A3
ADMINISTRATIVE REPORT
Date: November 8, 1996
TO: Vancouver City Council
FROM: Director of Finance, in consultation with the Director of the
Vancouver Public Library
SUBJECT: Library Square Project - Final Financing Plan
RECOMMENDATION
A. THAT Council approve the final expenditures and revenues
associated with the Library Square capital budget as detailed
in the report.
B. THAT Council approve the financing plan to fund the $6.413
million shortfall in revenue for the Library Square project
with a loan from Capital Financing Fund (Solid Waste Capital
Reserve) as described in this report. The loan will be repaid
on terms and conditions as determined by the Director of
Finance, with the source of funds for the repayment of the
loan to be debt charges as funded in the annual operating
budget.
GENERAL MANAGER'S COMMENTS
The General Manager of Corporate Services RECOMMENDS approval of A
and B, noting that the Library Square project represents the City's
largest single capital expenditure/project to date. The project was
completed on time and on budget with laudable participation by the
Library Board and its staff, combined with the project management
expertise of the City's Facilities Development group. The revenue
shortfall noted in this report is attributable to a drop in the
real estate market resulting in a lower selling price for the old
central library site and from intense competition with other
fund-raising campaigns, much of which reflects an economic outcome
outside the control of the City.
COUNCIL POLICY
City Council, on January 31, 1995, approved the projected 1995
expenditures and the revised funding sources of the Library Square
project, and instructed the General Manager of Corporate Services to
report back on a financing plan for the revenue shortfall at the
completion of the project.
PURPOSE
This report presents the final expenditures and revenues associated with
the Library Square project, identifies a revenue shortfall, and
recommends that the City enter into an internal financing arrangement to
address the shortfall.
BACKGROUND
On May 26, 1992, and in January 1993, Council approved budgets for the
Library Square project totalling $106.81 million and, in January 1993,
Council authorised the borrowing of $62.70 million to fund the PWC
Tower, for a total project budget of $169.51 million.
On January 31, 1995, Council approved the projected capital expenditures
for 1995 and the revised funding sources, and instructed the General
Manager of Corporate Services to report back on a financing plan for the
revenue shortfall at completion of the project, with interim funding
provided from internal sources.
In April 1995, Council approved the extension of the term of the Library
Square capital campaign to December 1995, and approved an additional
operating budget of $138,800 to be funded from the capital campaign
proceeds.
DISCUSSION
A. Expenditures
Library Square project has been completed. A summary of the current
approved budget and the final expenditures are as follows :
Current
Approved Final
Item Budget Expenditures
($ 000) ($ 000)
Competition 574 574
Capital Campaign-Phase I 500 468
Capital Campaign-Phase II 639 721
Land 7,000 7,000
Fees and Disbursements 12,149 12,175
Construction 113,772 115,840
Furniture and Fit-Up 12,246 11,844
Public Art 550 552
General Administration 2,525 2,690
Tower Financing 14,364 14,363
Contingency 2,730 0 (1)
GST 2,600 2,400
BCBC Leasehold Improvement 1,579 1,579 (2)
Discount on Debenture 149 149
Total $171,377 $170,355
B. Sources of Funds
Current Final
Item Approved Budget Revenues
($ 000) ($ 000)
1991 - 1993 Capital Plan 36,600 36,600
Sale of Old Site (Net) 22,171 22,203
Property Endowment Fund 10,400 10,400
Parking Site Reserve 7,700 7,700
Capital Financing Fund 9,999 9,999 (3)
Mortgage - Office Tower 62,700 62,700
Interest Earnings 1,087 1,637
Parking Revenue to May 1995 49 0
Unencumbered Rent(net) 2,229 1,849
Provincial Childcare Grant 388 350
Management Fee 1,690 1,690
Capital Campaign 12,639 8,814 (4)
Add l financing 3,725 6,413 (5)
Total Sources of Funds $171,377 $170,355
Notes:
(1) Contingency for the project has been removed reflecting the
completion of the project.
(2) BCBC leasehold improvement approved by Council in July 1995,to be
recovered from future rent payments from BCBC.
(3) Includes an additional financing of $1.579 million for BCBC
leasehold improvement as approved by Council in July 1995.
(4) Reflects total capital campaign revenue pledged and collected
to-date against the target of $12.639 million, a shortfall of
$3.825 million.
(5) The $6.413 million represents the revenue required to fund the
net adjustments to the project, including a shortfall in the sale
of the old site due to a drop in the market value of the land,
and a shortfall in the proceeds of the capital campaign due to
competition from other concurrent fund raising initiatives.
C. Financing Plan
The Director of Finance proposes that the revenue shortfall of Library
Square project of $6.413 million be financed with a loan from the
Capital Financing Fund (Solid Waste Capital Reserve). The term of the
loan will be for a ten year period with the 1996 interest rate set at 7%
per annum. In future years, the terms and conditions of the loan will be
determined by the Director of Finance based on the market conditions at
that time.
This loan of $6.413 million will be repaid by debt charges as funded in
the City s operating budget. For 1996, the partial year s cost is
$258,600 and funding is available within the current operating budget.
For 1997 - 2006, the annual debt charges will be provided for in those
operating budgets.
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