The final funding sources for the Cenovus Energy Hub have been approved after the project came in just over budget.
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Administration has requested a transfer of $536,893 from wastewater offsites to the Hub.
“During the final phases of construction, we required additional funds to complete a number of areas to ensure the facility was functional and opening on time,” said Tracy Simpson, executive manager of community development services, City of Lloydminster. “Additional costs were from various elements of the facility, including some concrete work, structural steel, fire stopping, electrical and general project expenses.”
The wastewater transfer supports the final infrastructure project related to water and wastewater improvements within 41 St. that supports the development of the Wigfield Area Structure Plan.
Simpson says construction was trending over budget as the project came to a conclusion.
“Close to the end of the project, the construction was trending over budget slightly,” she said. “The offsite development projects were trending under budget and we had hoped the project would come in on budget between those two elements.”
She explained the project went over the originally approved budget from December 2023 by 0.53 per cent.
The Hub also paid into some of the offsite levies.
“The Cenovus Energy Hub, as a development project, also paid into the offsite levy funds for our commercial lands only,” said Simpson.
Efforts are still ongoing to secure additional support for the project.
“The project team, with support from the mayor, has been actively advocating both the Alberta government and our neighbouring regional partners for funding and support,” said Simpson, explaining numerous applications were submitted to the Government of Alberta with no success.
She noted no funding has been received from the R.M. of Britannia or County of Vermilion River. The R.M. of Wilton, however, contributed $1M to the project. There are still two grants pending, totalling $1,433,932 related to surrounding ancillary projects on the site.
Of note, the annual budget surplus was put aside in 2023, 2024 and 2025 to support anticipated needs.
Simpson says as they looked at the project, budgets were trending upward in some areas and downward in others.
“We were anticipating they would balance out to an on-budget project,” she said. “Nearing the end of completion, we were seeing additional project overhead costs to ensure we were on time.
“One of the bigger ones was structural steel.”
As construction was underway, there were changes in steel design to ensure it functioned for the building.
“There were some things that came in that were time and material tendered, that came in higher than anticipated,” said Simpson. “One of them was the radon installation of the radon rock and layer on the cement pad.”
Snow removal and heating expenses were also higher than anticipated. Landscaping, however, coming in under budget.
“That’s one of the challenges of a construction management model. It’s kind of a free-flowing process until the end,” she said.
There’s still ongoing construction under the facility’s stairs, which is something the city is working on internally.
“Once we saw the space and realized that under the stairs area was kind of awkward and not good functional space, we wanted to convert it to a storage room,” she said. “We requested a change order price that came in higher than we thought was realistic, so we didn’t accept that change. We’re now doing that work internally outside the project.”
Weather delays caused problems for the project and tenders from 2023 drove prices up with inflationary impacts.
“One of the big challenges we had with the Cenovus Energy Hub project was our tight timeline,” said Simpson, noting they could have gotten more community support and fundraising with more time.
They also grappled with difficulties of not having a lottery license.
Coun. Jim Taylor chimed in saying they should look at securing funding ahead of time before moving forward with future projects.
“Moving forward, whenever we have any major capital project like this, I would encourage we have a major portion of that secured or budgeted in hand before we move forward,” he said.
Mayor Gerald Aalbers says the city is constantly grappling with ballooning infrastructure costs.
“Our infrastructure costs are growing so fast we’re on a downhill slide,” he said. “If councils of the day don’t make a decision and move forward today, there wouldn’t be a new rink.
“The way things are going, we’ll never keep up.”
Taylor pointed to the decision to build a $101 million facility and not building more within the city’s means.
“As a councillor, moving forward, I bring that from my opinion when I’m making votes on new capital projects coming up,” he said. “I’m taking that approach, maybe it isn’t going to be as extravagant, as large as those types of things and we build more within our means. We’re not going to have cash for everything, (and it’s) going to be less of a burden on the taxpayer.”
Coun. Michael Diachuk, who sat on council when the project was first approved, said they were building a project for the future.
“We weren’t building a project for today, we were building a generational project,” he said. “The expectation to be able to pay it off today, and have the people who live here currently pay it off, it’s not that kind of project. This building is going to be here for five decades or more, so there’s going to be multiple generations going through it.”
City Manager Dion Pollard gave insight into the short timeline the city was working with when approving the Hub.
“There was a timeline put on the project on the federal grant money of March 31 of this year to have that project complete,” he said. “If we don’t complete that project by, or guarantee that the project was going to complete by March 31, the federal money and the provincial money goes away. That was a major key to council having to make the decisions when they made them and how they made them.”
Council approved the transfer of $536,893 from the wastewater offsites to the Hub at the March 9 meeting. Council also approved the revised funding sources for the arena.
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