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HWT back to drawing board on fee hike

HWT back to drawing board on fee hike

There was a bit of polite pushback at the West Harbour subcommittee meeting today over contract management fees to be paid to the Hamilton Waterfront Trust. At issue appeared to be a desire by the Waterfront Trust to get its fees increased for overseeing some construction projects on the waterfront. Back in 2016, Council hired the Waterfront Trust at a cost of approximately $1.5M as project managers overseeing four projects on Piers 5-7 valued at approximately $15.5M—making HWT’s take roughly 10 percent of the contract value. But now the cost of the projects has ballooned to approximately $23.5M.but staff, pointedly recommended that HWT’s fee should remain at approximately $1.5M.

In the discussion that ensued, Hamilton Waterfront Trust Executive Director Werner Plessl suggested that since the size of the contracts had increased to $23.5 Million that the fee paid to the HWT should grow accordingly—in which case HWT would stand to gain another $800,000. He argued that his deal was to receive 10 percent, but staff suggested the $1.5 Million had been capped as the maximum that the parties had agreed to. Mayor Fred Eisenberger pointed out that the actual oversight work being asked of HWT did not appear to have increased, only the amount being paid to contractors who are actually performing the work on the ground. He also wondered why contract details of this nature were being hashed out in an open meeting. In the end it was recommended that staff and the HWT go back to negotiate the deal. Committee member Maureen Wilson wondered why they were even doing that, since staff’s recommendation was pretty clear—no more money.

The exchange highlighted a possible shifting political landscape in relations between the City staff and the Waterfront Trust. At one time HWT had been able to negotiate its fees for various projects directly with city finance staff, without council involvement. But that was when the HWT was still solvent as it worked through the $20 Million endowment that it received when the lawsuit with the former Hamilton Port Authority was settled in 2000. Those funds are long gone, as the HWT has struggled with operating losses that have rendered the organization dependent on work projects provided by the city. The HWT got a bit of a windfall when it sold its lease on the Discovery Centre back to the city for $2.6 Million. The terms were that the city would pay the note off at $230,000 per year. But then the city had to pick up the tab on the $769,000 legal tab the HWT incurred in its lawsuit with Sarcoa. The city is deducting about $70,000 per year from the annual payment until it has recovered its costs.

Unasked was the question of what would be the incentive for any organization acting as contract administrator to keep costs down, if they stood to gain as the cost of the work went up?

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