Prince George city council is trying to tackle a transparency problem following the approval of what is now a $22.5-million underground project.
The George Street Parkade, which also serves as the foundation for the Park House Condo Development, is currently $9.8 million over budget.
In 2017, the city agreed to partner with the developer to build the parkade intending to help attract housing and investment to advance downtown revitalization.
City council reviewed a report breaking down the project costs at last night’s council meeting (Dec. 7).
“This sucks,” Coun. Kyle Sampson said bluntly. “That is the word that comes to mind right away. It really ticks me off to see such a massive overrun on this project.”
The original estimated cost for the parkade in 2017 was $12.6 million, but because of groundwater problems, tariffs and other setbacks, the parkade at the corner of George Street and Sixth Avenue, is costing the city $22.5 million.
Council was alerted to the rising cost overruns on this project in the summer when the city’s annual report was released, prompting Coun. Brian Skakun to request the full cost breakdown on the parkade.
Hidden costs
During the discussion of the George Street Parkade report, all members of council expressed frustration that its true cost was not effectively communicated.
“I was surprised reading this report to find out that in July of 2018, the city knew the parkade was going to cost $20 million. I was absolutely flabbergasted,” said Coun. Cori Ramsay.
She says in March 2019, a report was brought forward where council was asked to approve a preliminary budget of construction costs of $12.6 million, which is almost an entire year after city staff knew the project would cost $20 million.
“Then in June of 2020 of this year, all of council received the capital project update report and there was no mention in that entire report of the George Street Parkade – the report said the only project expected to exceed its budget is Fire Hall No. 1.”
The cost overruns were approved by the former city manager – Kathleen Soltis, who departed from the city in September – under what is called delegated authority, which allowed her to approve cost overruns without alerting councillors.
“There were so many times that this could have been communicated to council and quite frankly I am outlining the order of events to show there is a glaringly obvious elephant in the room,” said Ramsay.
“We have a transparency problem. We have a communication problem. I feel that the information provided in our reporting was misleading, and that’s an understatement.”
In order to gain more oversight, council amended the city manager’s delegated authority at the Nov. 23 meeting to reduce it to five per cent of a total capital project budget, or $100,000.
Any further costs for capital projects would then have to be approved by council.
Citing COVID-19 and budgetary restraints, the city has also recently restructured its senior administration team.
“This process was not transparent and it should have been. This should have never happened and it can never happen again,” said Ramsay, adding she is confident council has now changed the delegated authority in a way that it can’t happen again.
Coun. Skakun also noted that the report shows the city committed $20 million to the developer in 2018, and at that time the city manager’s delegated authority was set at only $1 million per year.
It wasn’t until March 2019, that - at the request of city staff - it was changed to $7.5 million.
Ramsay says this change was misleadingly presented to council as a decrease, which would increase the frequency of reporting.
“None of us anticipated this loophole would be used for this,” said Ramsay. “The person I would really like to question doesn’t work for the city anymore.”
Next Steps
After Coun. Ramsay questioned the city’s timeline in approving budget increase for projects, Coun. Skakun put a motion on the floor to have the city prepare a further report on the George Street Parkade.
“I find this appalling. For us as a council to be kept in the dark – and I will mention there has been a leadership change – but we have been kept in the dark on so much of this, and when we are kept in the dark, the public is kept in the dark,” said Skakun.
“I also want a breakdown of the delegation of authority and how the developer could have been committed and told the city was going to give them $20 million when council didn’t know about it – it is shocking.”
Skakun said he wants the new report to include a history of how this unfolded including timelines, budget increases, the changes to the delegation of authority and any reports that came to council.
“We have literally tens of millions of cost overruns and the taxpayers have to pay for these mistakes. It bothers me that I had to make a motion in September to get this information to council,” said Skakun.
After posing the question, he was informed by acting deputy city manager Ian Wells that if Skakun did not make the request for this report, council would have been informed of the true cost of the parkade as a line item on next year’s annual report.
“We have had a change of administration but I think there is a lot of work to be done by the senior team going forward. Just the fact the transparency and the information council receives is underwhelming to say the least.”
Skakun’s motion for staff to prepare a second report on the George Street Parkade was approved unanimously by council.
