The City of New Westminster’s new civic facility and office tower is projected to be nearly $1.9 million over budget.
On Monday, council received a staff report about the Anvil Centre and office tower budget, which is forecasting the project will cost $88.3 million, exceeding the $86.4 million budget.
“The council wanted to be clear and upfront with citizens going into this election, so here are the figures as we see them,” said Coun. Bill Harper. “The projection is quite clear. It says we are $1.862 million over budget.”
Harper said the figure is “quite livable” given the scope of the project. He said it represents a number of things, including a $600,000 increase due to the change from the HST to the GST/PST and the inclusion of a full kitchen in Anvil Centre rather than the warming kitchen originally proposed. Instead of importing food from an outside source for conferences and events and keeping it warm at Anvil Centre, staff said a full kitchen would provide a better quality product.
“That figure, I believe, was in the neighbourhood of $450,000. So right off the hop you can see there is some serious change,” Harper said of the kitchen costs. “There was a number of other changes that took place as well. I think $1.8 million over is quite small when it’s a per cent.”
The figures aren’t final, Harper said, because the building is about 99 per cent complete.
“I think everyone at this table would have wanted this project to come in under budget, but I think we need to recognize this is probably one of the most significant and complicated construction projects the city has probably undertaken in a generation,” said Coun. Jonathan Cote. “The big cost drivers, number one, there was a tax change that put some significant pressure on the budget. And also this project did take longer to complete than was originally anticipated. Those two drivers certainly had an impact, but although the project has gone roughly two per cent over budget, there is still a strong business case for the project as a whole.”
Cote said the majority of the project has been funded by both casino revenue and the sale of the office tower. Even though the city will be taking on some of portion of debt to fund construction of the project, he said the debt financing will be fully covered by taxes from the office tower and the parking structure.
“Despite the costs we are looking at for this facility, there won’t be any impact on the residential property taxpayer,” Cote said. “The city has an incredible new facility for residents to enjoy, whether it be the museum, the new theatre or the conference centre, plus we have a Class A office building in our downtown that will bring jobs and vibrancy into our downtown neighborhood. Certainly not the type of report we like to see, but in the grand scheme I think two per cent, compared to what we often see in other government projects is very respectable.”
According to the staff report, when the city began construction of the project the Harmonized Sales Tax was in place. The reinstatement of the Provincial Sales Tax resulted in about $600,000 in additional costs to the project.
The report stated that the city had a base budget of $12.5 million for the parkade, which the city owns. The city is forecasting the parkade will come in slightly over budget.
Noting that most of the project was funded by casino revenues, Coun. Chuck Puchmayr sad it’s “absolutely phenomenal” for the city to get a building of this stature for $1.8 million. While he wished it had come in on budget, Puchmayr said it was a “difficult build” because of its cutting-edge design.
Council wanted the report released prior to November’s civic election.
“I don’t anticipate from what our consultants are telling us that it should be much greater than that, but I do agree we needed to come out with these figures now rather than in January,” Puchmayr said. “I think it’s important the public knows.”
Anvil Centre, which opened in September, includes a conference facility, the city’s museum, a theatre, a number of cultural spaces where classes will be offered, a dance studio and more.
When the city agreed to allow a destination casino to locate in New Westminster, it negotiated funding for a number of projects in the downtown and Queensborough neighbourhoods – including a civic centre.
Lisa Spitale, the city’s chief administrative officer, recently said the city’s goal was to create a facility with enough revenue generators to offset some of the costs in other services. Along with the conference centre, the city expects the office tower to generate money for city coffers.
“We wanted to use the taxes in the office tower as an offset also to the operating costs. The whole thing has to work comprehensively. We also recognize that city services have a cost to them, but they are also based on community need,” Spitale said. “Everything we have done in here has been based on a community need and an expectation of where we want to go in the future.”
In an attempt to leverage economic development opportunities for the downtown, the city sought to see if any developers were interested in partnering with the city on the development.
The city partnered with the Uptown Property Group, which proposed building an office tower on top of the civic facility – something city officials consider a critical part of the vision for economic development and revitalization of the downtown core.
When UPG withdrew from the project, the city decided to build the tower on its own – a move some resident feared would leave taxpayers footing the bill for a white elephant if it didn’t sell or get leased.
In March 2014, the city announced it had sold the officer tower for $35.5 million to 777 Columbia Street, a partnership jointly owned by Kingswood Capital and Duke Holdings – a company jointly owned by businessmen Joseph Segal and Suki Sekhon.
According to the Oct. 6 staff report, the office tower is nearly completed and is forecast to be slightly under budget at $31.6 million. The report states that Anvil Centre is forecast to cost $44 million, an increase of the base budget of $41.5 million.
