;a`��h ��.�i�'�L+�d?� P3:�s�i2,ti,�1,o�"��±;�/��������Nsa��:�,�';�.w�if.
The VflVI analysis established that there is a$3.2 million benefit to procuring the Project as a PPP.This VflVI analysis is
sensitive to modeled assumptions and the result could be materially different should the future outlook be different from
the assumptions presented earlier.
In addition to the quantitative analysis,one has to recognize that there are also qualitative benefits to procuring a project
as a PPP.This qualitative assessment is based on the ability of the procurement model to meet the needs and objectives
set by the City and described in Section 3.5.It is also complemented by the feedback received during the market
PwC 46 Business Case 5
sounding.Considering qualitative criteria implies that the procurement model yielding the highest VflVI might not be
best suited based solely on quantitative criteria.The following benefits of a PPP can be noted:
✓ The PPP model would allow the City to accelerate development of the Project.The construction timeline produced by
the City's technical advisors under the DBB provided for the completion of components of the Project over a lo year
period to reflect preliminary views regarding funding and affordability.While it is possible that the City could
accelerate development under a DBB,the PPP would guarantee delivery of the Project under a date certain
commitment.The value to the City of Saint-John and its citizens of delivering this Project more quickly than under a
DBB is significant even though it cannot be quantified. Benefits include improving citizens'health and well-being,
the City's ability to meet provincial water standards,avoid potential short-term boil alert orders,and decreasing the
environmental and financial cost of water leakage in the system,etc.
✓ Provides for a contractual obligation to adequately fund operations,maintenance and renewal of the WTP ensuring
the quality of the asset of a long term period
✓ Is likely to attract bidders with significant experience in the development of this type of infrastructure who would
have been unlikely to bid on a DBB.This experience will enable the City to benefit from the implementation of best
practices and standards on a national and global scale as well as innovative approaches to design and operations.
✓ Procure the Project at price and date certain
✓ Stimulate innovation as the design,construction and operation teams work together from the outset to design a
solution based on whole-life costs rather than solely capital costs
✓ Could enable the City to obtain PPP Canada funding of up to 25%of Project costs
✓ Could enable the City to obtain New Brunswick provincial funding at a minimum of 25%of Project costs linked to
PPP Canada's financial participation
✓ Significant level of internal and external controls associated with the contractual and financing structure including:
• Independent certifier who acts for both the City and PPP Contractor who signs off on substantial completion
based on achievement of specifications set out by the City;
• Lenders'technical advisors who oversee draw requests by PPP Contractor and ensure that the Project is on time
and on budget
• Performance regime which provides the City with the controls required to enforce quality standards
• Qualification process which leads to the selection of the best technically qualified and financially capable bidders
• Possible role of a process auditor who will oversee the procurement process and report on the transparency and
equity of the selection of the preferred bidder
• Strict controls in the evaluation process including explicit division and protection of financial bid from technical
bid
Taken together,the qualitative and quantitative analysis point to the PPP procurement model as being the best solution
for the Project.
�e�n ���l���w��Ttl,J��_K�����k.S'.`1��.� �4h'�diPi �.'d'�v'�fl��a'v.�'���f��d��1.��4�
A PPP procurement not only generates VfM and creates qualitative benefits but will also provide access to federal and
provincial funding equivalent to at least 50%of the Project costs.This funding will be critical to the success of the Project
as a full City undertaking would translate to a substantial water rate increase for the residents of Saint John. For the Ciry
ratepayers,this translates into a water rate ranging between$i,45o and $i,55o per year by 203o for a PPP procurement
6 Business Case Q�7 PwC
versus $i,65o and$i,75o per year over the same period for a traditional procurement3.Procuring this as a PPP is
therefore equivalent to a savings of io%to i5%to the ratepayer when PPP Canada and the Province of New Brunswick's
contributions are taken into account.
In addition,PPP Canada's involvement during the procurement phase,along with that of the financial,legal and
technical advisors,would provide another level of due diligence and ensure that the Project adopts best practices in the
delivery of infrastructure assets.
�s ,�� ..tB,.�,.�d� o,.�'.�����d;tfi;:?,--; =arS_1���������V�
The VflVI analysis concludes that a PPP procurement would generate value for money,when compared to the traditional
procurement approach defined as a DBB.
The PPP would be defined as follows:
✓ WTP and associated storage: DBFOM.The project agreement would have a term equal to the construction
period plus 3o years.
✓ Transmission Assets: DBF.
A single consortium would be responsible for the WTP and transmission assets components of the Project.
The procurement process would be divided into two components,being i)the request for qualification("RFQ")and ii)
the RFP.To the extent that the Project does not experience delays in approval from stakeholders,a request for
expressions of interest would not be necessary.The RFQ would be issued publicly on MERX consistent with the
procurement procedures of the City of Saint John. Respondents to the market sounding and other suppliers could be
contacted to alert them to the issuance of the RFQ. In addition,representatives of the City could participate in select PPP
conferences in order to speak about their Project in advance of the launch of the RFQ and depending on the conference
roster.
RFP evaluation parameters have not been developed at this time. Input from technical advisors is considered to be
important so as to better understand the impact of available technologies on quality and price.
3 Water rate calculation performed by the City
PwC Q�$ Business Case 7
Figure�illustrates key procurement milestones until financial close with the PPP Contractor.
Figure 7: Key Project milestones in the recommended PPP procurement model
���������������'r�'-'�
�O00mOmOmOmOmOmOmOOOmOmO00mOm0om
Business Case approval by Council
Comicil approves submission of I3usiness Case to PPP
Canad2 and RFP for owncr's cnginecr,public
awarenessandlegaladvisors
Procurem ent process preparation activities
Preparation of RFP for owner's engineer,public � � � � � �
awareness and legal advisors(i.s month)
Issue RFP for owner's engineer and legal advisors
� —
RFP open period(i month)
Proposal submission � �
Proposal evaluation period(0.5 month) .
PPP Canada approvaLfor Bnsiness Case ' �' � ' �
r. . , _. .> _,. _. _ . , ,. __ . —
Council approval for hiring ofowner's e�gineer,
public awarenessandlegaladvisors.Confirm
engagement offinancial advisors.T,aunch of
City desiga advanceinentto�zo%,drafting of � � — — — . . .
performance specifications a��d pirocurement
documentation(ii.5 months)
Procurem ent process
RFQlaunch
RFQopen period(3 monThs) � _
RFQsubmission � � _
RFQevaluation period(i month)
QualifiedbiddersannouncementandRFPlaunch � '
RFP o�en period(9 months) � ''
RFP submissian �� '
RFP evaluation period(z months) � �
RFP approval period(i month) � � �
Council approves preferred proponent and early �
works,ifnecessary
Financial close pe��iod
Confirmation of VfM presented to Council.Council �
authorizes execution ofcontracts
_ .— .— . _ _ � _ . — .. __. �_ __ __
Commercial and financia]elose
City activity -Gtity approval milestone -Proponent activiTy
Project milestone PPP Canada approval milestone Ctity and proponent activity
'�g� ;,;�Fr��,�aq..����������f���d�:��� �:l"�.S�C.
The project team will require prior approval from the Common Council for the completion of the major Project
milestones as follows:
✓ Business Case and submission to PPP Canada—second half of March 2oi3
✓ RFP for public awareness advisors,legal advisors and owner's engineer—first half of April 2oi3
✓ Hiring of owner's engineer pursuant to the RFP process—first half of July 2oi3
✓ Launch of the procurement process—first half of July 2oi3
✓ Preferred proponent and early works—July 2oi5
✓ VflVI validation and PPP contract execution—October 2oi5
8 Business Case 49 PwC
3. Project description and inuestment decision
�.1 T�t�°odac�tz�a�a
The City of Saint John is the largest city in the province of New Brunswick and the second largest in the Maritime
Provinces after Halifax. It is located along the north shore of the Bay of Fundy at the mouth of the St.John River. In
2oii,the City had a population of�0,063,and the population of the Saint John metropolitan region was of i2�,�61.
As Canada's oldest incorporated city and New Brunswick's largest municipality,the City has been providing municipal
services to local citizens for more than two centuries.The City's public water system was first established in i837 to
protect public health from waterborne disease(cholera)and as a supply for fire protection. Sources were chosen for their
good quality,available yields and pristine environment.The City is unique in the age of its water system,having some of
the oldest infrastructure in Canada.A very large water main running through Fernhill Cemetery predates the i86�
Confederation while another parallel water main was commissioned in i873.Other system-critical piping dates back to
the i89os. For example,a kilometre-long section of wooden pipe was replaced in 2oio.
The City's municipal water system,by far the largest in New Brunswick,has two main parts,each supplied by its own
watershed: Spruce Lake(supplemented from East Musquash)in the West and Loch Lomond/Latimer Lake in the East.
Water is pumped from Spruce Lake(elevation 6i.6 metres)to the Spruce Lake Storage Reservoir(io5 metres)from
which water flows by gravity to West Saint John. Latimer Lake(96 metres)water flows by gravity into the areas east of
the river and parts of West Saint John.Both sources provide good quality raw water,albeit with significant organic
content.Figure 8 shows the City's supply source.
Figure 8: City supply source
ti�lDSI1 QtiF( L�
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, Spruce Lake Loch Lomond ,�� �
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Source:City
PwC rjQ Business Case 9
The City has been diligent concerning drinking water.The Common Council has made safe,clean,drinking water its
foremost service priority.A comprehensive water system analysis led to the i999 Water Strategy,which highlighted the
need for full treatment,extensive network reconfiguration and significant upgrades to the water transmission and
distribution system,including expanded water storage capacity. Over the years,the Common Council has set a clear
direction on safe,clean drinking water.Several members of Common Council have championed the cause and a great
deal of effort,with bona fide success,has gone into securing funding support and encouraging progress.
Since i999,the City has invested over$i28 million in drinking water improvements,but more extensive upgrades of the
system of transmission and distribution are required.The network of water mains,pressure zones and storage reservoirs
has to be improved to meet basic system parameters for reliabiliry,hydraulic functionaliry and maintaining water
quality.A factor that contributes to high usage levels in this community is the large amount of water flushed annually to
assure local water quality in several neighbourhoods and at system extremities. System restrictions need to be addressed
and aging infrastructure replaced or rehabilitated so that good quality water at adequate pressure can be delivered to
consumers'taps across the City at an affordable price.In 2003,the Regional Medical Officer of Health expressed his
concerns regarding the water treatment quality in Saint John.As the Guidelines for Canadian Drinking Water Quality
("GCDWQ")and the Province of New Brunswick standards are becoming more stringent,the Ciry's water treatment
technology would have to move to more advanced processes as soon as possible.The Regional Medical Officer of Health
has indicated that Saint John Water must improve its water treatment process to meet regulations.This would be in
reference to the concern that treatment in Saint John does not meet current requirements for the treatment of surface
water and that the levels of disinfection by-products are higher than allowable levels; Saint John Water does not
currently filter the water(i.e.treatment only consists of coarse screening,chlorination and fluoridation) and the
disinfection by-products do not meet current and proposed Provincial standards.Water system improvements are
expected to reduce the frequency and scope of boil orders.
The Program is being undertaken to assure safe,clean drinking water for the City.The Program is a cornerstone
initiative that will allow City residents(population: �o,000)to have access to safe, clean drinking water.Currently,three
major issues are encountered with the existing water system as shown in Figure 9.
Figure 9: Issues with the City water system
i The water brought to the tap of City residents is unfiltered surface water.The water coming from Spruce and Latimer Lakes,
supplying the West and East sections of the City respectively,is only coarse screened,chlorinated and fluoridated.
2 Unfiltered surface water from the current system contains significant amounts of disinfection by-products,at levels often
more than twice that prescribed by Canadian standards.The by-products,as well as the inability of the system to adequately
treat potentially harmful protozoa,such as giardia and cryptosporidium,increases the risk of health issues,including a higher
risk of cancer and other illnesses.
3 The water is highly corrosive,accelerating the damage caused to the water distribution system due to its low pH.
As a result,a key objective of the Program is to address these key issues as efficiently and as promptly as possible.Its
central feature is a ioo million litre per day("MLD")water filtration treatment facility to be constructed on Ciry-owned
land south of Little River Reservoir. Beyond this modern treatment plant are a number of system infrastructure projects
necessary for treatment implementation,including industrial separation and water use efficiency.
10 Business Case 5� PwC
Q`�9�� ��?>�°�da����i�➢� ��� ��3� ��"td���zj� ��������a�-,��a
The City was incorporated in i�85 and has grown into a historically rich and culturally diverse ciry.The Ciry is the
project sponsor(the"Project Sponsor")of the Program,and therefore of the herein Project described in Section 3.5. It
is home to an"uptown"core,where historic buildings dot the banks of the Saint John River and the Saint John Harbour.
In 2oi2,the City was named a Top�Intelligent Community by the Intelligent Community Forum,an international think
tank that studies the economic and social development of the ust century community.The municipality currently
delivers over forty different public-facing services to citizens,including emergency services,planning and development,
building and law enforcement,roads and sidewalks,and parks and recreation services.Figure 10 illustrates the
exhaustive range of services available to the City's residents.
Figure 10: City of Saint John service offering
, � ,
�
, „
►•
• Growth& lannin • I�ei hUourhood ' Roadwayandsidewalk • Diinkingwater • Humanresources
p g S • Financialmanagement �`n
services nprovement maintenance • Indnstrialwater . pension Corporateplanning
• Permittin & • Recreafionand ' Pe�es[nanand�h-affic • AVaslewater • Intergovernmental
� g adminish�ation
managemen[ aP(airs
inspectionser��ices culLuralprogramming Utililybasiness • Assetma�agement
• Stormwa'Ler mana ement • Co orate
• Developmentsuppm4 � Ilreandrescue g �
Geograpl�ic management ____ ___ -. ___ ____ - wnnnimications
CL'IV1C25 - -
,�• infonnationsystems - • Hmergency ' Solidwastecollection � • 1nTu nalion
management • Enguieering technolog��systems
:�„',: ':'�.....: ,': �'.• Parks and puUlic . . . ..
_..... ......... ..... spaces
Source:City
The City is governed by an elected governing body known as the Common Council.The Common Council is responsible
for the legislative functions of the municipality such as establishing policy,passing local ordinances,voting
appropriations,and developing an overall vision for the City.The Common Council consists of the Mayor, 2 Common
Councilors representing the city at large,and 8 Common Councilors representing the City's 4 Wards (2 councilors per
ward),all for a term of four years.The City's service offering is determined and directed by the Common Council as well
as by an elected Mayor who is elected every four years.
Reporting to the Common Council is the City Manager who reviews important issues and reports channeled up the
decision chain by the Commissioner.The City Manager's office provides overall corporate management and strategic
direction to the City and the Saint John Sewerage and Water Utility("Saint John Water",or the"Utility").The primary
objectives are to provide sound policy advice to the Common Council and to ensure that the Common Council mandated
programs and services are delivered efficiently and effectively in accordance with public requirements. Six commissioner
report to the City Manager and together,they are responsible for assigning the appropriate human resources to the
project including technical,legal,financial,and procurement.They are the interface between the project team and the
Common Council.As a member of the senior management team reporting directly to the City Manager,the primary role
of the Commissioner is to strategically lead the Saint John Water team in delivering services that support the community
in achieving its long-term vision and goal for safe and clean drinking water. Services are delivered to enhance the quality
of drinking water and protect the natural environment with the treatment of wastewater. Furthermore,the
PwC rj2 Business Case 11
Commissioner is responsible for the execution of the Program,the completeness of the application,the dissemination of
information to the Saint John Water Committee and the Common Council,and the identification and securing of the
Program project funding.
Figure 11: City of Saint John organizational chart
�
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. .-
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,
„
, , , , ,
, , ,
The City manages separate operating and capital budgets for the General Fund and the Utility.The General Fund is
funded from property taxes,transfers from the Province of New Brunswick and non-tax revenues from fees,fines,
service charges etc.The Utility services are user-paid,prescribed and budgeted separately from the other municipal
services.
Presented on an annual basis,this comprehensive overview provides a wide range of analytical,operational,water
production and system management information pertinent to the service.Planned expenditures for 2013 are set to
increase by 2%for a total of$37,679,000. Figure i2 summarizes the Utility operating expenditures summary versus the
projected revenues summary according to the December 8th, 2oi2 proposed 2oi3 Water and Sewerage Rate Revision
report for the Utility.Detailed budget is given in Appendix A.
Figure 12: Utility operating expenditures and revenues summary
� � i i i - i
. . . • . . . - . -
. - .
Operating expenses 2i,489,000 2i,965,000 22,263,000 22,572,000
_................................................................................................................
Fiscal charges 15,438,00o i5,�i4,000 i�,582,000 20,020,000
;
...................................................................................................................................................................................................................................................................................................................................................................................................................................................................
Total expenditures 36,92�,000 38,�6i,000 38,988,000 42,592,000
Total revenues 36,92�,000 37,679,000 39�g45�oo0 42�592�000
Source:City Report to Common Council December 8,2012
12 Business Case 53 PwC
The Common Council underwrites prior budgets on its books at the end of each fiscal year.The detailed 2oio Utility
audited financial statements are available in Appendix B.
The Common Council provides drinking water services under Approval to Operate W-669 Drinking Water Distribution
&Treatment Facilities. Saint John Water provides services to ratepayers of the Utility in accordance with the New
Brunswick Municipalities Act.
a�a_P� ����°����g���� €��������a����� �������°���g���� c .��s�a��e��tP�a� ��� aA��ic�a����;�e��a t��� ���g�����t
Assuring safe,clean drinking water represents a challenge of enormous proportions for the City,for its Utiliry and for
ratepayers.It will test leadership,values and the ability of stakeholders to put the most important needs of the
community and future generations ahead of other interests.Safe,clean drinking water is the single,most complex,and
most significant initiative ever contemplated by the City.It is also the most vital.
The focus of the Action Plan for Safe,Clean Drinking Water or the Action Plan is on achieving three essential and
complementary outcomes:
✓ Drinking water of the highest quality for the community
✓ A least-cost solution(over the long-term)for users of the water service
✓ Sustainability: meeting needs today without compromising future generations
The Action Plan was able to identify several drivers pushing to structure and implement the Program as summarized in
Figure i3.
Figure 13: Program drivers
� �- . .
i.Public health Ensuring good water quality for Saint John's citizens
2.Technological upgrade Rehabilitating a deficient water system and meeting daily water demand
:..................................................................................................................................................................................................................................................................................................................................
3.Public safety Ensuring an adequate water supply for fire protection
4.Environment conservation Instilling water usage behaviours that encourage sustainability
i. Public Health—Ensuring good water quality for Saint John's citizens
Water treatment in Saint John has remained fundamentally unchanged since the i93os when disinfection with
chlorine was first introduced. "Treatment"today consists only of coarse screening("to remove sticks and eels")and
disinfection with either chlorine gas(East facility)or sodium hypochlorite solution(West facility).Fluoride is added
for reasons of dental health. However,advances in science have revealed previously unknown hazards to drinking
water,such as disease-causing pathogens and potentially harmful chemicals.This has led to increasingly stringent
regulation,with the primary water focus being public health and water quality.
The Walkerton tragedy of a decade ago awakened Canadians to the pathogenic bacterium Escherichia coli(E.coli)
Oi57:H�.E.coli Oi57:H�contamination of the town's water source,in combination with a lack of regulatory
commitment,sloppy operating procedures and inadequately trained staff,led to serious illness and the death of
people who trusted their water system. In 2ooi,the City of North Battleford,Saskatchewan had to deal with an
outbreak of gastrointestinal illness caused by the waterborne parasite Cryptosporidium.Less threatening,yet
serious,boil-water orders have hit other communities across the country,including the City's.
PwC 54 Business Case 13
It is therefore critical to improve water quality at the tap for the residents of Saint John.
2. Technological upgrade—Rehabilitating a deficient water system and meeting daily water demand
Saint John's water system challenges are substantial: a difficult river divide,some very old infrastructure,internal
corrosion(tuberculation)of kilometers of old cast iron mains,large amounts of unaccounted for or lost water,huge
industrial water consumption,unmeasured residential usage,a costly accumulated infrastructure deficit and,to a
certain extent,an inertia concerning drinking water that has plagued the community for the good part of a century.
Changing from these conditions to a modern public water system consistent with best practices that will serve Saint
John for generations to come presents a service,engineering and leadership challenge of significant scale.
One of these challenges comes in the form of an aging water main network.As a result of multiple deficiencies in the
existing water main system,significant water quantities are being lost in Saint John.Water main breaks can not only
cause a loss of millions of gallons of water per hour but also the loss of water pressure,ultimately leading to no water
service,as well as a drop in water quality at the tap to periphery residents.
3. Public safety—Ensuring an adequate water supply for fire protection
Given the importance of system improvements to firefighting capability,Saint John Water and the Saint John Fire
Department have been jointly assessing storage needs in terms of Fire Underwriters grading procedures and risks
associated with peak fire events.Saint John Water has also considered the operational aspects of scheduled
maintenance shutdowns or failure of critical system components.As a general rule, a sufficient quantity of water
must be stored at strategic locations in the system to ensure continued water service in case of fire emergencies.
4. Environment conservation—Instilling water usage behaviours that encourage sustainability
Water conservation is increasing in importance for management of water systems in Canada for many reasons,
including water supply stress,limitations on infrastructure capacity,and consumer fairness as water rates increase
to meet emerging requirements. Demand side management and water loss control are today considered standard
best practices for water utilities worldwide.Furthermore,water conservation is a win-win response to sustainability,
with both economic and environmental benefits.
Sustainability means meeting the needs of the present without compromising the ability of future generations to
meet their own needs.Although factors such as heavy industry,old infrastructure,fire fighting,system flushing and
unmeasured use can be used to rationalize high consumption,Saint John has to change its water usage paradigm—
for both drinking and industrial water. Usage has to be efficient,managed in a broad-based,integrated manner that
improves overall water productivity and delivers water based on the quality and service needs of the user.The
community as a whole has to secure its future sustainabiliry and moderate its overall water consumption.
��'�./i A���'��a?Y�4,Z�i`" 9+�' '�3�k'��'+�''��� �����g'����� ;xt��
Given the Program drivers described above,this section assesses the community's need for the Program while providing
quantitative and qualitative evidence for its immediate implementation.
i. Public Health—Ensuring good water quality for Saint John's citizens
The City's current water treatment is limited to coarse screening and chlorine disinfection. Fluoride is also added for
dental health reasons and not for drinking water purposes.The Medical Officer of Health has repeatedly emphasized
the need to improve drinking water treatment in Saint John.Waterborne disease is a risk in all surface water
supplies,one that disinfection with chlorine does not entirely eliminate.
The lack of adequate treatment facilities in the City is a fundamental deficiency as it limits its water treatment
capabilities and its ability to assure water quality to citizens. Unfiltered surface water from the current system
contains significant amounts of disinfection by-products,at levels which are often more than twice those prescribed
14 Business Case 55 PwC
by Canadian standards. By-products,as well as the inability of the system to adequately treat for potentially harmful
protozoa,increase the risks of health issues,including a higher risk of cancer and other illnesses.Furthermore,the
chlorination treatment process renders the water highly corrosive and could even become harmful to users.The
current water pH level is within a range of 6.0 —7.5 for raw water and 5.0 —6.5 for treated water,which according to
Health Canada standards is at the edge of acceptable drinking water quality. One objective of the Project would be to
reduce the dependence on chlorine and thus maintain the water pH level at more acceptable standards.The City
recognizes that this deficiency represents an unacceptable level of risk and jeopardizes the well-being of thousands
of citizens.To date,the strong commitment to drinking water is reflected in the system upgrades and local
improvements made since the turn of the millennium. Since i999,in its resolve to provide uncompromising public
safety standards when it comes to drinking water,the City has invested over$i28 million in more than i25 water
projects,but more investments are still required in order to meet the GCDWQ.
2. Technological upgrade—Rehabilitating a deficient water system and meeting daily water demand
Recommendations for improvements of system infrastructure are based on the analysis of many factors such as
condition and age of existing infrastructure,water quality,analysis of flows and pressures,environmental impacts,
security of supply,costs for new pipeline construction,rehabilitation and land acquisition.Upgrades of other key
water infrastructure,including pump stations,storage reservoirs,pressure reducing valve("PRV")chambers,
reservoir turnover,pump on/off operation,PRV settings and chlorination requirements are also included.
The system that delivers drinking water to users requires extensive reconfiguration and upgrade.These
transmission,distribution and storage improvements have to be completed in conjunction with or prior to
commissioning of new treatment facilities.Additional detail is provided at Section 3.�.
Improvements works include but are not limited to:
• System water storage
• System pumping
• Transmission mains
• Watershed
• System rehabilitation
• New industrial system
To date,almost 4o kilometers of old cast iron pipes have been restored,thus significantly reducing the
inconvenience of water main breakages.
3. Public safety—Ensuring an adequate water supply for fire protection
The City currently has 27.3 million litres("ML")of system storage capacity.The addition of a 26 ML of storage at the
treatment plant and 3.9 ML in the North End region will bring the total capacity to 57.2 ML.
Although expanding system storage capacity to the optimal level would not be included within the scope of the
Project,it will,however,be part of future and separate works to be conducted as part of the overall Program.
4. Environment conservation—Instilling water usage behaviours that encourage sustainability
Analysis of flow data,both measured and theoretical4,indicates a large amount of unaccounted for water loss,
including loss attributed to leakage,flushing,fire fighting,unauthorized connections and inaccurate meters.In
addition,these losses are amplified by leakages discovered in the transmission system between Phinney Hill and the
Lakewood Pump Station. Reducing the level of system water unaccounted for provides an efficient and relatively
° 2.3 persons per household at 350 litres/capita/day
PwC 56 Business Case 15
inexpensive opportunity to service future growth in potable water demand and can lead to a reduction in the volume
of water treated,thereby reducing operating costs.
Peak demand dictates system size and hence,capital costs. Lowering peak demand saves money.While public
education and by-law regulations play a part in reducing water use,a user-pay system and associated rate setting is
the most effective means of managing demand.Although consumers might not immediately react to price changes in
the short term,they will respond over the long run.If price changes are well structured,equitable,permanent,and
understood by the public,consumers will see the value of investing in behaviours,equipment and appliances that
use less water.The benefits of conservation and related price signals are largely lost,however,unless usage is
measured. Metering benefits customers through the assurance of paying only for the water they use.Metering also
collects data on how water is used and where water is lost in the system.
The following water use efficiency measures,although not part of the Project as described in section 3.5,are part
the Program to assure safe,clean drinking water:
• Develop a conservation and water use efficiency plan that identifies the means to achieve water efficiency,
recommends regulatory requirements to support efficient water use,and sets out information and guidelines on
what customers need to know to be proactive;
• District(Zone)metering and system integration;
• Water use efficiency and ICI meter renewal: renew 60%of the inventory of approximately 3,00o industrial,
commercial and institutional meters;
• Universal Customer Metering:plan,design and implement universal measurement of water consumption,to
include a full cost-benefit analysis,remote and automated reading,integrated billing software and installation of
approximately i3,�5o water meters;
• Enhanced leak detection and repair;
• Public education—Need,conservation and cost.
�.� �rc�ject desc��iptton crncl�co�L
Program Structuring and Implementation Plan
Drinking water is a cornerstone of public health, quality of life,business and a sustainable economy.On July i9th, 2oio,
the Common Council unanimously adopted the updated Action Plan for Safe, Clean Drinking Water. It outlines a
strategy to challenge the status quo and identify the necessary improvements to assure the quality of drinking water for
the residents of the City.A Program Structuring and Implementation Plan(the"Plan")was developed as the most
realistic approach for implementing the highest priority elements of the Program and recognizing the high cost of all its
proposed projects. It sought a practical,cost-effective strategy for delivering the infrastructure improvements and
facilities needed to assure safe,clean drinking water for the City.
Given the drivers and needs summarised in Section 3.3 and Section 3.4,the City developed the Program,comprised
of 33 initiatives and designed to address the Program's most pressing issues. Of the 33 initiatives identified by the Ciry,6
have already been completed.The remaining 2�initiatives are grouped into the following nine major categories as
shown in Figure i4.
16 Business Case rj7 PwC
Figure 14: Program major categories
� . . •. . . .- . .
i Water treatment ioo ML per day WTP located on a Greenfield site east of the City
;
2 Watershed improvements Dam rehabilitation
3 Transmission system ; Intakes and dam upgrades,raw supply transmission to WTP
improvements-raw supply
4 Transmission system ; Improvements to the potable water transmission network at various critical locations
improvements-potable
5 Water system storage ; Additional2g.g ML in three storage reservoirs
improvements
6 System pumping station ; New pumping station and rehabilitated pumping station
improvements
� System rehabilitation Rehabilitation of the water main system,potable transmission network,pressure system
and storage facilities
g East industrial system Rehabilitation and new installation for transmission from Lakewood pump station to
improvements Sandbank Hill
�...........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
9 Water use efficiency Water leak detection and repair,metering initiatives and education spending
The description of the Project's major categories is given as follows:
i. Water treatment: construction of a new loo MLD conventional water filtration treatment facility on City-owned
land south of the Little River Reservoir;
2. Watershed improvements: improvement of dam infrastructure including the installation of foundation anchors,the
addition of i.2 meters of free board to the earthen embankments,and the refurbishment of the concrete spillway
and abutments;
3/4• Transmission system improvements: construction and upgrade of water transmission mains to deliver raw water
from Latimer Lake to the area of the WTP East and treated water to the entire distribution system;
5. Water system storage improvements: construction of three storage reservoirs totaling 29.9 ML capacity,the first
located near Fort Howe at Magazine and Kitchener(3.9 ML)and the other two located at the WTP site(26 ML);
6. System pumping station improvements: construction and upgrade of two pumping stations to ensure drinking
water would flow from a new Reversing Falls Booster Pump Station to the Lancaster Water Storage Reservoir and
to the upgraded Spruce Lake Pump Station;
�. System rehabilitation: renovations,adjustments and local upgrades including the installation of water valves,the
rehabilitation of transmission mains and the modification of pump station pressure grades;
8. East industrial system improvements: construction and renovation of transmission system to deliver raw water
from Latimer Lake to Sandbank Hill.
9. Water use efficiency: includes initiatives which will reduce the perceived need for new infrastructure,lower
chemical use,and control demand for energy.This category is part of the Program but will not be part of the
Project.
PwC rj$ Business Case 17
The Project
The City has further identified i8 of the 2�initiatives of the Program as most urgent with the core of this Project being
the WTP.The 18 initiatives are identified in Figure i5 below.
Figure 15: ProjecYs elements and estimated costs
($)intentionally left blank so as not to compromise City's procurement process and financial outcome
of bids submission
. - . .
. .
L Water treatment i.Water treatment plant("WTP")
2.Watershed improvements 2.Robertson Lake Dam
g.Transmission system ; 3•Latimer lake intakes and dam upgrades
improvements—raw supply; 4,Supply Transmission(Lakewood Pump Station to WTP)
; 5.Transmission East(WTP to Sandbank Hill)
4.Transmission system 6.Transmission East-Central(Sandbank Hill to Marsh Creek)
improvements—potable ; �.Transmission Central(Marsh Creek to Metcalf Street)
8.Transmission Chesley Drive(PRV io'7 to RF Bridge)6
5.Water system storage 9•North End Storage Reservoir
!.............................................................................................
improvements ; lo.T`win Storage Reservoirs at WTP Site
6.System pumping station _ii.Reversing Falls Booster Pump Station.....................................................................................................................................
improvements ; 12.Spruce Lake Pump Station Upgrade
i .West S stem Modifications
3 Y
:............................................................................................
; i4.Ocean Westway Rehabilitation(Spruce Lake to Gault Road)
'7.System rehabilitation _�..............................................................................................
; i5.Potable Transmission East(Lakewood PS to Sandbank Hill)
i6.East Pressure Modifications
8.East industrial system ; 17.Industrial Transmission New(Lakewood PS to Sandbank Hill)
_ ______... _________ _________ ____..... _ __
improvements ; 18.Industrial Transmission Rehab(Lakewood PS to Sandbank Hill)
Total
Project definition criteria
The decision to restrict the Project's scope to i8 initiatives out of 2�is justified by the level of dependence of each
initiative on the functionality and efficiency of the WTP.Although the WTP will indeed filter and treat surface water,
improve water quality and eliminate disinfection products and chemicals added to the water,it will not, as a stand-alone
initiative,enable the City to fully meet its objectives.To obtain the full benefits anticipated from the WTP,a number of
other initiatives require implementation,herein referred to as"dependent"initiatives.The level of dependency of each
initiative to the WTP was refined following additional discussions with the City.These dependencies are presented in
Figure i5,on the basis of a Critical and High Impact level of dependency rating scale.
5 Costs expressed in 2010 dollars excluding contingencies and inflation
6 Includes Douglas Avenue and Central Spine rehabilitation
18 Business Case 59 PwC
The definitions of each of the two levels of dependency are as follows:
✓ Critical("CR"):initiatives that must be built to allow the City's drinking water system to be functional once the
WTP is built.These are initiatives,for instance,that allow:
• connection of the WTP to the rest of the City's water distribution system;
• the transport of water from the WTP to the rest of the City's water distribution system(e.g.pumping stations,
West system modifications); and
• recalibration of the water distribution network following the construction of the WTP(e.g. East pressure
modifications).
✓ High impact("HI"): initiatives which,if not completed,will result in a:
• high loss of efficiency of the water distribution system(e.g.replacement of very old transmission water mains
currently losing significant amounts of water),resulting in a significant reduction in the benefits anticipated
from the construction of the WTP; and
• high risk of failure of the water distribution system(e.g.rehabilitation of raw supply dam and intakes),resulting
in the loss of the anticipated benefits from the WTP construction.
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Several measures have been and will be implemented to ensure that the outcome of the Project can be measured and
monitored.These include performance management,sustainability standards,the use of updated technology to monitor
water quality,the adoption of industry best practice and finally protection of water source.
Performance management
Significant advances have been made at Saint John Water,including: enhanced water quality reporting, advanced
automated control through a Supervisory Control and Data Acquisition system("SCADA"),preventive maintenance
programs and a new management team(drawn from both public and private sectors).As part of the larger corporate
initiative,redefined service profiles outline utility services and their value,organize key elements within each service and
set goals.
A series of utility-based performance indicators are being used to manage service delivery and serve as barometers of
continuous improvement:
✓ Strengthen accountability at all levels: clearly showing ratepayers how they are being served and the value they are
receiving for the rates they pay;
✓ Focus on results: improving service delivery generally,identifying where and how quality,efficiency and
effectiveness can be enhanced;
✓ Stimulate greater innovation,creativity and productivity: guiding how City residents seek out both service
improvement and cost reduction;
✓ Improve budget processes: how resources are applied to best meet needs and expectations,with realistic analysis of
costs and benefits.
PwC (�jQ Business Case 19
Use of technology
A Computerized Maintenance Management System will form a solid foundation for preventive maintenance of water and
wastewater facilities.Implementation is beginning in treatment areas and will follow in transmission and distribution
functions.Use of instrumentation and control systems has advanced markedly and applying this technology in new
facilities will allow fully automated operation,with remote monitoring and alarm capabilities.Computer and laptop
access to treatment plant and other facility operations will give on-call personnel full access and control of those
operations.A WaterGEMS water model will be an important tool for development of Action Plan improvements and for
day-to-day operations of the transmission and distribution system,particularly in planning complex operational shut-
downs and system modifications.
Industry best practices
District Metered Areas across the water system will allow the audit of water use and the collection of data required to
identify and correct water loss problems in the system,thus reducing the amount of non-revenue water.Monitoring
water volumes entering districts,as well as volumes consumed,provides for timely identification of usage gaps.The
ability to analyze the system will further evolve as universal metering is implemented.Moreover,2oi2 marked the
completion of modeling and execution of Unidirectional Flushing Program for the entire water distribution system.This
is an industry recognized"best practice"for maintaining water quality in the distribution system.
Source protection and sustainability
Sources of drinking water are profoundly important to the community's future. Ensuring safe,clean drinking water and
sustainability of supply first involves protecting the front end watersheds,enforcing land-use standards,installing
protective infrastructure,monitoring activities,educating the public and measuring the draw on this vital resource.
Water source considerations have to be fully integrated into community planning,development decisions and the
management of water assets. In particular,the City's watersheds are"at risk"as they are located near major highways,
busy roads and the Saint John Airport,and thus easily accessible.As a first line of protection,the Ciry has long sought to
purchase available watershed lands.Management of these assets needs a higher profile,with participation of
stakeholders and governance by the jurisdiction most directly affected.
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This section presents a list of the feasibility studies produced to date for the City, and summarizes key recommendations
in each report.The City hired different contractors between 2008 and 2oio to produce:
✓ Environmental Assessment Saint John Drinking Water Treatment Facility Little River Reservoir,Saint John,New
Brunswick(Dillon Consulting Limited),September 2ou
✓ Consultant Presentation on Value Engineering(Robinson,Stafford&Rude,Inc.) ("RSR"),Water Treatment and
Distribution Improvement Program, Report to Common Council and Presentation,M&C 2009 —391,
November 26th,2009
✓ Water Treatment Plant Siting Report,CBCL Limited, December 2009
✓ Preliminary Design of Potable Water Treatment Facilities,Preliminary Design Report,R.V.Anderson Associates
Limited("RVA")on behalf of the City of Saint John,November 2009
20 Business Case 6� PwC
i.Enuironmental Assessment Saint John Drinking Water Treatment Facility Little Riuer Reseruoir,
Saint John,New Brunswick-recommendation
Through discussions with the New Brunswick Department of Environment,it was determined that development of the
WTP would require an environmental assessment("EA")under the Provincial Environmental Impact Assessment
("EIA")Regulation 8�-83 under the Clean Environment Act.Dillon Consulting Limited was retained by the City to
provide EA and approvals services for the Project.
This EA meets the requirements of the New Brunswick EIA Regulation 8�-83 and Section i6(i)of the Canadian
Environmental Assessment Act.The objective of the report was to:
✓ Consider the potential for both positive and negative changes on the environment;
✓ Outline mitigation and impact management measures;
✓ Assess residual and cumulative environmental effects;
✓ Identify compliance and effects monitoring needs associated with the WTP.
Based on the environmental screening,it was concluded that significant adverse environmental effects of the Project are
unlikely should the project adhere to the following:
✓ Redesign WTP to minimize effects in case of hazardous incident;
✓ Implement specific mitigation measures during the construction and operations phases of the Project.
The detail of the environmental assessment and proposed risk mitigation measures are included in the full version of the
report.
2. Consultant Presentation on Value Engineering-recommendations
A joint team of RSR and NCE Value Engineers("NCE")was engaged by the City in January 2009 to undertake a VE
review of the water treatment and system improvement program being considered for the assurance of safe,clean
drinking water.This systematic,function-based evaluation sought to enhance overall performance and help achieve best
value for the investments being made.The review had been envisioned in the Action Plan.
All critical aspects of the overall program were subjected to analysis:water treatment requirements,capacity and
location of treatment facilities,needed pipeline upgrades,project delivery options,risk considerations and detailed
technical issues.The VE process sought solutions that would satisfy performance expectations and offer lower program
lifecycle costs.
Three multi-disciplinary teams of North American experts in their disciplines,working with staff and preliminary design
consultants,applied formal VE methodology in three phases of review:
✓ Workshop #i System-Wide/Major Issues:looked at the"big picture",as well as a range of strategic questions
including capacity and location(s)of treatment facilities,separate potable and industrial systems East,essential
transmission and water storage upgrades,and east-west interconnection.
✓ Workshop #2 Program Delivery Strategy:focused on Program delivery,assessing alternative ownership and Project
delivery options,including risks associated with the different approaches.
✓ Workshop #3 Detailed Technical Review,Treatment and Infrastructure: an analysis of the improvement program's
technical considerations.
The City's preliminary design consultants,R.V.Anderson Associates Limited and CBCL Limited,responsible for water
treatment and water transmission and distribution and storage plans respectively,were participants in the value review
process.
PwC (�j2 Business Case 21
Findings of the three workshops are summarized in Figure i6.
Figure 16: Findings of the three workshops
One WTP East:defer West WTP,but maintain Spruce Lake as emergency back-up and as industrial supply
Configuration
� Desi n ca acit : ioo MLD but re uires a ressive water demand mana ement
g P Y q gg g
'
_............................................................................................................................................................................................................................................................................................................................................................................................................................................................................
Conventional water filtration process train,generally as proposed by RV Anderson
Treatment Disinfect with sodium h ochlorite solution for safe reasons
Yl� tY
:...........................................................................................................................................................................................................................................................................................................................................................................................................................................................................
Consider eliminating fluoridation:not a requirement of the GCDWQ
.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................
T-screen intake structure with air burst cleaning system
One new main maintain sound existin main refurbish"best"of others in future
, g >
Dual purpose raw water transmission mains in from Phinney Hill
System pipelines
Abandon and re lace with new otable connections alon Loch Lomond Road and Westmorland Road
P P g
Twin mains under Reversing Falls Bridge
Construct second otable connection throu h North End to RF Brid e
P g g
Reduce number of new storage tanks East and increase storage at treatment plant site
System-water storage
Further review and refine fire flow storage volumes
Reduce losses b a ressive leak detection and re air district meterin customer meterin reduced flushin
Y gg P g, g, g
Demand management/ :................................................ '
water efficiency use Conservation:public education and a revised rate structure to encourage conservation for both potable and
industrial users
_...........................................................................................................................................................................................................................................................................................................................................................................................................................................................................
Revisit scheduling and cash flow requirements to refine project sequencing.
Costs
No changes to CBCL estimates.
Source:City
3. Water Treatment Plant Siting Report
The City initiated an evaluation of potential treatment plant sites in the area between Little River Reservoir and Silver
Falls.Fifteen locations were initially considered.The general characteristics of each location were noted including slope
of the land,soil types,constructability,suitability for lagoons and storage reservoirs,site access,and groundwater depth.
Using the Geographical Information System,land owners,parcel sizes,elevation ranges and zoning designations were
identified.Potential sites were first narrowed down from i5 to 4 with conceptual drawings prepared to place treatment
buildings and an on-site storage reservoir at the highest elevations possible.A pros and cons list was prepared with the
two highest rated options being:
✓ Little River Reservoir Site#i is relatively undisturbed wooded land south of the Little River Reservoir.The plant
footprint,storage reservoir and settling ponds at this location would encompass approximately 2i ha entirely on
City-owned property.Approximately 88.6 ha of the i24 ha City-owned parcel is leased to Irving Oil Limited.The
Little River Reservoir is a popular recreational area that citizens are looking to enhance as a park.Transmission
piping to and from the plant could require an easement on adjacent private property.
✓ Silver Falls Reservoir Site #9,near Champlain Heights and Simonds High School,is bordered on the north by the
Silver Falls Reservoir which was previously a gravel pit.The WTP footprint,storage reservoir and settling ponds
would encompass approximately 2o ha of a 3o ha City-owned property.About u.2 ha are affected by the i9581ease
with Irving Oil.Transmission piping to and from the plant can be located along adjacent City-owned property,but a
large wetland south of the property constrains both the WTP site and other potential development in the area.
22 Business Case 63 PwC
CBCL Limited carried out the detailed comparative assessment of these two preferred sites,along with the original
Phinney Hill site,including a preliminary wetlands investigation.Their final report was submitted in December 2oog.
CBCL recommended that the City proceed with planning to construct a new water treatment facility at the Little River
Reservoir location(Site#i),subject to the completion of a water study and an EIA.
4.Preliminary Design of Potable Water Treatment Facilities
The final,site-specific Preliminary Design Report for the Saint John Drinking Water Treatment Facility was received on
August 8th 2oii from R.V.Anderson Associates Limited.The report issued the following recommendations:
Present and future design flows
✓ Approach to facility sizing: the City selected a ioo MLD maximum design capacity for the treatment facility,with a
75 MLD design average day flow. Future demand projections are based on planning projections for growth.
✓ Water conservation:the selection of plant design capacity assumes effective and ongoing conservation measures
which include the following:
• public education programs;
• elimination of distribution system leaks;
• industrial water conservation audits;
• non-revenue water reduction through leak detecting,pipe replacement,and district metering programs;
• toilet and fixture replacement programs;
• future full user metering.
Treatment plant site
✓ Site Selection:The site adjacent to the Little River Reservoir is on City-owned land, at relatively high elevation
(meaning reduced pumping costs).This will allow the delivery of raw water to the East Industrial System with much
less new transmission construction.Raw water will reach the facility site by gravity,with resulting treated flows
pumped to approximately the same hydraulic grade line("HGL")as currently exists in the East Graviry Zone(g6
metres above sea level).
✓ Hydraulic analysis:To minimize pumping costs for treated water,the facility will be located at the highest operable
site elevation possible.Flow through the facility will be by gravity,with treated water pumped to the 96m HGL to
feed the distribution system.A micro-hydro generator may be considered in the detailed design to be installed at the
front end of the plant.
Overall,it was recommended that the WTP focus on a limited range of conventional treatment technologies including
coagulation,flocculation,settling,filtration,and disinfection using chlorine,LTV,ozone or chloramines.A series of bench
tests were conducted,along with bench scale testing by two package pretreatment technology suppliers. Furthermore,
the City is conducting additional bench testing that focuses on disinfection by-product formation,to finalize details of
the treatment system concerning disinfection by-product reduction.
Conceptual Design Options and Life Cycle Costs
✓ Treatment Facility Unit Processes:The RVA report recommended that cost inputs be based on a conventional water
treatment plant.This particular technology would include flocculation,filtration,chlorination and corrosion control.
PwC 64 Business Case 23
Preliminar�Design
✓ Site Design:the new WTP would be constructed near the top of a hill,with the orientation and building layout
providing an attractive appearance,and a good view from the control room and operator area towards the access
driveway.
✓ Structural design:the structure would be constructed in accordance with the National Building Code of Canada as a
post disaster structure.The facility design also ought to comply with the American Concrete Institute 350/06 design
code.
✓ Process Design: since the WTP will supply water for the entire city,a redundancy of all pipes and unit processes
should be provided.The design is set up to allow for a 50%future expansion to the north-west of the facility,with
space also retained on the north-west side of the plant to allow for additional unit processes to be added to the
treatment train,should these be required in the future.
✓ Electrical Control&Instrumentation Design:three phase aerial power is not available in the vicinity of the site and
will need to be brought in.Three phase aerial lines would be extended along the access road to the facility.
✓ Instrumentation,control and SCADA:the instrumentation and control system would essentially allow full facility
control from the control room by the facility operator, as well as full automatic operation with remote monitoring
and alarming capabilities.
✓ Alternative energy sources and energy savings/sustainability opportunities: ground source heat pump systems for
heating/cooling,energy efficient and sustainability designs in accordance with the City's Award Winning Municipal
Energy Efficiency Program.
Capital and Operating Costs of Recom�nended Options
R.V.Anderson Associates have highlighted three major steps that must occur before the City can proceed to construction
of a new WTP:
✓ Finalization of plant design capacity;
✓ Conduct necessary environmental impact assessments;
✓ Undertake preliminary(new site)and detailed design.
;��� ��a����������� (�������^��:
The City of Saint John,the Common Council and all of the Project's stakeholders agree that it takes more than building a
water treatment plant to ensure safe,clean drinking water for citizens.As demonstrated by Section 3.5,a number of
initiatives also have to be undertaken concurrently in order for the Program objectives to be met.These initiatives,
including that for the WTP,are ultimately driven by the four drivers previously discussed and are the solutions to needs
identified by the City.
24 Business Case 65 PwC
Figure i�below summarizes the Program drivers and needs.
Figure 17: Program drivers
� �- . . -.
Improve water quality by providing treatment to
Public health Ensuring good water quality for Saint John's : address protozoa(giardia and cryptosporidium),
citizens address disinfection by-products(THM and HAA's),
and control corrosion within the distribution system.
� Rehabilitatin a deficient water s stem and Minimize leaks in water s stem increase ca acit to
Technological upgrade g y y ' p y
meeting daily water demand accommodate for 75 MLD average daily demand
� Ensurin an ade uate water su 1 for fire
Public safety protection � pp y Increase storage capacity from 27.3 ML to 5�.2 ML
_..............................................................................................................................................................................................................................................
Environment conservation ' Instilling water usage behaviours that Increase water rates,install metering system,decrease
encourage sustainability water use
PwC 66 Business Case 25
4. Procurement decision: defining the procurement models
for the VfM analysis
��� ��t�����e��������� tir��y�������P;�� ��a� �<���.�����������������
The selection of the procurement model is an important consideration which can impact the successful delivery of the
Project and the City's ability to meet its objectives,which are to:
✓ Implement the Project at the lowest possible risk-adjusted whole lifecycle cost
✓ Enable appropriate risk allocation and mitigation
✓ Allow the City to benefit from innovative solutions while ensuring a transparent and equitable procurement process
The VflVI analysis is a comparison of the estimated total risk-adjusted cost of the Project under two procurement models,
being the traditional model which would be used by the City for this type of Project and an alternative procurement
approach under a public-private partnership("PPP")model.
The alternative models are varied,so in order to define the most appropriate PPP model for the Project,a workshop was
organized by the City on October 30, 2oi2,the objective of which was to identify and define the potential PPP models
and confirm the traditional procurement approach.Attending the meeting were representatives from the City and PPP
Canada,as well as PwC professionals.
It was agreed that the following procurement models would be used for the procurement options analysis and VflVI
analysis of the Project:
✓ DBB
✓ PPP combining a DBF for the transmission component and a DBFOM for the WTP
�.� �'��c���io�Y�l�zcl�IP���c���r•�rar�ct�r•�pre���t a��r�����2
Definition
The City determined that if it were to proceed with the Project under a traditional procurement model,the DBB
approach would be the most likely contracting model used.Under a DBB,the City, acting as Project Sponsor,operator
and rate setter,would hire a design consultant that would:
✓ Complete schematic designs,drawings and preliminary specifications in the design development phase;
✓ Draft the procurement documents including the final design and contractual requirements;
✓ Work with the project manager,employed by the City,to observe construction work,review designs,manage the
construction,manage the tender process and approve progress and payment,as well as advise the City.
The City would likely engage a single general contractor for the 4VTP and multiple general contractors for the
transmission network components to manage the construction works.General contractors would be selected following a
public tender and would be selected based on the lowest cost as measured by volume and unitary cost of construction.
Such bidders would proceed with construction according to the plans delivered by the design consultant.Operations and
maintenance("O&M")of the assets would be assumed by City staff.Lifecycle repair work would typically be contracted
to third parties.
26 Business Case (�j7 PwC
Figure i8 illustrates the contractual relationship between parties in the DBB model while Figure i9 presents the
advantages and disadvantages of a DBB delivery model.
Figure 18: DBB model structure
� � � • � �
O&M Design Construction
Payments Payments payments
1 �
, . . . _____
.
Subcontracts to acquire , � , ,
capability and expertise
Figure 19: Advantages and disadvantages of a DBB delivery model
• . . . • . � : � . . . .- . � :
• Competitive bidding process • Risk of going beyond the project scope through change orders
• Easy to manage,universally understood,allows for • Design suffers from lack of input from construction contractors
project division into different components and subcontractors
• City controls design,which is completed to 95%-i00% • Limited risk transfer:engineers and contractors would not provide
before letting construction contracts guarantee of firm fixed price commitment
• Architect will work for the City and will provide best • Low opportunity/less motivation for innovation
recommendation on quality vs.price . Interface risk between construction lots carried by the City.This is
• Most projects value engineered with the City's a risk retained by the City
involvement during the design phase . Work in progress payments diminish leverage against non-
• Less up-front ancillary costs for consultants and legal compliance at substantial completion
advisors . Design does not reflect whole lifecycle of the asset
• Less work for City staff during procurement . Lifecycle costs not always funded by the City
• Warranty on construction and equipment limited to i to 2 years
post completion.Warranty typically not supported through liquid
security,putting enforcement at risk
PwC (�j$ Business Case 27
Payment mechanism
Under a DBB model,the City would remunerate contractors according to the following payment structure:
✓ Contractors would be paid ioo%of costs billed according to construction advancement
✓ The City would require from contractors a letter of credit covering io%�of cumulative construction costs,which it
would release two months after contract completion
In addition,the contractors would provide the following security package in favor of the City:
✓ A performance bond equivalent to 50%of each of the respective contracts
✓ A labour and material bond equivalent to 50%of each of the respective contracts
4•3 Public-�rivate par•tner°s�eip moc�e�
Definition
This section introduces the PPP procurement models which are being considered for the Project.
From all Project initiatives identified in Section 3.5,it was considered that the WTP could be a strong candidate for a
long term DBFOM contract given its potential to be built as a Greenfield faciliry on an independent site,thus allowing a
private partner to have a clear allocation of responsibilities,as well as enabling the mitigation of a number of risks.
Given the performance measurement challenges posed by the rehabilitation and maintenance of an existing water main
network,it was concluded that any long-term risk transfer to a private partner would be potentially limited.As such,for
the transmission assets,a short-term DBF procurement model would be applied.
The private partner would thus be responsible for the design,construction,long-term financing,operations and
maintenance of the WTP (initiative#i)and storage reservoir at WTP Site(initiative #io).For the remaining i6
initiatives,the same private partner would be responsible for the design,construction and short term financing of the
said initiatives while the City would keep the long-term operations and maintenance responsibilities.Together,these two
proposed procurement models would be known as the PPP model. Figure 2o below illustrates the PPP procurement
approach for the Project.
Figure 20: Project scope under a PPP procurement model
ll�.,�,,;
constr•uc�' ,�,construction and
and sho o•[-term financing
term fin�ia,. , � �DBP)
(DBb')
I
�Existing � "��
I Existing �
New Existing — — — �,
� Existing — — — New Raw
�
Existing NeW — — � — .. . transmission
_ _ _ _ � � Potable New � '� "backbone"
transmission
Potable � "bacicbone" � �
transmissioi� �� � �, V
"backbone" �Existing
� G� J
� Long-term desi�m,
const�•uction,finxncing,
operations and maintenance
(DBFOM)
' Assumption of the financial model
28 Business Case 69 PwC
Payment Mechanism
The contract would be awarded to a private partner who would commit to deliver the infrastructure for a fixed price and
by a specific date.The PPP remuneration structure includes the following:
✓ Milestone payments equivalent to 25%of the WTP construction costs and i00%of the capital costs of the
transmission assets are paid at the end of construction.90%of such payment is made at Substantial Completion and
the remaining io%is made at Final Completion.The holdback of io%to Final Completion aims to provide an
additional incentive to the private partner to address minor deficiencies which could affect in service of the
transmission assets;
✓ Annual service payments("ASP")for the remainder of Project costs to be paid over a horizon of 3o years.
Payment would be tied to the achievement of predetermined availability and performance criteria most notably linked to
requirements regarding water quality exiting the plant and a requirement for 24/�availability and service. Payment
would only begin once Substantial Completion had occurred,meaning the asset is delivered according to the City's
specifications.
The PPP would involve a security package as follows:
✓ Liquid security under the form of letters of credit typically equal to io%to i5%of the design-build contract;
✓ Parent company guarantees typically equal to 20%to 50%of the design-build contract and up to a year of the O&M
and lifecycle revenue;
✓ Liquidated damages in the event of delay;
✓ A performance bond equivalent to 50%of each of the respective contracts;
✓ A labour and material bond equivalent to 50%of each of the respective contracts.
4.4 l�c�rlcet s�a�aac�i�a� ��thodcalc��a� �c�acd sum�nc��s�;� ��y°�a���������
In order to validate and conclude upon the PPP model for the Project,a market sounding was conducted.The market
sounding provided an opportunity to understand market participants'views,concerns and ideas about the proposed
Project scope in anticipation of a competitive procurement process,and validated the City's views on the scope of the
PPP.
The market sounding exercise was carried out in three distinct steps as follows:
Step 1:Preparation of market sounding documentation
This first step focused on the development of a market sounding questionnaire describing the intended scope,project
timescales and other pertinent information,such as the identification of key stakeholders involved.This document was
developed following an in-depth review of existing Project information,indicative costs,and an in-depth discussion with
key stakeholders to understand the objectives and requirements related to the Project.
Step 2:Idenhfication of participants and interuiews
The selection of a sample of organizations to participate in the market sounding was particularly important as it enabled
the City to gain a comprehensive view from a wide range of proponents,including water sector specialists(design firms,
builders and operators)with significant experience in the water sector.The list also included equity providers who
typically invest in long-term PPPs. Once the list of participants was identified and agreed upon by the City and PPP
Canada,telephone interviews were scheduled accordingly.Participant firms are presented in Figure 2i below.
PwC 70 Business Case 29
Figure 21: Participants in Market Sounding
.• . .
AECOM provides professional technical and management support services for commercial and
AECOM Technology ; government clients worldwide.Its Professional Technical Services segment offers planning,consulting,
Corporation architectural and engineering design,and program and construction management services for a range of
; projects,including water and waste water facilities and power transmission and distribution.
�...................................................................................................................................................................................................................................................................................................................................................................................................................................................................
CH2M Hill is an engineering company providing water,environmental,transportation,and federal
CH2M Hill,Inc. services.It offers engineering,construction,operations,project management and related technical
services to municipal,state,federal and private sector clients.The company also provides water,waste
water and public works operations and maintenance services.
Corix Utilities,Inc. Corix Utilities develops customized water,waste water,and energy systems.
EPCOR owns and operates electrical transmission and distribution networks in Canada and the United
EPCOR Utilities,Inc. States.The company's Water Services segment treats,tests,distributes and sells water,treats waste water
and provides water and waste water plant financing and constructing services.
Maple Reinders provides non-residential construction services,including the construction of structures
Maple Reinders,Inc. such as water treatment plants.The company engages in construction management and supervision,
management and procurement of sub-contractors and value engineering support and participation.
NAC is a master builder that caters to the civil,municipal,biofuels,energy,mining and industrial
NAC Constructors Ltd. marketplace.NAC also partners with clients on construction management projects allowing engineers,
; contractors and owners to contribute.
PCL Construction operates as a general contractor in the construction industry in Canada,the United
PCL Construction States and the Bahamas.It offers construction services for commercial and institutional buildings.The
company also offers civil infrastructure construction services for roadways,bridges,tunnels,pipelines,
water and waste water treatment facilities,dams,mine site preparation,airports and light civil structures.
Plenary Group Pty Ltd.invests in,develops and operates public infrastructure projects for governments
The Plenary Group and business and local communities in Australia,Singapore and Canada.It is involved in various aspects
of project delivery,including financing,planning,design,construction and operations.
: ........
Degremont designs and builds drinking water production plants,desalination facilities,waste water
treatment plants and sludge treatment facilities for local authorities.It offers services relating to the
construction and refurbishment of plants,including equipment or processes,services relating to
construction contracts such as conducting studies on equipment,setting up indicators and developing
Degremont/United ; procedures,as well as operation services including direct operation,technical partnerships,consultancy,
Water Resources,Inc. maintenance and spare parts supply.
United Water provides water and waste water management solutions.The company's services include
contract operations,infrastructure management,customer service,metering,billing and collections,asset
acquisition and facility design,construction,and ownership.It owns and operates water utilities,and
operates municipal and industrial water and waste water systems through PPP and contract agreements.
SNC-Lavalin rovides en ineerin construction o erations and maintenance services.It offers civil
P g g, , P ,
SNC-Lavalin,Inc. structural and electrical engineering services,as well as project management and facilities management
services in different industries including water and waste water.
Veolia Water offers water and waste water services,including the management and operation of large-
Veolia Water scale and customized drinking water plants,waste water decontamination and recycling plants,drinking
water distribution networks and waste water collection networks.It also designs/builds the infrastructure
necessary to provide water services.
Step g:Synthesis and reporting
Each interview was documented and a report summarizing the results was drafted.The market sounding report is
included in Appendix C(intentionally removed).
30 Business Case 7� PwC
�a�� .�L��������.�3������t����� �,���m�������:�����
The following highlights can be drawn from the market sounding exercise:
✓ The contemplated PPP procurement model with a DBFOM procurement for the WTP component and a DBF
procurement for the remaining i6 initiatives is a structure which would create market appetite;
✓ Transferring the operation and maintenance components for the existing water main transmission assets would
present particular challenges whereby only a limited number of risks could realistically be transferred;
✓ The City should only transfer risks that the private sector can reasonably control;
✓ Without consideration to the additional time it could entail,the trial of a treatment process in order to collect data
and document the performance of the system proposed for full scale implementation,or piloting,is generally
considered by most participants a good step to integrate to the procurement process;
✓ The City should prepare a good communication plan and manage political risks. It will be particularly important to
obtain the support of stakeholders such as special interest groups at the outset, as there has historically been more
public opposition towards PPP for water projects;
✓ Participants were concerned about the risk that the procurement process could be stopped by the Ciry,causing
bidders to lose their investment associated with bid preparation;
✓ The WTP payments should be separate from those for the transmission initiatives to facilitate the obtainment of debt
financing;
✓ Although municipal project sponsors have more technical know-how,they are usually perceived as being more risky
because of their more limited PPP procurement expertise.This could result in a premium charged to municipal
projects;
✓ The City should make detailed water quality date available,as pricing and proposed water processes will hinge upon
the quality of such surveys;
✓ The contractual documentation should enable adjustments to availability payments as a result of changing water
quality and quantity input over the duration of the project agreement;
✓ The evaluation process should include a financial component adjusted for the quality of the technical proposal.The
City should avoid giving too much weight to the financial proposal as it could end up with a sub-standard proposal;
✓ The City should use a proven procurement approach and not reinvent the wheel(i.e.use existing project
documentation templates) ; and
✓ PPP Canada's backing will provide comfort to market participants that the Project will proceed and reach financial
close.
� r y4�(��� ,,r,re�.t}uqi N-�*•ti^ �"�^�� -; � p ' �& �. 9 1` r�'ll� R,' �� ��� 1° �v v��' �w &C"���C°��" ���a���� Sm�Se
x�� ,.,'3�����k'ellitFPo�.Lk'�.� '�� �.�. �il.,_,��� MY.k .1��'� k.�i+�.�J' � ��r� ��!k. �EH �tC� .1 ..��
Following the market sounding and workshops with the City,the PPP procurement model presented in Section 4.3 was
selected as the Shadow Bid which will be compared against the traditional procurement model,or the Public Sector
Comparator.
Figure 22 illustrates the contractual relationship between parties in the selected Shadow Bid model.
PwC 72 Business Case 31
Figure 22: Shadow Bid model structure
� � Private
financing
,
Availability& � •
performance Services � ,
payments
� � � , �
Capital Investment �
� ' �
Return on
Investment �
WTP+on-site
storage Transmission �
assets
�
Subcontractors
Subcontractors
� � � �
DB—Design
Build
O—Operations
M—Maintenance
Figure 23: Advantages and disadvantages of a PPP delivery model
• . . .- . � . . . . - .
• Fixed price,date certain commitment; • City is contractually obligated to make maintenance and lifecycle
• The City is able to enforce achievement of its payments in line with the service standards defined in the project
specifications through the contract and payment agreement.This will remove flexibility to divert funds away from
mechanism(pay for performance); these activities under budget pressures;
Design and pricing reflects whole lifecycle of the asset; ' • Success of the PPP depends on the quality of the project
� agreement and the City's ability to clearly and accurately
• The private partner assumes significant risks,including communicate its performance requirements.This requires a shift
interface and coordination during construction(such as in how projects are typically planned;
between design and construction,and between lots of
construction); • Planning and procurement take longer than under a traditional
procurement;
• Quality of asset at the end of the project term is assured
through handback condition assessment; • Can be misunderstood and raise opposition from special interest
groups;
• City can access innovative solutions.
• Up-front planning and procurement costs are higher.
32 Business Case 73 PwC
5. VfM analysis
�ot v�117 a�eettz�dotoc���
This section presents the approach to the Project's VfM analysis.
The VfM analysis reflects the Procurement Options Analysis Methodology developed by PPP Canada and is composed as
follows:
✓ Estimation of Project costs
✓ Estimation of the probability and value of risks retained and transferred by the City under each procurement model
✓ Development of the financing and tax structure assumptions for the Shadow Bid
✓ Development of the assumptions for the financial analysis
Horizon
The horizon for the analysis varies according to the nature of the capital expenditure.It is determined given the useful
life of the underlying assets and the nature of the infrastructure project. In order to make the analysis of the Public
Sector Comparator and Shadow Bid comparable,a single horizon is used for both models.
The VflVI analysis period considers the following:
✓ Lifecycle costs—horizon reflects at least one renewal period for major components
✓ Financing costs—debt should be repaid and equity should be released by the end of the concession period
The VfM for the Project has been developed using a term of 3o years plus the construction period.
Risk analysis
An essential element of the VfM analysis relates to the risk identification Value for Money
and quantification methodology.Managing risks in complex
infrastructure projects is critical to delivering facilities within a fixed
budget and timeline.A conservative approach will allow the City to build
an appropriate contingency to protect against unforeseen circumstances. .
-�
The City's objective should not be the maximization of risk transfer to �'
the private sector.Instead,it should strive to transfer risks to the party
best suited to develop the appropriate risk management strategy.In fact,
should the City transfer excessive risks to the private sector it could '
result in higher costs to the City. • '��
:. •
The Business Case risk analysis approach is performed in four distinct
steps as follows:
i. Development of a risk matrix identifying and describing all potential public Sector Shadow
risk events Comparator Bid
2. Determination of the probability of occurrence of each risk and its related cost base
3. Allocation of each risk between the private and public sectors for each procurement model analyzed
4. Perform a Monte Carlo simulation with io,000 iterations to define a cost probability distribution for all project risks
PwC 74 Business Case 33
The list of participants in the two risk workshops organized by the City and the result outputs are shown in Section o.
NPV and discount rate
The VfM analysis hinges upon two major variables:the cash flows generated by the Project,and the discount rate at
which they are discounted.
The discount rate is the interest rate used to determine the present value of future cash flows.Bringing these cash flows
back in time follows the concept of time value of money,which reflects the opportunity cost of capital:funds available
earlier can earn a return or fund capital expenditures,thereby reducing the associated cost of borrowing.The discount
rate is a key parameter in the calculation of the present value of the Project's cash flows.Should an inappropriate
discount rate be used in the analysis,there is a possibility that an inappropriate procurement model would be selected.
Discounting the cash flows of a project enables the comparison of different methods of procurement on a like for like
basis in order to determine which one provides better quantitative risk-adjusted value.
Indexation factors
In order to take inflation into account in capital investment costs,specific inflation indices should be used,reflecting the
category of cost. For instance,construction costs should be indexed according to a widely accepted construction inflation
index according to a construction disbursement schedule or S-curve.Using the right inflation factor for each cash flow as
it occurs will provide the right disbursement schedule to be used in the affordability analysis of Section�.
�.� �'me�jLCt co�ts
Basis of assessment
Design and construction costs were developed by CBCL Limited and R.V.Anderson Associates Ltd for the City in 2oio
based on a DBB procurement strategy.Opus provided an assessment of the Project costs with respect to construction,
operation and rehabilitation activities associated with the Program.
Base Project design and construction costs include general conditions,contractor overhead/profit and engineering fees.
However,these costs exclude any design or construction contingencies which were assessed separately as part of risk
workshops conducted in January 2oi3.
In addition,this section also presents the estimated O&M costs over the analysis horizon.
Detailed costing
Construction costs
Figure 24 presents the cost breakdown by initiatives,in 2oio dollars,for each Project initiative.A detailed cost
description is presented in Append'u�D (intentionally removed).
As previously indicated,base design and construction costs are estimated excluding contingencies and risks but
including general conditions,contractor overhead/profit and engineering fees. Design advancement level is currently
between 5%and io%according to Opus(see Appendix D intentionally removed).
34 Business Case 75 PwC
Figure 24: Estimated Project costs broken down by initiatives, excluding contingencies and risks
($)intentionally left blank so as not to compromise City's procurement process and financial outcome
of bids submission
. - . .
. . . `
1.Water treatment i.Water treatment plant("WTP")
2.Watershed improvements 2.Robertson Lake Dam
g.Transmission system ; 3.Latimer lake intakes and dam upgrades ;
improvements—raw supply 4,Supply Transmission(Lakewood Pump Station to WTP)
; 5.Transmission East(WTP to Sandbank Hill)
:..............................................................................................
4.Transmission system ; 6.Transmission East-Central(Sandbank Hill to Marsh Creek) ;
_.............................................................................................
improvements—potable ; �,Transmission Central(Marsh Creek to Metcalf Street)
8.Transmission Chesley Drive(PRV io�to RF Bridge)9
5.Water system storage ; 9.North End Storage Reservoir
improvements ; lo.Twin Storage Reservoirs at WTP Site
6.System pumping station 11.Reversing Falls Booster Pump Station
improvements i2.Spruce Lake Pump Station Upgrade
; i3.West System Modifications
; i4.Ocean Westway Rehabilitation(Spruce Lake to Gault Road)
�.System rehabilitation :..............................................................................................
; i5.Potable Transmission East(Lakewood PS to Sandbank Hill)
:..............................................................................................
i6.East Pressure Modifications
8.East industrial system 17.Industrial Transmission New(Lakewood PS to Sandbank Hill)
:..............................................................................................
improvements ; 18.Industrial Transmission Rehab(Lakewood PS to Sandbank Hill)
Total
Figure 25: Project costs broken down by design versus construction components, excluding contingencies and risks
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
Figure 26 presents the construction disbursement schedule for the Project.
Figure 26: Construction disbursement schedule
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
$ Costs expressed in 2010 dollars excluding contingencies and inflation
9 Includes Douglas Avenue and Central Spine rehabilitation
PwC 76 Business Case 35
Design-build timeline
The original DBB construction schedule provided for completion of the Project elements over a ten-year period in order
to sculpt expenditure to affordability constraints(see AppendiY H).The DBB would therefore have been broken into
many contracts awarded over a long period of time.It was determined that this model was not directly comparable to the
PPP.As a result,the construction timeline for the Public Sector Comparator and Shadow Bid are shown to be the same.
The time invested in preparation for the PPP prior to RFP launch would be used in the DBB model to complete design.
This,combined with the fact that the PPP would be delivered under a fast track construction approach,leads to the
construction completion being estimated to be approximately the same under both models as shown in Figure 2�.The
WTP and the transmission assets are expected to be delivered on the same date.
Figure 27: Project design and construction timeline according to the Shadow Bid
Design-build timeline
Contract Financial Substantial Final
start close completion completion
� ;yl)d077C�7ti � _%(�771C�:iii�i'PS � ;'77iUiY(-�?S �
i Aug., i Nov., i Jan., i Mar.,
2oi5 2oi5 2oi8 2oi8
Operation and maintenance costs
The costs required to operate the asset and perform regular maintenance of the WTP are the same under the Public
Sector Comparator and the Shadow Bid. Figure 28 presents the annual operating costs. Detailed cost description is
presented in Appendix D (intentionally removed).It should be noted that operation and maintenance costs for the
transmission network are not included as part of the Project and would be carried separately as part of the Utility Fund
capital program.
Figure 28:Annual operating costs
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
Life cycle costs
These costs are associated with planned or scheduled replacement,renovation and/or refurbishment of the WTP.These
costs are the same under the Public Sector Comparator and the Shadow Bid.Figure 29 presents the cost breakdown for
the asset renewal costs. Detailed cost description is presented in Appendix D(intentionally removed).
Figure 29: Life cycle profile
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
Under both procurement models,it is anticipated that lifecycle costs would be disbursed by the City according to the
lifecycle investment calendar during the operating period.
36 Business Case 77 PwC
Ancillary costs
Ancillary costs reflect costs associated with the planning and procurement of the Project.Assumptions under each
delivery model are presented in Figure 30.
Figure 30:Ancillary costs in 2010$
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
<�m� ����,�"�: ������������ c����� �����ntz��:����a�
Risk analysis is an important process in the selection of a delivery model, and enables a balanced(i.e.risk-adjusted)
comparison between the cost of delivering the project under the Public Sector Comparator and the Shadow Bid.The
exercise determines how risk transferred between the City and its PPP Contractor.The analysis also enables the Ciry to
identify key risks and to develop a risk mitigation strategy.
Risks are usually transferred to the party best suited to manage the risk,and hence the party who will minimize its cost.
Such allocation depends on the capacity of the party to control the risk,on the availability of mitigation measures and on
the cost of the risk.
Participants
Workshops were held in Saint John on January 2i and 22,2oi3. In order to facilitate the process,a preliminary list of
risks was identified and sent to each participant prior to the workshops. During the meeting,a panel of technical and
financial specialists debated each risk item,identified the cost bases,assessed the probabilities of occurrence and
estimated the relative impacts according to each delivery model.Figure 311ists the panel of specialists present at the
workshops.
Figure 31: List of participants in the January 2013 risk workshops
.
Bill Edwards Commissioner City
Dean Price Project Engineer(Committee Chair) City
Kevin Fudge Finance City
Fran�ois Beaulieu Legal affairs City
Nicole Taylor Water specialist City
Kendall Mason Deputy Commissioner—Saint John Water City
Gerry Mattsson Project Engineer(Second Chair) City
Phil Ouellette Intergovernmental Affairs City
Paula Carroll Administrative Assistant City
Stephen Lidington Financing and procurement PPP Canada
Richard Youmaran Financing and procurement PPP Canada
Walt Bayeless Water infrastructure,risk Opus
Philippe Raymond Project finance,risk PwC
Paul Mai Project finance,risk PwC
Patrick el Kareh Project finance,risk PwC
PwC 78 Business Case 37
As previously described,the risk quantification approach consists of four steps:
i. Identification of risks
2. Determination of the probability of occurrence
3. Allocation of risks between private and public sectors
4. Quantification of risks and Monte Carlo simulation with io,000 iterations
Detailed methodology
The first step consisted of identifying risks that will have a significant impact on Project costs.PwC and the City
developed a list of 46 risks grouped in io categories.The complete risk matrix is included in Appendix F
(intentionally removed).
The risk matrix divides risks into Specific and Global risks.Specific risks are risks specifically associated with cost
elements of the Project.The quantification of these risks is compared to the contingencies for design and construction.
Global risks are those that result from the complex internal forces and compelling external forces to which large,
complicated and long-duration projects are generally exposed. Global risks affect the Project as a whole.
Global risks include the risk of delay which has an impact on two cost drivers in both the Public Sector Comparator and
Shadow bid models:
✓ Inflation: Cost of delaying the project by one month such that inflation will increase labour and material costs
✓ Intentionally left blank so as not to compromise City's procurement process and financial outcome
of bids submission
A delay in a PPP also impacts the cost of financing estimated as being the cost associated with additional private
financing.The cost of a one-month delay was calculated and the results are presented in AppendiY G(intentionally
removed).Appendix I(intentionally removed)provides the detailed summary of the risk workshop.
Participants in the risk workshops first determined the probability of occurrence of each risk for each of the delivery
models considered. Participants were then able to determine the monetary impact of each risk on the delivery models.
Using a triangular distribution,minimal(95%probability),most likely(50%probability)and maximal(5%probability)
impacts were identified. Based on past experience,participants were able to determine the risk allocation between the
City and its PPP Contractor.
Finally,PwC carried out a Monte Carlo simulation using Oracle's Crystal Ball program.This simulation calculated the
expected monetary value of each risk under the predefined set of assumptions outlined during the workshops.The
exercise relied on io,000 runs to quantify risks,resulting in total value for retained,transferred and shared risks under
the two delivery models.
The Monte Carlo outputs are illustrated in Figure 32 and Figure 33 while Appendix G(intentionally removed)
provides the risk input assumptions under each delivery model developed during the risk workshops.
Figure 32: Risk quantification under the Public Sector Comparator in 2010$
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
38 Business Case 79 PwC
Figure 33: Risk quantification under the Shadow Bid in 2010$
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
Risk results
The output of the risk quantification exercise is presented in Figure 34. It is important to reiterate that the risk analysis
output includes risks,contingencies and efficiencies.
Figure 34: Summary of risk assessment
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
The top five risks identified as having a significant impact on Project costs are presented in Figure 35•
Figure 35: Project top five risks in 2010$
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
r� �n' ��'�bk'��'a���;"���� C���� � ;"� e�3���
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
Figure 36: Long term (30 years) New Brunswick benchmark rate
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
Figure 37: HST calculation assumptions (in 2010 dollars)
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
�.,s�� ,��u���:���a�! ���������$��r� ��c�������a����������
It is expected that the PPP Contractor would have a financing structure as presented in Figure 38.
Figure 38: PPP financing structure
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
PwC $Q Business Case 39
�a�� �a�g�����W�����x���� �'��l ����s�1�����'��
The VflVI is computed in NPV terms over the Project's 3o-year analysis horizon(Intentionally left blank so as not to
compromise City's procurement process and financial outcome of bids submission)in order to account for
the time value of money(i.e.a dollar today is worth more than a dollar in the future).When base costs,ancillary costs,
risks and contingencies are taken into account,the VflVI totals $3.2 million.This VflVI analysis will be refreshed at the
moment of RFP bid submission whereby the estimated Project costs will be substituted with the PPP Contractor bid
costs.The VfM is illustrated in Figure 39•
Figure 39: Project VfM Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
Cost categories for the VfM analysis are broken down according to Figure 40.It is worthy to note that the global and
specific risks parts of the Risks Retained component of the Shadow Bid represent risks retained by the City under a PPP.
Figure 40: Cost categories-Public Sector Comparator and Shadow Bid
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
Figure 41:Variation in VfM according to changes in input assumptions
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
40 Business Case $� PwC
6. Integrated recommendation
The VflVI analysis in Section o established that there is a$3.2 million benefit to procuring the Project as a PPP.This
VflVI analysis is sensitive to modeled assumptions and the result could be materially different should the future outlook
be different from the assumptions presented earlier.
In addition to the quantitative analysis,one has to recognize that there are also qualitative benefits to procuring a project
as a PPP.This qualitative assessment is based on the ability of the procurement model to meet the needs and objectives
set by the City and described in Section g.5.It is also complemented by the feedback received during the market
sounding.Considering qualitative criteria implies that the procurement model yielding the highest VflVI might not be
best suited based solely on quantitative criteria.The following benefits of a PPP can be noted:
✓ The PPP model would allow the City to accelerate development of the Project.The construction timeline produced by
the City's technical advisors under the DBB provided for the completion of components of the Project over a io year
period to reflect preliminary views regarding funding and affordability.While it is possible that the City could
accelerate development under a DBB,the PPP would guarantee delivery of the Project under a date certain
commitment.The value to the City of Saint-John and its citizens of delivering this Project more quickly than under a
DBB is significant even though it cannot be quantified. Benefits include improving citizens'health and well-being,
the City's ability to meet provincial water standards,avoid potential short-term boil alert orders,and decreasing the
environmental and financial cost of water leakage in the system,etc.
✓ Provides for a contractual obligation to adequately fund operations,maintenance and renewal of the WTP ensuring
the quality of the asset of a long term period
✓ Is likely to attract bidders with significant experience in the development of this type of infrastructure who would
have been unlikely to bid on a DBB.This experience will enable the City to benefit from the implementation of best
practices and standards on a national and global scale as well as innovative approaches to design and operations.
✓ Procure the Project at price and date certain
✓ Stimulate innovation as the design,construction and operation teams work together from the outset to design a
solution based on whole-life costs rather than solely capital costs
✓ Could enable the City to obtain PPP Canada funding of up to 25%of Project costs
✓ Could enable the City to obtain New Brunswick provincial funding at a minimum of 25%of Project costs linked to
PPP Canada's financial participation
✓ Significant level of internal and external controls associated with the contractual and financing structure including:
• Independent certifier who acts for both the City and PPP Contractor who signs off on substantial completion
based on achievement of specifications set out by the City;
• Lenders'technical advisors who oversee draw requests by PPP Contractor and ensure that the Project is on time
and on budget
• Performance regime which provides the City with the controls required to enforce quality standards
• Qualification process which leads to the selection of the best technically quali�ed and financially capable bidders
• Possible role of a process auditor who will oversee the procurement process and report on the transparency and
equity of the selection of the preferred bidder
• Strict controls in the evaluation process including explicit division and protection of financial bid from technical
bid
PwC 82 Business Case 41
Taken together,the qualitative and quantitative analysis point to the PPP procurement model as being the best solution
for the Project.
42 Business Case 83 PwC
7. Projectfunding and affordability
�Q� S�-��� �o ��'����ce� +�f fiPtacl�
Saint John Water,in conjunction with advice from design consultants,provided the City's Finance Department with
capital and operating estimates for each of the Program's categories.Without investments from other government levels,
an investment of this magnitude will cause considerable upward pressure on the Utility budget and associated Utility
rates.
At present,funding has not yet been secured from other government levels and certainty will only be obtained once this
Business Case has been submitted to the relevant authorities.
While the VfM analysis does not reflect any assumptions regarding capital contributions from the Province of New
Brunswick or the Government of Canada,the City requested that PwC complete the affordability analysis with the
following assumptions:
✓ Federal contribution or PPP Canada fund contribution: 25%of eligiblel�Project costs
✓ A minimum 25%contribution towards capital costs from the Province of New Brunswick paid at Substantial
Completion
✓ City funding for the remaining balance
It must be noted that the provincial contribution would depend on the City's ability to secure the PPP Canada funding for
the Project,and given that PPP Canada's funding is available only if the procurement model selected is the PPP,the City
has assumed,for the purposes of the Business Case and the affordability analysis,that a DBB would obtain no funding
from other government levels.Figure 42 presents the cash disbursements in nominal dollars as well as the related
timing of such disbursements in a PPP procurement.
Figure 42: PPP Project sources and uses of funds
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
. h ,
j �b �.�..�.�r�' .o-�0m r1�J�c'B"d� �i���.'�4�+i�'f�� �§��+ki -9'.�l„fu�E,'iC'i!'1�#����.��.���4Z.�ps� ��fi9 '"���,���;ars � �?,;1!��i��"..�li�:.� � �.�a:ia�.��� �e�u.�-'���,b�:t�F��-��a
�.o-, ���� � .,, . .M . �
As illustrated in Section 6,a PPP procurement not only generates VflVI and creates qualitative benefits but will also
provide access to federal and provincial funding equivalent to at least 50%of the Project costs.This funding will be
critical to the success of the Project as a full City undertaking would translate to a substantial water rate increase for the
residents of Saint John.For the City ratepayers,this translates into a water rate ranging between$i,45o and$i,55o per
year by 203o for a PPP procurement versus $i,65o and$i,75o per year over the same period for a traditional
procurementll. Procuring this as a PPP is therefore equivalent to a savings of io%to i5%to the ratepayer when PPP
Canada and the Province of New Brunswick's contributions are taken into account.
In addition,PPP Canada's involvement during the procurement phase,along with that of the financial,legal and
technical advisors,would provide another level of due diligence and ensure that the Project adopts best practices in the
delivery of infrastructure assets.
10 For the purpose of the Project affordability analysis,eligible costs include construction and procurement costs,but exclude taxes and financing costs.
" Water rate calculation performed by the City
PwC 84 Business Case 43
8. Procurement strategy
�,� ,I��c�rrraaT��ac����a�ca��c�errz��at�r°QC��s
As described in the preceding sections,the VfM analysis concludes that a PPP procurement would generate value for
money,when compared to the traditional procurement approach defined as a DBB.
The PPP would be defined as follows:
WTP and associated storage: DBFOM.The project agreement would have a term equal to the construction period
plus 3o years.
Transmission Assets: DBF.
A single consortium would be responsible for the WTP and transmission assets components of the Project.
The procurement process would be divided into two components,being i)the RFQ and ii)the RFP.The market sounding
exercise was successful in soliciting input from several key suppliers in this sector and sensitizing them to the Project
and indicative timeline.To the extent that the Project does not experience delays in approval from stakeholders,a
request for expressions of interest would not be necessary.The RFQ would be issued publicly on MERX consistent with
the procurement procedures of the City of Saint John. Respondents to the market sounding and other suppliers could be
contacted to alert them to the issuance of the RFQ. In addition,representatives of the City could participate in select PPP
conferences in order to speak about their Project in advance of the launch of the RFQ and depending on the conference
roster.
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
RFP evaluation parameters have not been developed at this time. Input from technical advisors is considered to be
important so as to better understand the impact of available technologies on quality and price.
44 Business Case $rj PwC
Figure 43 illustrates key procurement milestones until financial close with the PPP Contractor.
Figure 43: Key Project milestones in the recommended PPP procurement model
���������������'r�'-'�
�OmO00mOmOmOmOmOmO00m00000000000
Business Case approval by Council
Council approves submissioo ofRusiness Case to PPP � �
Canada and RFP for owner's engineer,public
awarenessandlegaladvisors
Procurem ent process preparation activities
Preparation of RFP for owner's engineer,public
awareness and Legal advisors(i.s month) I
Issue RFP for ownei's engineer a��d legal advisors � ��� �
RFP open period(�month) � �
Praposal submission � �
A�oposal evalitation period(0.5 month)
PPP Canada approvaLfor Business Case _ _� . I, �_ � �
Council approval for hirina ofowner's engineer,
public awareness and legal advisors.Confirm
cngagement offinancia]advisors.T.aunch of
City design advancement to�zo%,drafting of
performance specifications a��d proc.urement
documentation(ii.5 months)
Procurem ent process
RFQlauncli � �
RFQ open period(3 months) � � �
RFQ submission � �
RFQevaluation period(�month)
Qualified bidders announcement and RFP launch
RFP open period(9 months) I
RFP submission �
RFP evaluation period(2 months)
RFP approval period(i month)
COUncil approves preferced proponent and eaely �
works,ifnecessary
Financial close period �
�Co�firmation of VfM presentcd to Council.Council
authorizes execution ofcont�acts
Commercial and financial cLose
City activity -City approval milestone �Proponent activity
Project milestone PPP Canada approval milestone City and proponent activity
The diagram above shows that it is intended that the City would obtain Common Council approval of the Business Case
by mid-March 2oi3 with a view to submitting the Business Case to PPP Canada in the first week of April, 2oi3.In order
to accelerate the procurement process,it has been determined that the City will immediately begin the drafting of the
RFP documents for public awareness,legal and technical advisors and launch those RFPs in order to have selected these
providers by the end of June 2oi3.Their engagement would be conditional on obtaining official written notice of PPP
Canada funding expected by July i, 2oi3.
The timeline assumes that if PPP Canada funding is approved in July 2oi3, Common Council would approve
engagement of the technical and legal advisors at this time and launch the procurement process.Common Council will
be kept informed in a timely fashion on the progress of the process.
Opus believes that the technical advisors would need to advance design to approximately 20%prior to RFP launch.This
work,along with development of the output and performance specifications would take place over a i2-month period
between July i, 2oi3 and June 30, 2oi4 in parallel to the development of the RFQ,RFP and draft project agreement
documentation. RFQ launch would occur in early March, 2oi4 with a plan to issue the RFP by the end of July,2oi4 in
order to be able to reach financial close by the end of October, 2oi5.The schedule also provides for the possibility of
entering into an early works agreement with the preferred bidder in order to enable some preparatory work as of
August 2oi5,in advance of the winter of 2oi5-2oi6,when works will be slowed due to weather conditions.
PwC 86 Business Case 45
a��au� ��'�.������5 ���`;�����i���s�����'l%2�D���,�_u"���k�� ;.��F��°��
The City has the authority to undertake the PPP procurement and will appoint a project manager as well as key members
of the project team(see Figure 44)to begin the procurement phase.There is no additional legislative or policy
authority required to carry out the Project as a PPP.
�A�� ������:� ���+��� ��e�������������� ����������
The Action Plan,a priority of the Common Council and the citizens of Saint John,will fundamentally improve an
essential public service. However,adequate resources have yet to be formally allocated to overall program
implementation and management.Managing the magnitude and complexity of a program like this calls for a dedicated
team of qualified engineering professionals backed by operational,administrative,financial,legal and other expertise.A
public information resource commitment is also important.Beyond its significance for public health,the Project also
represents a major financial challenge as it will expend substantial resources.Although the City has already budgeted for
these expenses,they must be effective in producing desired outcomes and carefully managed to maximize value for
money.
The Project's organizational chart as outlined in Figure 44 incorporates the governance role through to management of
the various Project components.It illustrates a structure that will ensure accountability of each individual for every
taxpayer dollar spent on the Project.At Project level,it provides for senior leadership direction and links to the
administrative responsibilities of the Commissioner,who subsequently reports to the City Manager.
Figure 44: Project organizational chart
� r �
Project External Project
AdUisors Organizational Chart
,, , � � /
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, • � � - � � �
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46 Business Case 87 PwC
The choice of procurement model will facilitate the selection of a Project governance structure reflecting best project
management practices.As such,the City will appoint a SCDWP project manager(the"Project Manager")to be in charge
of coordinating the various aspects involved in the completion of the Project. On the one hand,the Project Manager will
be supported by dedicated teams in the form of committees(e.g.,technical,finance,monitoring)and on the other hand,
they will enlist the services of external advisors in specific fields of expertise to complement the Project resource
requirements.
The role of each stakeholder is as follows:
✓ Project Manager
The Project Manager ensures that the procurement of the Project is implemented in a seamless fashion,particularly
with regard to Project schedule and costs.They will also have overall responsibility to ensure that the Project is
designed and built according to contract specifications.In addition to having overall project coordination
responsibilities,they will have budget and construction monitoring duties.The Project Manager reports to the Ciry
Commissioner and is expected to commit to the Project on a full-time basis.
✓ Technical Committee
This committee assesses the technical elements of the Project such as its design,architecture,functionality and
compliance to any required regulatory standards.More specifically,it will address technical issues arising from
design and construction.The Technical Committee will also act as an intermediary between the City and the PPP
Contractor.
✓ Finance Committee
This committee will monitor the Project's costs and approve underlying expenses up until financial close.Any cost
deviation during the procurement process resulting either from a change in public awareness,owner's engineering,
legal,or financial costs will be subject to the review of the Finance Committee.To do so,it will maintain a
disbursement log to help the stakeholders understand the Project's costs evolution as well as potential funding
shortfalls the Project might encounter.
✓ Monitoring Committee
This committee is responsible for directly monitoring the quality and progress of the Project's infrastructure.It will
request and review the various audits,tests and checks submitted by the PPP Contractor during the design and
construction stages of the Project.The Monitoring Committee ensures that construction is compliant with the output
specifications and that construction progress is aligned with the original timetable.
✓ Financial and procurement advisor
PwC will act as financial and procurement advisor for the City. In its role,PwC will assist with the drafting of
procurement documentation,the evaluation of bids submitted and the negotiations through to financial close.
✓ Technical advisor
The technical advisor would assist the City with advancing the design up to a level where RFP documentation can be
drafted(i.e.circa 20%).Furthermore,they will also be responsible for drafting the performance specifications and
asset hand-back requirements to be included in the RFP documentation.Additionally,the technical advisor will
assist with the evaluation of technical proposals during both the RFQ and RFP phases.
✓ Legal advisor
The legal advisor will draft all contractual documentation between the City and the PPP Contractor(e.g.,Project
Agreement and schedules).The legal advisor will also provide support to the City during the financial close process
with the PPP Contractor.
PwC $$ Business Case 47
✓ PPP Canada
PPP Canada is a federal government agency responsible for promoting PPP in Canada.It provides funding to
infrastructure projects,should they meet its screening criteria. PPP Canada's role will include the provision of
guidance through the Business Case phase and Project procurement.
✓ Independent certifier
The role of the independent certifier is to support the Project team in monitoring the construction of the Project.The
independent certifier will be mutually hired and remunerated by the City and PPP Contractor as soon as the
financial close is reached.The independent certifier produces monthly reports that identify issues and typically
include the following:
• Details of monthly site visits and comment on the construction status
• Reviews of specific work undertaken
• Reviews of mock-ups and material samples
• Comment on the installed infrastructure quality and compliance with specifications
• Adherence to the contract program and progress versus the agreed completion date
The independent certifier should identify,as early as possible,any areas requiring clarification and ensuring that all
compliance issues are promptly managed. Furthermore,a few years prior to and at the end of the project agreement,
the independent certifier should produce periodic asset condition reports. In the event that an asset fails to meet a
given specification within the hand back requirements,the City could then be entitled to withhold service payments
until the situation has been remedied by the PPP Contractor.
The amalgamation of the different disciplines above and the proposed governance structure will enable the City to
properly manage its Project's timetable and budget.Appropriate work processes,controls and reporting protocols will be
implemented,and modern program/project management software used to assist in managing implementation will be
made available to the Project team.
External advisors will be hired by July 2oi3 through an RFP process which should begin in April 2oi4.
�m� �r8���c� ay�;g���:�.��,������,� ��,�� ��������
The City's Utility Fund Capital Program has set aside a sum of$5,000,00o in 2oi2 and $5,000,00o in 2oi3 to
implement the Program.These funds would cover the PPP procurement process.
The current PPP Business Case team consists of engineers,water utility managers, accountants and lawyers from several
departments who are also supported by Strategic Services who coordinate media and government relations.This project
team is working upon request to deliver the outcomes to move the Project forward. However,team members are at the
moment not committed full time on the Project,since they manage a portfolio of mandates for the City.
The City recognizes that it will need a dedicated full time internal staff as well as external advisors to procure the Project
as a PPP. For the time being,it has mobilized il staff working part-time on the Project.Upon approval,the team will
grow to include full-time and part-time members,who in turn will engage and manage the external advisors.
48 Business Case 89 PwC
�m,� ��� �r�����a���t�
Project documentation is an important task within a structured and rigorous PPP procurement. Key Project documents
include,but are not limited to,the following:
Tender documents for legal and technical advisors
The tendering documentation for legal and technical advisors will ensure that these external advisors will be hired on the
best quality-price basis.The scope of work for legal advisors would include the drafting of legal documentation such as
the RFQ,RFP,Project Agreement and the negotiation with bidders during the financial close process.Technical advisors
will be hired to advance the Project design to an acceptable level(i.e.approximately 15%)for procurement,at which time
they would undertake the drafting of performance specifications.In addition,technical advisors will participate in the
calibration of the payment mechanism as well as the technical evaluation of qualifications and proposals received.
Performance specifications
The performance specifications refer to the output,standard or objectives the City desires for the Project.Such
specifications could be either performance-based according to the type or quality of material,or could be output-driven
(e.g.building has to be able to sustain an earthquake of 6.o magnitude on the Richter scale,water quality has to have a
ph level between 6.5 and 8.5,etc.).
Project Agreement
The project agreement details the obligations of the PPP Contractor and the expected services to be provided over the
term of the agreement(usually twenty to thirty years).This document also outlines the way in which the PPP Contractor
is remunerated from the moment the asset is commissioned,as well as the conditions in which the said asset is to be
handed back to the City at the end of the agreement.
Payment mechanism
The payment mechanism is a schedule of the project agreement and is a key document which governs the way in which
the PPP Contractor is remunerated over the duration of the PPP contract.A well-conceived payment mechanism will
typically cover the following elements:
✓ Remuneration for availability of the asset and good performance
✓ Remuneration for positive volume enhancement as applicable
✓ Penalty for non-availability
✓ Penalty for performance failures
In the event that the quality or availability of the services rendered is compromised,an abatement is applied to the
annual service payment,thus incentivizing the PPP Contractor to perform up to the specified standards of the project
agreement.The payment mechanism should consider:
✓ Demand risk over which the PPP Contractor has no control
✓ Cost items over which the PPP Contractor has no control(e.g.property tax,utilities pricing)
✓ The severity of the quality or availability failure(e.g.the payment deduction imposed upon a contractor working on
a hospital building for the unavailability of a critical care unit is more severe than that for a waiting room)
✓ Inflation factors which should be agreed upon at the outset
PwC QQ Business Case 49
By applying these principles,the City will properly align its incentives with those of the PPP Contractor. Finally,a
properly drafted payment mechanism also allows for the sharing of risks,such as those of poor service delivery or
maintenance deficit during operation.
Hand-back Requirements
Although the buildings and facilities will always be owned by the City,it will nonetheless want to ascertain that the asset
is transferred in acceptable conditions at the end of the project agreement. One way of doing so is through the payment
mechanism,which permits the withholding of annual service payments in the event of any service failure caused by poor
maintenance.Another way is by clearly articulating the City's expectations with regard to asset condition at the end of
the project agreement.For instance,such conditions could be based on the expected remaining useful life of the asset or
specific asset quality grading.A typical asset hand-back requirement would specify asset condition monitoring a few
years prior to the end of the project agreement so that in the case of poor maintenance,service payment withholding
could be enforced.
RFQ
In order to attract greater participation from credible local and international companies,the RFQ document should be
simple and should not require respondents to incur significant expense in preparing a response.The evaluation process
should be clearly defined so that bidders can assess their ability to be qualified.The information required from bidders
should be limited to the technical and financial capabilities required to undertake the Project.
RFP
The RFP documents seeks to select a bidder that offers the best value for money for the City and obtain a commitment
from the preferred bidder with respect to the cost,timeline and performance of the project over the term of the project
agreement.The RFP package should include all the information bidders need to prepare their proposals including the
draft project agreement,procurement timetables,output specifications,payment mechanisms,key commercial terms
and evaluation criteria as described in this section.
50 Business Case g� PwC
y. Implementation plan
�e� �a����et�����«
Several engineering reports have been completed in support of this project1z.The preliminary design report for the WTP
and the Water System Improvement report form the basis for the Program.A site selection study has confirmed the best
site for the WTP and the City has received site approval from the Province of New Brunswick for the EA report.The
public was engaged during the open house sessions that were a part of the EA project.The session concluded that public
health improvement will be achieved through the implementation of the Project.
�9,� ��',.������'�����x�°
The project team will require prior approval from the Common Council for the completion of the major Project
milestones as follows:
✓ Business Case and submission to PPP Canada—second half of March 2oi3
✓ RFP for public awareness advisors,legal advisors and owner's engineer—first half of Apri12oi3
✓ Hiring of owner's engineer pursuant to the RFP process—first half of July 2oi3
✓ Launch of the procurement process—first half of July 2oi3
✓ Preferred proponent and early works—July 2oi5
✓ VfM validation and PPP contract execution—October 2oi5
Furthermore,the City will also need to obtain final confirmation from PPP Canada for the approval of the Business Case
and federal funding commitment as well as confirmation from the Province of New Brunswick for the approval of the
provincial funding commitment.This confirmation should be received in early July 2oi3.
�o� '���`k;���"�1������' ��.���f��li'�'%'�ii?n.���2� 4,:�u"2d�����+r��ii?%P���'�i�"4'.�d�"u�vS�',��
There are three different stakeholder engagement strategies that are expected to support the PPP alternative for the
Program.The governmental relations strategy was developed in early February 2oi3,and its objective is to secure a
meaningful financial commitment from the Government of New Brunswick in order to support the Program.The
government relations strategy maps out the various provincial partners as well as sequencing of activity between the two
levels of government.
The second strategy was developed in mid-February 2oi3,and established the framework for the Program awareness
and education from the present to Apri15, 2oi3 (City of Saint John submission date to PPP Canada).The objective of the
plan is to coordinate the necessary awareness and education on the Program and its link to PPP Canada prior to the
Common Council's vote.The plan coordinates the activity of ii different City staff and teams as well as the engagement
of seven different stakeholders and partners.
12 For an exhaustive list of existing documentation,please refer to Section 3.7
PwC 92 Business Case 51
The third strategy is the larger public awareness and education exercise which will be developed and implemented after
Common Council provides its direction on the PPP alternative by Apri15,2oi3. In the event the Ciry pursues the PPP
alternative,the plan is to develop a request for proposals to identify a private sector partner to support the City's effort in
a public education and awareness exercise.The City has already started developing the goals and criteria for the request
for proposals and has also collected best practices and lessons learned from other jurisdictions which have undertaken
similar exercises.
�� i�; �`�fX�� 1J�'�u'IN�."��'sti�il�a�a�1r � sr�"dr;i� L`+�t_�.w�a��n�������:u"'����;,�.wiit
The City will put in place a team which will ensure the completion of the Project as well as facilitate its transition into the
operating phase. Rigour,accountability and transparency will clarify the budget and control processes elaborated by the
Project team for both the construction and operating phases.This endeavour will be essentially initiated by the Project
Manager with the assistance of inembers of the technical committee.
The City understands that contractual documentation and management will be particularly important in a PPP and will
assign a full-time staff inember in order to manage any communication issues that could arise between the City and the
PPP Contractor. It is anticipated that the construction period will be more labour-intensive and will require more
monitoring by the City,and as such the identified full-time individual will also be able to obtain the support of a broader
team within any one of the committees identified in Figure 44. Post-procurement tasks that will need to be completed
over the life of the Project most notably include:
✓ Interface with the PPP Contractor and potential funding authorities(municipal,provincial and federal)
✓ Follow-up of construction progress and updates to the City of any anticipated schedule delay
✓ Management of project costs and preparation budget tracking dashboards
✓ Ensuring that a commissioning plan has been prepared by the PPP Contractor at the outset, and that such plan has
been agreed upon by the City
✓ Based on the independent certifier report,ensuring that the Project is delivered according to the performance and
technical specifications
✓ Calculation of any adjustment or abatement to the service payments based on the payment mechanism
The City will add additional resources as required during the operating phase,but such additional resources will be
internal to the City and should not create any additional costs.
52 Business Case 93 PwC
io. Bibliography
✓ Enuironmental Assessment Saint John Drinking Water Treatment Facility Little Riuer Reseruoir,Saint John,New
Brunswick(Dillon Consulting Limited),September 2ou
✓ Consultant Presentation on Value Engineering(Robinson,Stafford&Rude,Inc.) ("RSR"),Water Treatment and
Distribution Improvement Program, Report to Common Council and Presentation,M&C 2009 —391,November
26th, 2009
✓ Water Treatment Plant Siting Report,CBCL Limited,December 2009
✓ Preliminary Design of Potable Water Treatment Facilities,Preliminary Design Report,R.V.Anderson Associates
Limited("RVA")on behalf of the City of Saint John,November 2009
✓ Water/wastewater sector study,PPP Canada,January 2oi3
✓ Report to Common Council M&C 2010—247,A Challenge of Community and Essential Service,a Report on the
Action Plan for Safe,Clean Drinking Water,July i2th 2oio
✓ Report to Common Council M&C 2oY1 —85,Assuring High-Quality Drinking Water,Program Structuring and
Implementation Plan,April�th 2ou
✓ Report to Common Council M&C 2011 —262,Safe,Clean Drinking Water—Progress Report#i,October 6th 2oii
✓ Report to Common Council M&C 2o1Y —2�0,Safe,Clean Drinking Water—Progress Report#2,October 2oth 2ou
✓ Report to Common Council M&C 2ozi —282,Safe,Clean Drinking Water—Progress Report#3,November 3rd 2011
✓ Report to Common Council M&C 2011 —295,Safe, Clean Drinking Water—Progress Report#4,November i6th 2oii
✓ A Challenge of Community and Essential Service,July 2oio
✓ P3 Business Case Development Guide,Improving the delivery of Public Infrastructure through Public-Private
Partnerships,PPP Canada
PwC 94 Business Case 53
95
Appendix A -
Utility budget
PwC 96 Business Case
97
�. � pa �.T �ro co � �n � r� cov� �vc � �
� �
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December 8, 2012 � ' ��, o�,� `
�,r�'t`�-��-��, �`� �
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Y`
His Worship Mayor Mel Norton and
The Citti�of Saint)ohn
Members of Common Council
Your Worship and Councillors,
Subject; Proposed 2013 Water and Sewerage Rate Revision
The first draft of the 2013 Water and Sewerage Budget included a proposed rate increase of$72.00 or a
7.4% increase over the 2012 rate for flat rate customers. An equivalent adjustment would be applied to
the metered customers.
Council was also advised that there would be continued upward pressure on water rates as the City
moved forward to invest heavily in the Clean Water program. Council expressed some concern about
the impact of the proposed rate increases on homeowners in general and those on limited or fixed
incomes in particular. Council requested that various mitigation measures be explored to lessen the
impact of the proposed rate increase.
Staff advised that adoption of the Shared Risk Pension model would ease pressure on the Water Utility
budget and any resultant savings could be applied to lower the anticipated increase. A lower overall
rate increase is the most equitable mitigation measure as it applies universally to alJ customers.
An analysis was completed in the past week to determine exactly how rates would be impacted if the
contribution rate proposed for the City (13% CSC and 17% PSC) as outlined in the Shared Risk model
were applied to the Utility budget.
The total amount budgeted for pension contribution in the first draft was approximately $3,000,000.
The amount required under the Shared Risk Plan is projected to be approximately $2,000,OOO.The net
effect is to reduce the proposed rate increase from 7.4%to 3.7%.
SJ Water 2013 Proposed 2013 Revised
Flat Rate (%/$) 7.4%/$72 3.7%/$36
Metered
Service Charge No Change No Change
Consumption 7.4% 3.7%
98
Page 2
A revised bylaw amendment schedule is attached for Council's consideration. The new rates can be
adopted at third reading. Given the need for rate certainty and the need to make the necessary
adjustments to the billing system, should Council decide not to pursue the Shared Risk Plan it is
proposed that the revised rate still apply for 2013 and that the Capital from operating account be used
to cover any resulting shortfall. While this approach will serve to increase borrowing costs it would be a
temporary measure for the 2013 year only.
It is important to note that a full water rate review will be carried out in 2013 and the P3 business case
will also be completed. The outcome of both these initiatives will have a direct impact on future rates.
The 2014 rate will then be revised to reflect the combined effect of these initiatives and any adjustment
for actual pension contributions.
As noted, Council also requested that staff exploring other mitigation measures. Staff are considering a
variety of options and will have to assess our bylaw authority to implement such measures. These
efforts will be examined in more depth and a report will be presented to Council in the New Year. The
proposed rate adjustment will nevertheless provide immediate relief to all customers.
Recommendation
That Common Council approve the revised 2013 rate schedule as attached and adopt same at Third
Reading of the Water and Sewerage Bylaw amendment process.
R ectfully submitted,
� ��
` �
trick Woods CGA
City Manager
99
07/1212012
SAINT JOHN WATER SERVICE BASED BUDGET
2013-2016
201�2 201�3 2014 2015 2016
Bud et Bud et Forecast Forecast Forecast
Operating Expenditures
Drinking Water
Watershed Management 249,000 244,000 248,000 252,000 256,000
Water Treatment 2,092,000 2,076,000 2,097,000 2,118,000 2,139,000
Water Pumping&Storage 996,000 1,086,000 1,101,000 1,116,000 1,132,000
Transportation & Distribution 4,370,000 4,456,000 4,517,000 4,579,000 4,643,000
Customer Metering 667,000 708,000 719,000 730,000 741,000
Industria! Water
Watershed Management 476,000 403,000 408,000 413,000 418,000
Water Pumping &Transport 822,000 1,063,000 1,081,000 1,099,000 1,118,000
Customer Metering 104,000 100,000 102,000 103,000 105,000
Wastewater
Wastewater Pumping 2,097,000 2,180,000 2,213,000 2,247,000 2,281,000
Wastewater Collection 2,520,000 2,604,000 2,646,000 2,687,000 2,730,000
WasteWater Treatment 4,398,000 4,208,000 4,277,000 4,346,000 4,418,000
lnfrastructure Management
Municipal Engineering 1,306,000 1,099,000 1,103,000 1,121,000 1,139,000
Other Internal Charges 509,000 542,000 555,000 565,000 576,000
Net pension costs 883,000 1,196,000 1,196,000 1,196,000 1,196,000
21,489,000 21,965,000 22,263,000 22,572,000 22,892,000
Fiscal Charges
Debt servicing 9,833,000 9,229,000 8,890,000 10,378,000 12,429,000
Capital from Operating 5,605,000 6,485,000 8,692,000 9,642,000 9,825,000
Total Fiscal Charges 15,438,000 15,714,000 17,582,000 20,020,000 22,254,000
Total Expenditures 36,927,000 37,679,000 39,845,000 42,592,000 45,146,000
Revenues
Flat rate Accounts 16,065,000 16,665,000 17,860,000 19,266,000 20,471,000
Metered Accounts 17,377,000 17,419,000 18,390,000 19,531,000 20,510,000
Fire Protection Levy 2,200,000 2,270,000 2,270,000 2,450,000 2,800,000
Storm Sewer Levy 1,060,000 1,100,000 1,100,000 1,120,000 1,140,000
Other revenues 225,000 225,000 225,000 225,000 225,000
Total Revenues 36,927,000 37,679,000 39,845,000 42,592,000 45,146,000
Key Metrics: - - _ _ _
Flat Rate - Wafer& Sewerage 972 1,008 1,080 1,164 1,236
Meter Rates:
Block 1 1.0974 1.1380 1.2188 1.3139 1.3953
Block 2 0.6988 0.7247 0.7761 0.8366 0.8885
Block 3 0.2466 0.2557 0.2739 0.2952 0.3135
Debt Service Ratio 26.63% 24.49% 22.31% 24.37% 27.53%
100
Page 1 of 1
101
Appendix B -
Utility audited,�nancial statement
PwC �02 Business Case
103
Financial Statements
The City of Saint John
Water and Sewerage Utility
December 31, 2010
�
� � � , ,
°� ERNST&YOUNG
104
CONTENTS
Pa�e
Independent Auditors' Report 1-2
Operating Fund Balance Sheet 3
Operating Fund Statement of Revenues and Expenses 4
Operating Fund Statement of Surplus {Deficit) 5 �i
Capital and Loan Fund Balance Sheet 6
Capital and Loan Fund Statement of Equity 7
Statement of Source and Application of Capital Financing 8
Notes to Financial Statements 9-16
105
Illlii��� ,,,..
III� ��� ���III 1
I I I I = ERNST&YOUNG
INDEPENDENT AIJDITORS' REPORT
To His Worship The Mayor
and Members of Common Council of The Cify of Saint John
We have audited the accompanying financial statements of The City of Saint
John Water and Sewerage Utility, which comprise the balance sheets of the
Operating Fund and the Capital and Loan Fund as at December 31, 2010 and the
related statements of revenue and expenses, deficit, equity and source and
application of capital financing for the year then ended, and a summary of
significant accounting policies and other explanatory information. The financial
statements have been prepared by management of The City of Saint John Water
and Sewerage Utility using the basis of accounting described in Note 1.
Management's responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these
financial statements in accordance with the basis of accounting described in
Note 1; this includes determining that the basis of accounting used is an
acceptable basis for the preparation of the financial statements in the
circumstances, and for such internal control as management deterinines is
necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditors' responsibility
Our responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit in accordance with Canadian generally
accepted auditing standards. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial statements. The procedures selected
depend on the auditors' judgment, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditors consider internal control relevant
to the entity's preparation and fair presentation of the financial statements in order
to design audit procedures that are appropriate in the circumstances, but not for
the purpose nf expressing an opinion on the effectiveness of the entity's intemal
controL An audit also includes evaluating the appropriateness of accounting
106
policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the financial
statements.
VVe believe that the audit evidence we have obtained in our audit is sufficient and
appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the
financial position of The City of Saint John Water and Sewerage Utility as at
December 31, 2010 and the results of its operations and the source and
application of its capital financing for the year then ended in accordance with the
basis of accounting described in Note 1 to these financial statements.
Basis of accounting
Without modifying our opinion, we draw attention to Note 1 to the financial
statements, which describes the basis of accounting. The financial statements are
prepared to comply with the requirements of the Department of Local
Government of New Brunswick for municipalities. Our report is intended solely
far the information and use of His Worship The Mayor and Members of Common
Council of The City of Saint John, and the Minister of Local Government of the
Province of New Brunswick, and is not intended to be and should not be used for
any other purpose.
�itistio-� f (��L L f�
Dieppe, Canada, '
December 19, 2011 Chartered Accountants '�
'I
107
The City of Saint John Water and Sewerage Utility
OPERA7'ING FUND . ,
BALANCESHEET
As at December 31
2010 2009
Page $ $
ASSETS
Accounts receivable 18,294,630 16,419,412
Due from associated entities
6 Water and Sewerage Utility
Capital and Loan Fund 3,193,650 ---
15 Long-term receivable[note 9J 73,432 44,264
21,561,712 16,463,676
,
LIABILITIES AND (DEFICIT)EQUITY
Accounts payable and accrued liabilities 15,889,800 9,765,107
6 Due to associated entities
General Capital and Loan Fund 7,664 7,664
General Operating Fund 3,703,246 3,274,070
Water and Sewerage Utility
Capital and Loan Fund --- 2,723,372
City of Saint John—Pension Fund 1,100,859 ---
12 Other payables jnote 3J 589,017 671,657
Interest payable on long-term debt 229,447 264,187
21,520,033 16,706,05 7
5 Surplus(deficit) [note �J 41,679 (242,381)
21,561,712 16,463,676
See accompanying notes �
;
� L/
/
Signed on behalf of the CounciL
(/�i y /
�/ Mayor hai f Finance Committee
,r�"t ._,0,�,i,i`JD
/ �
3
108
The City of Saint John Water and Sewerage Utility
OPERATING FUND
` STATEMENT OF REVENUES AND EXPENSES
Year ended December 31
Budget Actual Actual
2010 2010 2009
(Unaudited)
Pa�e $ $ $
Revenues
Charges to customers 30,523,000 30,665,805 29,196,493
Charges to General Operating Fund[note SJ
13 Water supply for fire protection 2,300,000 2,200,000 2,045,000
13 Storm sewerage 970 000 910,000 910,000
3,270,000 3,110,000 2,955,000
Total revenues 33,793,000 33,775,805 32,151,493
Expenses
Water supply
Purification and treatment 2,105,000 1,887,353 2,168,903
Transmission and distribution 6,277,000 6,334,935 4,889,485
Pumping 921,000 1,155,280 869,570
Sewerage collection and disposal
Sewerage collection system 2,162,000 2,221,889 1,824,231
Sewerage treatment and disposal 5,242,000 4,683,287 3,684,959
Billing and collection 491,000 565,680 494,295
Operational support 454,000 253,569 279,519
Engineering 1,276,000 1,298,785 915,756
Administration and general
government services --- --- 2,865,415
18,928,000 18,400,778 17,992,133
Fiscalservices
Interest on long-term debt
Debenture debt 2,644,932 2,208,148 2,160,740
Principal installments
Debenture debt 5,447,000 5,447,000 5,725,000
Discount on debentures issued 250,000 62,659 56,449
Capital projects ftnanced by the
General Operating Fund 5,605,000 5,605,000 5,605,034
Short-term financing costs�note SJ 399,618 313,336 132,053
13 Funding pension fund[note 6J 427,000 1,431,324 317,060
Infrastructure agreement reserve 24,500 24,500 24,500
14,798,050 15,090,967 14,020,886
Total expenses and fiscal services 33,726,050 33,491,745 32,013,019
Excess of revenues over expenses 66,950 284,060 138,474
5 Excess revenues(expenses)of previous ears (66,950) (66,950) 11,822
5 Excess of revenues over expenses
for the year --- 217,110 150,296
See accompanyirzg notes
4
109
The City of Saint John Water and Sewerage Utility
OPERATING FUND
STATEMENT OF SURPLUS (DEFICIT)
Year ended December 31
ZO10 2009
Page $ $
Deficit, beginning of year (242,381) (380,855)
4 Excess of revenues over expenses for the year 217,110 150,296
(25,271) (230,559)
4 Excess revenues of previous years 66,950 (11,822)
12 Surplus (deficit),end of year�rzote 4J 41,679 (242,381)
See accompanying notes
5
110
The City of Saint John Water and Sewerage Utility
CAPITAL AND LOAN FUND
BALANCESHEET
As at December 31
2010 2009
Page $ $
ASSETS
Accounts receivable 10,000 ---
3 Due from associated entities
Water and Sewerage Utility Operating Fund --- 2,723,372
11 Fixed assets[note 2J 333,568,727 273,972,932
333,578,727 276,696,304
LIABILITIES AND EQiTITY
11 Debentures[note 2J 45,832,000 46,279,000
3 Due to associated entities
General Operating Fund 21,574,206 8,423,735
Water and Sewerage
Utility Operating Fund 3,193,650 ---
General Capital and Loan Fund 83,557 83,557
15 Deferred contributions�note 8J 1,510,063 1,510,062
72,193,476 56,296,354
7 Equity 261,385,251 220,399,950
333,578,727 276,696,304
See accompanying notes
Sign d on behal f the Council:
y�" -�_
�cs..-.. �+}^� Mayor C r of Finance Committee
I
6
111
The City of Saint John Water and Sewerage Utility
CA�ITAL AND LOAN FUND
STATEMENT OF EQUITY
Year ended December 31
2010 2009
Page $ $
Equity,beginning of year 220,399,950 194,498,823
Debt repaid during the year by the Utility
Operating Fund
Debenture debt 5,447,000 5,725,000
Contributions in aid of construction
Federal and provincial government 29,477,517 14,238,209
Fixed assets purchased by the Utility
Operating Fund 39,456 26,780
Capital projects financed by the Utility
OperatingFund 6,021,328 5,911,138
6 Equity,end of year 261,385,251 220,399,950
See accompanying notes I
7
112
The City of Saint John Water and Sewerage Utility
STATEMENT OF SOURCE AND APPLICATION OF
CAPITAL FINANCING
Year ended December 31
2010 2009
$ $
Source
Debenture issue 5,000,000 6,500,000
Government contributions 29,477,517 14,238,209
Fixed assets purchased by the Utility Operating Fund 39,456 26,780
Debt repaid by the Utility Operating Fund 5,447,000 5,725,000
Capital projects financed by the Utility Operating Fund 6,021,328 5,911,138
Net increase in due to associated entities 19,067,493 3,517,994
65,052,794 35,919,121
Application
Debt repayment 5,447,000 5,725,000
Capital expenditures 59,595,794 30,194,121
Increase in accounts receivable 10,000 ---
65,052,794 35,919,121
See accompanying notes
I
�I
8
113
The City of Saint John Water and Sewerage Utiliiy
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
1. ACCOUNTING POLICIES
These financial statements have been prepared to conform in all material respects
to the accounting principles prescribed for New Brunswick municipalities by the
Department of Local Government.
Financial statement presentation
The financial statements of the City of Saint John Water and Sewerage Utility [the
• "Utility"] have been prepared in accordance with the fund basis of accounting. ,
The Operating Fund reflects the Utility's working capital and results of operations '
and the Capital and Loan Fund reflects its investment in fixed assets and
outstanding long-term debt. �
Fixed assets and depreciation
Fixed assets are recorded at cost. Funds received through capital assistance
programs, cost-sharing arrangements or loan forgiveness are treated as additions
to equity in capital assets.
The Utility does not record depreciation on its fixed assets, but an amount equal to
annual debt repayment is charged to operations and credited to equity in capital
assets. The Utility also charges to operations all capital projects that are financed
in the current year from operating funds.
Accrual accounting
The Utility follows the accrual method of accounting for revenue and expenses.
Accounting for a surplus or deficit at the end of a fiscal year
Section 189(4) of the Municipalities Act of New Brunswick requires that the
Utility establish rates which result in a quadrennially balanced budget. Further,
Section 189(5)(b) states that should a surplus or deficit exist at the end of a year, it
must be spread over a four-year period commencing with the second ensuing year.
9
114
The City of Saint John Water and Sewerage Utility
NOTE5 TO FINANCIAL STATEMENTS
December 31, 2010
1. ACCOUNTING POLICIES [Cont'd]
Accounting estimates
The preparation of financial statements in conformity with the accounting
principles prescribed for New Brunswick municipalities by the Department of
Local Government requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
Financial instruments
The carrying values of the Utility's financial instruments, except for long-term
debt, approximate fair value because of their short-term maturity and normal
credit terms. The Utility's accounts receivable do not represent significant
concentration of credit risk because the accounts are owed by a large number of
ratepayers on normal credit terms. As long-term debt is arranged with the
Province of New Brunswick and is not renegotiable, the fair value of long-term
debt, affected by changing interest rates, has not been determined. At year-end,
the Utility did not have any exposure relating to derivative instruments.
,
l0
115
The City of Saint John Water and Sewerage Utility
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
2. DEBENTURES �
Debentures consist of the following:
Year of Interest Term 2010 2009
Issue Rate Years Balance Balance
% $ $
2000 6.100 to 6.400 10 � --- 313,000
2001 2.450 to 5.500 10 424,000 848,000
2002 3375 to 5.750 10 1,540,000 2,310,000
2003 3.050 to 5.000 10 1,962,000 2,6I6,000
2003 2.750 to 5.125 10 3,804,000 5,072,000
2004 2.750 to 4.800 10 6,552,000 7,020,000
2005 3.750 to 4.375 10 2,625,000 2,800,000
2006 4.150 to 4.450 10 6,400,000 6,800,000
2007 4.450 to 4.850 10 5,950,000 6,300,000
2008 3300 to 4.850 10 2,250,000 2,375,000
2008 2.100 to 5.550 15 3,150,000 3,325,000
2009 1.000 to 4.500 10 4,750,000 5,000,000
2009 Q.950 to 5.000 10 1,425,000 1,500,000
2010 1.500 to 4.SS0 10 5,000,000 ---
45,832,000 46,279,000
The aggregate amount of principal payments required on the Utility's long-term
debt in each of the next five years is as follows:
�
2011 5,384,000
2012 4,960,000
2013 4,190,000
2014 6,948,000
2015 3,550,000
Fixed assets include an amount of$26,954,215 (2009 - $7,896,725) for which
financing has not been arranged at year-end.
11
116
The City of Saint John Water and Sewerage Utility
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
3. OTHER PAYABLES
2010 2009
$ $
Vacation pay 310,017 259,657
Retirement allowance 279,000 412,000
589,017 67l,657
The Utility has provided for vacations earned but not paid.
Employees upon retirement from the City of Saint John are entitled to a retirement
pay allowance equal to one month's pay, to a m�imum of six months, for every
five years of service. The program has been amended to provide certain
employees with a payout option prior to retirement. Accepting the early payout
option eliminates further accumulation of retirement allowance entitlement for
those employees.
Employees of Local 18 hired after June l, 1998 and Management employees hired
after March 23, 2009 are not eligible for retirement allowance, now or in the
future. These policies are established in the Local 18 collective bargaining
agreement and the Management terms and conditions of employment.
4. OPERATING FUND SURPLUS OR DEFICIT
The surplus or deficit for each year is taken back into income over a four-year
period commencing with the second ensuing year. The balances remaining at the
end of each ear axe as follows:
Y
2010 2009
$ $
2005 --- 98,028
2006 (33,682) (67,364)
2007 (203,672) (305,509)
2008 (88,373) (117,832)
2009 150,296 150,296
2010 217,110 ---
41,679 (242,3 81)
12
117
The City of Saint John Water and Sewerage Utility
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
5. TRANSACTIONS WITH THE CITY OF SAINT JOHN
GENERAL FUND
The Water and Sewerage Utility Operating Fund reimbursed the General
Operating Fund an amount of $1,425,000 (2009 - $1,551,000) for its share of
general government operating costs. In addition, the General Operating Fund is
charged for storm sewerage costs $910,000 (2009 - $910,000) and water supply
for fire protection for an amount of$2,200,000 (2009 - $2,045,000).
Interest is charged on the balances between the General Fund and the Water and
Sewerage Utility on a monthly basis.
The Utility's water cost transfer is within the maximum allowable by regulation
based on the applicable percentage of water system expenditures for the
population.
6. PENSION PLAN
A. OVERVIEW
The City provides pension benefits to employees in accordance with the
provisions of the revised City of Saint John Pension Act as enacted on May 12,
1994 and last amended on June 18, 2008. The plan is administered by a Board of
Trustees, representing Common Council, management, unionized employees and
retired employees. Prior to May 1994, the plan was governed by The City of Saint
John Pension Act, 1970. The plan is subject to the provisions of the New
Brunswick Pension Benefits Act which became effective January l, 1992.
The plan is a defined benefit plan which provides for pensions based on length of
service and rate of pay. Both the City and the employees make contributions to the
plan. The plan is funded by eligible employees contributing 50% of the current
service cost to the plan to a maximum of 9% of aggregate salaries and the
employer contributing the balance of the current service cost. Based on the 2009
actuarial valuation, the current service cost of the plan was 20.6% of payroll. At
no time can the overall employer contribution rate be less than 7.5% of aggregate
salaries.
13
118
The City of Saint John Water and Sewerage Utility
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
A. OVERVIEW (Cont'd)
The employer is obligated to make additional contributions, if necessary, to
adequately amortize any unfunded liability or solvency deficiency. The City
charges all of its contributions to expense in the year the contribution is made.
The amount contributed for employees funded by Water and Sewerage Utility for
2010 amounted to $2,220,330 (2009 - $1,124,864).
B. ACTUARIAL INFORMATION
The 2010 actuarial valuation indicated the present value of accumulated plan
benefits was $495,380,000 and the market value of net assets available to provide
benefits was $372,228,000 with an estimated unfunded liability of$123,152,000
on a going concern basis. As of December 31, 2010, the liabilities on a solvency
basis were $218,007,000 greater than the solvency assets.
This valuation relates to the entire plan, which includes employees funded through
both the General Fund and the Water and Sewerage Utility. Current costs and
special funding payments are allocated to each fund on the basis of a percentage
of payrolls. >
C. DUE TO THE PENSION PLAN
The New Brunswick Pension Benefits Act requires that a solvency deficiency be
funded over a period of five years unless an exemption is requested to fund over a
period of no more than fifteen years, or the period to December 31, 2018,
whichever is shorter, or an exemption from making solvency payments is granted_
In 2007, this exemption from making solvency special payments to the pension
plan was_sought and received. As a result of receiving this exemption, there is no
longer solvency funding due from the City of Saint John as at December 31, 2010.
During 2010, the City of Saint John paid the plan an amount of $12,424,654,
which represented required special funding and interest on a going concern basis
(2009 — $2,721,547). The Utility Fund's share of this for 2010 is $1,431,324.
The City of Saint John is required to make special going concern payments until
2024.
14
119
The City of Saint John Water and Sewerage Utility
NOTES TO FINANCIAL STATEMENTS
December 31,2010
7. INTER-FUND ACCOUNTS
All inter-fund accounts at December 31, 2010 represent current transactions and
are in compliance with the policy established by the Department of Local
Government.
8. DEFERRED CONTRIBUTIONS
The Province of New Brunswick ("Province") established the Saint John Harbour
Clean-Up Trust in the amount of$26.6 Million to provide for the Province's one-
third share of the Harbour Clean-Up Project cost. These Trust funds will be
released to the City as costs of the project are approved. As of December 31,
2010, an amount of$12,592,837 of trust funds has been released to the City.
According to the terms and conditions of the Deed of Settlement and Trust
Agreement, interest income shall be distributed to the City annually. The amount
of interest distributed to the Ciiy as of December 31, 2010 is $1,510,063, which
has been deferred and will be applied to the project in the future. There are no
specific terms on the usage of the interest deferred.
9. UNRESTRICTED DEPOSIT ACCOUNT
The City and its employees participate in a group life insurance plan which has a
potentially refundable component, the Unrestricted Deposit Account ("UDA"),
based on actual plan experience. Annually, a portion of any excess of premiums
paid over claims experience is eligible to be refunded to the City and its
employees. Both the City and employees pay premiums into this plan.
The UDA has accumulated $224,882 of eligible refundable premiums during the
years 2004 to 2010. The City has collected an amount of $151,450. The
remaining amount of$73,432 is recorded as a long-term asset as the City intends
to hold this amount to fund future potential premium increases. Of the eligible
refundable premiums accumulated, $21,876 and $146,786 were used to reduce
payroll costs in 2010 and 2009 respectively. The remaining $56,220 is recorded
as due to employees, which was subsequently distributed to employees in August
of 2011. The City will review the balances in the UDA annually.
15
120 �
.. `, .
The City of Saint John Water and Sewerage Utility
NOTES TO FINANCIAL STATEMENTS
December 31,2010
10. COMMITMENTS
In 2009, the City entered into an agreement with Pomerleau Inc. for the
construction of the Wastewater Treatment facility at Hazen Creek in the amount
of $51,805,878 plus HST. As of December 31, 2010, costs of $39.9 Million
related to this project have been incurred. The project is due for completion in
2011.
11. COMPARA.TIVE FIGURES
The comparative financial statements have been reclassified from statements
previously presented to conform to the presentation of the 2009 financial
statements.
16
121
123
Appendix C -
Market sounding report
PwC �24 Business Case
125
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
PwC �26 Business Case
127
Appendix D -
Detailed cost report by Opus
PwC �28 Business Case
129
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
PwC 130 Business Case
131
Appendix E -
V��'VI assump tions
PwC �32 Business Case
133
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
PwC 134 Business Case
135
Appendix F -
Global risks description
PwC 136 Business Case
137
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
138
139
Appendix G -
Project risk matrix
PwC 140 Business Case
141
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
PwC �42 Business Case
143
Appendix H -
Design-build tirneline for the Public
Sector Comparator
PwC 144 Business Case
145
ID ' Task 'Task Name Duration Start Finish 'Predecessors 2015,_Half 2 2016,_Hal_f 1 �2016 Half 2 2017,_Half 1 2017, Hal_f 2 2018_Half 1 2018 Hal_f 2 2019 Half 1
---
-- - ---- -- - --
ID I _ I JIAIS O , NID JIFIMIAIMIJIJIAIS O N D JIFIMI_A , M J JIAIS O N D J F M A M J JIAI_S O N DIJIF M
1 i� 0-1 Water Treatment Facility Design 13,1 mons? Sat 15-08-01 Sun 16-07-31 �
2 IQ 0-2 Water Treatment Facility Construction 32,75 mons? Mon 17-04-03 Thu 19-10-03 I
3 Q Site Works 8,7 mons? Mon 17-04-03 Thu 17-11-30 I
4 Q Concrete 15,25 mons? Mon 17-05-01 Thu 18-06-28
5 i� Masonry and Superstructure(Building) 14,75 mons? Mon 17-08-14 Thu 18-09-27
6 i� Equipment 12,7 mons? Mon 18-04-09 Thu 19-03-28
7 I� Mechanical 15,75 mons? Mon 18-04-16 Fri 19-06-28
8 I� Electrical 29,25 mons? Mon 17-07-10 Thu 19-10-03 I
9 IQ 1-1 Robertson Lake Dam Design 5,75 mons? Mon 15-07-27 Thu 15-12-31
10 IQ 1-2 Robertson Lake Dam Construction 7,6 mons? Mon 16-04-04 Mon 16-10-31
11 I� 1-3 Roberston Lake Tunnel Inpsection 3,35 mons? Mon 15-08-03 Tue 15-11-03 I 0
12 I� 2-2 Latimer Lake Intakes Design 13 mons? Fri 21-01-01 Thu 21-12-30 I
13 I� 2-3 Latimer Lake Intakes Upgrades(wet well rehabilitatic 5,25 mons? Tue 22-06-07 Mon 22-10-31 I
14 '� 2-4 Latimer Lake Intakes Dam Upgrade 7,5 mons? Mon 20-04-06 Fri 20-10-30 I
15 Q 4-1 Transmission to Treatment-Design 19,5 mons? Tue 15-08-04 Fri 17-01-27 i
16 Q 4-2 Transmission to Treatment-Construction 32,5 mons? Mon 17-04-03 Thu 19-09-26 I
17 �� 5-1 Transmission-WTP to Sandbank Hill-Design 19,5 mons? Tue 15-08-04 Fri 17-01-27 I
18 IQ 5-2 Transmission-WTP to Sandback Hill-Construction 32,5 mons? Mon 17-04-03 Thu 19-09-26 I
19 I� 6-1 Transmission-Sandbank to Marsh Creek(Loch Lorr 13 mons? Mon 15-08-03 Fri 16-07-29
20 '� 6-2 Transmission-Sandbank to Marsh Creek(Loch Lorr 13 mons? Mon 17-04-03 Thu 18-03-29
21 �� 6-3 Transmission-Sandbank to Marsh Creek(Westmorl 12,95 mons? Tue 19-01-01 Fri 19-12-27
22 � 6-4 Transmission-Sandbank to Marsh Creek(Westmorl 26 mons? Wed 20-04-01 Tue 22-03-29 i
23 � 7-1 Transmission-Central-Design 13,1 mons? Wed 20-01-01 Thu 20-12-31 I
24 � 7-2 Transmission-Central-Construction 7,5 mons? Mon 21-04-05 Fri 21-10-29 I
25 Q 7-3 Transmission-Central-Clean and Line 12,75 mons? Tue 17-01-03 Sat 17-12-23 I
26 iQ 9-1 Transmission-Chesley Drive-Design 12 mons? Wed 20-01-01 Tue 20-12-01 I
27 '� 9-2 Transmission-Chesley Drive-Construction 7,5 mons? Mon 21-04-05 Fri 21-10-29 �
28 Q 9-3 Transmission-Douglas Ave Rehabilitation 7,6 mons? Mon 17-04-03 Tue 17-10-31
29 � 9-A Transmission-Central Spine Rehabilitation 42,45 mons? Tue 15-08-04 Wed 18-10-31 I
30 Q 15-1 North End Storage Reservoir-Design 13 mons? Mon 16-01-04 Thu 16-12-29
31 � 15-2 North End Storage Reservoir-Construction 7,6 mons? Mon 17-04-03 Tue 17-10-31
32 � 16-1 Storage Reservoir at WTP-Design 7,75 mons? Mon 15-08-03 Fri 16-03-04 I
33 � 16-2 Storage Reservoir at WTP-Construction 33,7 mons? Mon 16-04-04 Tue 18-10-30 I
34 �� 17-1 Reversing Falls Booster Station-Design 12 mons? Mon 17-01-02 Fri 17-12-01 I
35 iQ 17-2 Reversing Falls Booster Station-Construction 12 mons? Mon 18-04-02 Fri 19-03-01
36 I� 18-0 Spruce Lake PS Upgrade 20,75 mons? Mon 17-05-01 Thu 18-11-29
37 I� 20-0 West System Modifications 6,65 mons? Tue 18-05-01 Thu 18-11-01
38 i� 21-0 Ocean Westway Rehabilitation 6,6 mons? Mon 17-05-01 Tue 17-10-31
39 � 22-0 Potable Transmission East Rehabilitation 6,6 mons? Wed 24-05-01 Thu 24-10-31
40 � 23-1 East Pressure Modifications-Design 6,6 mons? Tue 18-05-01 Wed 18-10-31 I
41 � 23-2 East Pressure Modifications-Construction 58,75 mons? Wed 19-05-01 Tue 23-10-31 I
42 � 25-1 Industrial Transmission-New-Design 3,35 mons? Mon 15-08-03 Tue 15-11-03 I 0
43 I� 25-2 Industrial Transmission-New-Construction 6,45 mons? Mon 16-05-09 Wed 16-11-02 I
44 I� 26-1 Industrial Transmission-Rehab-Design 11,8 mons? Fri 24-01-05 Fri 24-11-29 I
45 I� 26-2 Industrial Transmission-Rehab-Construction 6,45 mons? Wed 25-05-07 Mon 25-11-03 i
Project: SCDWP BASE_SCHEDULE_ Task Progress Summary External Tasks � ; Deadline '
Date: Fri 13-03-01 Split , , , , Milestone � Project Summary External Milestone
P 1
1 2019 Half 2_ 20_2_0,Half 1 2020,Hal_f 2 2021,_Hal_f 1 2021,Hal_f 2 I 2022,_Half 1 2022,Half 2 _ I 2023,_Hal_f 1 2023,Half 2 2024,_Hal_f 1 2024,_Half 2_ 2025,Half 1 2025, Hal_f 2 2
A M J JIAIS O N D JIFIMIA �M JIJ A ! SIO � N . D J F ' M A M JIJIAIS O N DIJ . F ! MIA � J J A S ! O � NIDIJ F ' M A M . JIJ � AIS O N D JIFIMIA � M J J ' AIS ' OINID J F MiA M � JIJIAIS O N D
Project: SCDWP BASE_SCHEDULE_ Task Progress Summary External Tasks � ; Deadline '
Date: Fri 13-03-01 Split , , , , Milestone � Project Summary External Milestone
P
Appendix I -
Detailed summary of the risk
workshop
PwC �48 Business Case
149
Intentionally left blank so as not to compromise City's procurement process and financial outcome of
bids submission
PwC 150 Business Case
Presentation of Business
Case to Common Council
City of Saint John Drinking
Water Program
, : .
�
�
Introduction
PwC
Objective
• The purpose of this presentation is to provide Council with a summary of the
Business Case and Value for Money analysis in respect of the City's water
program infrastructure development initiative (the « Proj ect »)
• The Initial Business Case has been prepared in order to recommend a
preferred procurement model for the Project to the City, PPP Canada and the
Prn�ri n�P nf NP�n� Rri i n c�n�i rk fnr th Pi r rP criPrtivP �nn ci r�Pra ti nn a n r� a ririrnva 1
1 1 V • 111 V V V 1 i �V 1• il 1 K 11 AJ 1 1 1 V 1� i V 1 <11 V 11 1 V AJ N V V�.1 • V V V 11 AJ 1�.L V 1 K�.1 V i 1 \.�.11 K K N FJ 1 V ♦ K l
1 1 1
to provide funding for the Proj ect
PWc 2
153
PwC's Mandate
In late Apri12o�2, the City issued an RFP to identify consultants with:
« demonstrated expertise with drinking water systems and in the structuring
and evaluation of public private partnerships in order to help realize the
potential of the Drinking Water Program... »
PwC was selected as a result of that RFP
PwC 3
154
Status vs key stages in P3 procurement
, . . . �
, � • � � � . � � � • � , � .
, � . . • - -
� -
• Establish business needs and objectives
• Evaluate delivery options
• Conduct P3 screen and initial risk assessment
• Establish base projects costs
• Assess market interest (initial market sounding)
• Identify, allocate and quantify proj ect risks
• Conduct VFM analysis
• Assess project capital requirement against the affordability envelope
• Develop business case
• Prepare reports for approvals
PwC 4
155
V : Review o Basic Conce ts
p
PwC
VfM: Review of Basic Concepts
• Comparative financial analysis of the estimated risk adjusted cost of
completing the project under two different procurement approaches being i)
the traditional procurement approach that would be typically be used by the
City to complete the project and ii) an alternative approach
• Like for like comparison :
- lt is assumed that the project has to meet the same long term pertormance
and quality standards under both procurement approaches
- The analysis horizon is the same under both approaches
- Base costs (design, construction, operating, maintenance and renewal
costs) are the same under both approaches
PwC 6
157
V�f-�Vl: Review of Basic Concepts (cont'd)
' � � � � . . � ' 1 � � . . �
� � �
.
. �
. � � : � � � .
.
1 � � '
� � . � . ,
: � '
• . . .
• , • : �
� Estimate the costs of a • Can be compared with: � Compare PSC and P3
project scenario that would _ Shadow Bid: Cost estimate Option on a standardized
reasonably be undertaken by of expected private sector basis
the public sector bids, prior to bid • Projects compared:
• Typically constructed during submission — Before bids are first
the Business Case stage and _ Actual Bids: Actual costs of received, and when bids
finalized before bids are p3 bids received from are first received
received vendors
— Prior to financial close
� Must be based on same level
of performance as P3 option
PWc 7
158
VfM: Review of Basic Concepts (cont'd)
The Public Sector Comparator (PSC)
• Based upon the traditional form of public sector procurement.
• Estimate of the full cost of delivering the project to the same standard as
required by the private sector under P3 procurement
• Includes:
Raw Capital, Operatin� and Lifecvcle costs (pre-risk adiustment)
1 � 1 V �/ �1 ✓ �
+ Competitive Neutrality adjustments (included to remove any advantages
or disadvantages that accrue to the Government e.g. taxation)
+ Transferred Risk (i.e. risks that would be transferred to the private sector
under P3)
+ Retained Risk (i.e. risks borne by the public sector)
= Risk Adjusted PSC
Pwc 8
159
VfM: Review of Basic Concepts (cont'd)
Risk
• Important stage in determining the value of the PSC and Shadow Bid
• Identify and quantify material proj ect risks
• Allocate risks between those:
- transferred to the Private Sector and
-1-�-- - , �--- 1�- - T�--�-�� - n- -1---
- i=e�aiiieu uy �lie ruuiic �ec;�ur
• VFM is maximized by the optimal allocation of risk between the public and
private sectors:
- each risk should be allocated to the party best able to manage it
PwC 9
160
V�f-�Vl: Review of Basic Concepts (cont'd)
Risk (cont'd)
"Risks should be allocated to the party best able to manage them"
Shared
Government
should retain risks Private sector should
that are inherently manage risks that are
governmental inherently commercial
• Changes to scope • Inflation � Design, Construction,
• Planning permission • Regulatory Commissioning
• Latent defect • Taxation • Operating and maintenance
costs
(existing) • Force Majeure
• Operating performance
� Technology obsolescence
� Project financing
� Latent defect (new)
• Responsive repairs
PwC 10
161
VfM: Review of Basic Concepts (cont'd)
Shadow Bid (SB)
• The Shadow Bid model is a proxy of the public sector's cost under P3
procurement
• It includes estimates of the private sector's:
- construction costs
- operatin� and maintenance costs
1 V
- taxation treatment
- debt cost and
- equity returns
• It also includes retained costs and risks by the public sector (e.g.
procurement costs)
• The private sector estimate for the Shadow Bid model is replaced with the
private sector's bid as the procurement proceeds
PwC 11
162
� ' ' 1 i I I ' I I I
- , .
Competitive Competitive
Neutrality(A) Neutrality(A)
Private
Partner
Payments (E)
Private
Partner
Raw PSC(base payments (E) Raw PSC(base
costs) (C) costs) (C)
Retained Retained Retained Retained
risk and costs risk and costs risk and costs risk and costs
�D) �F) (D) �F)
� , � � : �
� . � � i �
' � � ' i 1
. 1 1 1 . 1 1
Pro 'ect Back round
J 9►
PwC
Principal needs and drivers
• The Safe, Clean Drinking Water Program (the "Program") is being undertaken
to assure safe, clean drinking water for the City of Saint John (the "City")
• Currently, three major issues are encountered with the existing water system:
- The water brought to the tap of City residents is unfiltered surface water.
The water coming from Spruce and Latimer Lakes, supplying the West and
r. _ _� _ -�' - -r�,- - �''--- - -1'---�-- --�-- - - � -�-� - -1- �
�dst secti�ns �r tne �iry respectiveiy, i5 �nry c�arse screeneu, cni�rinateu
and fluoridated
- Unfiltered surface water from the current system contains significant
amounts of disinfection by-products, at levels often more than twice that
prescribed by Canadian standards. The by-products, as well as the inability
of the system to adequately treat potentially harmful protozoa, such as
giardia and cryptosporidium, increases the risk of health issues, including a
higher risk of cancer and other illnesses
- The water is highly corrosive, accelerating the damage caused to the water
distribution system due to its low pH
PwC 14
165
Principal needs and drivers (cont'd)
The Project is being undertaken to answer to the followings needs
1 1 � � �
: : Improve water quality by providing
: : treatment to address protozoa (giardia
Public health : Ensuring good water quality for : and cryptosporidium), address
: Caint _Tnl�n'c �iti�Ane : �icinfAr�tinn h��_r�rnrlii�tc (TT�1�/� anr�
, AJI,ILlil V Villl V <.i�.iLJ�L11J , \.l1A1L1111i1i�.LV11 1J Y Vl V\.Ll.lt.l.Al `1111�1 l,llil.l
✓ 1
: : HAA's), and control corrosion within
: : the distribution system
.....................................�........................................................:....................................................................
: Rehabilitating a deficient water : Minimize leaks in water system,
Technological : �
: system and meeting daily water : increase capacity to accommodate for
upgrade � :
: demand : 75 MLD average daily demand
...................................................................................................................................................................
Public safety : Ensuring an adequate water : Increase storage capacity from 27.3 ML
: supply for fire protection : to 57.2 ML
.....................................:........................................................:....................................................................
� Instilling water usage �
Environment � : Increase water rates, install metering
conservation : behaviours that encourage : system, decrease water use
: sustainability :
PwC 15
166
Project components
• The Project includes i8 of the 2� initiatives identified under the Program, divided
into the following categories
1. Water treatment: construction of a new loo MLD conventional water
filtration treatment facility on City-owned land south of the Little River
Reservoir
n TAT•�torr�o� imr�r���omar�i-o• imr�r���omor�+ �� �•�m ir��rnr�Fr»n�Fiiro ir�n����ir�rr t�o
G. Y Y Clll.l�711L.�,L 1111�J1 V V l.11l\.111�J. 1111�J1 V V t.11lt.11l V1 �,LQlll 11111 QOI.l l,l�.11Al l. 111L.11.1t.L111� llll.
installation of foundation anchors, the addition of i.2 meters of free board to
the earthen embankments, and the refurbishment of the concrete spillway
and abutments
3. Transmission system improvements: construction and upgrade of water
transmission mains to deliver raw water from Latimer Lake to the area of the
WTP East and treated water to the entire distribution system
4. Water system storage improvements: construction of three storage reservoirs
totaling 29.9 ML capacity, the first located near Fort Howe at Magazine and
Kitchener C3.9 ML) and the other two located at the WTP site (26 ML)
PwC 16
167
Project components (cont'd)
5. System pumping station improvements: construction and upgrade of two
pumping stations to ensure drinking water would flow from a new Reversing
Falls Booster Pump Station to the Lancaster Water Storage Reservoir and to
the upgraded Spruce Lake Pump Station
6. System rehabilitation: renovations, adjustments and local upgrades including
the installation of water valves, the rehabilitation of transmission mains and
the modification of pump station pressure grades
�. East industrial system improvements: construction and renovation of
transmission system to deliver raw water from Latimer Lake to Sandbank Hill
PwC 17
168
Project components (cont'd)
. . . -. . .
i.Water treatment : 1. Water treatment plant ("WTP") :
......................................................._..................................................................................................
2.Watershed improvements : 2. Robertson Lake Dam :
...........................................................................................................................................................
g. Transmission system : 3. Latimer lake intakes and dam upgrades �
. ..................................................:
improvements — raw supply : q.. Supply Transmission (Lakewood Pump Station to WTP) :
.......................................................•..................................................................................................:
: 5. Transmission East (WTP to Sandbank Hill) �
..................................................................................................:
4. Transmission system : 6. Transmission East-Central (Sandbank Hill to Marsh Creek) :
:.................................................................................................:
improvements — potable : �. Transmission Central (Marsh Creek to Metcalf Street) �
...................................................................................................:
: 8.Transmission Chesley Drive (PRV io�to RF Bridgej :
..........................................................................................................................................................
5. Water system storage : 9. North End Storage Reservoir :
. ......... ....................................................................:
improvements � io. Twin Storage Reservoirs at WTP Site �
.......................................................:.................................................................................................;
6. System pumping station : 11. Reversing Falls Booster Pump Station :
..............................................
improvements : i2. Spruce Lake Pump Station Upgrade :
.......................................................�..................................................................................................:
; 13.West System Modifications �
..................................................................................................:
: 14. Ocean Westway Rehabilitation (Spruce Lake to Gault Road) ;
�. System rehabilitation : � .
: 15. Potable Transmission East (Lakewood PS to Sandbank Hill) :
:.................................................................................................:
� 16. East Pressure Modifications �
.......................................................�..................................................................................................:
8. East industrial system : 17. Industrial Transmission New(Lakewood PS to Sandbank Hill) :
...............................................................................................:
improvements : 18. Industrial Transmission Rehab (Lakewood PS to Sandbank Hill) :
PwC 18
169
Choice o the Procurement Model
PwC
Procurement decision
• The selection of the procurement model is an important consideration which can
impact the successful delivery of the Project and the City's ability to meet its objectives,
which are to:
- Implement the Project at the lowest possible risk-adjusted whole lifecycle cost
- Enable appropriate risk allocation and mitigation
- Allow the City to benefit from innovative solutions while ensuring a transparent
--- , - -�--'1-1-1 - ----- --------- ---1 ----- ----
aiiu ec�ul�d�ie �i-uc;ureliieii� �ruc;e��
• The alternative models are varied, so in order to define the most appropriate PPP
model for the Project, a workshop was organized by the City on October 30, 2012, the
objective of which was to identify and define the potential PPP models and confirm the
traditional procurement approach. Attending the meeting were representatives from
the City and PPP Canada, as well as PwC professionals.
• It was determined that the following procurement models would be used for the
procurement options analysis and VfM analysis of the Project:
- Design-bid-build ("DBB")
- PPP combining a design-build-finance ("DBF") for the transmission component
and a design-build-finance-operate-maintain ("DBFOM") for the WTP
PWc Zo
171
Procurement decision (cont'd)
The PPP delivery model for the project scope is illustrated in the diagram below:
Y�es��t,�,cc,[lsli°utcf;i
and short term n��a�.,eons�uction and
financing � � , • - .=rm financing
.
4
I �;xisting
�� � Existing
I New Existing _ _ _ �
.
Existing — — — New
� � •
Existing NeW � � New ' ". ' "' Raw
. _ _ _ • � I � transmission
Potable «backbone»
Potable � transmission
«backbone» � �
transmission �Existing I
«backbone» I
� -i - - - - J
Long term design,
� construction,financing,
Secondai-�- � � operations and maintenance
transmission
'1'ap
PwC 21
172
Design- Bid-Build (DBB)
• Key Players
- City: Project definition, financing,
product standards /specification &
contractual terms
� � � � �
- Designers: detailed design & contract
administration
0&M Design Construction
- Contractors: construction & Payments Payments payments
commissioning 1
- O&M contractors
� ,:
�
• Multiple separate contracts � ' ' ' '
• Design undertaken in detail before
construction commences
• Owner heavily involved ,
Subcontracts to acquire ;, , , , ,
• Responsibility for operations, maintenance capability and expertise
and lifecycle retained by the City
Pwc 22
173
PPP
• Single entity responsible
, � , , Private
for Design, Build, and financing
Financing
Availability& � •
performance Services � ,
• Transmission assets: DBF �Yments -
„ � . �
• �rP: Operate and Capital Investment '
�
� • �
T T-�--1-�-- ------ - � -- - 1-----
1V1d1Ilid1II UVeT d lUII� ieT111 Keturn on �
Investment
period (e.g. 3o year
WTP+on-site
warranty) storage Transmission �
assets
�
Subcontractors
• Private sector finances Subcontractors
design and construction ' � � � , , ' � ,
costs
DB—Design
Private sector is paid based B"iid
� O—Operations
upon its actual M—Maintenance
performance of the
services
PwC 23
174
Payment Mechanism and Security
The following table presents the assumptions regarding the payment mechanism and
security packages for each procurement model
� : . . - . . . - . . - . . . . - . .
Payment: Payment:
• Contractors paid 90% of billed costs • Milestone payments equivalent to 25% of the WTP construction costs and
according to construction 100% of the capital costs of the transmission assets are paid at the end of
advancement construction.
• City would holdback 10% of • 90% of such payment is made at Substantial Completion and the remaining
payments which would be released 10% is made at Final Completion. The holdback of 10% to Final Completion
2 months after construction aims to provide an additional incentive to the private partner to address minor
completion deficiencies which could affect in service of the transmission assets;
• Annual service payments ("ASP") for the remainder of Project costs to be
paid over a horizon of 30 years.
Security: Security:
• A performance bond equivalent to • Liquid security under the form of letters of credit typically equal to 10°/o to
50% of each of the respective 15% of the design-build contract;
contracts • Parent company guarantees typically equal to 20% to 50°/o of the design-
• A labour and material bond build contract and up to a year of the O&M and lifecycle revenue;
equivalent to 50% of each of the • Liquidated damages in the event of delay;
respective contracts • Performance bond equivalent to 50% of each of the respective contracts;
• Labour and material bond equivalent to 50% of each of the respective
contracts.
PwC 24
175
Market sounding key findings
• In order to validate and conclude upon the PPP model for the Project, a market
sounding was conducted. The following are some of the high :
- The contemplated PPP procurement model with a DBFOM procurement for the
WTP component and a DBF procurement for the remaining initiatives is a structure
which would create market appetite;
- Transferring the operation and maintenance components for the existing water
main transmission assets would present particular challenges whereby only a
limited number of risks could realistically be transferred;
- The City should only transfer risks that the private sector can reasonably control;
- The City should prepare a good communication plan and manage political risks;
- Participants were concerned about the risk that the procurement process could be
stopped by the City;
- The City should use a proven procurement approach and use existing templates
- PPP Canada's backing will provide comfort to market participants that the Project
will proceed and reach financial close.
PwC 25
176
V
PwC
VfMApproach
The VfM analysis reflects the Procurement Options Analysis Methodology
developed by PPP Canada and is composed as follows:
• Estimation of Project costs
• Estimation of the probability and value of risks retained and transferred by
the City under each procurement model
• Development of the financing and tax structure assumptions for the Shadow
Bid
• Development of other assumptions for the financial analysis
Pwc 27
178
Financial Projections
• Project cost estimates for design, construction, maintenance, operation and lifecycle are
presented in rea12o10 dollars and reflect the date at which the cost estimates were
developed by the City and its technical advisors. The results of the risk analysis are also
presented in real dollars, because the risks were estimated as a percentage of base costs
which are in 2oio dollars. Real dollars do not include inflation
• Costs in real dollars are then adjusted for inflation based on the projected project
schedule
T�o rooi���o ����o cr��i�o ��r m�r�o�� �«�T�/f��l nr»�voio �r�� t�o oor�oificn+�r �r»�v000 �ro
� 1111.. 1l..rJl,lllrJ Vl Ull.. V Q1lAl.. 1V1 111Vlll.J' l Y 11Y1 J Q11G11,'�71�7 Qlll..l llll.. �71.11�7111 V llJ' Q11G11,'�71..�7 Ql l..
presented as a Net Present Value ("NPV"). Because the VfM analysis serves to compare
the total cost of each procurement option over the lifecycle of the assets, and each
procurement option will reflect a different profile of future payments by the City for
design, construction, maintenance, operations and renewal, those future cash flows are
discounted to produce the NPV of costs under each option and allow for a like for like
comparison.
. -� . .
Annual inflation rate 2.0%
Discount rate 4.0%
. �
(A) Inflation factors 1.02 1.04 1.06 1.08 1.10
(B) Discount factor 0.96 0.92 0.89 0.85 0.82
(C) Costs in real dollars 100.00 5.00 10.00 15.00 20.00 50.00
(D) Costs in nominal dollars (C)*(A) 108.27 5.10 10.40 15.92 21.65 55.20
PwC �E) Costs in present value (D)*(B) 92.55 4.90 9.62 14.15 18.51 45.37 28
179
Base Costs and Schedule
• Design and construction costs:
- Were developed by CBCL Limited and R.V. Anderson Associates Ltd for
the City in 2010 based on a DBB procurement strategy.
- Reviewed by Opus
- Include general conditions, contractor overhead/profit and engineering
fees but exclude design and construction contingencies which were
assessed separately as part of risk workshops.
• Operating and maintenance expenses for the WTP:
- Estimated by R.V. Anderson
- Reviewed by Opus
• Lifecycle costs and schedule for the WTP :
- Estimated by Opus
• Base Costs are the same in both the PSC and Shadow Bid
PwC 29
180
Base Costs and Schedule (cont'd)
An estimation was also made of ancillary costs associated with each
procurement approach. These include:
� . • ' . � • : �
rinanciai and iegai advisors �
Project team ✓ ✓
Owner's Engineer ✓
Project Management ✓
Public awareness and ✓
education
PwC 30
181
Base Costs and Schedule (cont'd)
• The construction schedule for the DBB as originally estimated by CBCL and
R.V. Anderson set out construction of components of the Project over a 10
year period.
• For the purposes of the Business Case and in order to ensure comparability,
the same design-build scheduled has been used for the PSC and Shadow Bid:
Design-�iuilcl time�ine
Contract Financial Substantial Final
start close completion completion
� , a . , uI� 1
�f.'±i;i? !�!�;y � �?�y 1�'f}.3,a"��`f�y Y s>tj�F€;g��j��,4
i Aug., 1 Nov., 1 Jan., i Mar.,
2015 2015 2018 201$
PwC 31
182
Risk quantt.fication
Approach
• Workshops were held in Saint John on January 21, 22 and February 15, 2013.
• In order to facilitate the process, a preliminary list of risks was identified and
sent to each participant prior to the workshops.
• During the meeting, workshop participants composed of technical and
financial specialists debated each risk item, identified the cost bases,
assessed the probabilities of occurrence and estimated the relative impacts
according to each delivery model.
PwC 32
183
Risk quantt.fication (cont'd)
Approach (cont'd)
Workshop participants included the following:
.
Bill Edwards Commissioner City
.....................................................................................................................................................
Dean Price Project Engineer (Committee Chair) City
.....................................................................................................................................................
Kevin Fudge Finance City
.....................................................................................................................................................
Fran�ois Beaulieu Legal affairs City
Nicole Taylor Water specialist City
.....................................................................................................................................................
Kendall Mason Deputy Commissioner — Saint John Water City
.....................................................................................................................................................
Gerry Mattsson Project Engineer (Second Chair) City
.....................................................................................................................................................
Phil Ouellette Intergovernmental Affairs City
.....................................................................................................................................................
Paula Carroll Administrative Assistant City
.....................................................................................................................................................
Stephen Lidington Financing and procurement PPP Canada
.....................................................................................................................................................
Richard Youmaran Financing and procurement PPP Canada
.....................................................................................................................................................
Walt Bayeless Water infrastructure, risk Opus
.....................................................................................................................................................
Philippe Raymond Project�nance, risk PwC
.....................................................................................................................................................
Paul Mai Project�nance, risk PwC
.....................................................................................................................................................
Patrick el Kareh Project finance, risk PwC
PwC 33
184
Risk quanti.;�cation (cont'd)
Approach (cont'd)
• � ' � � � . � � � � � �
� • List and describe all risks . participants' ',
' associated with the project ,
experience ,
�� ', • Risk matrix
,-. , ,
• Dialogue ,
• � � � - • �ategorize cost pase ana . Examples '
' probability of occurrence ',
�
' � � • Allocate risks between the • Risk workshop
' public and private sectors ',
—,
• Technical advice � �sk
� � •
• Use risk analysis software to ', adjustment
. model most likely risk • Financial model '
outcome
PwC 34
185
Risk quantt.fication (cont'd)
Results
The five most significant risks by value are:
i. Risk of scope change requested by the City before or during construction.
Causes can include pressure from stakeholders, insufficent project scoping or
definition and scope creep
- This risk is largely mitigated through the PPP but some level of risk
- --1'--- - - 1- �- - --1-'-- - � �--- ��- - ^'�-- - -- - -' -��-- r-- 1�- - -- --' - , � - - �'- - --- 1-
c;�ntinue5 w �e retaineu Uy tne �,ity espeeiaiiy r�r Tne peri�u ieac�in� up t�
financial close
2. Cost overruns specifically associated with the WTP electrical systems
- This risk was estimated to be higher under the PPP than under the DBB
because the private sector partner would likely spend extra time on
programming and control in order to ensure performance during the
contract term resulting in higher costs
3. Inflation during construction
- This risk was estimated to be the same under the DBB and PPP
PwC 35
186
Risk quantt.fication (cont'd)
Results (cont'd)
The five most significant risks by value are:
4. Risk of cost overruns specifically associated with the WTP mechanical
systems
- This risk was estimated to be lower under the PPP because of the potential
impact of innovation leading from whole lifecycle design (operator
working with design team j
5. Risk of cost overruns specifically associated with the supply transmission
line
- This risk was estimated to be lower under the PPP because of the potential
impact of innovation relating to the approach used for laying pipe in sandy
terrain
PwC 36
187
Financial Assumptions
. . . .
Analysis horizon 30 years
Discount rate Reflects PPP Canada guidance
Discount date January 1 , 2013
Indexation of the Annual service �9�ariable�osts�furing�perations
payment
HST Net amount payable by the City
Special Purpose Vehicle Costs Cost of setting up and operating the SPV during the term of
the Project Agreement
Project Financing Assumptions
Form of financing Short term debt and long term bond
Amount of financing Representative of financings for comparable projects
concluded in the last 12 months
Debt Equity Ratio Ibid
Financing Fees Ibid
Interest Rate Ibid
Equity Rate of return Ibid
PwC 37
188
VfM results
• Based on the estimated base costs, risks and contingencies and on the
financial assumptions, the estimated VfM is $3.2 million in net present value
on January 1, 2013.
• In other words, the VflVI analysis concludes that the PPP is the lowest cost
option for the City.
PwC 38
189
Sensitivitr� Analysis
The VfM analysis is based on a series of assumptions. As a result, PwC
conducted a series of sensitivity analyses in order to test the impact of changes
in key assumptions on results.
VflVI was most sensitive to:
• A decrease in the discount rate
• An increase in the interest rate associated with long term financing
• An increase in the proportion of equity relative to debt
PwC 39
190
Qualitative considerations
In addition to the quantitative analysis, one has to recognize that there are also
qualitative benefits to procuring a project as a PPP
• The PPP model would allow the City to accelerate development of the Project
• Provides for a contractual obligation to adequately fund operations,
maintenance and renewal of the WTP ensuring the quality of the asset of a
'long term period
• Is likely to attract bidders with significant experience in the development of
this type of infrastructure
• Stimulate innovation as the design, construction and operation teams work
together from the outset to design a solution based on whole-life costs rather
than solely capital costs
• Could allow the City to access funding from PPP Canada and the Province of
New Brunswick
• Control mechanisms within a PPP are significantly higher than under a DBB
PwC 40
191
Qualitative considerations (cont'd)
The PPP can have some disadvantages as well, some of which are presented
below:
• City is contractually obligated to make maintenance and lifecycle payments
in line with the service standards defined in the proj ect agreement. This will
remove flexibility to divert funds away from these activities under budget
YrPCCiirPc
• Success of the PPP depends on the quality of the project agreement and the
City's ability to clearly and accurately communicate its performance
requirements. This requires a shift in how projects are typically planned
• Planning and procurement take longer than under a traditional procurement
• Can be misunderstood and raise opposition from special interest groups
• Up-front planning and procurement costs are higher
PwC 41
192
Pro 'ect Fundin and A ordabili
J 9► �
PwC
Project funding and affordability
• While the VfM analysis does not reflect any assumptions regarding capital
contributions from the Province of New Brunswick or the Government of
Canada, the City requested that PwC complete the affordability analysis with
the following assumptions:
• Federal contribution or PPP Canada fund contribution: 25% of eligible
PrniPrt �nctc
i ivJvv� vvr✓�v
• A minimum 25% contribution towards capital costs from the Province of
New Brunswick paid at Substantial Completion
• City funding for the remaining balance
PwC 43
194
Project funding and affordability (cont'd)
• While the VfM analysis does not reflect any assumptions regarding capital
contributions from the Province of New Brunswick or the Government of
Canada, the City completed the affordability analysis with the following
assumptions:
- Federal contribution or PPP Canada fund contribution: 25% of eligible
PrniP�t rnctc
� �.�J.,.,� .,�,.��.�
- A minimum 25% contribution towards capital costs from the Province of
New Brunswick paid at Substantial Completion
- City funding for the remaining balance
The City's has assumed that the financial participation of the Province of New
Brunswick depends on the City's ability to secure the PPP Canada funding for
the Project. Given that PPP Canada's funding is available only if the
procurement model selected is the PPP, the City has assumed, for the purposes
of the Business Case and the affordability analysis, that a DBB would obtain no
funding from other government levels
PwC 44
195
Disclaimer
PwC
This Business Case ("BC") has been prepared by PricewaterhouseCoopers LLP ("PwC")for the
exclusiUe use of the City of Saint John (the "City") and PPP Canada as part of PPP Canada's
procurement process requirement.
The information contained herein (the "Information") has been prepared by PwCfrom material
prouided by and discussion with other parties including the City, CBCL Limited, R.V.Anderson
Associates Limited, Opus International Consultants Ltd. and OpusDaytonKnight Consultants Ltd.
(together "Opus"). No uerification of the Information has been carried out by PwC or any of its
respectiue agents, directors, officers or employees.
�.� r-. � � .� .-. � �• � .� r
rreparation oJ tnis tsusiness c.�ase aoes not imp�y rnar rwc.� nas in any way aual"rea tne inJormation.
In addition the achieUability or otherwise of the Information is not warranted or guaranteed by
PwC.Actual results may be significantly more or less faUOUrable.
PwC and its respectiue agents, directors, officers and employees make no representation or warranty
as to the accuracy, reliability or completeness of the Information. PwC shall not haue any liability to
any person under the law of contract, tort and the principles of restitution or unjust enrichment or
otherwise for any loss, expense or damage which may arise from or be incurred or suffered as a
result of anything contained in this Business Case or any matter deemed to form part of this Business
Case.
The information contained in this Business Case is strictly confidential and must not be copied,
reproduced or used, in whole or in part,for any purpose other than that for which it is intended.
�'wC 46
197
`�' °�ti REPORT TO COMMON CDUNCIL
.
�. :�k
�.
14 March 2013 ciry oF saint tot�
His Worship Mel Norton
and Members af Common Council
Your Worship and Councillors:
SUBJECT: P3—Case Studies
The City of Saint John is preparing a business case submissian to P3 Canada in
support of the Safe Clean Drinking Water project.
Staff have consulted with the City of Moncton and City of Abb�tsford to learn
from thcir experience with the P3 process. In the first instance the project
proceeded while in the second instance it did not.
The attached slidc deck summarizes the information gathered and staff are
preparea to review the material with Council.
� Respectfully submitted,
�
� �� _,�
. atrick Woods, CGA
CiTV MANAC�x
198
. .
• . � � - � � -
� . -
1.-,�.�.+'�'��' "'�``p �'. ,'I ' I.� ''�' f 1 �' � '� '. � �. � b Y.
' �/ A 'R, � ..i ti� / - �`- � '� �`" � , �• � , L' �
�' 7 I� ' _ :. `>� ., •�
l ti \ `� + �ry
I �,�./ ? � • �� � '�� ����
� - C ;� �*° ! _ �' �in �.
Case Studies - Lessons Learned
199
• • � • � "
This case study research was comp�eted to support
Common Council in their current examinatior� of
funding alternatives for the delivery of the Safe, Clean
Drinking Water Program .
�
�vyr �ofin
200 "�
• • � • -
e Case studies are designed to heip understand :
— Decision to investigate a P3 approach
— P3 process experience
— Results and lessons learned
. . . . � . . . . .
- ' ' - ' - s • . • - . -
.
�
�.���r ro};ti
201 "-—
- �
� • � a � �
� �
• Cities have their own unique opportunities and
challenges -- unfair to compare circumstances
— Observations not conclusions
• Learn from the experience of others to help :
— Maximize opportunities and avoid pitfalls
— Implement innovative solufiions to address service needs
— Make decisions that deliver the best value to residents
���
��
s�u��r Jcs}t`
202 �'
� � � v
Service Need (Treatment Plant}
� Water did not meet drink�ng water standards
• Boil orders in 1997 and 1999 , lead presence, and drought
Why Moncton considered P3 alternat�ve?
� $32 m�llion cost estimate for tradifiional approach
� No funding available from federal and provincial programs
� Debt financing would consume borrowing capacity
• Need for a more immediate solution to address quali�y issues
��
��
�.,��r,«f;�
203 "�
� � �
Process Experience
• Limited process guidance with very few similar projects
� Investment in experfi advice of $485,400 �feasibility/process}
� DBF�M �design, build , finance, operate, maintain) —
because of timing of delivery, cost, risk transfer, innovative
technology, experience
m Transparent and fa�r evafuation �RFP) and process
� Careful contract negot�ations
��
S:�1VT �()I1\'
204 `-�"
� � �
Results Lessons Learned/Best Practices
0 City retains control and Q Rigorous project management
ownersh�p of utility and rates and planning
� Right decisi�n — quick � Investment upfront for
solution w�th no funding professional services and due
� Lower costs — fower rates dilige�ce
• Munici al status for tax ° 4pen communications and
p
purposes (i.e. , HST rebates �ransparent process
}
Contract su orts ood • Careful and fair contract
e pp g
relationship with Veolia and negotiations that protect the
service delive mun�cipal�ty and citizens
�
f
�V VT 1{)]I`
205 ~�-`
� • � � � � �
Service Need (Water S�pply)
� Current water supply unable to meet demand of projected
growth of community
A Surface water solution best option (treatment required)
P3 Consideration
• Project es�imated to cost $340 million (traditional approach)
° fJpportunity to access to PPP Canada fund�ng
f,,' �.�.
�
s;ttWr 1c�t�`
206 �`�'
i
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� � � � � � �
Process Experience
s Business analysis concluded P3 less expensive
— delivery likely on time and within budget
� Provincial legislation requires electorai assent for debt
funding
• Referendum coincided with municipal election
� Communication strategy promoted `YES Campaign'
� Organized opposition to P3 approa�h
��
SAtV7'Ji)Fi:\
207 ��'
� � ���- '-� ..� • ', ��� _:..�•
Results Lessons Learned/Best Practices
� Residents �oted 7�% � Strategic comrr�unication
against the project — citing required to ensure public clearly
concerns of cost, supply understand process,
need and pro�ected expectations and resufts
community growth � En
gagement of sfiakeholders
� Project on stand-by with needed to support a coordinated
requirement to evaluate communications effort
other short and �ong-term
options �possibly more
expensive}
�
S.11V"I' it)Fl�'
208 - .`W'.
� � � � • � � •
� �
� Understand regulatory � Engage external advisors --
policy framework expertise
� Effective project screening • Demonstrate va�ue for
procedure money -- business case
• Educate Council � Understand private sector
� Communicate interest — competition
� Build in-house ex erience ° Understand risk transfer -
p
real
• Due diligence up front
• Commitmen� to team
� Ensure openness and continuit — lon -term
transparency
Y g
�
�,���� 1���;�
209 � _�
REPORT TO COMMON COUNCIL
� oF
�a
� �
14 March 2013 -
foiy`H r
City of Saint John
His Worship Mel Norton
and Members of Common Council
Your Worship and Councillors:
SUBJECT: P3 —Water Rate Analysis
Attached for Council's consideration is a high level financial analysis of the impact of
the SCDW program both in the traditional mode and using a P3 approach.
In order to develop the projections a series of assumptions had to be made. In the
interest of simplicity and consistency the rate analysis relies on the data and
assumptions in the PwC business case for the SCDW program. The analysis also
takes into consideration the future annual operating and capital expenditure
requirements of the Water Utility.
The actual water rates in future years will largely be determined by the actual
construction and financing costs of the program at time of implementation.
Staff from the finance department will be available to review the results of the
analysis. A shorter version of the slide deck that maintains the necessary
confidentiality requirements will be available for public presentation as required.
Respectfully submitted,
° � �1 �
'1
J. atrick Woods, CGA
MANAGER
210
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Safe, Clean Drinking Water Project
211
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❑ Purpose of the analysis is to forecast the financial implications for the Utility
and the ratepayers of funding the SCDW project
❑ Affordability will be measured by the ability of ratepayers to absorb the
investment in SCDW, i.e. accepting required rate increases
❑ The financial analysis includes the following scenarios:
❑ Traditional — SCDW project funded 100% by ratepayers
❑ P3 Procurement — SCDW funded 100% by the ratepayers
❑ P3 Procurement - funded 50% by ratepayers, 25% by P3C, and 25% by PNB
❑ P3 Funding is based on 18 project initiatives that are considered either
"Critical" or "High Impact", which are included in the P3 project scope, as
recommended by PricewaterhouseCoopers LLP
2
212
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, ��" � ' � • • .
• PWC conducted a risk workshop with the City's project team and with input from OPUS
consulting. The results of the workshop produced estimated costs for various
contingencies and risks applicable to each procurement model. Finance has assumed the
values calculated represent likely costs and have included these costs as part of the
contingencies within the financial model.
• The SCDW project includes separating the City's largest East industrial user from the
Potable Water System. Based on rate setting principles, only costs attributed to the East
Industrial Water System should be assigned to that system. Finance has assumed that
the impact of system changes will be revenue neutral to the Utility for purposes of
estimating rates in the affordability analysis.
• Finance has assumed at this time funding from other levels of government is only
available under a P3 procurement model.
• Potential Funding is assumed to be 25% of eligible costs from P3 Canada with a matching
Provincial contribution under a P3 procurement model.
3
213
• • � �
• Debenture Period — 30 Years
• P3 Concession Period — 30 Years
• Long Term Yield — 4.22%
• Capital Funded from Operating - $7,000,000 continuous for years 2018 and beyond
• Capital and Operating Projections are based on estimates from CBCL, RV Anderson,
Opus and City Engineering
• Assumes Gas Tax Program continues indefinitely, with the Utility receiving $3 million plus
inflation over 30 years
• Assumes all Capital is spent in year of projection
• Consumption assumptions are based on 2012
• Assumed Negotiated Contract Settlements are overall revenue neutral to the City
4
214
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� _ • � s � � � �
SCENARIO 1- No Funding
. � � � . �
Low High Low High Variance Variance
2013 $Z,00g $s,00s $Z,00s $Z,00s $o $o
2014 $1,030 $1,060 $1,030 $1,060 $0 $0
2015 $1,080 $1,120 $1,080 $1,120 $0 $0
2016 $1,130 $1,160 $1,100 $1,140 $30 $20
2017 $1,300 $1,400 $1,150 $1,250 $150 $150
2018 $1,600 $1,700 $1,600 $1,700 $0 $0
2019 $1,650 $1,750 $1,650 $1,750 $0 $0
2020 $1,650 $1,750 $1,650 $1,750 $0 $0
2021 $1,650 $1,750 $1,650 $1,750 $0 $0
2022 $1,650 $1,750 $1,650 $1,750 $0 $0
2023 $1,650 $1,750 $1,650 $1,750 $0 $0
Z024 $1,650 $1,750 $1,650 $1,750 $0 $0
2025 $1,650 $1,750 $1,650 $1,750 $0 $0
2026 $1,650 $1,750 $1,650 $1,750 $0 $0
2027 $1,650 $1,750 $1,650 $1,750 $0 $0
2028 $1,650 $1,750 $1,650 $1,750 $0 $0
2029 $1,650 $1,750 $1,650 $1,750 $0 $0
2030 $1,650 $1,750 $1,650 $1,750 $0
$0
With no funding under either procurement model, the Flat Rate is projected to be in the
range of $1 ,650-$1 ,750 per year
5
215
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SCENARIO 2- P3 Funding with Matching PNB Funding
, 1 f B I , �
Low High Low High Variance Variance
zo13 $1,00s $Z,00s $Z,00s $Z,00s $o $o
2014 $1,030 $1,060 $1,030 $1,060 $0 $0
2015 $1,080 $1,120 $1,080 $1,120 $0 $0
2016 $1,130 $1,160 $1,100 $1,140 $30 $20
2017 $1,300 $1,400 $1,100 $1,200 $200 $200
2018 $1,600 $1,700 $1,350 $1,450 $250 $250
2019 $1,650 $1,750 $1,400 $1,500 $250 $250
2020 $1,650 $1,750 $1,400 $1,500 $250 $250
2021 $1,650 $1,750 $1,400 $1,500 $250 $250
2022 $1,650 $1,750 $1,450 $1,550 $200 $200
2023 $1,650 $1,750 $1,450 $1,550 $200 $200
2024 $1,650 $1,750 $1,450 $1,550 $200 $200
2025 $1,650 $1,750 $1,450 $1,550 $200 $200
2026 $1,650 $1,750 $1,450 $1,550 $200 $200
2027 $1,650 $1,750 $1,450 $1,550 $200 $200
2028 $1,650 $1,750 $1,450 $1,550 $200 $200
2029 $1,650 $1,750 $1,450 $1,550 $200 $200
2030 $1,650 $1,750 $1,450 $1,550 $200
$200
Projected Ratepayer savings of $200-$250 per year
6
216
�,'_�-���.' _ _-. .. _
� . . �'��� t
� ;ft�� � � �
s��t�w
�:r��.��
• The Investment will have a significant impact on the water & sewerage
rates
— If no funding is available, rates will escalate under either procurement model
estimated between $1600 -$1750 depending on the year.
— Under a P3 model with funding from P3 Canada and matching contribution from he
Province, rates are estimated to increase in the range of $1400 - $1550 depending on
the year.
• 25% Funding from P3 Canada with matching contribution from PNB
would mitigate the costs for the Utility and the ratepayers
— City Savings increases from approximately $3.2M (VFM) to approximately $84.1 M
— Long Term Debt is reduced by $100M
7
217
� � � � �� � � �� � � � � � � � � � � �
�
aS��n'
M & C2013- 43 " � �
;� ' � �-�:�
March 12, 2013 ' • "
Tl�g�Cityrnf5�i�nt)o�
Hzs Worship Mayor Mel Norton
and Members of Common Council
Your Worship and Mernbers of Council:
SUBJECT: HIGHWAY USAGE PERMIT (HUP) - PROVINCE OF NEW BRUNSWICK
CURED-IN-PLACE PIPE LINER FOR WATER MAIN UNDER REVERSING
FALLS BRIDGE ON HIGHWAY 100
BACKGROUND
As part of the refurbishment of a water main on the west side, a cured-in-place pipe liner for said
water main is being installed under the Reversing Falls Bridge on Highway 100, A Highway Usage
Permit (HUP) is required by the Depariment of Transportation and Infrastructure (DTI) for
infrastructure constructed upon DTI controlled property. The agrecrnent is not unlike a railway
crossing licence or an agrccmcnt to cross natural gas pipelines in that a permit holder, the City, is
required to commit to a standard set af texms and conditions in return for thc privilege of placing its
infrastructure under the Province's bridge. "111c HUP attached to this M&C is substantially the same
as previous permits in respect to its terms and conditions. The security deposit, $25,000.00, is he�d
for three (3} years.
PURPOSE
The purpose of this report is to present the a�-eement to Council for its considcration.
INPUT FROM OTAERS
The City Solicifor's Office has reviewed the documentation with input from the City's Insurance Co-
ordinator and the Commissioner of Finance whose input was sought in respect to the security
deposit.
218
Page 2
RECOMMENDATION
It is recomrnended that the City of Saint John enter into "Highway Usagc Permit {IIUP} No.
201311R010000201" with the Province of New Brunsr7vick (Ministcr of Transportation and
Infrastructure) and that the Mayor and Common Clerk execute the docurnentation.
Respectfizlly submitted,
�
�-
���� �-� I3 L ���-�_.._
Dean Price, P.Eng. Brian Keenan, P.Eng.
Municipal Engineer Engineering Manager
� � �.��� . � L �
Wm. Edwards,P.Eng. . atrick Woods, CGA
�i�f Commissianer City Manager
Transportation & Environment
219
N�w.�Nouv�
��������
File NQ,: 31QU-I 1-19 c �, :v a D A
February 28,2013
I1�. Mel K.Narton
Mayor
City of Saint Jo�m
PO Box 1971
Saint John NB E2L 4L1
Sub,�ect: Highwa�y Usage Psrrnit ZDI311R010000201
I�all a Cured In Plac.�P1pe L�ner for the
H'a#er Main on DTI raght-af-way under the
Reversirig FaY1s Bridge(R2.IS) ox Highw�ay I00
City of Sairtt John,Saint John Coitr�ty
Dcar May�r Nvrton:
Fiuth�r to yQw request, please find enclosed two (2} originals of�IxghRray Usage P�mit
Number 201311RO10UQ0201 for the installation of a c�red-in plac,� pipe liner for the
water main on Department of Transportation at�d Infrastructure right-of-way unde�r the
Reversing Fa2is Bridge (R215) on Highway l0U in the City of Saint John, in the County
of Saint John. Please review the enclosed HLJPs and arrange to have bvfi1� originals
execut�d and returned to this afl-tce along with the yearly occupation fee as per Section
1.�2 and surety depasit as per Sec�eion S.U4. Proof vf in�,x,nce, vvith "HER MAJFS'I'y
THE QUEEN in ri�t of#he Province of New Brunsw�icic, as represented by the Min�istcr
of Transportation and Iufrastru.cture" as a na�ned additional insured per Section $ af the
HUP is also required.
((�ice we have received the executed documants, fces and proof of insurance, the HUPs
will be forwarded fi�r final elcecution. An executed HLJP will then be returnee�to you for
your files.
If you have any quastions please c�ontact me a#{5U�453-6724.
Sincerely,
�
Peter McDonald
Prope7ty Mac�agement Q�cer
Enclosures
Transportatbnliransports www.gnb.ca
P.O.6axJC.P 6000 �rederlcton New BrunswickJNauveaa-8�unswick E3S5H1 Wnada
�0
Ne�vv Nv��rea�a
���t�s��c�
Departm�nt of Tra�.sportati�n
an� Infrastructure
. .
�. � ��, S� � ��It
�
Pe�rm.it l�o. �0�.3��I�01�U0����
221
�GHR'AY USAGE PERMIT
PERMIT NUMBER 201311Rfl100�201
'�'��S P�RNRT issued in duglicate originals this of ,2013.
FROM: HER MAJESTY TH�QUEEN
in right of thc
Provinoe of New Brunswick,
as repr�sented by the
Minister af Transportation and Infrastructnre
�1CI'CIIi�$er Cell�t�le nM1InS�CI"�
TO: THE C'�T'Y QF SAINT JOHN
a body c�aiporate by Royal Charter,
eonfi�.med and atnended by
Acts of the Legis�lative Assembly af Nevv Brunswick
{hc�einaf�er call�the"Applieant")
WH�REAS the Minister, under and by virtue af the H�gl�way Act, Ghapter H-5
R.S.N.B. {"hTighway Act"}, has the administration and control of highways, as defined
therein,in the Pxovince ofNew Brnnsvv�ick{"Highways"};
AND WI�REA3 the Applicant submitted an application on December 18, 2012
ta the Minister to install pipe caatyng insi[�e a water main on structure R215 in�the City of
S�nt John, Saint John Cou.nty("�nt+ork");
AND WHEREAS the Applicant has requested that the Minister con��nt to the
work being constructed and operated within the Highways pnrsuant ta an applieation and
plan submitted, af any and the Minister has agreed t� revie�r this application �nd plan
pursuant to Sectioa 44.1 of the��1'fghway Act for p�rnai�ssion to enter npon, use, cross,
construct aind operate the wvrk in, under and over those portions of the Hig�xways more
pa�ticulazly described in Schedule °A" hereto a#ached and fornniag a part hcreof
{"Approved Highways"}for the purposc of construchit�g and aperating the vvork,
AND WHEREAS the Minister has, in the Minister's discre�tion, agreed to issaxe a
highway usage pexmit pursuant to Section 44.1 of the Highway.Rct containing teams and
conditions�s mvre particr�larly described her�in(°HUP„);
,.
222 "`
THEREFORE in oonsideration of the payment of the sum of ten doll�rs($10.40}
by cacl�party to th�other, the receipt and suffici�ncy of which is �►cl�owledged by each
to the othe�, and in consideration of the covenanfs, teirms and condxtions hereinafter
containe�,the Minister and the Applic.�nt covenant and agree as follo�rs:
�i VEl\�`l�tfL
1.0� The Minist.�x,pursuant to Sec�ion 44.1 of the�Iigf�w�y Act, herei�y suthorizes the
Applic�nt, subjact to the terms t�ad conditions herein contained, to enter upan, use and
cross the Approved Highways f��the purpQSe nf oonstructing thc work(��Construction")
for the periods of time more paxtaicu,larly hereinaf�x descn�bad.
1.02 The Applicant shalI pay to the IV4inister upon execution and #'or eaeh fiscal yeax
thereafter, due and payable on the first day of Apri1 in eac]�fiscal ycar during the term of
the HLTP,as sct out in Sectioa 9:
(i) thirty-seven dollars and fifly cemts ($37.50) for eaeh kiIometer of a
oolle�bor or lc�cal highway along which work is unde�rtaken as listed in
Schedule "A" foz a curnulative amount of thirts-seven doIlars and fifty
cents�$37.50).
�. CONSTRUCTION
2.{�1 The Applic�n�, its �on�actais, servants, agents, ernployees and workeis, may,
from time ta timE duz�ng the term hereof and at its own expens�,perform Constructipn on
the Appmved �ighways. The Applicant sha11 cazry out the Constructia� in aecordance
with and meating the prescrib�ad standards �f all applicable federal and provincial
statutes,as am�nded from time to time, anr�municipal by-laws and all regulatians,atrlers,
dimctives, permits and licences in respe�t therec�f which apply to ar otherwise affect#he
Construction ar which apply to or otherwise affect the Agplicant �nd its business assets,
insafar as the same relates to the Constraction, including, but not lixnited ta, tlus HLTP,
the Hig�way Act and a11 enviranmental and occupational health amd safety laws.
2.02 The A�licant sha11 submxt all plsns a�d specif cations detailing location, timing
and duration of Construction to the Minister for the Minister's approval pxior to the
com�nencemeiat of any Constru.ction on the Appraved Highways. The Applicant shall nat
undertakc nor commeACe any Consir�ction prior to receiving written. approval fram the
Minister afthe plaus and specifcations. The appraval af the plans and specifications for
any Constructivn to bc carried aut on t}�e Approved Highwa.ys does not in any way affect
or alter the A.pplieant's respansibility for the design and oanstrfzction of the work and the
�Wlinister hereby specifically denies any such responsibility.
2.Q3 The Applicant agrees ta complete aud deliver to the Minister fior approvai,which
apgraval will not be unreasonably withheld, a fwal "as built" plan of the Applicant's
,�
223 -
work at locations where it is on the Approvad Highways, within three (3} �onths of the
cumpletion of the installation of the work.
2.04 The Applicant shall carry out the Canstruction in such a manner as to camply
with the �ccupatianal Healfh and Safety Act, Cha.pter 4-0.2, R.S.N.B. 1973, including
a�y regulations or orders made t�exeunder.
�.OS The Applicant shall during the period of ConstruGtion:
{i) take every reasonable precaaktion to ensure the health anc� safcty of its
employocs and the health az►d safery of aay other person having ar,cess to
the place of employment where a3ay o£the Construction is ta#�ng pla�e;
and
{u'} ensure that iis employees oom�aly with the Occupa#anal�Y'�artke and Saf'eiy
Act,the regulations and any order made in accordance w�ith the Act or#he
regulations.
2.06 The Applic,ant shall, upon the request of the Mi.niste�, provide to the MYnisfer,
witbiu seven (7) d$ys of such request, a l.etf.ar outliyung the steps taken by the Applicant
to camply with the provisions of Paragiaph 2.04 and Paragraph 2.05 hereof.
2.07 l+To mate,iial or equipment shall be deposited or stored on the Appraved Highways
without the prior written appmval of the Distric�Transpartation E;agin�r of#he Minister
("the i}isttict F�tgineer").
2.48 All bnzs�and debris is to be disposed of offthe Approv�ci Hig�ways.
2.09 'i'he method of insta�iation and construction of the work shall be as p�r Schedule
"A", Sch�dule "B" and Schedule "C". If c�onditions do not permit the methnd of
installation as descxibed in �chedule "A", Sched�ile „�" and Schedule "C° at a parCicular
location, t�ie Applieant may, with the prior wx�tten appmvai of the Dishict Engineer,
which apprQVa.l shall not be unreasonabiy vvithheld, use an alternate m�thod of
installation.
2.10 No Construction is to take place during darkness or reduced visibility, exeept with
the prior approval of the Ilistrict Fa�ginccr.
2.11 The Applicant shall give the District Engin�er nvt less than two {2)weeks wxitten
natice before commencing�onstraction,exclud�ng normal n��ainteaau�e activzties.
Z.1Z The Applicant shall ensure thaz it, its cvntraGtors, warkers aud agc�ats abide by
and will be bound by the t�rms and c�nditions of this HUP�
224 °�
3. PUBL.IC NOTICE
3.01 No Constnic,�ion excluding aeri,al patrol and nozmal maint�nnance activiiies shall
be eamme,noed or carried out prior ta the Applicant giving timely and sufficient natice to
the travelling public using the Apprnved Highway�, warning of the Constructian and of
the disruption to traffic tha#may result therefmm.
4. STANDARD OF CONSTRUC"TION
4.01 AII Constraetion sb�all be performed by the Apglicant in a gaod and workrnanlike
manner at its vwn expense. The Minister may order#he Agplicant to stop Constr�zction
if, in the Miwuster's opirrion,it is not being carried out Yn a goad and workmanlike m�ner
according ta th�plans and specifications submitted and approved by#�e Minister for such
Constructian. The Applicar�t shall immediately stop Construction after being o�rdered to
stop by #he Minister. The ordering of the stopping af Const�ction by the Minister,
regandleas of the reasan, shall nat gave rise to auy claa�m by the Applica�t against the
Minister and any such claim is hea+eby specifically barred_ Failute of t5e Mirlister to give
instructions in regards to the Consiruction dces not zelieve the Ap�plicant af $ny
respansibilities and liabilities under the HUP or athexwise.
4.02 The Applicant ahall use every reasonable effvrt to evsure,where practical,tliat:
{�) a11 Canstn�ctian is performed in a manner that causes as little damage as
possible to the Approved H�ghways;
(b) through trai�ic flow is maintained on the Approved Highways dur�ng all
Constrvction aocording to the DepaRoient of Transportation Work Area Tra.fi€"xc
Canlrol Maaual, as am�nded from time to tixne,the receipt of whicb.the AppEicant
ackaow�edges;
(c} the Constetiction does not i.�terfere with or obstruct the Appxoved
Highways or traffic thereon except as may be reasonai�ly necessaiy ar r�quired
during actual periods of Co�nstruction;and
(d} the Co�struction does not altcr or int,exfere with the draina.ge pattern of the
Approved.Highways or any pmperty that is adjacenf to t]�e Appraved Highways.
5. REPAIRS TU THE APPROVED�GRWAYS
S.QI Upcm completion of any Constructioa, the Applicant shall, at its expense and so
far as is gractical, restore, repair ax�d landscape t12� Approved Highways to the extent
necessary to restore the Agproved Hig�ways tv at least the condition existing priar ta the
commencement of suc�t Consiruction in a manner satisfactvey#o the I7istrict Engine,�r.
�
225
�.02 All repairs to the Approved Highways, inciuding repairs rec�uired to rectify any
darnage, alteration or environmental disruption ta the area suxrowndi.ng the Approved
Highways where the wflrk is Iocated, occ�sioned by subsidence or caused by the
Can.structiot�or e�xistence of tbe work, at the request and to the regs�nable satisfaction of
the Distric�Engineer, shall be the responsibility of the Applicant for#he entire pexiod that
the w4rk remai,ns on the Appraved Highways.
SA3 If the Miixist�er is rt�guirod to make any regairs to the Approved �Ii�ways as a
result of the Constructioz� by the Applicant, or as a result of the presence of the wark on
the Approved Highways, the Applicant shall, upon demand, reiminuse the Minister for
the cost of all expeases reasonably incurred in eonnection t�erewith, providcd however,
that, except in eme�rgency siivations, the Niinist�r sha,ll first give the Applicant written
natice of any situation meoessitating#he use of the power conf�emred und�r this section and
allvw the Applicaint a re�sanable opportunity to forthr�vith prnceed to dilig�tly repair the
same.
5.U4 The Applicant xhall provide to the Minister, at the time o£the execuizon of tbis
HUP, a cash security deposit in the amou�t of tw�auty-five thousand dollars
(SZS,OOO.QO) f�r the purp�se of this section to be held by the Minister, on a without
interest basis. The Minister may use portions or all vf rhe cas�h security deposit for the
pucposes of ensuring that the Applicant meets its obligarions hereciu cnntained. At the
end of three (3) years from the date of completion of Construction, the Ministes sh�ll
return to the Applicant that partion of the sccurity deposit t�hat x�►ains unused, without
interest therean.
G_ RELQCATIUN 4F APPR�VED HIGHWAYS
6.41 Notwitbstanding any other provisions of this HLTP,if the Mina.ster relocates, either
pennanently or tcmporarily,rep�rs,mai.ntains or z�designs the Approved Highways, ttie
Minister may request the Apglicant to altex, remove or relacate, either penx►anently or
temporaxaly, the work at the Applicant's e�nse within sixty (60} days after be�ing
requestad in writing by the Minisi�er. The Applicant shsll al#er,remave ar relocate, either
permancnt�y ar temporarily,its work wifhrn sixty(GO)days af�r being requested to�o so
by the Minister, provided, however #hat the M'inister shall, if possible, grant to the
Applic�t a new HUP containing simitar t�rms and candations as herein set aut allowing
the Applicant to ccrosiruct its work an an alt�mate or replacemeat site, if any. Nothing
herei�o�oantainad obligates the Minister to pay arry casts of the Applicant or to pz�ovide thc
Applieant with an alternate means or r�place,ment work.
7. LIABII.ITY AND II�TDENIl�I'I`I�
7.01 The Minister shall not be responsx`ble for any damage to the work from any ca�use
whatsaever.
226 `�
7,02 The Applicant shall indemnify and sa�re harmless the Minister froxn a�d against
any and all liabilities,d�rnages, claims, suits and actions whatsvever resulting in any way
fram the Cons�truction, operation flr existence af the work af the Applicant or of its
employeses, ag�ts, cantractors or subcontractors.
7.03 The Appli.cant sha11 promptly pay corngansation to the M�iz�aster fior aIi damages
suffexed by the Minister as a result af the Construction or the eJCaist�ttce of the work an the
Approved Highwa3+s.
7.04 The Applicant agrees that if any co�tamination shonid be encount�rred, on, in,
�nder or around the prop�ty identified in Schedule"A"that:
(i) all work vwi�cease immediately in that area; and
�ii) the Minister will be innrmediately advised of the said contatninativn in
order fiur the Minist�r to assess i�e situa.tion.
7.05 If the Applicant fails to abide by Seckian ?.(1� and conta�minaxi.on is later
dete�mined to have been present, the Ministea� sball not be responsibl� for the resulting
detericmation or damage.
S. INSURANCE
S.U1 The Applicant, at rts own e�ense, shall purchase and ma�iataiu in full force
d�ing the term of the HLTP, �nd any extensions or renewala thereo� ge,neral liability,
pollution, and avtomobile insura�nce in form aaid content acceptable to the Minister,
acting;reasonably, to pzotect the Applicant, their contractors aad subcontrac#ors, as well
as the Miniate�r,�usJher resp�ctive successnrs ax�d assigus,and hisJk�er respectiv�directors,
vfficers, emplayees,agen#s and servants.
8.02 Such insurance sha11 pmvide coverage for property damage to the Appmved
Highways,including loss of use thereo� and shall protect the Ministe�,Iiis/her successors
and assxgx�s, and his/her respective directors, officets, employees, agents and seavants
from all claims arising out of liability far property damage and bodily injury (i�ncluding
d�ath and personal inf ur3') arising aut of the existence, con.struction, use, opera.fiion,
maint.�nance and rehabilitxtian of th�e work and use and occupancy of the FiCTP, but
exciuding any claims ta the extent that they arise out of the negligence ar miscanduct of
the Minister, his,/her successors and as�igns, and his/her respective directars, officers,
empinyees,agenta an.d servants.
8.03 The Applicant sba11 procuxe and maintain insurance policies which shall include
the endorseanpxts and extensions as c�ontained in.Part A,Part B,and Part C h�rein.
227 `
PART A. Commercial G�neral�.iability
The Insurance Policy requir�d under this part sball include;
(i) an"occu�rence" definition of"Accident';
(ii� "Hcr Majesty the Queen"listed as au"Aticlitional Insured";
(ua) 4wners and Conttactors Pmt�ctive Liab�ity;
(iv) a G`ross Liab�lity clause;
(v) a Waiver af Subrogafiion in favour of the Minister;
(vi) Blanket Contractual Liability;
(vu) Pruducts/Completed Operations Liability;
(viii) Broad Farm Property Damage;
(ix) Non-owned Auto Liability;
(x} Contingent Empioyer's Liability;
(xi} Personal Injury extension ofbad.ilY inJur�'�
(xu) coverage for machi.nery attached to vehicics;
(xiii) a si�ty (60) day notice p�rovision to be given by the Insurer to the
Miiniste�of any change to, canceIlation o� or lapSing nf cavcrage;
and
(xiv) liability lrtmits of five million dollars($5,000,000.00)
and said insuxamce policy shail not be on"Claims Made" form.
PART B. Pollativn�Enviran�ental Impa�irment)Liabiliiy
The Tnsurance Policy required under this part shall include:
{i} "Her Majesiy the Queen"listed as an"Additional T�sured';
(ii) a Cmss Liability clause;
(iii} a Waiver af Subrogation in favour of the Minister;
{iv) a �ixty (60) day notice provision to be given by the Insurcr to the
Minister of any �ange to, cancellation of, or lapsing of coverage;
and
(v) liability limits of five million dollars{$S,OOQ,Q04.OQ)-
PART C. Automobi�e Liability
The Insurance Policy required under this part shall include:
{i) "Her Majesty the Queen"�isted as an"Additional Insured";
{u) a Cross Liability clause;
(iii} a Waiver of Subarogation in fa�our of the Minister;
(iv} a sixty (60) day natice provision to be given by the Ins�,urer to the
Ministex of auy ch�ange to, cancellation a� or lapsing of cov�rage;
and
(v) liability limits�f five million dollazs($S,OQ0,000.00).
228 "
Notvvithstanding any breach of any af the terms or c�nditions of the policy, ar any
negligence or wi�fiil act or omission ox�alse regrescutatior�(indiv�idually or callectively, a
"Breach") by any insutt�i, additional insured, or any othar person, such Breach shall not
invalidate or otherwise limit the Applicant's liability, iridemnity and a.ns�rance
obligations under this HUP.
8.04 All insurances re�uired to be procur�d and maintained by tlre Applicant shall bc
obtained from a�n Insurance C�mpany (U�dervvriter) licenced to da business in the
Pmvince o�New Brunswick.
$AS �f CIUSC�� �IP..�Cl ]21517�'�IIC� �C1�1tleS ��.g. capti�re, reciprocal or any other form af
alfi�emste risk financing} are used �trad of conventia�al insur�noe the Applicant shall
pmvide nine�.y(90) days grior written nonce ta the�Vlinistex of the program structure and
participants wifih sufficient inforn�afiion to determine what, if any, supp�ementary
inaurance requireanen#s may be need� (e.g. „cut-thmugh" endorsement to captive
reinsurers)to ensure aantinued,adequate prntection foz�the Minister.
8.06 The Applicant shall pr+ovide the Minister with Certificates of Insurance acceptable
to the Minister and signed by a zepresentative authorized to bind the Insurer listing all
r�uired extensions and endorsements required her��in. Cerhificates of Insurat�ce far all
insurance palicics maintained in. complianc�with this provision, or other documentation
in form and content acceptable to fihe Minist�r, shall be delivered to the Minist�r prior to
any constru�ion that may affect the Approv�Highways and prior to cammencement of
thc operati�n of the Applicant's work. Certifiicates of Insxuance, or other dveumentarivn
in farm and content acceptable tv the Minister,acting reasonably,evidencing any renewal
of or�eplacemea�t ins�uances, sl�all be delivered to the Minister not later than fif�n (15j
days �rinr to the expiration of e.xisting policie�s. The t�quirean�nt of the Applicant ta
provide proofs of insurance to the 11�anister shall surviva the completion of the work and
termination of tlus HUP and the Minister reserves the right to as� �or, and the Applicant
agrees to provide forthwith, evidence of x+equired insurances cavering the period
subsequent to the term �f the H[JP as in the Minister's sale oprnion is necessary, All
sttch certificates a�d prnofs of insurance reqcYired hereund� shall be deemed ta comgly
with the requirements af Paragraph $.03 herein by i.dcnt�fying the additional insured as
follows:
��R MAJESTY THE QETEEl�
in right of the
Provi�nc�of New Brunswick,
as nepresentec�by the
Mixiister nf Transpartation and Tnfi�astructure
PO Box 6U40
Fredericton NB E3B SH�
Facsimi]e: (50�453-2900
8.07 The Minister rescrves the right at any time during the tetm of the HETP ta rec�uire
the Applicant to secuxe and carry such athar Insurances �s are de�med aPProAriate by the
Mini�ter havi.ng regar�to the nalure of the work under thc HUp.
229 ��
8.08 The insurance raquir�nents se�t aut in t]tis HLTP shall not in any way limit the
Applicant's liabiIaty arising ou#of tlre HUP or otherwise.
9. TERIVIINATIUN
9.01 Tfiis HUP shaIl terniinate:
(a) on the 31�day af Decelnber 2063 or
(b) at the option of the Minister ttpon wri.tten notice tp the Applicant:
(i) if the work is used for any purpase ather than as identified herein;
(i�� in#he evcnt the Applicant shall not have oammenced opera�ions on
the Approved Hig}�ways for the construction af the work within twa (2}
yeaz�s from the da,te�aereaf, the pertx�i.ssioa hereby granted shall thcrcupan
immediately termin,ate withaut furt�er act ar notice;
(ii�t) if thc Applicat�t defaulls in observin$or performin�g the obligations
herein, and it fails to remedy or to diligenntly take steps with a v�iew of
remedying such default within a reasanable period of ti�ae after the sacme
has been brought to the attention of t�e Applicamt�y t�e Minis'ter by way
of written natice theTeo�the Minister may at tt�e Miniistex's sote disaretion
aaxd without recaurse by the Applica�nt terminatc the HUP; or
(ivj if in the sole apinian of the Minister the Constraction or the wvrk
is creating a situation hazazdous to the general public
but the obligations of the Applicant umder this HUP s�hall survive such cessation
and te�nat�on af such permission. If this HUP is teiminated pursuant to
Snbparagraph 9.41{b), the rights hereby granted shall therf;upon immadiately
terminate without fitrkb.er aot or notice, and all rights of the Applicant shaIl
thereupon cea�e and expire, and the Applicant agrees to execute and file sueh
documents as may be necessary to confirm or to give pnblic notice v� such
termination.
�.0� At the expiry of the term under Clause 9.01{a), ar any extensioa thereof, this
HUP may be renewad in the discne�ion of th.e Minister far successive pe�iods of ten (1 Q)
yea�, each such rene�vval to be on substantia�ly the same tenns and condi#ions as set aut
in this HUP, exoepting fi�e payment of fces whaeh may be established ar pmvided for by
�egislation or regulatian, until the work is abandoned as set out in Clause 9.�4 or uutil it
is tern�inated in acc�ordance with Clause 9.01(b}.
9.f13 The M�inister shall not be lYable to pay any amonnt for costs ar damages incu.rxeti
by the Applicant as a result vf the terminatian ofthis HLJP for any reasan.
230 '
9.04 In the event the Applicant elects ta abandon the operation of its work in whole or
in patt, fihe Applicant shall provide notice in writing to the Minist�r af its intention to
ahandon and the notice of such abandonrnent shall effec�ively terminate this HUP,
provided that thc Applicant shall thereaf�er have the obligation hereunder to forthwith
undcrtake and cornplete a11 those dentnlition, remaval, r�nedying and rehabilttation
und�ngs Qr conditions necessary ta comply with the conditions af this HUP.
9A5 As a condition of aba�otdanmen#, the surface�nd the right-of-way of the Approved
Highways ooncerned shall be restored, so � as practicable, to the same oonditicm as it
was prior to the entry and use a�the Applicant Any such work done by �lae Applicant
pursuant to or recognized by this provision is to be earried out c�ompletely at the expense
of the Applicank
9.Ob Where the Ministc,�r has obligated the Applicant as a candition of approving the
ab�ndonment to maintain, remedy or take other mcasw�es with respect to the work, the
Applicant shal� have fiill ri�ght and pertnission at any time where necessary there�fter,
notwithstanding the tcrmination af this HUP, to enter upon E�te said Appmoved Highways
with people,machi��ry and material,fvr the purpose of carrying out such ob�igations;but
a.lways restoring or repairing however, any damage to the Approved Hig,�ways thereby
occasianed, amd where required,paying compensation f�r damages to tlte Minister arising
from such entty. Any such work done by the Applicant pursuant to, or as eontemplateri
by,this provision is to be carried out eornpl�tely at the exp�nae of the Applicant.
9.p7 Exccpt for those mattecs cantained in Para.graph 9.01(6), if the Applic�t defaults
in observing or performing any vf the terms aaid conditions herein set fvrkh to bc
observed and perFormed by it and i#fails to x�mady ar to dilxgently take steps with a view
of remedying such defauh after the same has been brought to the atte�ttion vf #he
Applicant by the Minister by way of written notice thereof�la�Applicant agrees to pay,as
lic�idated damages to Yh� Minister for each suc� default or breach, the amou�xt �f ten
thousand dollars ($1fl,000.00).
10. NATURE aF HLTP
10A� The Applicant's right to occupy the Approv�d Highways pvrsuant to this HLJP is
as a mere lic�ncee. This HUP does not grant nor e�nvey to the Applieant any tit�e to the
Approved HighwaYs-
20.02 It is understoad and agreed that any plans,i�cluding the glans specified in Section
2.02 and Section 2.03, are to be prepared by the Applicant for purposcs vf the
Construction�r for identifying property ar the status of title of pro�a�y and the Minister
does not, in any way, represent or werrant ta the Applicant that its Approved Highw�.ys
are located as shown vn the said plans or that the Minist�z awns or controls all or any
portion of the right-af-way shown. The location af the Approvod Highways is
determined by the Applicant at ifs sole ri.�c and the work is plaoed theteon solely at the
risk of the Applicant. If the Applicant vsr�shes to oonfirm or determine the title or
owneirship of the Approved Highways, it shall examine such tide and ownership at its
231 �
own expense and the Minist�r shall nat he reqtured to produce any abstract of titic, title
deeds, ar capies theraof or any evidence of title other than �hose in poss�ssion of t�e
Minister.
10.03 This HUP is non-exclusive. Ths Minister hereby reserves tl�e ri�t to graat
pe:rmiss�on to other persons to use the Approved Highways for whatever putpose the
Minister deerns necessary provided; always, thak t�xe Minister shall not petynit any other
person to use the Appro�ed Highways �ar any such purpose if such vse or any
construction of othe,r worlc in connect;ion therewith would in any way damage the work ar
in#erfsre with the Applicant's use thereof.
10.04 This HUP, and any right conveyed herein by the Minister to the Applicant, is
su�ject to any ather agreement,permission or right previously�nterad into or granted by
the Muuster to any o�her persons or eorporations ta nse the Approved Hig}�ways. The
Applicant hereby agrees not to dan�age or in any way inteafere with any other pe�ons' or
oorporations' use and enjoyme�t of the Approved Highways. Th� Applicant further
agreea to reimburse any person or corporation for the costs of any daYnages to their plant
or equipment located on the Aggmved Hig�tway� arising fram or caus�d by the
negligence of the Applicant in the carrying out of the Constriuction,
1U.05 While the provisions of this HUP are intended #o be fu]ly bincling and eff�ctive
bet�veen the parties, in t3�e event that any particuIar provision or provisions hereof or a
poz�tion of atty said pnovisian is faund bo be void,vi4lab�e or u�nenforceable far any reaeon
whatsoever, then the salne shall �e dc�med to be seve,red from the remainder of this
HUP,and all other pnc>visions�hall remain in full force and effeet.
10.06 This HUP in no way affects ox binds a�ry other htinister, departmenfi, agency or
crown corporation of the Provinoe af New Brunswicl€.
10.OT Notanithstanding anything herain, the Minister x�tains the right far t�he public tn
utilize the Yocation as descnbed in Schedule "A"for the purpose of a highway.
11. NUTICE
1.1.01 Any notxce, direc�ion or other instrument required or pezmitted to be given t� the
Minister hereu.txder shall be in writing and may be given by xegisterer� poat, postage
prepaid,or by delivering the same addressed to the Minister as follaws:
Mi�ister af Transpa�rtation and�nfirsstructure
PO B�x GO(10
Fredericton NB E3B 5H1
Facsfmite: (SU6)453-�900
or to such other address as the Minister may from tinae to time designate in vuriting to the
Appiicant.
�r.;
232 °'_
Any motice, dir�ecti�n or other instnzmenEt requirad ar permittod to be give� to the
Applicant he�rennder shall be in writing aad may be given by registez�ed post, postage
prepaid,or by deliveting the same a.ddresscd#o the Applic,�nt as f�allows:
Cfty of Saint Jvhn
PC'�Sa�c i971
Saint Jvhn lYB E2L 4L1
Attentiwa: Common Clerk
Faesimile: (506}674-4214
Copy: Chief�3�#y Engineer
Fax: (506)658�4740
or ta such other address as the Applicant may from time to time designate in writing to
the Minister.
11.02 Any notice, direction or other instrttm�t aforesaid, if dclivered, shall bc deemed
to l�ave been given or made on the date on whic,h it was delivered ar, if mailed, sha11 be
deemed to have been given or made on the thit�l business day fnllowiuug on which it wa�
�nailed.
12. NER'BRUNSWLCK LAWS OIt ItEGUL,AT�UNS
12.01 This HLTP will be ix►ferpzeted acoording to the laws and regulations of the
Province of New Brunswick. In the event this HLTP or any portion of this HUP is or
appcars ta be in conflict wyith any provision of the Laws or Re�ulatians of the Province of
I�ew$run.swic,�c, then the pmvisions of the Laws or Regulations of the province af New
Bn�nswick shall prevail azxd tlus HUY or the portian of tb.e HUP in oonflict shall�be void
aad of no force ar effect,but auy portaiion af this HUF not in conflict shall continue in full
farce�ad effect.
12.02 Tlre Highway Act and n�egulations made there�xnder, as eaGh may be amended fmm
time t� time, and any act or reguiativns made in substitution th�reof a�aply to �lae HUP
and the Applicant a�ees to be baund thereby_
�3. SINGQI,AR-PLURAL
13.Q1 Whenever herein the cantext psrmits, wards d�noting the singul�r aha11 incluci.e
the plural, the masculine shall ir►clude the feminine, aud a person shall include a
oorporation and vice versa.
�:
233 '-
14. BINDING EFFE�T
lA.Ql T�is ��iTP, and everything herein oontained, shall inure ta i�e benefit of end be
binding upon the psrties hereta and their respective suecessors and assigns pravided,
however, that the inclusion herein of the ward assigns �hall not be construcd as
pe�nitting a�y assignmcnt by the Applicant not authorized by this HUP.
15. ASSIGNMENT
15.01 Thx,s I�.UP, arid the permission gFanted hereby, shall not be �ssi�ned by the
Applicant without the prior vvritten oonsent of the Minister attd such consent shall nat be
unreasonably withlteld or delay�ed.
16. NaN-WAIVER
X5.01 The failure by the 1Vlinister to er�ercise any xig�►t or to require or insist that action
be taken acoordiag tfl the terms of this HUP in no way waives the right of the Minister to
require or insist#hat an action be tak�n accarding to t.�►e terms af this HUP.
17. AMENDMENTS
17.01 Tf at any time during the contin.uan�ce of this HUP#he pazties deein it necessary or
expedient to xnake any alterahvn pr additions to this�-IUP, they may do sfl by means of a
written amendrnent between them which shall be supplemental to and forn� part of thzs
�iiJP.
18. TIME
18.01 Time is of the essence in this HIJP.
19. DISCONTINiT CE
19.01 In the eveut that the Minister intcnds to discontinue any of the .Approved
Highways, the Minister sha11 provide reasonable natice to the Applicant of sach
intention:; pravidad that the Applicant shall be respnnsible in accordance with tha
provisions of Section 6 as a result of sueh$isoontanuance.
234 R`�
20� ENTIRE AGREEMENT
ZQ.Ol This �iUP and all attached schedules constitute the entire agreem�nt betwcen the
paztias with respect to any matter ref�xrec� to herein and �y previous ag�eement,
war,�-anty ar representation of any 1dnd,written ar oral, expressed or implied,between tLe
paxties hereto or aa their behal� a,re hereby�erminated and of no farce and effec�
IN WITNESS WIIEREOF the parties hcxeto �ave dtily executed this Highway Usage
Permit at the City of Fredericton,in the County of Yark and Province of New'Branswick, on the
date shown above.
SIGNED,SEALED a.�d�ELIVERED ) HER MA.TESTY THE QiTEF,N
in the prese�nce of: ) in Riglit ofthe
} Province of New Snu�swick
) as represented by the
) Minister af T4an.sportation a�d Infrastrucfure
)
)
)
)
)
Witness ) Fred$Ianey �
) Assista�t De�tnty Minister
) an behaif of the
) iVlinister of Transportation and Infrastructure
)
}
)
)
) CTTY OF SATNT JOHN
)
)
)
)
)
Witness ) Per: Mel K.Norton
� 'Fit�e: Mayor
)
)
)
)
)
�Vitness ) Fer: donathon Tay�or
� Title: Comman Clerk
D(?T(L 3020611�)
�
235 _"
Schednle"An
�anspartation ni�strict 4
HighwaylLacati�an T�peJ Description ��of�� Permit Number
ClrissifiCStiOri Oceupation(ICm)
Rvute lOD 15 Collect�r Limeal 0.220 201311R01U0�0241
Sea Plaa: Rava�sing Falls Bnd�Waka Mam Rop�
i�:�
236
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Schednle "C"
1. The Applicant must follaw WATCM and must contact the Dzstrict prior to the
oommencement of constr�ction and i.rtune�diately after oompletion.
Z. Hangar system and catwalk shall be insp�cked aQd any necessary repairs sha11 be perFo�'ned
by the Applicant at its own cost priar to beginning ofcanstruction.
243 �'"
AFFIDAVIT
�,Jonathan Taylvr,of the Ciry of Saant Jvhn,in the Caunty of Saint dahn and Province of New
BnYnswicic,ynake oath and say:
I. THA'F I a.m the Cammon C1ex1� of the City of Saurt John and have custody of the Camm�n
Sea1 hereof.
2. 'I'�E seal to the foregoing i.nstrumcnt affixed is the Common Sea1 of the said City of Saint
John and that it was so af�xed by C?rder of the Crnnmon Cotmcil of the said City.
3. THAT the signature "Mel �. Norton" to the said iflsfirument is the signatur�e of MeI I�.
Norton, Mayor of the said City, and the signature "J�onat�ton T�ylvr" th�ereto ia my own
�ignatta.re_
4. 'FHAT we are the proper officers to sign thc foregoing instzument on �ehalf of the City of
Saint Jok�n.
SWORN TO AT the City of Saint Jahn, )
in the Caunty of Sa:in#John, )
in the Pt+pvince of New Brunswick, )
this day of ,2013 )
)
)
BEFORE ME, )
)
)
)
A C�mmissioner of�aths ) Jonxth�n Taylor
Being a Solicittyr )
244 ��
Ttte(.tity of Saint]ohn
March 18, 2013
Deputy Mayor Rinehart and Councillors,
Subject: Committee of the Whole — Capital Cost Agreement Peel Plaza Project
The Committee of the Whole, having met on March 18, 2013, adopted the following resolution:
RESOLVED that the Committee of the Whole recommends the text of the Second Amending
Capital Costs Agreement between The City of Saint John and the Province of New Brunswick
be received from the Committee of the Whole; and further, that the Agreement be approved and
its execution by the Mayor and Common Clerk be authorized.
Sincerely,
Mel Norton
Mayor
�p �
SAIN`F JOHN I'.O.Box 1971 Saint John,E�IB Canada E2L 4L1 I ww�,%saintjohn.ca I C.P. T 971 Salnt John, N.-6.Canada E2L 4L1
���
245
This SECOND AMENDED CAPITAL COSTS AGREEMENT made in triplicate this
day of March, 2013 (the "Effective Date").
BETWEEN:
THE CITY OF SAINT JOHN, having its offices at the City Hall
Building at 15 Market Square, Saint John, New Brunswick, a body
corporate by Royal Charter, confirmed and amended by Acts of the
Legislative Assembly of the Province of New Brunswick, hereinafter
called the "City"
OF THE FIRST PART
- AND -
HER MAJESTY THE QUEEN IN RIGHT OF THE PROVINCE OF
NEW BRUNSWICK, as represented by the Minister of
Transportation and Infrastructure, hereinafter called the "Province",
OF THE SECOND PART
WHEREAS by a Capital Costs Agreement dated February 11 th, 2010 (the "Original
AgreemenY'), the City and the Province entered into an agreement to share in the
Capital Costs for the construction of the Detention Facility, Vehicular Tunnel and the
City's Portion Pedestrian Connection Tunnel within the Police Headquarters, Public
Plaza and Parking Facility;
AND WHEREAS the City and the Province amended the Original Agreement on March
14, 2012 (the "Amended Agreement") in accordance with the terms and conditions
thereof;
AND WHEREAS the City and the Province wish to further amend the Original
Agreement in accordance with the terms and conditions hereof;
AND WHEREAS this Second Amended Capital Costs Agreement (the "2"d Amended
Agreement") relates to the application by the City to the Province for a final payment
relating to the the Capital Costs for the construction of the Detention Facility, Tunnels
and Parking Facility;
AND WHEREAS the Parties agree that there has been a Substantial Variance between
the actual Capital Costs of the Facilities and the estimated amounts specified in
Sections 3.1.3.1 and 3.1.3.3a)(i) of the Original Agreement;
2�6
2
AND WHEREAS Common Council on , 2013 resolved:
(a) [enter resolution]; and
(b) That the Mayor and Assistant Common Clerk be authorized to execute
the Second Amended Capital Costs Agreement.
NOW THEREFORE THIS SECOND AMENDED AGREEMENT WITNESSES THAT in
consideration of the mutual covenants and agreements herein and subject to the terms
and conditions set out in this 2nd Amended Agreement, the Parties agree as follows:
1. The Parties agree that the recitals aforementioned are true and correct in all
material aspects.
2. The Parties agree that the Original Agreement is hereby modified and amended
as follows:
A. The following clauses are added to Section 3.1.3:
3.1.3.5 The Parties agree that there has been a Substantial Variance
between the actual Capital Costs for the Facilities and the amounts on the
basis of which the payments specified in Section 3.1.3.1 and Section
3.1.3.3a)(i) were computed as a result of increased costs incurred in the
construction of the Police Headquarters and Parking Facility.
3.1.3.6 The Parties agree the Substantial Variance between the actual Capital
Costs for the Police Headquarters and the amounts on the basis of which the
payments specified in Section 3.1.3.1 is an additional $1,226,717.62 Dollars.
3.1.3.7 The Parties agree the Substantial Variance between the actual Capital
Costs for the Parking Facility and the amount on the basis of which the
payments specified in Section 3.1.3.3a)(i) is an additional $7,844 per space.
B. The following Section 3.1.3.3 is modified and amended as follows:
3.1.3.3 In the case of the Parking Facility:
a) Province of New Brunswick (i) $38,701 plus any applicable
Harmonized Sales Tax per
stall for 180 stalls for a total
contribution of $6,966,180,
excluding HST;
(ii) remains unchanged; and
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(iii) the Province to withhold
$278,647 which represents
seasonal work not completed
as of the Effective Date which
will be invoiced by the City to
the Province once the
seasonal work to the Parking
Facility is completed.
C. Section 3.2.6 is modified and amended as follows:
3.2.6 The Parties recognize that a substantial amount of work has been
done in order to complete the Facilities Sharing Agreement and
Operating Costs Agreement and notwithstanding the Parties have
not entered into both agreements as of the Effective Date, the
Province shall not withhold payment to the City once the City has
invoiced the Province for final payment.
D. Section 3.2.7 is modified and amended as follows:
3.2.7 Subject to the provisions of Section 3.1.3 and notwithstanding
Sections 3.2.1 and 3.2.6, the Parties agree that the City may make
an application for final payment for those parts of the Capital Costs
associated with the performance of the work on the Detention
Facility, Tunnels and Parking Facility.
E. Section 3.2.8 is modified and amended as follows:
3.2.8 Subject to Section 3.2.2, the final payment will be made under this
2na Amended Agreement upon submission of a properly certified
invoice by the City and approval by the Provincial Representative.
F. Section 3.2.10 is modified and amended as follows:
3.2.10 The amount claimed shall be calculated on the basis of the City
Representative's estimate of the actual costs for direct materials,
direct labour, and other expenses expended or incurred as of March
31, 2013. Determinations of whether costs are properly allocable,
allowable, and reasonable shall be in accordance with generally
accepted accounting principles. But for certainty, the Province shall
be allowed to obtain proper reconciliation documentation from the
City in order to determine the actual costs and expenses incurred by
the City relating to the Facilities.
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G. Section 3.2.11 is modified and amended as follows:
3.2.11 The Province recognizes that there are three (3) registered Claims
for Lien against the Police Headquarters as of the Effective Date
which have not been discharged and is agreeable to make payment
as contemplated by the Original Agreement and this 2"d Amended
Agreement.
H. Section 3.2.12 is deleted.
3. The Parties hereby confirm that all other terms and conditions of the Original
Agreement and Amended Agreement are in full force and effect, unamended,
except as expressly provided in this 2�d Amended Agreement.
4. This 2�d Amended Agreement may be executed in one or more counterparts,
each of which when so executed shall be deemed to be an original and such
counterparts together shall constitute one and the same instrument.
5. Any notice under this 2"d Amended Agreement shall be sufficiently given by
personal delivery or by registered letter, postage prepaid, mailed in a Canadian
post office and prepaid courier, addressed, in the case of notice to the City, to the
Assistant Common Clerk, 15 Market Square, P.O. Box 1971, Saint John, New
Brunswick, E2L 4L1, Telephone: 506.658.2862, Fax: 506.674.4214 and a
mandatory copy to the City Representative, and in the case of the Province, to
the Minister of Transportation and Infrastructure, Kings Place, 440 King Street,
P.O. Box 6000, Fredericton, N.B., E3B 5H8, Telephone: 506.325.4520, Fax:
506.444.4400 and a mandatory copy to the Provincial Representative;
or to any other address as may be designated in writing by the Parties and the
date of receipt of any notice by mailing shall be deemed conclusively to be five
(5) calendar days after the mailing.
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IN WITNESS WHEREOF the City of Saint John has hereto fixed in its corporate seal
and caused these presents to be executed by its duly authorized officers in the manner
prescribed by the Municipalities Act, R.S.N.B. 1973, c. M-22, and amendments thereto,
and Her Majesty the Queen in Right of the Province of New Brunswick, as represented
by the Minister of Transportation and Infrastructure has caused these presents to be
executed as of the day and year first written above.
SIGNED, SEALED & DELIVERED
in the presence of
THE CITY OF SAINT JOHN
Per:
Mel Norton, Mayor
Jonathan A. Taylor,
Assistant Common Clerk
Council Resolution: , 2013
HER MAJESTY THE QUEEN IN RIGHT OF THE
PROVINCE OF NEW BRUNSWICK
Per:
Hon. Claude Williams,
Minister of Transportation and
Infrastructure
2HD
PROVINCE OF NEW BRUNSWICK
COUNTY OF YORK
�, , of the City of Fredericton, in the
County of York, and Province of New Brunswick, MAKE OATH AND SAY:
1. That the within Instrument was executed by the Honourable Claude
Williams, Minister of Transportation and Infrastructure for the
Province of New Brunswick.
2. That the signature of "Claude Williams" set and subscribed to the
said Instrument is the signature of the said Claude Williams and
was subscribed thereto in my presence.
SWORN TO before me at )
Fredericton, in the County of York )
and Province of New Brunswick )
the day of March, 2013. )
)
)
)
)
)
Commissioner of Oaths, �
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