The Development Agreement. Long-Term Care Home Renewal Branch October 2016
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1 The Development Agreement Long-Term Care Home Renewal Branch October 2016
2 Learning Objectives By the end of this session, you will have a solid understanding of: The description and purpose of a Development Agreement (DA), and how it is executed. Outline milestones and deliverables of the construction project described within the DA. Significant differences between a General Contractor (GC) and a Construction Manager (CM). This presentation is for general convenience for full detail and a definitive description of rights and obligations see the DA itself. 2
3 Agenda Description and Purpose of a DA DA Preparation and Execution Process Construction Manager (CM) vs General Contractors (GC) General Contractor Milestones and Deliverables Construction Manager Milestones and Deliverables Questions 3
4 Development Agreement: Description and Purpose The DA is a legal document signed by the operator and the Ministry of Health and Long-Term Care (the ministry) that states the terms and conditions for redevelopment projects that operators must comply with in order to receive a Construction Funding Subsidy (CFS) per diem under the Construction Funding Subsidy Policy for Long-Term Care Homes, After a LTC home operator is approved into the Enhanced Strategy, a DA must be prepared and fully executed before the project can proceed with an assurance of funding (subject to meeting the conditions in the DA). o The operator must work with their assigned Project Manager (PM) to provide the detail necessary for the ministry to draft the DA. Without an approved DA in place, construction cannot begin. 4
5 DA Execution Process PM must confirm the project details and schedule, with the operator. Operator may need to contact their architect for a project schedule. The ministry s legal team prepares the DA based on standard template Operator and the operator s legal team review and operator signs DA. The Minister then reviews and signs the DA (and it is then considered fully executed.) Confirmation of Project Details Preparation of the DA Operator Review and Signature Minister Review and Signature 5
6 Planning Grant for Non-Profit Homes The Planning Grant will be provided to eligible non-profit operators (e.g. charitable, not-for-profit, municipal) to cover $250,000 per project for costs associated with organizing and preparing for the redevelopment project. The eligible operator will receive this one time grant after the Development Agreement is fully executed. Eligible expenses include professional or consultant services (e.g. an architect, engineer, project manager) and must be incurred before construction starts and within two years prior to construction start (or back to the execution of the DA if that was earlier). A Planning Grant may be provided only where no grant of this type has previously been provided to the Operator in respect of the redevelopment of the home, or in respect of any other LTC home at 6 the same location.
7 What s the Difference? General Contractor (GC)? Contractually responsible to the Operator for the entire construction work of the project. Takes overall responsibility for the project; may perform work itself or hire subcontactors and supervise the work. Public Tender after the Working Drawings have been approved Selection of GC must be approved by the Minister Construction Manager (CM)? Plans, coordinates, and controls construction of project. The Operator (not the CM) hires/selects subcontractors for a project, with assistance of CM. Public Tender required, but selection of CM does not require Minister approval. Minister approval of selection of at least first publicly tendered subcontractor is required. CM bid may include an option to convert contract into a stipulated sum contract 7
8 Development Agreement Milestones and Deliverables General Contractor Process of proceeding through Construction with a General Contractor 8
9 Site Approval If a Site has not been identified in the application: New LTCH Site Land Purchase Agreement / or 30+ year Lease Agreement Minister Approval of site for the LTC Redevelopment Zoning - permit the operation of a Long-Term Care home 9
10 Preliminary Plans Ministry Approval Development Agreement Executed Site Approved (if needed) Submission of the Preliminary Plans Operational Plans (if required) Review by Technical Specialists PP not approved Letter from the ministry Approved PP Approval Letter on behalf of the Minister 10
11 Working Drawings Ministry Approval Requirements Addressed Preliminary Plans Approved Operational Plans (if required) Review by Technical Specialists WD Not Approved: Letter from the ministry Approved WD: Approval Letter on behalf of the Minister 11
12 Begin Tendering Ministry Approval Procurement for Construction Preliminary Plans Operational Plans (if applicable) Minister Approval to Begin Tendering Working Drawings 12
13 Material to Support Request for Approval to Award 3 Bids 1 Proposed Successful Bid 2 Alternate Bids FEC Final Estimate of Cost Finance Letter of Confirmation of Financing for the Project Ministry Review Minister has the right to Reject any Bids Minister Letter of Approval 13
14 Submission to the Ministry Proof of Bonding a fifty percent (50%) performance bond a fifty percent (50%) labour and material bond. Proof of Insurance Builder s Risk property insurance Wrap Up Liability insurance Environmental/Pollution Liability insurance Certificate of Good Standing under the Workplace Safety and Insurance Act (Ontario) Municipal Approvals Submission of All Permits required for Construction Construction Schedule Agreed upon by the Operator and General Contractor - consistent with Project Schedule in DA Minister Approval in writing 14
15 Construction Approval Construction Schedule WD FEC PP - Minister Approval to begin Construction - Expires after 9 months Tender Approval 15
16 Occupancy Plan Approval, Pre-Occupancy Review, and First Resident Date Occupancy Plan Pre- Occupancy Review Licencing First Resident Date 3 Months prior to anticipated First Resident Date Inspection Occupancy Approval Confirmation that applicable conditions of licensing have been met* Confirmation of Admission of First Resident *DA is not a commitment to issue a licence Licensing requirements must be met separately. 16
17 Final Statement of Disbursements (FSD) Due by One Year after First Resident Date Auditor s Report LEED Certification 17
18 Development Agreement Milestones and Deliverables Construction Manager Process of proceeding through Construction with a Construction Manager 18
19 Selection of a Construction Manager Selection of Construction Manager Executed Development Agreement Public Tender Ministry Approval is not required Construction Manager Cannot: Select Sub-Contractors Allocate own employees for Construction Work Stipulated Sum for Construction Tender/Bid may include an option to convert a CM contract into a stipulated sum contract Only when 75% (by contract value) of subcontractors have been selected. Original bid must include markup and overhead on top of the amounts owing subcontractors Operator to inform the Ministry Stipulated Sum may not be raised once the Construction Manager has been selected 19
20 Early Work Tendering Ministry Approval in CM Scenario Preliminary Plans Approved Operator must request Minister to approve or deny Minister Letter detailing work that can be tendered Construction Work Must Wait Working Drawings Approval Minister Approval to begin Construction 20
21 Bid Tendering for Sub-Contractors Minister must approve the start of tendering for sub-contractors. Contract between Operators and the Sub-Contractor Greater than $100,000 Public Tender required Greater than $25,000 and less than $100,000 Competitive Process RFP in writing inviting at least 3 potential sub-contractors Subcontractor Stipulated Sum Contracts Greater than $250,000 Bonding Requirements with a financially sound and reputable bonding company: a fifty percent (50%) performance bond and a fifty percent (50%) labour and material bond 21
22 Subcontractor Bids Submitted to Ministry Selection of First Sub-Contractor for 1) early work (if applicable) and 2) main work - Copies of Public Tender documents - List of all bids submitted - Copies of the bid submitted by the proposed selected candidate - Copies of two alternate bids that could be selected - Minister Approval Required Selection of all other Sub-Contractors - Copy of Public Tender of RFP Documents - List of all bids submitted - Copy of selected bid - Minister Approval Not Required Work Cannot be Completed - Operator can select replacement from previously submitted bids or - Re-Tender Stipulated Sum - CM - Only where 75% of the Sub- Contractors (by contract value) have been selected - Bid must have included an option to convert a CM contract into a stipulated sum contract, with specified markup and overhead. - Operator to inform the Ministry 22
23 Initial Estimate Cost and Final Estimate of Cost Submission IEC Submitted after Sub-Contractors have been Selected Required to obtain Approval to Begin Construction FEC Submitted 30 days after the last Sub-Contractor has been selected FSD Up to 1 year after First Resident Date 23
24 Conclusion Purpose of a Development Agreement (DA) Process for receiving/executing a DA Milestones and deliverables of the construction project described within the DA. Significant differences between a General Contractor (GC) and a Construction Manager (CM). See DA for details and definitive requirements. 24
25 The Development Agreement Thank you for your participation!
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