City officials say "unexpected construction costs" are to blame for a significant budget amendment made to Penticton's ongoing Ellis 4 Dam upgrade project.
Approved by Penticton City Council by a vote of 5-0 on Feb. 11, the budget for the Ellis 4 Dam upgrades is now $18 million. That represents a $7.5 million increase from what the project was originally estimated to cost.
For the modified budget, $11 million will be funded through external debt financing.
"I'm not sure we should be leaving the dam half finished in freshet season, so that's probably not an option," Penticton Mayor Julius Bloomfield said. "I think we have to deal with what we've got on the table right now."
The city describes Ellis 4 Dam as a "critical" piece of Penticton's infrastructure that provides flood protection. It is almost 100 years old and spans 520 metres.
Upgrade work began in 2024 and involved "restoring the existing dam to reduce the risk of failure due to climate change impacts, natural disasters and extreme weather events," according to the city.
The project was originally estimated to cost $10.5 million. Of that, $7.1 million was being provided by the federal and provincial governments through the Investing in Canada Infrastructure Program.
Requests for further funding from other governments were unsuccessful, city officials added.
Kristen Dixon, the city's general manager of infrastructure, says several challenges in recent months contributed to the cost increases.
"The $7 million overreach is largely due to the unexpected soil conditions that were encountered during construction," Dixon told city council, adding that additional consulting costs and contractor standby time contributed to $1 million of those costs.
Assumptions that had to be made in preparing the project design deviated "significantly" from what has been experienced through construction, she said. The effort and resources used to navigate ministry approvals and processes were "higher than anticipated."
Dixon stated that city staff considered pausing construction on the project until the spring but instead opted to proceed and avoid the risk of flooding.
"Given the potential risks to the community, if the dam were not operational in advance of the 2025 freshet and ability to store water to service the south irrigation district, the decision was made to proceed despite the difficult construction conditions and more expensive project costs," she said.
Penticton's 2025-29 financial plan has been amended to reflect the project's updated budget.
Coun. Ryan Graham questioned the cost increases and asked if higher levels of government could assist with the project's ballooning costs.
"How did we get it so wrong and who is responsible for that?" Graham asked.
"Where's our provincial and federal governments in respect to this? I don't want to delay this, but is there any ability to get a minister on the line and say, 'hey, this is a massive price tag now for a very small community and tax base.'"
Dixon assured city council that staff reached out to the federal grant officials to express their frustration with the situation.
"We could also send some letters and request for further assistance but there are no other appropriate grants that I'm aware of," she said. "That doesn't mean we still can't ask for help following completion of the project."
Construction is expected to finish by the spring of 2025.
“Completion of the project is essential as the dam does not meet provincial dam safety regulations," Dixon said.
"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.”
