City finance staff spent the last three years wrestling with how to manage the rising costs associated with the downtown parkade project, according to emails obtained by The Citizen through a Freedom of Information request.
The official budget for the parkade project was $12.6 million, but the final cost came to $34.16 million – $22.46 million for the parkade, $597,138 to connect the parkade to the city's district energy system, and $11.1 million for water and sewer upgrades in the area, and other off-site works. (see story)
A series of emails between Rob Clark, a financial analyst in the city's financial planning division, and the city's senior staff, show the parkade cost overruns challenged the city's finances.
On April 19, 2018, Clark wrote an email to city project supervisor Steven Mercedes, asking about the cost to connect the parkade to the city's district energy system. The email was CC'd to finance director Kris Dalio and city infrastructure engineer Alan Clark. Rob Clark said he knew the original cost estimate to connect the parkade was $20,000, but asked for an updated estimate.
"Now I'm thinking the DES work may be much more significant and so I'm wonder what the cost estimate on that should be now?" he wrote. "The cost estimate will be important, because I honestly don't know where the money will come from at this point."
On May 3, 2018, Mercedes provided Rob Clark with an updated cost estimate of $394,000 to connect the parkade to the district energy system.
In an email on Aug. 3, 2018, Clark provided Soltis and Dalio with an updated forecast on city's reserve funds.
"Without surprise, we have a problem in general funds mostly precipitated by the George St. Parkade project expected overage of $7.2 million," Clark wrote. "My cash flow prediction seems to be holding for now. Where I thought we'd be at July is pretty much where we are so far. That will change as the parkade project nears completion, where I show us now approaching around $10 million by June 2019 if the predictions about its overage hold true."
In April 2019, city staff proposed changes to allow the city manager to approve cumulative budget changes up to five per cent of the city's annual operating budget each year. Prior to that change, approved by city council in May 2019, the city manager could only approve cost overruns up to one million dollars on any given capital project.
However, on Feb. 24, 2020, Clark wrote an email to Dalio warning that the five per cent delegated authority wouldn't be enough to cover the city's rising costs.
"Just a heads up that I estimate at this point the total budget amendment required for 2019 will come close to $10 million, putting us well over the 5% threshold," Clark wrote. "The biggest single contributor is of course the new parkade."
The same day, Dalio replied: "Great, thanks Rob. Can you give me an itemized list of that $10M? Just the bigger figures. Kathleen will have to decide what she wants to bring to Council for amendment to get back under the 5%."
On Feb. 26, 2020, Soltis signed a budget amendment report form – capital, authorizing $6.64 million in cost overruns associated to the parkade project in 2019 alone. The form included $5.35 million from the city's endowment fund for the parkade construction itself, plus $752,062 for relocating downtown sewer lines, $398,401 for relocating water lines, and $139,103 for other off-site works.
On April 14, 2020, Clark wrote an email to Mercedes to double-check the cost estimate to connect the parkade to the district energy system was still accurate.
"I'm trying to figure out how much room we have in the Endowment Fund so your assistance would be greatly appreciated," Clark added.
"I think the budget is correct with the only exception that because we have been rushed to move this project up to the first week of May 2020, we are ensuring some additional costs," Mercedes replied via email on April 16, 2020.
The final cost to connect the parkade to the system came in at $597,138.
After city council requested an update on the parkade costs on Aug. 31, 2020, Wells emailed Clark on Nov. 23, 2020 to ask for a budget update on the project.
"Not super sure what you're asking, Ian. The budget for the new parkade is $12,613,000," Clark replied in an email on the same day. "Spending to date on that project is $22,211,276.67 and there is one pending invoice #3508 for $241,054.80 for a total of $22,452,331.47. Approximately $4.5 million of that spending has occurred in 2020 and will result in another budget amendment at the close of this year."
