A recent report from City of Hamilton staff revealed that the capital costs for the Barton-Tiffany tiny shelter project ballooned past the $2.8 million budget estimate up to $7.9 million – over $5 million more than expected.
Capital costs are in addition to operational costs, which are pegged at approximately $3.96 million every year.
Staff say that the increase in capital costs reflects “the complexity of site activation, including environmental mitigation, infrastructure servicing, and regulatory compliance.”
A breakdown of costs shows that the single largest line item for the project was site construction, which came in at $4.2 million.
A description of those costs says that the number includes “all site construction labour and materials, electrical servicing, interior fencing, site grading and seeding, and additional environmental testing.”
Next, the shelter units, common building, and washroom facility purchases ended up costing $2.4 million.
Staff did not provide a further breakdown of those costs, but the initial estimate for the tiny shelters provided by MicroShelters Inc. was $1.76 million.
The city also spent $646,878 on planning, including for additional external professional architectural and engineering support, and $414,672 for third-party consultants for design services.
An additional $239,193 was spent on unit modifications to the common building, which reportedly “required structural and accessibility changes to best meet the needs of the shelter program and code requirements.”
Addressing the high site-related construction costs, staff write that the project “required unanticipated grading, servicing, erosion control, and infrastructure installation work.”
The Barton-Tiffany site was deemed to be contaminated due to the fact that there were previous industrial operations there.
“By comparison, had this project been delivered without environmental or servicing constraints, costs potentially could have been lower; however, there were no suitable alternative sites to consider at the time.”
Staff add that one of the other extra costs was that the electrical wiring and lighting components of the shelter units did not meet Canadian Standards Association requirements, and thus all units “required full rewiring before occupancy.”
The “deficiencies” were only identified during post-delivery inspections of the shelter units, which were shipped from China through an American company by the Brantford-based MicroShelters Inc.
As a result, staff indicate that they might be taking legal action “related to deficiencies, errors or unmet contractual obligations” in an effort to recover some costs.
In the meantime, the city will be using $4.6 million from the Federal Unsheltered Homelessness and Encampments Initiative and $586,970 from the Provincial Encampment Response Initiative to fund the increase in capital costs.
Those funds were originally designated to go towards supporting the site’s operational costs, meaning that the city will have to come up with additional money in another way.
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