Brock Mission cost overrun puts city cash reserves at risk

Two years ago, tearing down the former Legion building that served as the Brock Street Mission men’s shelter was announced as a leading-edge approach to battling homelessness.

The project would cost $7 million. It would replace the decrepit shelter with 30 short-stay rooms and 15 apartment units.

Homeless men would come off the street into a room, transition to a low-cost apartment while learning how to live independently, then move on to permanent housing.

Brock Mission, an independent non-profit that survived on a mix of fundraising and government supports, would finance most of the cost on its own.

Within a year the city took over. Peterborough Housing Corp. would own the new facility and Brock Mission would run it. The estimated cost increased to $7.5 million.

Three months ago, city council gave final approval to that plan. The new Brock Mission would still operate on what is known as a “homeless to housing” model.

In the words of a staff report that city council will consider Monday night: “The Brock Project is the foundation of emerging local homelessness strategies; it shifts the homelessness response system away from a dependence on expensive emergency services to integrated longer term solutions focused on ending chronic homelessness.”

Ending chronic homelessness is a big goal and would be a wonderful accomplishment. “Homelessness to housing” is considered the best way to get there.

But that same staff report contains unsettling news about the suddenly burgeoning cost of a new Brock Mission and the stretch that is required to pay for it.

The cost is now $10.8 million, a 44-per-cent increase from a year ago.

According to staff at the city and Peterborough Housing Corp., nothing that can be done to pare it back without gutting the project and starting over with a new design that might prove even more expensive.

That opinion might be correct, but the facts presented to support it are thin.

When tenders were opened six weeks ago the low bid included construction costs that were $2 million higher than expected. That’s attributed to “recent” increased costs for steel and other construction materials and labour.

That 33-per-cent increase is “consistent with other project costings and the current construction market,” according to the report. No comparative figures are given to justify that claim.

It also turns out $161,000 to pay for a temporary shelter and a feasibility had not been included in the original estimate.

And that more than $400,000 in city contributions couldn’t actually be counted because they had no cash value.

In terms of potential savings, talks with the contractor are ongoing, the report says, but the building can’t be any smaller nor lose any features without “impacting the durability and functionality of the project.”

The answer is to raid reserve funds. Nearly $2 million comes from money intended to provide a cushion in case welfare rolls swell, reducing that fund by more than half. A social housing reserve will lose $500,000 of its $700,000. Peterborough Housing Corp. will kick in its entire $250,000 capital reserve.

That’s a very risky approach, one city finance staff have cautioned against in the past.

City councillors should require stronger justification before signing off on the idea that a new Brock Mission can’t possibly be held to a tighter budget.