The city's new underground parkade downtown is roughly $9.85 million over-budget, according to a report going before city council on Monday.
The city has spent $22.45 million on the project, which had an initial budget of $12.61 million, acting deputy city manager Ian Wells wrote in a report to council. The underground parkade, located on Sixth Avenue near George Street, was built in partnership with A & T Projects Development Ltd. The parkade provides parking, and serves as the foundation for, the company's planned four-phase, 160-unit condo complex.
Several major design changes, as well as unforeseen costs, contributed to the 78 per cent increase in cost, Wells wrote.
"In February 2018, due to engineering concerns regarding fluctuating ground water levels, the design for the Parkade was changed," Wells wrote. "Initially, the design was to be similar to the Marriott Hotel’s and the City’s 6th Avenue underground parkades, where a dewatering system was used while the parkade was being constructed. Once the structure was completed, the parkade would take on water during high ground water events. However, because of concerns for public safety and liability risks due to potential flooding, and potential damage through hydrostatic pressure, Administration decided it was prudent to install a permanent dewatering system."
That change, along with structural changes to the foundation, having to relocate a major fibre optic cable, having to remove several buried foundations and oil tanks and several other smaller changes added up to $2.32 million in extra costs.
In addition, the project initially called for 266 underground parking stalls and 68 surface parking stalls. The design was changed to cover the entire 2.5-acre lot, increasing the number of underground stalls to 289, and reducing the number of surface stalls to 62.
That size increase added $1.52 million to the project cost, Wells said.
"Other factors that arose during construction which further increased costs were: (U.S.) tariffs, an extremely busy and volatile construction market with a shortage of skilled labour, and an increase in construction costs that amounted to an overrun of $2,947,334.97," Wells wrote.
The remainder of the cost overruns were the result of bids coming in at higher-than-expected costs for the roof waterproofing membrane; mechanical, electrical and fire suppression systems; retaining walls and fencing required because of the land grade changes; and a laundry list of other added expenses.
"...Administration is cognizant that Council is concerned with rising project cost overruns and will be assessing the current state of the capital program delivery structure in order to provide a roadmap forward on how to improve the structure to a level that is on par with leading peer municipalities and how to reduce cost overruns," Well wrote.
Despite the added costs, the project – once all four phases are complete – are expected to add $36 million in additional tax revenue to the city over 40 years, he added. The project created an estimated 308 direct and 319 indirect jobs.
"The development of the Parkade provided opportunity for the City to sell vacant surface parking lots for development, such as the Marriott Hotel and Hyatt Hotel sites," Wells wrote. "The City investment in the Parkade and the Developer’s residential project were one of the key components in the investment decisions made by the developers of the Hyatt Hotel Project and the Student Housing Project."
Those two projects are expected to generate a further $30 million in tax revenue for the city over 50 years, he said.
In addition, the parkade will provide the foundation for a new, 85-space YMCA child care centre, that is expected to start construction in spring 2021. That project has received $4 million in grants from the provincial government and Union of B.C. Municipalities.
"Administration feels that the construction of the Parkade and the residential development has helped the City achieve Council’s focus area of advancing progress in the Downtown," Wells wrote.
City council will have a chance to ask questions of city administration about the report on Monday night.
