West Kelowna council looking to borrow $8M to fund construction of new fire hall

West Kelowna City Council will be faced with a big decision request during next week’s meeting.

The decision on how to fund the construction of the new Fire Hall #32 will be up for discussion alongside a staff recommendation to complete an Alternative Approval Process for the borrowing of $8 million for the project.

Earlier this year, council members approved the location for the replacement of the firehall, which is located in the Lakeview Heights neighborhood.

Now, the city will be getting an update on the Progressive Design Build process, an outline of the project budget and funding strategy as well as options available for elector assent.

Staff will be seeking direction on the elector assent process during the Nov. 28 meeting.

A Request for Proposal closed on Aug. 18 and the city received five submission.

Chandos Construction LP was selected for the first phase of the project, which is design, with a total project cost of $326,683.

The city is moving forward with a Progressive Design Build which will see all parties, including architects, builders and the city, working together as the design process is carried out.

Now, the city is working to finalize the budget for the remaining parts of the project.

“The funding strategy for the Fire Hall #32 replacement project included $8,000,000 in long-term borrowing,” says a staff report.

“The strategy included an annual reserve contribution of $520,000 to the fire hall replacement reserve, starting in 2022, and will be “converted” to cover the principal and interest payments of the long-term debt once the funds have been borrowed.”

Challenges with the borrowing strategy have been increased interest rates. However, the city does not anticipate borrowing will be undertaken until 2026, if elector assent is achieved.

According to the report, the city anticipates the annual interest rate will drop by then to bring the annual debt repayment in line with a contribution from reserve funds, resulting in no new taxation. However, if interest rates don’t drop, council would still consider options for no new taxation.

At this time, the construction costs are estimated at $14,314,900.

That would be funded with $8 million in borrowing, $3.8 million from reserves, $150,000 in developer costs, $1.18 million from the Parks DCC and $1.17 million in operating surpluses.

City staff are recommending the Alternative Approval Process (AAP) because it “is more cost efficient” compared to a referendum, the time to acquire elector approval is much shorter and it would require minimal staff resources.

An AAP requires that 10% or more of the eligible electors must sign and submit response forms in opposition to defeat the project.

According to staff, an AAP would cost about $10,000 and would take about 27 weeks to complete whereas assent voting in the form of a referendum could cost up to $50,000 and take 34 weeks to complete.

Staff note that it is of “critical importance” that construction starts as early as possible in the year to avoid delays due to weather.

According to the staff report, should council agree to move forward with the AAP, it could begin as early as February 2024.

West Kelowna City Council will discuss this matter and make a decision on Nov. 28 at 1:30 pm.