THUNDER BAY – Dramatic jumps in global commodity prices, along with a winter that’s taken a heavy toll on local roads, will force the City of Thunder Bay to go millions over budget to complete planned roadwork in 2022.
City council voted Monday to approve adding $1.8 million to the roads budget in 2022, while deferring some other planned work.
It’s a situation that could continue to worsen throughout the year, with tenders for road and other infrastructure work coming in 10 per cent higher than anticipated on average so far in 2022.
That’s been driven by general inflationary increases as well as spikes in specific commodities like asphalt and large-diameter pipe, said the city’s head of engineering and operations, Kayla Dixon.
Six capital contracts put out by the engineering department so far this year have come in a collective $2.4 million over budgeted costs, Dixon reported, and one of those had already been reduced in scope to mitigate costs.
Contracts that have gone over budget include road resurfacing, water and sewer work, and the replacement of the Woodcrest Road Bridge.
In addition to market pressures, underground replacement projects on three streets had to be expanded beyond the city’s initial plans.
In a memo presented to city council Monday, Dixon recommended delaying or reducing the scope of several roadwork projects scheduled for this year, as well as dipping into carry-forward dollars from previous years, to address the overages.
Mayor Bill Mauro, however, proposed drawing on the city’s reserves for a further $1.8 million to keep much of the work on this year’s agenda, including contingency funds for an anticipated increase in patching and sealing after a harsh winter.
“I think everybody knows we have had a difficult year,” he told councillors Monday. “This will put some projects back in that were going to be deferred until 2023. I just think unfortunately we find ourselves in a position [where] I think it’s necessary.”
Even with the extra dollars, the city will still defer part of its reconstruction of Crown Street (the section from John to Cornwall streets) and the replacement of a water main on Cumberland Street (from Villa Street to McVicar Creek) to 2023.
Staff looked at the priority level of the work as well as deadlines attached to external funding for some projects, to decide what work to defer.
“It is possible” more projects will have to be deferred later this year, Dixon said in an interview.
“We do have several additional capital contracts that will be opened over the next several weeks. So we’ll have a better understanding, probably by the end of June we’ll know how many more projects might need to be deferred.”
Many other municipalities are facing comparable situations, Mauro and Dixon underlined, but it remains extraordinary.
“I don’t think we’ve ever seen anything like this,” said Coun. Andrew Foulds.
One concern is that prices often remain at least somewhat elevated after market spikes, Dixon said, which would reduce the buying power of a municipal infrastructure budget that's already being stretched.
“What we expect to see is that these market prices won’t necessarily return back to what they were previously, so now we’ll have higher costs going forward, which of course, unless our budgets increase, [the city’s] infrastructure gap will continue to [grow],” she said.
Staff have previously estimated the city would need to spend in the neighbourhood of $20 million more per year to properly maintain its infrastructure.
