CITY OF VANCOUVER

ADMINISTRATIVE REPORT

 

Date:

October 28, 2004

 

Author:

Rick Gates

 

Phone No.:

604-871-6036

 

RTS No.:

4263

 

CC File No.:

1602

 

Meeting Date:

November 18, 2004

TO:

Standing Committee on City Services and Budgets

FROM:

Director of Social Planning

SUBJECT:

Capital Grant - Redevelopment of Little Mountain Neighbourhood House

RECOMMENDATION

CITY MANAGER’S COMMENTS

Although Council has supported this redevelopment since it was first proposed in the late 1990’s, included funding in the 2000-2002 Capital Plan and purchased a site to accommodate it, the project being proposed now is significantly more expensive than that which was contemplated just two years ago. Even with an increased Infrastructure request, from $1 million to $2 million, and an anticipated increase in Provincial funding for the childcare component of the project, the City’s commitment will have to be increased by more than $500,000 from the amount Council committed in 2002 for the project to go ahead.

At the outset, it was hoped that the new site would house both the LMNH and the Library’s Riley Park Branch, which share the existing Main Street site. However, it has been determined that there is not enough room on the site to be able to meet current operating requirements for both uses. This creates a problem around the future of the library, once LMNH moves.

Council has agreed in principle to sell the existing site once the relocation is complete and to designate the proceeds to the new facility. However, if the City sells the land, the library may have to be relocated at additional cost (assuming that the new owner would look to other uses for the site). Alternatively, the City could retain ownership of the site until the library can be relocated, but funding equal to the sale value of the site would then need to be found for the LMNH project.

In addition to this funding issue, Council should note that even if it is agreed to increase the City commitment by $500,000, this project can only proceed as envisioned if Federal-Provincial Infrastructure funding is approved ($2.0 million) and LMNH raises approximately $500,000. If costs continue to escalate, this may create significant pressure for the City to provide even more capital funding from the City’s capital expenditure program, which is already under pressure because of other community needs and increasing costs.

The City Manager therefore recommends that Council make it clear to the Little Mountain Neighbourhood House Society (by approving Recommendation B) that the proposed $1.9 million in additional funding for the redevelopment, for a total of $4 million, is the maximum that will be provided.

COUNCIL POLICY

Approval of a Capital Grant requires eight affirmative votes.

PURPOSE

This report has three objectives:

BACKGROUND

Little Mountain Neighbourhood House (LMNH) was developed in 1976 as part of the Federal/Provincial/Municipal Neighbourhood Improvement Program (NIP). With funding from NIP, the City purchased and renovated a two-storey storefront building at 3981 Main Street for the fledgling Little Mountain Neighbourhood House Society and a small branch library. LMNH leases the facility from the City for $1 per year, and the rent paid by the Library (approximately $17,000 per year) to LMNH helps pay for the operating costs of the Neighbourhood House. City Council has approved the continuation of this lease arrangement on a number of occasions.

When LMNH began 26 years ago, it had three staff providing social services in the Riley Park community - a neighbourhood with extensive needs but little in the way of services to meet those needs. Since then it has grown to become one of the larger Neighbourhood House operations, with over 70 staff and an annual budget of just under $1.4 million. More than 20 of their programs are delivered from 11 off-site premises as there is not enough room in the Main Street facility for them. While this arrangement does enable the delivery of a wide range of services, it is neither efficient nor cost effective.

A functional plan for a new facility, produced in 1993 and updated in 2002, shows that approximately 15,000 square feet of space is needed. Subsequent architectural design has been based on this functional program.

The City allocated $1.1 million from the 2000-2002 Capital Plan for LMNH to allow for the purchase of a new site and initial design and permit costs.

In July, 2002, City Council agreed to purchase a site at 3867-3891 Main Street for this project. At that time, Council also approved, in principle, the sale of the existing Little Mountain Neighbourhood House (LMNH) land and facility at 3981 Main Street and that the proceeds of this sale will go towards the costs of construction of the new facility.

Council was advised at that time that the estimated total cost for this project was $5,110,000. In addition to $1.1 million that Council had already committed to the project, an estimated $1,360,000 was still required from the City if the project was to proceed. It was noted that these were rough estimates as no actual design work had been done yet.

Council also endorsed an application from Little Mountain Neighbourhood House Society to the Federal/Provincial Infrastructure Program for funding for the proposed new Neighbourhood House Facility and agreed that this project be included in the City’s list of priorities for Infrastructure funding.

VANCOUVER PUBLIC LIBRARY AND LMNH

One of the first issues faced by LMNH was whether or not, and how, the small branch library could remain as part of the project. This library had been located in the LMNH building since its inception and there was a strong desire on the part of the community, LMNH and Vancouver Public Library (VPL) to keep it there. When the new site was purchased, staff was instructed to report back to Council on the viability of a joint-use development on this particular site.

Unfortunately, after months of design and redesign, negotiations and compromises, both sides agreed that it was not possible to meet the operational needs of a neighbourhood branch library and a Neighbourhood House on this one site. The major problem was that VPL needs a minimum of 6,000 square feet for a well-functioning branch, while LMNH needs 12,000 -15,000 square feet; but the zoning only allows for just over 15,000 square feet in total. A number of schemes involving shared space were investigated, as well as plans for putting the library on two floors or on the second or higher floors. None of them worked. City staff did investigate the possibility of purchasing an adjacent site to make the site large enough to accommodate both uses. However, the property owner on the other side of this lot wound up purchasing it.

Therefore, by November, 2003, VPL and LMNH had formally concluded that it was not going to be possible to have both uses on the one site (see the letter from VPL, APPENDIX A). VPL has reiterated its commitment to stay in the neighbourhood and to work with the City to provide cost effective library service in Riley Park following the relocation of LMNH.

The Library has expressed a strong interest in developing library space in the Riley Park Hillcrest Olympic facility when it reverts to the City for community use. This approach may require the development of an interim service prior to the availability of the Olympic facility.

One implication that arises from the loss of this joint facility opportunity is that the $17,000 in annual rent currently paid by VPL will no longer be available to LMNH once the Neighbourhood House moves to its new facility. LMNH will have to adjust its operating budget accordingly.

DISCUSSION

1. Design of The New Neighbourhood House

Once the decision had been made that this was to be a stand-alone Neighbourhood House, the architect has been working with LMNH to develop a detailed design. Throughout this process, he has been in close touch with Planning Department staff to work out any design problems before applying for a permit. The end product is shown in APPENDIX B.

Some key features of this design include:

2. Project Costs

Completion of the detailed design then enabled the next step, a detailed cost estimate. This was completed in May, 2004. The total estimated construction cost was $5,447,000. This estimate did NOT include professional fees, permits, development cost charges, furnishings and equipment, removal of hazardous material or taxes. These items cost an additional $1,251,000, for a total project cost (including land purchase) of $7,560,000.

This estimate is $2,450,000 (48%) higher than the preliminary one provided two years ago. Factors which contributed to the cost increase include:

Other City capital projects have been facing comparable cost increases, for many of the same reasons.

LMNH has been working with their architect to find ways of reducing the costs for this project. They considered five options for reducing the costs. After considering the pros and cons of each option, the LMNH Board has decided that the construction of a concrete building, with a partial third floor for the childcare program, is the best choice to meet the needs of the community and the Neighbourhood House itself. The total estimated construction cost for this option is $4,750,000, which leads to a total project cost of $6,715,000, as summarized below.

Little Mountain Neighbourhood House Redevelopment Cost Estimates

 

July 2002 Estimates

May 2004 Estimates

Reduced (by LMNH)

Land purchase

$830,000

$862,000

$862,000

Construction

$2,633,000

$5,447,000

$4,750,000

Fees, equipment, contingency

$1,647,000

$1,251,000

$1,103,000

TOTAL PROJECT COST

$5,110,000

$7,560,000

$6,715,000*

* This includes a construction contingency of 6% per year, until June, 2005. Should the tender be delayed beyond that date, an additional escalation allowance of 6-8% ($275,000-$300,000) should be factored in.

 

3. Project Funding

A total of $1.1 million was included in the 2001 and 2002 Capital budgets for this project. This was the source of funds for the purchase of the site ($862,000) and preliminary design and permit costs ($100,000 approved as a grant to LMNH, a balance of $138,000 is currently unallocated).

Council has agreed with the principle that when the new facility is completed, the current site will be sold and the proceeds will be applied to the project budget. The current estimate of the value of the existing building and land is $625,000.

This project is also eligible for capital funding from the City ($250,000 Capital Grant; $150,000 from City-Wide DCL’s) and the Province ($250,000 Capital Grant) for the childcare component.

LMNH has applied for a Federal/Provincial Infrastructure grant in the amount of $2,000,000.

Finally, LMNH has committed to try to raise $500,000 - $600,000. They couldn’t begin any serious work in this area until the detailed design is finished.

Little Mountain Neighbourhood House Redevelopment Funding Sources

   

Federal/Provincial Infrastructure

$2,000,000

City (already approved)

$1,100,000

City Childcare Grant

$250,000

City DCL Funds

$150,000

Sale of current site

$625,000

Province Childcare Grant

$250,000

   

LMNH fund-raising

$500,000

TOTAL

$4,875,000

   

Total Project Cost (previous page)

$6,715,000

Shortfall

$1,840,000

Two years ago, the estimated additional City contribution to the project, to cover the shortfall, was $1,360,000. Since that time, project costs have increased by almost $1.6 million, but the additional funding being requested from the City ($1,840,000) is only $520,000 more than was anticipated two years ago. The remainder of the project cost increase is projected to be covered by an increased Infrastructure Grant (from $1 million to $2 million) and a projected increase in the Provincial childcare funding of $100,000.

Under this scenario, the City’s potential total financial commitment to the project is $3,965,000 (rounded off to $4 million), consisting of the 2002 Capital funds already approved ($1.1 million), City childcare and DCL funding ($400,000 total), the sale of the existing site ($625,000) and $1,840,000 to meet the currently projected shortfall.

If the Infrastructure funding is not approved, there will be a shortfall of $3,840,000, and the project cannot proceed. In this event, staff will work with LMNH to try to come up with a less expensive project and/or other funding sources.

4. Funding For Further Design Work And Permits

The 2000-2002 Capital Plan contained an allocation of $1.1 million for the LMNH project. This money was to be used for the purchase of the new site, with the balance ($238,000) to be available to pay for architectural design and permit costs.

In January, 2003, Council approved a grant of $100,000 for LMNH. This was used to produce the current design and design options, along with detailed costing. The next stage in the process is for the architect to complete the working drawings and apply for a development permit. The estimated cost for doing this work is $125,000; consequently staff are recommending a grant for this amount, to come from the remaining 2002 allocation.

FINANCIAL IMPLICATIONS

In 2002, Council agreed in principle that the funding shortfall of $1,360,000 would be covered by the City. This brought the total City commitment to $3.5 million, including the funding allocated in the 2000-2002 Capital Plan, the proceeds from the sale of the existing site and a contribution to the childcare component of the project.

Based on the revised project estimate, the required additional City funding would increase to $1,840,000. This increases the City’s total commitment to $4.0 million.

There is currently no source of funding identified for this additional contribution of $1.84 million. However, if the Federal/Provincial Infrastructure funding for this project is approved soon, then it does not make financial sense, given the current rapid increases in construction costs, to delay this project until such time as the next Capital Plan is approved. In this instance, based on the commitment included in Recommendation B, staff will tender the project to set the costs and report back on the appropriate source of funding to allow the project to proceed.

ENVIRONMENTAL IMPLICATIONS

The proposed new facility will be designed to the LEED gold standard. This has increased the construction costs marginally (3 – 5%), but should result in lower operating costs and reduced energy use.

SOCIAL IMPLICATIONS

Little Mountain Neighbourhood House continues to provide a wide range of social services to Riley Park residents. LMNH is also actively involved in community development and capacity building, helping this neighbourhood to become an even better place to live, work and play. However, this work is becoming increasingly difficult to do as there is not enough room, or the right kinds of spaces in the existing facility.

A new facility that is designed to meet existing and future community needs will enable the community work to be done far more efficiently and effectively and give residents a clearly identifiable centre for their community involvement and activities.

CONCLUSION

Even though there is a strong desire on the part of LMNH, VPL and the community to include a branch library in this project, detailed design work has shown that this is not feasible.

The current detailed cost estimates for the relocation and redevelopment of LMNH are somewhat higher than previous estimates; however, this is the situation being faced by all capital projects. To be in a position to fast-track construction (and thereby avoid further cost increases), final working drawings need to be prepared. Staff are recommending that funding be approved for this work.

* * * * *

 

APPENDIX A
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APPENDIX B
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cs20041118.htm

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