Eligibility of Municipal Staff Costs Under Transportation Grant Programs
MUNICIPAL GRANT PROGRAM UPDATES
Advisory: September 26, 2006
Eligibility of Municipal Staff Costs Under Transportation Grant Programs
The following is a summary of clarifications that have emerged regarding the eligibility of municipal forces as a portion of the sharable cost of grant supported municipal projects. This list is intended to provide samples for general guidance covering the most common situations.
1 Project Management and Planning Office
In some instances there may be a joint municipal/private sector group that functions independent of the routine municipal administration process, and is dedicated to the delivery of transportation projects that may be cost-sharable under one or more grant programs. To the extent that this group is dedicated to accepted cost-shared projects under one or more provincial grant programs, both the payroll costs and proportional office space costs for municipal and private sector staff located in this office, may be eligible components of those projects.
Those staff members engaged in the collection, assembly, or distribution of information related to the application for, and/or reporting on those grant programs, are considered to be in global administrative positions, and as such their staff and space costs are not eligible expenditures under the grant programs.
2 Financial Services
Those staff members engaged primarily in the collection, assembly, or distribution of information related to the application for, and/or reporting on those grant programs, are considered to be in general administrative positions. As such, their staff and space costs are not eligible expenditures under provincial grant programs.
3 Survey and Drafting
Where survey and drafting staff are dedicated full time to the delivery of accepted cost-shared capital transportation projects, and their daily activities are limited to those projects, then their costs are considered to be an eligible component of those projects. (See note below.) Other more general activities such as those related to maintenance of control systems and information, storage/retrieval and updating of project files and drawings, response to public information requests, etc., are considered to be administrative costs and are therefore not eligible under provincial grant programs.
4 Traffic Signs
The supply and installation of traffic signs at the time of construction are eligible components of an accepted cost-shared capital transportation project. (See note below.) Subsequent to construction, the periodic cleaning, upgrading, or replacement of the signs, is considered to be an operation and maintenance activity. Operations and maintenance activities are not eligible for cost-sharing under provincial grant programs. A special exemption may be considered where a change in provincial or national sign standards necessitates the system-wide replacement of a particular sign or sign type.
5 Traffic Detours
The design and installation of traffic detours is an eligible component of an accepted cost-shared capital transportation project. Construction contractors should have the flexibility to utilize their own forces, to subcontract the service, or utilize municipal forces. Where the contractor on a cost-shared project elects to utilize municipal forces, the municipal cost directly associated with providing those services would be an eligible component of the project cost. (See note below.)
6 Traffic Signals
The capital cost to supply and install traffic signals is an eligible project under several transportation grant programs. It is appreciated that the effective and efficient operation of a traffic signal system is dependent on the use of standard or interchangeable parts and rapid response to a variety of signaling problems. The municipality may therefore utilize its own resources or sole source the resources necessary to supply and install traffic signals. (See note below.) Subsequent to construction, the routine operation and maintenance of the traffic signal system is not eligible for cost-sharing under provincial grant programs.
7 Top Lift Paving
Top lift paving or pavement overlays are eligible projects under several provincial grant programs. Where a municipality has the in-house expertise, materials, and equipment necessary to carry out these projects, the in-house costs are eligible under the grant programs, provided the costs apply only to accepted eligible cost-shared projects. (See note below.)
8 Bus Refurbishment
Where mechanics and shop space are dedicated full time to the total refurbishment of transit buses, their costs are considered to be an eligible component of a cost-shared bus refurbishment project. (See note below.) Activities related to the ad hock replacement, or repair of bus parts or components, as well as routine or periodic maintenance and inspection activities, are not eligible for cost-sharing as these are considered to be operational and maintenance items rather than capital items.
9 LRT Track Rebuilds
The labour and equipment costs for major track rebuilds or rehabilitation involving the replacement of rails and replacement or reseating of ties and bedding materials are eligible components of an accepted cost-shared project. (See note below.) The periodic grinding or refinishing of rails however is considered to be routine maintenance, and any staff or equipment costs related maintenance is not eligible for cost-sharing under provincial grant programs.
10 Use of Municipal Forces as an Alternative to Tendering
In considering the economic benefits of utilizing private sector forces versus municipal forces on a particular project, the municipality should also consider the implications of the Agreement on Internal Trade. Under this agreement, Chapter 5 Annex 502.4 pertaining to municipalities, includes sections referencing the procurement of goods and services costing in excess of $250,000, as well as the fair and non-discriminatory acquisition processes for acquiring those goods and services. Using a bus refurbishment project as an example, a small municipality refurbishing 1 or 2 buses may not be affected by this agreement. In the case of a larger municipality refurbishing a larger number of busses, it may be prudent to tender the project thereby opening the process to any qualified out-of-town or out-of-province suppliers or contractors. The results of the tender process and any subsequent contractual experience may become factors in the economic benefits analysis leading to a decision to utilize municipal forces.
While some in-house staff, equipment, and space costs are eligible cost components on accepted cost-shared projects under provincial grant programs, the costs are limited to that period of time where the staff and equipment are fully dedicated to and working directly on the accepted capital projects. It is not intended that grant funds be used as a general subsidy for any specific municipal operation or department, or project management group.
In general, where a municipality desires to allocate provincial grant funds to offset the cost for providing in-house expertise, materials, equipment, and etc., to undertake work on eligible capital projects or components of projects through one or more provincial grant programs, the municipality is required to undertake an independent comparison of its in-house costs with private sector costs for comparable work packages. Where applicable, this cost comparison should include an evaluation of the non-monitory costs/benefits of utilizing in-house forces versus private sector forces to undertake the particular work package in question. This cost comparison should be submitted along with the application to utilize municipal forces on that particular work package. It is not necessary to resubmit this cost comparison with every subsequent project application for similar work, however, it is recommended that the municipality periodically update its cost comparison and evaluation, to ensure that its in-house operation is remaining competitive with the private sector.