The $47.4-million Highway 11A/Northland Drive project has been temporarily cancelled.
The project was scheduled to begin this year but is being temporarily cancelled due to a few reasons, including escalating construction costs that have greatly exceeded the approved budget.
“When the costs came in, they were much over what we expected. For that reason, we don’t think it’s viable to continue with the project at this time,” engineering services manager Konrad Dunbar told Red Deer city council Monday.
Bids for the project came in more than $25 million over budget.
The engineering services report presented to council on Monday said there has been no interest from developers in proceeding with development in that area and due to increased construction costs throughout the city for repair and maintenance, debt funding needs to be prioritized for these needs.
The project consisted of creating four lanes on Highway 11A from Gaetz Avenue to the QEII, a CP Rail overpass and two roundabouts.
Approximately $9.8 million of the $47.4M has been expensed, leaving approximately $37.6M of funds remaining unspent. Dunbar said the money that has been expensed has gone towards design, land acquisition, utility relocates and preliminary works.
The works completed to date are not “throw-away” costs because they are required works for when the project is restarted, according to the engineering services report.
The proposed funding from Alberta Transportation ($15 million) and CP Rail ($3 million) are part of Cost Contribution Agreements and therefore the funding remains available once the project is rescheduled. But those funds would not be altered by inflation, said Dunbar.
Due to this being only a temporary cancellation, work is still required – it will be rescheduled in future budget years in accordance with development growth and in partnership with the Northland Drive project as a whole. Council will review all projects in context with the entire capital plan during deliberations.
Administration is currently communicating with the affected landowners to notify them of the delay in the works and a broader communication will be released to the general public.
Coun. Vesna Higham thanked administration for their foresight in temporarily cancelling the project.
“I can recall in my first term when the Collicutt Centre opened and when all the dust settled it went $1 million over budget,” Higham said, adding that the backlash to that $1 million was significant.