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More wrangling has come to light between the City of St. John’s and the developer of Galway.
Actually, it's about lights.
This time, it’s about the Galway neighbourhood’s decorative streetlights, and who should receive the money the city is saving because of them.
DewCor, the devloper, has asked that it receive the savings, stating, “the city must remain revenue/cost neutral, with city taxpayers paying no more and no less.”
DewCor, owned and operated by former Newfoundland and Labrador premier Danny Williams, reached an agreement with the city in 2016 that it purchase and install the decorative streetlights at its own cost and that the city take over the ownership of the lights, including operation, maintenance and replacement costs in addition to the normal cost of electricity.
A cost analysis at the time indicated there would be potential savings of $491,000 to the city over the anticipated life cycle of the infrastructure which would offset the cost of future ownership when compared to the standard Newfoundland Power installation.
Since DewCor covered those costs upfront — including the poles and underground wiring — and given that the lights are LED and require less electricity, the company said it should be compensated by $589,000, which it says is the net present value of the amount the city would normally pay Newfoundland Power over the anticipated life cycle of the streetlights, with provision for ongoing maintenance and electricity costs.
“This is only fair and equitable treatment for both the developer and taxpayers, and negotiations have been going on since 2018,” Danny Williams said in a letter to city council.
“Quite simply, Galway cannot be expected to incur basic streetlight costs when others do not.”
But not everyone on city council agrees.
At city council’s committee of the whole meeting Wednesday, Councillor-at-Large Maggie Burton said city staff is recommending that the city retain any savings realized from the use of the streetlights, which were installed by the developer in place of the standard streetllights.
“This is a unique situation,” said Burton, head of the planning and development committee, who noted the city does not own, operate or maintain Newfoundland Power light poles.
She said staff believe that if DewCor wanted the savings, it should have included this condition in the initial request to council to use decorative streetlights.
She said the city approved the decorative lights in the first phases of Galway, “even though this is not something the city would normally undertake.”
Burton admitted the lighting has a direct impact on the city’s operating budget. However, she noted the projected savings are based on a number of assumptions regarding future operating and managing costs and, therefore, may or may not be realized in full.
In accepting ownership of these streetlights, the city accepts any risks associated with future costs, she said. As a result, she said, having the city keep the savings is “a fair recommendation.”
Williams said it’s not fair and he is disappointed with the recommendation.
“It’s not appropriate for the city to increase the cost of development in Galway (which is ultimately paid by the resident and business taxpayers in Galway) and use those funds for the benefit of taxpayers in other areas of the city,” he noted.
Williams said DewCor paid approximately $1.37-million for the streetlights, and the city will reap the benefit by owning a much more esthetically pleasing streetscape for the same cost as standard streetlights, with no obligation to pay a rental in perpetuity. To date, nearly $150 million of private money has been spent in Galway for infrastructure and improvements at no cost to the city, Williams said.
“In order to alleviate the financial obligation by the city, we would be prepared to accept this payment as 50 per cent this month and 50 per cent in January 2022, or credited against the company’s municipal taxes."
Council members agreed to defer discussions about the issue to the next committee of the whole meeting on Jan. 20, as Ward 5 Coun. Wally Collins said he wanted further time to review the information.
“We’re building (more or less) a new city over there and there are a lot of things that were never brought up before,” said Collins. “This only popped up to me this last week, so I’d really like to get more information so I can vote on it. … $500,000 is a lot money.”
It’s one of a string of disagreements the city and DewCor have had since the project was begun. The latest was about the installation of a Christmas tree at the main Galway roundabout. Williams was forced to remove it when city council said it was a distraction to motorists.