No other option: Penticton city staff say critical dam upgrades must be completed despite $7.5M jump in price

Photo: City of Penticton

Ellis 4 Dam site in winter construction conditions.

The cost of a dam upgrade in Penticton has ballooned by $7.5 million, leading to plans to take on external debt to fund the project.

The Ellis 4 Dam upgrade was a budget line item originally approved at a total cost of $10.5 million, $7.1 million of which is bring provided by provincial and federal government grants.

Now, due to "a series of unexpected construction costs," according to the city, it is now estimated at a total of $18 million.

Staff explain, in a report that will be presented to council on Tuesday, that postponement is not recommended.

"The Ellis 4 Dam, which is nearly 100 years old, is a critical piece of City infrastructure that provides both flood protection and irrigation demands, and the consequences of a failure are extremely high,” says Kristen Dixon, the general manager of infrastructure.

“Completion of the project is essential as the dam does not meet provincial dam safety regulations. If a major storm occurred, the spillway may not be able to handle the incoming flow and the dam would overflow. It’s critical we complete this work to ensure the resiliency and capacity of the structure.”

Dixon calls the project "extremely complex" and adds that winter working conditions, and incorrect assumptions in the initial planning stage that were discovered during construction as to design, have collectively resulted in "significantly higher than expected construction costs."

Also, according to the report, "the effort and resources required to navigate required Ministry approvals and processes were also higher than anticipated, compounded by the Chilcotin River Landslide (which absorbed limited Ministry resources), resulting in delays to the construction schedule and higher than anticipated consulting costs."

As a result, in order to complete the project, the city is on the hook to make up the balance to cover the new total. City staff note that "requests for further funding from other governments were unsuccessful."

The new proposal is to borrow $11 million, scrapping the original plan of taking $3.4 million from the Water Capital reserve.

"This option allows the City to preserve the limited Water Capital reserve for other critical infrastructure commitments while ensuring the timely completion of this essential project," reads the report.

"Debt payments would be funded by the water operating fund annually and are approximately $880k based on a 20-year term and a 4.46 per cent interest rate, which will be incorporated into the 2026 user rates."

The staff report concludes by saying that due to the importance of the dam, the city has "little option other than completion [of the project.]"

City council will receive the report and discuss the staff recommendation at Tuesday's council meeting.