ADMINISTRATIVE REPORT

TO:

Vancouver City Council

FROM:

General Manager of Engineering Services, in consultation with the Directors of Facility Design & Management, Real Estate Services and Legal Services

SUBJECT:

Gastown Parkade Redevelopment: Authority to execute a Construction Contract with Dominion Fairmile Construction Ltd. for Water Street Parkade Upgrade and Expansion

 

RECOMMENDATION

CITY MANAGER'S COMMENTS

COUNCIL POLICY

Contracts over $300,000 are to be authorized by Council.
PURPOSE

This report seeks Council approval of a revised budget for the Water Street Parkade based on tenders and for authorization to execute a contract with Dominion Fairmile Construction for the upgrade and expansion of Water Street Parkade, on similar contract terms that Council authorized in November 2002 for the Cordova Parkade.

BACKGROUND

The City is the owner of the Gastown Parkade which is comprised of two separate parking structures across the lane from each other in the Gastown area: The Cordova Street Parkade (formerly the Woodward's Parkade) and the Water Street Parkade.

On November 5, 2002, Council approved a budget of $32.0 million, GST and DCL's excluded, for the reconstruction of the Cordova Street Parkade ($21.8 million) and the redevelopment of the Water Street Parkade ($10.2 million). The redevelopment was to include parking capacity for the redeveloped Woodward's building, with $1.0 million to be recovered from the developer.

Council also approved the following recommendation:

In the November 2002 Council report, Council was advised that in order to meet the extremely tight time-line for the delivery of the WHEX space being developed as part of the project, the project would be tendered on a fast-track basis, whereby prices are obtained for the sub-trades work sequentially and rolled-up into a fixed price with the general contractor (Dominion).

On November 26, 2002, Council authorized the Director of Legal Services to execute a construction contract with Dominion for the Cordova Parkade in the amount of $18.127 million, with provision for additional sub-trade work to be tendered sequentially for a total contract price up to a maximum of $19.5 million.

Work on the Cordova Street Parkade is underway with demolition of the old parkade complete and excavation and shoring work nearing completion. Bids have been received by Dominion for the major sub-trade work for Cordova and Water Street parkades.

Preliminary work on the Water Street Parkade has commenced with the relocation of the tenants, negotiating encroachment agreements, removal of asbestos, structural shoring, selective demolition, and miscellaneous excavation in order to meet the committed deadlines for the commercial space.

JUSTIFICATION FOR WATER STREET PARKADE EXPANSION

The City of Vancouver has taken a number of measures to ensure the health of heritage areas, including the provision of off-street parking. The Gastown Parkade provides most of the parking supporting the Gastown area. As approved, the redeveloped Gastown Parkade will provide a total of 1159 parking spaces, 243 fewer than the previous structure.

In addition to parking, the Water Street Parkade project also includes: three levels of offices (12,000 square feet funded by the Property Endowment Fund), an improved facade that is more consistent with the area, remediated floor slabs, upgraded lighting and fire protection, and a seismically upgraded structure.

Despite the conditions attached to the in principle approval in the November, 2002 report, staff are recommending that the two and a half floor expansion be built as part of the parkade reconstruction project for the following reasons:

1. To support the existing community and expected heritage redevelopment.

The Gastown Heritage Area contains approximately 2.5 million square feet of building space, not including this development. This level of development would require approximately 2,500 parking spaces, in the context of Downtown development where standards are reduced to discourage vehicle use. The recently approved civic initiative, the Gastown Heritage Management Plan, offers powerful incentives to redevelop and upgrade heritage buildings in the Gastown Area. This will further press the requirement for parking in the area. In addition to the Gastown Parkade, there are approximately 700 parking spaces in the community. The parkade will have 1159 spaces, and with the expansion adding another 254 spaces to bring the total to 1413. With full development of the parkade, the Community would have 2,100 spaces, still less than the reduced requirement

2. To support parking requirements of WHEX and the Hastings Street Corridor.

The WHEX development is expected to need 400 additional parking spaces and it has the right to ensure that a minimum of 500 parkade spaces are available for short term public parking. The increased parking supply could also help the economics of building retention and upgrade for the many heritage buildings on nearby Hastings Street which are not in the Gastown Heritage Area.
3. To support redevelopment of the Woodward's site.

Because of the difficulties of providing parking on site, it is expected that the Gastown Parkade will provide up to 500 parking spaces for the Woodwards site redevelopment. In January 2003 Council authorized the purchase of the Woodward's building and expressed a desire to redevelop the building. Staff are to report back on options for such redevelopment after a public consultation process, however, the project would seem to have a higher probability of proceeding in the near term.

4. To provide parking for future development at a cost-effective rate.

The provision of parking in the Gastown Parkade for the Woodward's building can be provided at a lower cost than within the Woodward's site, which would likely be over $25,000 per space. The provision of parking in the Gastown Parkade is also likely the only real option if a significant portion of the Woodward's building is to be retained.

The provision of added parking in the Water Street Parkade balances the location of parking, since many of the spaces directly serve Water Street heritage buildings, and the City's tenant WHEX, which has its main access on Water Street.

5. To reduce construction impacts on the Community and WHEX.

The Gastown Community has experienced a series of on-going disruptions due to various construction projects in the area, repaving, utility service upgrades and this civic initiative. The Business Improvement Association strongly supports minimizing the construction period and disruption to the Gastown Area. In addition, the lease with WHEX provides for "quiet enjoyment" after WHEX commences its operation in Spring of 2004. This will create a significant restriction in construction activities that might be permitted after WHEX commences operations, meaning that any future addition would be a much higher cost.

6. Synergies with the current construction project

The Water Street Parkade project will involve structural and architectural upgrades designed to allow the additional two and a half floors of parking above the current structure. Approximately $1.5 million of the $5.0 million cost of this addition is required to be expended now in conjunction with base building upgrades, even if the expansion work is deferred.

On the basis of the above, staff are recommending that the City proceed now with the addition of two and a half floors on the Water Street Parkade.

FINANCIAL IMPLICATIONS

On the basis of the final design incorporating Development Permit "prior-to" conditions, an accelerated schedule and phased construction of the Water Street Parkade work, tenders were sought and received for most of the major subtrade work. Based on these firm prices, the Director of Facility Design & Management has prepared an updated budget projection as follows (WHEX items excluded):

 

Component

Current Budget

Proposed Budget

Additional Funding Requirement

1.

Cordova Street Parkade

$21.8 million

$22.0 million

$0.2 million

2.

Water Street Parkade Upgrade

$9.0 million

10.78 million

$1.78 million

3.

Water Street Office

$1.2 million

$1.75 million

$0.55 million

4.

Water Street Expansion

note 1

$5.0 million

$5.0 million

 

Total (note 2)

$32.0 million

$39.53 million

$7.53 million

 

 

 

 

Note 1: In November 2002, Council approved this expansion in principle and contingent on the redevelopment of Woodwards. This report seeks Council approval to proceed with the expansion at this time and it therefore is reflected as an increase in the project budget.
Note 2: The above budget assumes full GST rebate and $80,000 in GVRD/DCL levies.

The projected budget variance on items 1, 2 and 3 in the table above has arisen primarily as a result of necessary increased scope of work, increased complexity of the mandatory seismic upgrading, the need to accelerate and compress the construction schedule and phasing construction to accommodate use of the parkade during construction. A breakdown of these costs is as follows:

1.

Incorporation of a Light-Well:
In order to accommodate the Leckie Building, a light-well will be included in the Water Street Parkade to allow light to penetrate to existing windows. This was not originally budgeted.

$ 300,000

2.

Upgrade Water Street facade to address DP "prior-to" conditions.

$ 250,000

3.

Accelerated Schedule:
In order to meet the dates for the commercial space it is necessary to add a second crane and to work overtime.

$ 350,000

4.

Selective Demolition and Phasing:
The seismic upgrading is more complex than originally anticipated, requiring demolition and shoring of major support systems while keeping the parkade in operation.

$ 650,000

5.

Additional cost of relocated elevator to access office and parkade. (Portion of cost to be allocated to WHEX ($300,000) not included).

$ 573,000

6.

Contaminated soil removal (Cordova Parkade)

$ 200,000

7.

Relocate Retail Tenants and temporary services.

$ 125,000

8.

DCL's and GVRD Levy

$ 80,000

 

Total

$ 2,528,000

 

 

 

 

 

 

 

 

 

 

It is recommended that the Water Street Parkade budget be increased by $2.53 million for the above items.

The additional floors on the Water Street Parkade (Item 4 above) will add $5.0 million to the project budget if constructed now. If this addition is delayed, an additional $1.5 million will have to be added to the budget now to strengthen the existing structure to accommodate the addition at a later date. As noted, staff are recommending that the additional parking space be added at this time.

Source of funding for these additional items for the Gastown Parkade project to be as follows:

The original project budget assumed that approximately $1.0 million would be funded by the developer of the Woodward's building. This contribution was intended to offset costs incorporated in the design and pricing of the Cordova Parkade rebuild that werenecessary to accommodate the parking requirements for the Woodward's redevelopment. At the present time it is uncertain who the developer of the Woodward's building will be, however, this funding is necessary now if the parkade is to be built to accommodate the parking requirements of that redevelopment. As a result, the Director of Finance recommends that interim financing be provided by the Parking Sites Reserve with the financing to be recovered from the eventual Woodward's redevelopment.

CONTRACT WITH DOMINION FOR WATER STREET

On the basis of tendered prices, it is recommended that a contract be entered with Dominion Fairmile Construction Ltd. for the Water Street Parkade upgrade and expansion including WHEX related items in an amount of $15,763,000 plus GST.

The cost of items to be funded by WHEX for demolition of columns and foundations and relocation of an elevator is $919,000. This cost is included in the above contract price and requires the approval of WHEX.

The contract for Water Street parkade with Dominion will either be a separate contract on terms similar to that for Cordova Street Parkade or will be incorporated in the existing contract for Cordova Street Parkade, subject to terms satisfactory to the Director of Legal Services.

BUSINESS CASE ANALYSIS

The incremental cost of the Water Street addition is $3.5 million or $13,800 per stall. Over a 25 year period the users of the parking stalls will generate a net present value of $12,800 based on the present economics of the parking operation, a 3% annual growth in revenues, and 7% capitalization rate. This leaves an incremental cost to the City of $1000 per stall or $250,000 for the addition. This cost would be recovered through a variety of sources, most notably payment-in-lieu parking. Through this program, redevelopments which cannot meet their by-law parking requirements can pay the City for the provision of their parking. This is particularly critical in heritage areas where parking cannot be provided within the existing buildings. The current payment in lieu parking fee is $14,500 per stall. Therefore, over the life of the parking structure the addition will be self funding on an incremental basis, and will contribute to the City's objectives of support for the Gastown Heritage community.

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© 2002 City of Vancouver