Whitehorse city council discussed options for the retrofit and replacement of the city hall, a project that is set to cost considerably more than originally thought.
In 2014, planning began to either improve or replace the building located at the corner or Steele Street and Second Avenue and consolidate more city services there.
As work on the project continued in 2020 it was found that renovation of the existing city hall building, particularly the portion constructed in 1966 would be significantly more expensive than anticipated. The reason identified for the higher cost was large structural changes that would have been required in order to bring the structure in line with new building codes.
“The option preferred by council as being the most functional and economical was to demolish the existing 1966 city hall along with the existing fire hall and build a two-storey structure,” a city staff report to council reads.
A replacement structure was designed that included a high-efficiency biomass heating system and a transit hub in the building. It was approved by city council in the spring of 2021 at an estimated cost of $24.7 million, two thirds of which was to be paid for with external transfer payment funding.
According to the report presented to council at its Dec. 6 standing committee meeting, that price will continue to climb. City property management manager Peter O’Blenes broke the news to council in his report that a more thorough cost estimate found that the new city hall building would cost about $3.5 million more than expected, but cost savings and additional external funding have brought the potential budget shortfall down to $1.5 million.
The report states that the anticipated increase in costs is the result of higher commodity prices, COVID-19 related supply chain issues and a tight labour marker.
“If the city chose not to proceed with the project as planned and instead explore alternate options or make substantive changes to the scope of the project, significant costs could be incurred with planning and redesign and a large portion of the existing funding may no longer be available,” the report reads.
Councillors discussed the way forward knowing that the planned city hall would cost more. Some suggested that it was time to cut losses and come up with a new plan for the facility.
Coun. Ted Laking highlighted the 170 per cent increase in the cost of the city hall project since 2014— he said inflation has been just under 15 per cent in that same time.
“In terms of the cost, I understand that there is an argument to be made that if council were to change direction on this, that there will be some sunk costs that we will potentially lose out on,” Laking said.
“That has been the case and an argument that that council has always fallen back to and I’m sympathetic to it. But at a certain time, I think that we need to decide what is in the best interest of the city in the long term and the taxpayers in the long term.”
Coun. Kirk Cameron suggested the possibility of a return to the earlier plan for a retrofit of the existing city hall building, possibly including the biomass heater system.
Valerie Braga, the city’s director of corporate services said once detailed design of upgrades to the 1966 portion of city hall were completed it became clear that bringing the old building up to standards would be the more expensive option.
Laking also raised the possibility of moving more city staff and operations to other sites such as the city operations building as a way of keeping costs down.
“Where we are at, $26.2 million today, and we haven’t issued the tender yet. I am worried that we will continue to see this trend of the project getting more expensive as we move on.
O’Blenes said the operation building’s office space is basically maxed out.
“As far as sort of going back and looking at whether we can change the design of this building, we’re out of time, otherwise, we’re going to basically forego 75 per cent of the funding for this project. It needs to start in the spring,” said Mayor Laura Cabott.
Cabott added that the sharp rise in the project cost of the building reflects more than just inflation but also the decision to consolidate more city services in the proposed building that was made since 2014 and the more detailed investigation into costs that has gone on as the project was planned.
“Quite frankly, I think, you know, a city needs the city hall. So we need to move on this thing and move on it soon,” she said.
O’Blenes’ report notes that the city’s draft 2022 budget contains the extra $1.5 million that the city will have to come up with in order to build the new city hall. It states that if the city hall project proceeds as planned a contract for its construction will be awarded early next year. Relocation of staff to accommodate construction is set to start in the late spring and building completion is planned for late 2023.
Contact Jim Elliot at jim.elliot@yukon-news.com