ADMINISTRATIVE REPORT

 

Date:

January 13, 2004

 

Author:

Liane McKenna

 

Phone No.:

604.257.8691

 

RTS No.:

3903

 

CC File No.:

1611

 

Meeting Date:

January 27, 2004

TO:

  

FROM:

General Manager of Vancouver Park Board

SUBJECT:

Financial Support Request for the Millennium Sport Facility

RECOMMENDATION

CITY MANAGER'S COMMENTS

COUNCIL POLICY

Allocation of funding to capital projects must be approved by Council

Grants to outside organizations require eight affirmative votes of Council.

PURPOSE

This report seeks Council authority for:

SUMMARY

The Millennium Sport Facility Society Project reflects a model of non profit partnerships with the community and other levels of government that will provide a recreation facility for the citizens of Vancouver at a much reduced cost. The facility will be operated by the two partner nonprofit organizations at no cost to the Park Board and the City of Vancouver. As the project was entering its final phase, escalation of construction costs, project changes and changes to the Development Cost Levies have increased the cost of the facility by $1.18 million. Although the MSFS have raised more than $3.5 million in funds for this facility, including funding of $1.7 million from the Canada/BC Infrastructure Program, they indicate that their fundraising capabilities have been exhausted. This beneficial project is in jeopardy unless some alternative ways of funding support for this project are found. Staff are recommending that Council approve grants equivalent to the total Development Cost Levies to a maximum of $360,000 and $820,000 to complete the funding for this project all from the approved $20 million Capital Plan Pool for projects supported by higher levels of Government and other sources.

BACKGROUND

The Millennium Sport Facility Society (MSFS) is a unique partnership between two non profit recreation groups: the Phoenix Gymnastics Club; and the Pacific Indoor Bowls Club. MSFS has received an allocation of parkland for a new joint use building at the corner of Midlothian Blvd. and Clancy Loranger Way in Nat Bailey Stadium Park. It will contain space on the lower level for an indoor lawn bowling facility and on the upper level, a gymnastics program space.

The anticipated cost of the project was just under $4.0 million. In 1987 the Park Board (with Council support) set aside $250,000 to assist the Pacific Indoor Bowls Club to relocate to a new facility. In addition, MSFS initiated a fund-raising campaign that has raised approximately $1.6 million from donations, as well as an allocation of $1.7 million from the Canada/BC Infrastructure Program. The Park Board supported MSFS in their grant submissions and their facility review processes.

The Park Board also entered into a Memorandum of Understanding with MSFS defining responsibilities for the Society and the Board before, during and after the construction of the facility and establishing operating commitments for at least the first 25 years after the building is open. Under the MOU the Society will act as the owner of the building for the purposes of designing and building it.

BENEFITS OF THE PROJECT AND THE PARTNERSHIP

The Phoenix Gymnastics Club and the Pacific Indoor Bowls Club have long histories with recreational programming in the City of Vancouver. With over 4450 children that range in age from 18 months to young adults served by the Phoenix Gymnastics Club and more than 250 members in a rejuvenated Pacific Indoor Bowls Club (their oldest member is 97) these two clubs have formed a unique partnership as the Millennium Sport Facility Society (MSFS) to build and operate a facility that will serve recreational, sport and community needs. Both of these clubs have programs and activities open to everyone and have extended outreach programs in the community beyond their existing facilities.

Since the inception of this unique partnership project the Park Board has recognized the benefits that this project will have for the community:

DISCUSSION

PROJECT STATUS

MSFS received a development permit early in 2003, issued tender documents for the project and have a Certified Professional working in preparation for a building permit application submission. The group has continued to fund raise with a view to beginning construction in the Fall of 2003. However the project has entered its final phase at a time when construction costs have escalated rapidly and the organization now requires funding support in order for the project to be built. This project, with fund raising potential almost exhausted, has firm contract pricing that was committed to the end of December 2003 and subsequently extended into January, 2004. This pricing will not hold beyond this date. If MSFS are not able to move forward, the costs for the project will continue to rise and this will put the project at risk. All of the grant funding and much of the funding support through the community may also be lost. Many of the benefits that this project will bring to the citizens of Vancouver including partnering with nonprofit groups to build and operate recreation and sport facilities, will not be realized.

CONSTRUCTION COST ESCALATION

When this project was presented for design approval at the Park Board meeting in January 2003, its cost was estimated at just under $4,000,000. In the intervening time tender pricing has been received, costs of construction have escalated throughout the industry, modifications have been made to the facility as an outcome of review by the Urban Design Panel and the Planning Department and the Development Cost levy for 2004 have increased. The cost of the facility has increased to $4,754,000.

Construction costs have experienced a sharp increase over the last twelve months and are expected to significantly exceed the overall rate of inflation over the next ten years. Increases are due to a number of factors, the most significant of which is the increased cost of labour due to a shortage of skilled trades people. This will be exacerbated by the high level of construction activity generated by low interest rates, as well as the significant amount of anticipated construction related directly or indirectly to the 2010 Winter Olympic Games.

CITY WIDE DEVELOPMENT COST LEVY

At the time that the project estimate was initially done, the City-Wide Development Cost Levy was assessed at $2.50 per sq.ft. Effective at the end of January 2004 this levy will increase to $6.00/sq.ft. resulting in a total of $360,000 DCL charges for this project.

PROJECT REVIEW

The Society has also been working closely with Park Board staff over recent months completing an internal Park Board review of the specifications, tender pricing and interior design to ensure that MSFS has adequately addressed staff concerns and to confirm that all forseen construction and soft costs have been included in the project budget.

In response to the Park Board's earlier review, MSFS had an informal "LEED" review done by their Architect Walter Francl, who has estimated that the project could achieve the "LEED Certified" level.

Project Funding

The following table summarizes the current project cost and the available funding:

Of the $3.57 million of funding available, $3.32 million has been raised by MSFS, its dedicated staff person and many volunteers. The largest source of funds raised is $1,700,000 received through the Canada/BC Infrastructure Grant Program with an additional $1,620,000 coming from the non-profit clubs and the contributions of their members, individual and corporate donations and Foundation grants.

Council agreed to a Park Board request to allocate $250,000 of Park funding from the 1987- 1990 Capital Plan to relocate the Pacific Indoor Bowls Club from Grimmett Park. This funding has been held in reserve and it is recommended that it be granted to the MSFS to support the construction of the new facility.

MSFS had raised a significant portion of the project costs when the Board considered the design in January 2003. Their plan was to raise the balance of the funds by hiring of a fundraising consultant who was to focus on securing a naming sponsor/gift for the project. These efforts were not successful.

MSFS has indicated that they believe that they have exhausted their fundraising options over the five years that they have been pursuing this goal. A delay in the project to continue to pursue fundraising would put the project in severe jeopardy. Costs would increase with the rapidly rising construction pricing and could result in the loss of grant funding given the deadlines of the Infrastructure Grant to provide proof of construction initiation early in 2004.

The total funding gap is now approximately $1.18 million based on the revised project budget which includes the full Development Cost Levy contribution. The City Council is now being requested to take on a financial partnership role in this project, contributing the remaining $1.18 million, including $360,000 to offset the City Wide Development Cost charges and $820,000 to cover the fund raising shortfall and the increase in construction costs in the tendered contract.

The alternative for MSFS if this funding is not approved would be to downsize the building or reduce its quality. Throughout the planning for this facility including the review of tendered pricing, the MSFS and staff have reduced costs and critically evaluated the need for building square footage. This facility is now at a size that is minimal for the programs that will be housed in the facility and at a quality of development that supports the building's program but does not reflect anything beyond basic finishing. Further reduction in floor area would require redesign and resubmission of the project adding costs and delaying the project further.

The extent of reduction in building size necessary to recover the funding gap would significantly alter one or the other of the building levels and place one of the non profit partners in a position of opting out of the partnership and the project because their program could no longer be successfully run. This would also have potential negative impacts on the grant and club funding secured to date for this project.

As ongoing partners in this project and with the proposed additional funding support from City Council, Park Board staff will continue to support the MSFS during the construction phase of this project. Staff will monitor expenditures and be involved in the project management decisions and directions. This has been agreed to by MSFS and the Park Board is being requested to include a clause amending the existing MOU to this effect that is satisfactory to the General Manager.

CONCLUSION

The Millennium Sports Facility project is in jeopardy of not proceeding unless additional funding of $1.18 million can be secured. The Park Board has allocated space for the facility within Hillcrest Park and the Park Board and Council have allocated $250,000 to the project by way of a grant. The Park Board believes this is a valuable project for the citizens of Vancouver and given the dedication and hard work brought to the project by the MSFS, supports the allocation of additional capital funding to MSFS through a grant of up to $1.18 million.

* * * * *

ag20040127.htm

Comments or questions? Send us e-mail at info@city.vancouver.bc.ca
© 2002 City of Vancouver