The majority of Salmon Arm council has approved an agreement with Canadian Pacific Railway that will allow the Ross Street Underpass project to go to tender – but not without risk.
Risk was the main topic of discussion regarding the underpass at council’s Nov. 23 meeting.
A report from the city’s chief administrative officer, Carl Bannister, said the construction agreement, which was drafted by CPR, has undergone several revisions from both sides.
Regarding risk, particularly because it’s an active railway, Bannister’s report said there is a gap in the potential consequences of a serious event (from business interruptions to a derailment as a worst-case scenario) and the city’s insurance.
“Specifically business interruption, loss of profit and consequential damages to CP are not covered by insurance available to the City. The City continues to work with CP to look at alternate options for reducing or eliminating this gap in coverage (CP has agreed to remove direct references to this liability in the agreement; however, this does not remove the liability if so assigned by the courts),” Bannister wrote.
He said staff aren’t confident the issue of business interruption insurance can be resolved through more negotiations.
“The remaining risk is diffcult to quantify, would be case specific and ultimately determined by the courts but could be anticipated to be financially significant if CP’s operations are interrupted for any length of time,” Bannister wrote.
Coun. Tim Lavery, who emphasized that he believes the underpass is needed and knows staff have worked to their utmost on it, was alone in voting against signing the construction agreement. He said he’s not okay with the risk and would like CP to take on the business interruption insurance.
“If it was other than a liability issue, I would be full-on voting in favour.”
Coun. Kevin Flynn, who noted he’s in the insurance industry, said the city can’t buy the business interruption insurance and it’s not up to the city to determine if CP can. He said CP will undoubtedly do everything it can to mitigate risk.
Flynn said the community voted clearly in favour of the project, and it’s time to tender it. Coun. Debbie Cannon made a similar comment about moving forward.
Coun. Louise Wallace Richmond said the city has been in a complex chess game for the past 25 years and has followed staff’s lead. She said this may not be the checkmate everyone wanted, but it’s time to move forward.
Coun. Sylvia Lindgren asked what would happen if there was an accident interrupting rail traffic now. Rob Niewenhuizen, the city’s director of engineering and public works, said it would be under CP’s insurance. He added that since staff have had more time to work on the construction agreement, there has been an extensive amount of engineering done to help minimize risk, as well as the addition of real-time monitoring of track settlement.
Mayor Alan Harrison said CP is the city’s partner and the project is now at a tipping point.
He said risk will exist as it’s an active railway and 25 trains a day will be going through a construction site.
The options would be to continue to negotiate with little hope of a different outcome, to break off negotiations and go to the Canadian Transport Authority – which could delay the project for two years, or abandon the project.
Harrison concluded there’s risk with anything, and “I think we’ve mitigated the risk the very best we can for taxpayers.”
He said signing the agreement will mean the project can proceed to tender with construction starting in the spring.
The 2020 budget lists $15.7 million for the underpass, which includes $1 million from CP plus a grant of $500,000 that CP applied for on the city’s behalf.
“Additionally, CP is completing the hotbox detector relocation works at their cost and has removed the city’s reponsibility for fiber relocation costs,” states the staff report.
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