MAY 8, 1997

                             ADMINISTRATIVE REPORT

                                           Date:  May 1, 1997

   TO:       Standing Committee on City Services and Budgets

   FROM:     Director of Finance

   SUBJECT:  1997 Basic Capital Budget


        A.   THAT the  1997-1999 Capital Plan provision  for Downtown South
             Park  Acquisition be reduced by $1,531,600  to provide for new
             revenue transition funding in the 1997 Operating Budget.

        B.   THAT the allocation  of the 1996 Capital  from Revenue funding
             of $9,068,400  to the 1997 Capital Budget be as follows:

             Public Works                      $ 3,000,000
             Police Protection                     700,000
             Social and Cultural Facilities      2,036,400
             Other                               1,732,000
             Supplementary Capital               1,600,000
                  Total                        $ 9,068,400

        C.   THAT  the  1997  Park  Board Basic  Capital  Budget  totalling
             $11,273,900,  as summarized  in  this report  and detailed  in
             (Appendix 2) be approved, with the funding to be provided from
             borrowing  authority  as approved  as  part  of the  1997-1999
             Capital Plan.

        D.   THAT  the allocations  to  the Protection,  Social &  Cultural
             Facilities  and Other  components  of the  1997 Basic  Capital
             Budget as summarized in this report and detailed in Appendix 3
             be approved.


        The General Manager of Corporate Services notes that Recommendation
        A  is  supported  by the  Corporate  Management  Team  as the  most
        appropriate way to provide the necessary transition funding for the
        1997 Operating Budget.   The General Manager RECOMMENDS approval of
        A, B, C and D.


   The  1997-1999 Capital  Plan  includes provision  for  $32.2 million  in
   capital expenditures to  be funded  from the  Operating Budget  (Capital
   from Revenue) over the three  years of the plan.  The 1996  component of
   this funding is $10.6 million.

   On  April 8,  1997, Council  approved a  reduction in  the Capital  from
   Revenue  portion of the  1997-1999 Capital Plan  totalling $1,531,600 to
   provide transition funding for new revenues in the Operating Budget.


   The purpose of this report  is to summarize the 1997 Capital  Budget and
   to  seek Council  approval for  the allocation  of Capital  from Revenue
   funding and for debenture authority necessary to complete the funding of
   the 1997 Capital Program.


   The  1997-1999 Capital  Plan  forms the  framework  within which  annual
   capital budgets are prepared.   The two components of the annual capital
   budget are:

       Basic Capital, which includes project/program - specific items that
        were included in the Capital Plan, and 
       Supplementary  Capital,  which includes  items  that  had not  been
        anticipated  in the Capital Plan  but which have  become a priority
        during the course of the Plan. 

   Funding  for  these  capital  budgets  comes  from  debenture  borrowing
   approved  by  the plebiscite  and/or by  Council  and from  Capital from
   Revenue approved as part of the annual Operating Budget.

   On  March 25, 1997, Council approved the 1997 Engineering Capital Budget
   along with the debenture portion of  the funding program.  Funding to be
   provided  to the Engineering Capital Budget from the Operating Budget is
   included in Recommendation B of this report.

   On  March 25, 1997, Council  approved the Fire  Protection Basic Capital
   Budget,  including funding to begin planning for the replacement of Fire
   Hall  #3 and  for completion  of  Phase II  of the  Fire Training  Site.
   Funding  for this  work  is from  borrowing  authority provided  in  the
   1997-1999 Capital Plan.

   On April  14, 1997, the Park Board approved the Park Board Basic Capital
   Budget and forwarded it to Council for approval.

   On April  8 and April 24,  1997, Council approved the  final revenue and
   expenditure  estimates  of  the   1997  Operating  Budget,  including  a
   provision of $9,068,400  to support  the City s capital  program.   This
   allocation includes  a reduction  of $1,531,600  from the  $10.6 million
   Capital from Revenue provision  included in the 1997-1999  Capital Plan,
   in order to provide transition funding for new  revenues approved a part
   of the 1997 Operating Budget estimates.


   Funding for the 1997 Basic Capital Budget

   The  following  table summarizes  the  total funding  for  the 1997-1999
   Capital  Plan  (including  unallocated borrowing  authority  from  prior
   Capital  Plans) and  the portion  to be  allocated to  the 1997  Capital

                        Capital Plan      1997     Unallocated
                          Funding        Budget     Balance  
                           ($000)        ($000)      $(000)

   Capital from Revenue(1):$30,668       $9,068      21,600

   Debenture Authority:
   Plebiscite (1994-1996)   1,082            0       1,082
   Plebiscite (1997-1999)  83,383       33,190      51,275
   Sewer                   49,417       16,660      32,757
   Water                   74,100       23,100      51,000
   Total Debentures      $207,982       72,950     135,032

   Total Funding         $238,650      $82,388    $156,632

   (1)     the 1997 provision includes a  reduction of $1,531,600 related to
           transition  funding  in  the  1997  Operating  Budget  which   is
           reflected in the table.

   A summary of the  projects/programs in the 1997-1999 Capital  Budget and
   the funding  allocated in  the Plan  and in the  1997 Capital  Budget is
   included in Appendix  1.   Appendix 2 provides  additional detail  about
   projects  in the  Park  Board Capital  Budget  and Appendix  3  provides
   details about the projects/programs funded in the Protection, Social and
   Cultural Facilities and Other sections of the 1997 Capital Budget.

   As  noted in the  table, $72,950,000 of  the funding for  the 1997 Basic
   Capital  Budget  comes from  debenture authority,  including $33,190,000
   from plebiscite authority and  $39,760,000 in sewer and water  authority
   approved by  Council.   Note 2  indicates the  amount of  this borrowing
   authority  approved  in advance.   Recommendations  in this  report will
   provide authority for the balance of this funding.

   Providing Transition Funding:  Reducing Capital from Revenue

   Capital from Revenue of $10.6 million was proposed in the 1997 Operating
   Budget,  however,  on  April  8,  1997  Council  approved  the following

   B.   THAT  Council approve  the  provision of  $1,837,600 in  transition
        funding to annualize new revenues within the 1997 estimates, source
        of  funding to be $1,531,600  through a reduction  in the provision
        for Capital from Revenue  and $306,000 from the elimination  of the
        balance in the Demolition Fee Reserve.

   This  action leaves  the  Capital from  Revenue  provision for  1997  at
   $9,068,400 and requires the  deferral of $1,531,600 in projects/programs
   from  the 1997  Capital  Budget.   Council  must now  decide, among  the
   approved projects in the 1997-1999 Capital Plan funded from Capital from
   Revenue,  which will  be reduced  to provide  the  required savings.   A
   listing  of the programs/projects that were recommended for funding from
   revenue funds in  the 1997-1999 Capital Plan are included  in Appendix 1
   of this report.

   At the time the  Capital Plan Review Group reported  its recommendations
   on the 1997-1999  Capital Plan to Council  (July 23, 1996),  the members
   identified the following projects  as being of lower priority  and where
   further reductions in the Plan might be achieved:

                                           Capital Plan

         Vancouver Museum Rehabilitation   $3,000,000
         Downtown South Parks Acquisition   2,500,000
         City-owned Social/cultural facilities                                              500,000
         Orpheum washroom upgrade             350,000
         Other                                180,000
   The  recommendation  of  the Capital  Plan  Review  Group  was that,  if
   projects/programs needed to  be eliminated from the Capital  Plan, these
   were  the ones to which Council  should look.  Subsequently, Council has
   approved funding for the  Vancouver Museum totalling $1,340,000, leaving
   $1,660,000  for  the final  phase of  that  rehabilitation project.   In
   addition,  of the  funding available for  the Orpheum  Washroom upgrade,
   $80,000 has been utilized in an expanded asbestos removal project at the
   Queen  Elizabeth Theatre,  leaving $270,000  available for  the washroom

   On February 4, 1997, when considering the need for transition funding in
   the 1997 Operating  Budget, Council also identified the Library Outreach
   Program  reloaction  project as  a  potential  source of  the  necessary
   transition funding.    The Library  Outreach program,  which is  further
   discussed in Appendix 3,  involves the relocation and expansion  of this
   program from the basement  of the Kitsilano Branch Library  into Library
   Square.   The space  proposed to be  occupied is currently  owned by the
   Property Endowment Fund.  The project involves the following components:

        Purchase of Library Square Property                                     $   854,000
        Tenant Improvements              200,000
        Furniture and Equipment          145,000
        Total                         $1,200,000

   Funding for this  project is requested in the 1997  Capital Budget.  The
   Library  Board  will be  present  at  Committee  on  May  8  to  make  a
   presentation in support of this expenditure.

   The  issue of which project(s)  should be reduced  to provide transition
   funding was reviewed by the Corporate Management Team on April 29, 1997.
   The CMT supports the  priorities established by the Capital  Plan Review
   Group. However,  given Council s  support for the  Museum rehabilitation
   project,  they   recommend  that   funding  for  Downtown   South  Parks
   acquisition be reduced by $1,531,600 to provide the necessary transition
   funding.  This will  leave $968,400 available for park  land acquisition
   in the  1997-1999 Capital Plan.   This  recommendation is  based on  the
   conclusion that:

     the allocation in the Capital Plan is a general  allocation to support
      park  land  purchase  over a  period  stretching  beyond  the  current
      Capital Plan,
     there are no specific parcels contemplated for purchase at this time,
     there is  currently DCL funding available,  and in  future years there
      will be additional funding, for park land acquisition,

   Recommendation  A of  this  report confirms  the proposed  reduction and
   Recommendation B presents an  allocation of the balance of  Capital from
   Revenue that reflects this recommendation.

   Funding for the 1997 Supplementary Capital Budget

   The 1997-1999 Capital Plan  includes $5.0 million for  the Supplementary
   Capital  Budget.    The 1997  allocation  is  $1,600,000.   Council  has
   previously  approved  $423,000  of  this funding  to  individual  items,
   leaving $1,177,000 to be  allocated from among the funding requests.   A
   report  recommending allocation  of  this funding  will  be before  City
   Services and Budgets Committee on May 15, 1997.


   1.   Engineering

   As noted,  the Engineering  Basic Capital Budget,  totalling $63,406,000
   was  approved by  Council  on March  25, 1997,  subject  to approval  of
   Capital  from  Revenue.   Revenue funding  is  proposed to  complete the
   purchase of the CP Rail right of Way in False Creek that was approved by
   Council in 1996.  

   Approval of Recommendation A  of this report will allocate  Capital from
   Revenue to complete the funding of this budget.

   2.   Park Board

   On April 14, 1997, the  Park Board approved its 1997 Capital  Budget and
   is referred to Council for approval.  Details of the  Park Board Capital
   Budget  are provided  in Appendix  2 of  this report  and the  budget is
   summarized in the following table:

                             1997-1999       1997
                            Capital PlanCapital Budget  Balance

   Land Acquisition        $ 3,665,000  $ 1,683,000$  1,980,000
   Park Development          7,527,900    4,113,300   3,414,600
   Facility Development     11,788,400    4,916,700   6,871,700
   Overhead Costs            1,249,400      427,300     822,100
   Debenture Costs             271,300      133,600     137,700
                           $24,500,000  $11,273,900 $13,226,100

   The Capital  Plan allocation  indicated above excludes  $2.0 million  in
   community centre funding to  be provided from Capital from  Revenue that
   was  approved by the electorate  in an opinion  question associated with
   the  1996 municipal election.  Subject to Council approval, that funding
   will be provided to the Park Board in 1998 and 1999.

   The Park Board Capital Budget proposes several projects that will expand
   the  services  provided  by  the  Park  Board  and  which  will  require
   additional operating  costs to be  added to the global  budget in future
   years.    A review  of  the  details  attached as  Appendix  2  indicate
   identifiable  operating  costs  exceeding   $400,000  annually.    These
   include:  $79,000 in  increased staffing and maintenance to  support the
   Park Board  Information System; $80,000 for the refurbished Stanley Park
   Service Yard; $24,500 for mainentance of realigned Stanley Park seawall;
   $77,400  for  refurbished/rebuilt  community  centres  and  $13,700  for
   maintenance of  the  Engine  374  Display Pavillion  at  the  Roundhouse
   Community Centre.

   All  of the  funding for  the  1997 Park  Board Capital  Budget will  be
   provided  from debenture borrowing  and Recommendation B  of this report
   provides for that funding.

   3.   Fire Protection

   As  noted, the  Fire  Protection 1997  Capital  Budget was  approved  by
   Council  on March  25,  1997.   It  included funding  for  the following
   projects, all funded from debenture authority:

        Fire Hall #3 Replacement - Design Phase                                     $   500,000
        Fire Training Site - Phase II    770,000
        Total                         $1,270,000

   4.   Social and Cultural Facilities

   The 1997-1999 Capital  Plan includes funding of  $8,450,000 for projects
   related to  social and  cultural facilities  owned  by the  City and  by
   others.    These include  upgrading  or relocation  for  social service,
   daycare  and cultural  facilities,  relocation of  the Library  Outreach
   program, rehabilitation of the Vancouver  Museum and continuation of the   Public Art program.  All of these projects are funded  from Capital from

   The 1997 Capital Budget  includes funding be allocated to  the following

     relocation and expansion  of the Library Outreach Program  ($346,000).
      This funding  will allow the Library  to undertake  improvement of the
      space at Library Square.  The balance of  the funding, to purchase the
      space from the PEF, will be provided in the 1998 Capital Budget.

   In  addition,  general  allocations   are  requested  to  the  following
   programs,  with specific expenditures to be reported back to Council for

     capital  requirements  related  to  City-owned  social,  cultural  and
      daycare facilities ($100,000)
     the capital grant program, that supports  the capital needs of  social
      and cultural facilities not owned by the City ($100,000)
     continuation of the Public Art program ($150,000).

   Details of these requests are included in Appendix 3.

   5.   Other

   The  Other  category  of  the  Capital  Plan  includes  allocations  for
   maintenance and upgrading  of the  City Hall Precinct  (City Hall,  East
   Wing  and VanCity  Buildings  and City  Square  offices) and  the  Civic
   Theatres,  and a  contribution to the  Affordable Housing Fund.   All of
   these projects are funded from Capital from Revenue.

   The 1997 recommended allocations include:

     maintenance / upgrading of City Hall Precinct ($780,000)
     contribution to the Affordable Housing Fund ($372,000)
     asbestos  removal   at  the  Civic   Theatres  ($580,000,   previously

   Details of the new requests are included in Appendix 3.


   The  1997 Capital Budget represents the first annual budget arising from
   the  1997-1999 Capital Plan and  provides for the  allocation of funding
   included in that Plan to individual projects and programs.

                               *    *    *    *
     Appendix 1
                 Summary of the 1997 Basic Capital Budget

                             1997-1999        1997     1997 Funding
                               Capital      Budget   Borrowi Revenue

     Streets (1)               47,710      17,986    14,986   3,000 
     Communications (2)           960         465       465       0 
     Street Lighting            4,373       1,540     1,540       0 
     Traffic Signal             7,970       3,655     3,655       0 
     Sewers                    49,417      16,660    16,660       0 
     Waterworks                74,100      23,100    23,100       0 

                              184,530      63,406    60,406   3,000 
     Parkland Acquisition       3,663       1,683     1,683       0 
     Park Development           7,528       4,113     4,113       0 
     Recreation Facilities     11,788       4,917     4,917       0 
     Overhead & Debenture       1,521         561       561       0 
                               24,500      11,274    11,274       0 

     Fire Department            6,670       1,270     1,270       0 
     Police Department          1,800         700         0     700 

   Social & Cultural
     City-owned Facilities      2,500         100         0     100 
     Capital Grants               500         100         0     100 

     Crabtree Corner              500           0         0       0 
     Public Art                   750         150         0     150 
     Museum/Planetarium         3,000       1,340         0   1,340 
     Library Outreach           1,200         346         0     346 

     City Hall Precinct         2,300         780         0     780 

     Downtown South Parks         968            0        0       0 
     Affordable Housing         2,500         372         0     372 
     Civic Theatres               850         580         0     580 

   Supplementary Capital        5,000       1,600         0   1,600 

   Total Capital Budget       237,568      83,750    72,950   9,068 

   (1)                    In an opinion question associated with the
       1997-99 Capital Plan borrowing questions, the
       electors approved additional funding of $2.0 million from the
       Operating Budget for
       Community Centres.  This funding will be considered as part of the
       1998  and 1999 Capital Budgets and has been excluded from this