Agenda Index City of Vancouver

Kenneth Bayne, Director of Financial Planning &Treasury

April 19, 2000

TO: Mayor Owen and Councillors

Copy: Judy Rogers, City Manager

FROM: Ken Bayne, Director of Financial Planning & Treasury

SUBJECT: 2000 Operating Budget: E-Comm and the Vancouver Emergency

During discussion on the 2000 Operating Budget, Councillors raised issues related to the operating costs associated with E-Comm (Emergency Communications for Southwestern British Columbia Inc) and the Vancouver Emergency Operations Centre (VEOC). The purpose of this memo is to provide some background on the development of these facilities and the anticipated costs that will be borne by the City. The information in this memo is based on a series of administrative reports that have been approved by Council since May 1995. Council members are referred to these reports for more detailed information.

SUMMARY

E-Comm and the VEOC are closely related, having grown from a concept for a post disaster, emergency operations centre for the City of Vancouver. This project was to replace the City’s aging and seismically vulnerable emergency operations centre at 312 Main Street and the dispatch and radio systems that supported Police and Fire operations. The project evolved, from a City of Vancouver project, to a multi-organizational, multi-government project in which Vancouver is a one of many partners.

While the scale of the project evolved, the basic interests of the City in initiating it have not changed. The City has realized significant financial and operational benefit through its partnership in the broader E-Comm project.

As a large technology implementation, E-Comm is not without risks. Throughout its development, Council was made aware of the costs that the City would face, and more importantly, about the risks the City was taking by proceeding with a project that did not have formal commitments from all the potential partners.

The costs faced by the City have not appreciably changed. In 1997, Council was advised that the gross costs of the new operation would be approximately $12.8 million annually. The 2000 Operating Budget includes $11.0 million to provide for dispatch and radio. Based on the current roll-in schedule, when fully functional, these costs will increase to approximately $12.0 million. These costs have been offset by cost savings, including $3.5 million in Police dispatch and radio costs; further savings will be achieved with the move of Fire to E-Comm dispatch later this year. In addition, the City has avoided the significant costs of replacing its emergency operations and communications facilities and systems at a cost greater than our involvement in E-Comm.

E-Comm has completed implementation of the new wide area radio system within the City of Vancouver and our Fire and Police departments are now on the system. Police have been dispatching from the new facility since mid 1999 and with the completion of the new Altaris CAD system in 2000, Fire dispatch will also migrate to the new centre. The radio system is now being extended to the rest of the GVRD and other agencies are being brought onto the system as quickly as possible. The E-Comm budget anticipated a further three members to be in the dispatch centre this year.

The City’s significant involvement with E-Comm is not without risks, even at this stage of the project. The E-Comm budget and the levies to participants are based on a roll-in schedule that has already seen some delays. Delays beyond current expectations could increase the start-up costs and the levies to be borne by all participants. City staff continue to work with E-Comm to deal with the technical and operational issues and to monitor the costs that will be passed on to the City.

WHAT IS E-Comm?

As currently constituted, this emergency operations and communications initiative (the “project”) involves a number of components:

· a new post disaster building to house the “project”. The building is located at Hastings and Rupert Street in Vancouver.

· a wide area radio system which - when completed - will provide 800 megahertz, digitally-trunked communications throughout the entire southwest corner of the province, from Boston Bar to Pemberton to the Sunshine Coast and south to the US Border. Built into the system is the capacity for inter-agency communications among emergency service providers, a key shortcoming of the many individual systems currently in place.
· a consolidated emergency services dispatch centre providing E-911 call taking service for the GVRD and the capacity to provide dispatch services using state of the art computer-aided dispatch. This centre is capable of providing services for the RCMP, other police agencies and BC Ambulance throughout the area as well as Fire dispatch within the GVRD.
· Emergency Operations Centres comprising:

· a 20,000 square foot City of Vancouver Emergency Operations Centre (VEOC) from which the City will coordinate its emergency services responsibilities in the City.
· the regional offices of the Provincial Emergency Program
· disaster recovery centres for the Port of Vancouver and Fraser Port

While the concept of this “project” was initiated by the City of Vancouver, the continued development and management has passed to the project participants (members) through a unique new agency called E-Comm, Emergency Communications for Southwest British Columbia. E-Comm is an independent provincial corporation with public sector members (shareholders) consisting of 13 Class A and 33 Class B members.

BACKGROUND

In the spring of 1994, the Vancouver Canucks extended their playoff run into the Stanley Cup finals. Following the seventh game of the final, the Stanley Cup riots took place in downtown Vancouver, requiring mobilization of several emergency services organizations, including the Vancouver Police and Fire departments, the RCMP and BC Ambulance. Following the disturbance, it was determined that the inability of these emergency responders to communicate with one another was a major obstacle to effectively handling the crowds.

Perhaps more than any other single event, the Stanley Cup riots focused attention on the ability of emergency services in the region to handle emergency situations. The various reviews that followed this incident pointed out the shortcomings of the current facilities and systems that support emergency management in the City and region:

· police and fire dispatch facilities and communications systems were housed in seismically vulnerable buildings.
· police and fire dispatch equipment in use in the City was outdated and required replacement.
· emergency radio channels utilized by the Police and Fire departments were often operating beyond their capacity and would require significant upgrading.
· communications among emergency services organizations in the region was not available making it difficult to deliver on mutual aid agreements. This shortcoming was also identified by the Oppal Commission, the BC Police Commission and the Attorney-General’s Ministry.

Given that many emergency services organizations in the area were also faced with costs to upgrade their outdated systems, the opportunity to leverage the participation of others into an effective regional emergency management system was timely. However, for the City, the first steps related to our own needs.

On October 4, 1994, Council approved the recommendation of the City’s Emergency Management Committee:

This report documented the then rationale for undertaking such a study, including the condition of existing facilities and systems that supported emergency management and the advantages of providing these services from a single post-disaster building. Although no specific studies had been completed, it was estimated that development of a facility to provide for the City’s needs would be in the vicinity of $12 to $14 million. Most notably, the report also identified the opportunities available for improved emergency management in the region if other agencies participated in such a facility.

Over the next 40 months, Council received a number of reports related to development of the “project”. These reports documented the planning for the “project”, the progress made on seeking participation of other agencies and the risks being faced by the City in pressing ahead with a project that was beyond the scope of the City’s needs without firm commitments from others.

On July 27, 1995, Council received a report from the Emergency Management Committee outlining the needs of the City for an emergency operations centre housing fire and police dispatch and emergency management operations. Council authorized staff to plan for and construct an emergency operations centre for the City as a cost of $14 million with funding from:

· $6.66 million from the Canada BC Infrastructure Program
· $7.3 million from existing City capital funding

In addition Council instructed the City Manager report back on the costs of upgrading the City communications system with a view to including funding in the 1997 - 1999 Capital Plan.

The report also documented the interest of other organizations, including BC Ambulance, the Provincial Emergency Program, the Police Services group in the Ministry of the Attorney General and emergency management representatives from several regional municipalities. Council approved the participation of other agencies in the new facility and the associated communications systems on the understanding that there would be no additional cost to the City.

On September 28, 1995, Council considered an In Camera report from the City Manager which proposed expenditures related to the communications (radio) system at a cost of $1.8 million. Council authorized staff to:

· develop the information and communications components of a multi-agency emergency operations and communications centre
· design a replacement radio system for Vancouver which would integrate with a regional radio and computer aided dispatch system
· develop tenders for purchase of the Vancouver component of the regional system
· to prepare a capital plan submission for the Vancouver radio system replacement.

Although the City was taking the risk that it would bear the full cost of this work, it was anticipated that a substantial portion of the funding would be recovered from other agencies participating in the project.

At the same time as Council considered this report, an update report on the “project” and its potential participants was presented to Council. There were two notable feature of this report:

· the organization of the “project” contemplated a number of agencies would be represented in the new facility and have access to the new radio system, however, the concept of shared dispatch services had not been formalized. It was anticipated that each agency would operate its dispatch services independently.
· The report also spoke to the risks associated with the proposal. The City Manager noted that the support of other agencies involved in the planning phases had not been confirmed by appropriate decision making authority and that other potential participants seemed unwilling to commit to the project until costs were more clearly identified. In order to ensure that the originating participants would not be required to bear all of the start up costs, a financial model was to be developed that would require all participants to share in these costs.

On February 29, 1996, Council instructed staff to proceed with the rezoning of the preferred site for the new centre at the corner of Hastings and Rupert Streets on property owned by the City. Council subsequently approved the purchase of three adjacent lots in order to consolidate the site.

On June 13, 1996, Council considered an update report that summarized the major issues of the project, including the Emergency Operations and Communications Centre; the Wide Area Radio System; the cost-sharing model and the governance of what was now becoming a much more complex organization than originally anticipated.

Governance of the new facility was identified as a significant issue for the participants. System users were from a variety of governmental and quasi-governmental agencies and some private sector groups with a variety of mandates. As a result, the sponsors supported development of a new governance model which would represent the interest of all parties. This was the first time a separate organization had been identified as appropriate for managing the facility and its systems. In approving Recommendation C of the report, Council agreed that, if such a corporation was established that the City would assign management of the emergency operations and communications centre and City’s Fire and Police dispatch operations to the new corporation.

This report also dealt with the costs of replacing the Vancouver emergency services radio system. These costs were identified, prior to tenders being issued, at $23.5 million, including $13.5 million for the system backbone, $9.0 million for Fire, Police, Engineering and Parks user equipment and an additional $1.0 million for building costs. Council was not asked to provide a source of funding for this work, however, approval of the recommendation was a commitment to incur future costs of approximately $3.75 million annually for debt charges or lease costs, depending on the mechanism utilized to finance the system. This cost represented only the cost of providing a replacement radio system to the City’s emergency services. However, the City’s participation with others in theproposed wide area radio system offered significant benefit to the City both in terms of cost and functionality.

The months that followed this report represent an important transition period in the development of the new emergency operations and communications system as the City moved from being the primary sponsor and developer of a City project that had the capacity to provide services to others to a participant in a multi-agency organization that was to be governed by its members.

On May 13, 1997, Council considered a report seeking authority to continue with the “project” that was to house a broad range of emergency service agencies. The report noted that the City was taking some risk in proceeding without firm commitments from other participants. An assessment of these risks indicated that the City costs associated with the project could increase by approximately $5.7 million beyond the funding committed if these commitments did not materialize. Council authorized staff to:

· continue seeking firm commitments from other participants
· complete the design and tender stages for a building and support systems large enough to accommodate the needs of a number of agencies and estimated to cost $24.6 million. Funding for the City portion of the centre had been approved by Council and the balance of the costs were to come from the other participants.
· proceed with the replacement of the Vancouver radio system if the partnership proposal did not proceed.
· proceed with the preliminary phase of the Wide Area Radio System at an estimated cost of $4.6 million

On July 8, 1997, Council received an information report clarifying the components of the “project”. The current structure of the “project” follows from this report. To develop and manage the entire package, the members had proposed a unique new agency governed by its members and called E-Comm, Emergency Communications for Southwest British Columbia.

On September 25, 1997, Council authorized City membership in the E-Comm corporation and subscribed as a Class A shareholder for Fire Services and a Class B shareholder for future municipal services. Council also authorized the Vancouver Police Board subscribing as a Class A member for police services.

This report also summarized the costs of participation as approximately $12.8 million annually for Police and Fire dispatch, radio and user equipment costs. These costs were to be offset by savings in departmental budgets related to communications and dispatch activities. The net cost to the City was estimated at $5.5 million (1997 dollars). Council was also advised that the new radio system would be expensive and that there were risks in the final cost, particularly with respect to the Computer Aided Dispatch (CAD) system costs.

On October 29, 1997, the City began the process of transferring the “project” from the City to E-Comm. The City has continued to provide project management and other services to E-Comm ona full cost recovery basis during the start-up period. Staff are currently negotiating the phase out of these services with E-Comm.

On June 25, 1998, Council approved the transfer of ownership in the new building to E-Comm and a 99-year lease for the land on which it sits. In this transfer the City recouped all of the costs incurred in planning and constructing the building and related systems.

CURRENT STATUS OF E-Comm

With respect to the services it will provide, E-Comm is in a start-up phase which will likely continue for another 18 to 24 months. During this period, development of the wide area radio system will continue and member agencies will come on line. In addition, agencies that have committed to participating in the consolidated dispatch system will be accommodated.

The wide area radio system (being developed in four phases) and the CAD project ($183.2 million) and the E-Comm building were estimated to cost $207.7 million in 1997. The City portion of this budget was $14.0 million for the building and $25.3 million for the dispatch and radio system, equivalent to an annual expenditure of $4.5 to $5.0 million had the City financed its portion of the “project” on its own.

The E-Comm building has been completed within the approved budget of $23.5 million. As noted the building has been transferred to E-Comm and the City has been compensated for all of the costs it incurred in the development. The projected operating costs for the building for 2000 ($1.27 million) are slightly higher that the 1996 estimate ($1.12 million) primarily due to an increase in security services from 8-hour to 24-hour service and the inclusion of property taxes which had not been anticipated when the building was to be City-owned. These costs and their allocation are summarized in Appendix 1.

The first phase of the radio system (Phase-0 that accommodates the City of Vancouver) was completed within budget (approximately $18.0 million) and is currently being used by Vancouver Police and Fire. Vancouver is now being billed for this radio system access. Phase 1, which extends service to the rest of the Greater Vancouver Regional District, is currently being implemented in nine sub-phases. The first sub-phase is now complete (Richmond RCMP) and the remaining sub-phases, are scheduled to be completed by the end of this year, barring further problems with the acquisition of sites for radio towers.

The dispatch component of the system is also proceeding. Vancouver Police have been dispatched from the centre since June 1999. Vancouver Fire dispatch was to move to E-Comm in early 2000, however, delays in completing the new CAD installation, with acceptance of the Firehall Alerting System and with staff training has delayed that move until at least the fall of 2000. The City is now being billed for Police dispatch services and charges for Fire dispatch will begin later this year.

This phase of the E-Comm project is not without risk because of the complexities of moving a disparate group of agencies with varying demands onto the radio and dispatch system. Delays havebeen experienced in the roll-in schedule for dispatch operations primarily due to delays in the development of the CAD related to the CIIDS (RCMP CAD/RMS system) interface, and delays in achieving acceptance of the Firehall Alerting System. These delays, combined with issues associated with diverting resources to Y2K issues, and staffing and training issues, have extended the implementation schedule, delayed Vancouver Police in moving to the new Altaris CAD and Vancouver Fire being dispatched from E-Comm. Subject to training of dispatchers, Vancouver Fire is expected to be dispatching from E-Comm in the third quarter of 2000.

Dispatch levies were set under the assumption that an additional three new participants of varying size would join E-Comm by the end of 2000. Staff have been actively pursuing a number of potential new participants, however, any delays in signing up these members could impact on E-Comm’s start up costs and the City’s levies for 2000 and 2001. However, delays in having other participants join E-Comm will increase start up costs, however, these additional costs will not have an immediate impact on the costs levied to the City. Within the cost distribution model developed for E-Comm, these costs will be capitalized and charged to all future participants as part of their annual levies. If E-Comm fails to attract the number of participants anticipated in the business plan, the existing participants will be required to bear these costs. This risk was identified to Council in 1997.

While E-Comm is experiencing some challenges in achieving the original roll-in schedule, the commitment of City staff remains strong. Both the Fire and Police department continue to work with E-Comm staff to ensure the project delivers the functionality and associated benefits anticipated when it was first envisioned in 1995. Finance staff, who were instrumental in developing the initial costing model for E-Comm continue to monitor its application and the costs that are being allocated to the City. In the meantime, the City’s levy from E-Comm remains within the levels identified for Council in 1998.

IMPACT ON THE OPERATING BUDGET

As “owner” of the project, E-Comm is responsible for developing and operating the wide area radio system, the consolidated dispatch centre and supporting systems. E-Comm also manages the Emergency Operations Centre (EOC) and its supporting systems, which houses the Vancouver Emergency Operations Centre and the Regional Emergency Coordination Centre (RECC). E-Comm is a not-for-profit organization so that all of the capital and operating costs associated with these services, including the payment of property taxes to the City, are distributed to the members.

The City is responsible for approximately 35% of the capital and operating costs of the dispatch centre and radio system and for 75% of the costs of the Emergency Operations Centre.

i) Dispatch and Radio System

The first component of the costs ($5.3 million) associated with dispatch and radio operations was added to the Operating Budget in 1999. These were costs associated with use of the radio system by Fire and Police and of the dispatch centre by Police. In 2000, an additional $5.7 million has been added, annualizing the costs from 1999 and adding the first of the costs for Fire dispatch.

- 9 -

Once the City is receiving full dispatch and radio services from E-Comm (expected in 2001), these costs, now at $11.0 million, are expected to increase to $12.0 million, below the original estimates.

The transfer of radio and dispatch operations from the City to E-Comm has resulted in offsetting savings in the operating budget. As noted in the interim budget report, the Police department budget has been reduced by about $3.5 million to reflect these savings. With the move of Fire dispatch later this year, additional savings estimated at $900,000 annually will be available to offset the City’s increased billing from E-Comm. In addition to these savings, the City’s participation in E-Comm will result in the avoidance of significant costs associated with the replacement of emergency facilities and dispatch and communications systems and equipment, costs that in total would likely have been greater than the costs identified here. Finally, if the City had proceeded on its own, many of the benefits associated with the involvement of others in the “project”, including inter-agency communications and a consolidated approach to regional emergency planning and coordination might have been lost.

ii) Vancouver Emergency Operations Centre

At the time the “project” was transferred to E-Comm, Council agreed that the City would prepay the capital portion of its participation in the Emergency Operations Centre, including the sublease for the Vancouver Emergency Operations Centre (VEOC) at a cost estimated at $9.9 million and the “seat” in the RECC at a cost of $75,000. To date, the City has made a payment of $8.66 million for these purposes and the final installment is expected to be made within a few weeks. The source of funds for this obligation is the original emergency operations and communications centre funding approved in 1996.

Annual operating costs associated with the City’s participation in the VEOC and RECC are to be billed to the City by E-Comm. An estimate of these costs for 2000 ($340,000 detailed in Appendix 1) are included in the 2000 Operating Budget (Emergency Program) estimates. These costs are partially offset by the property taxes that the City will earn on the E-Comm building and site, estimated at $270,000 in 2000. The operating costs for the VEOC are less through E-Comm than they would be if the City had built its own independent centre, as originally planned. The City realizes the benefits associated with economies of scale and shared overhead. There are some opportunities to reduce operating costs somewhat by reducing janitorial service in the facility, and this will be pursued through discussions with E-Comm staff.

Ken Bayne
Director of Financial Planning

E-Comm
Shared Costs - CC 0900 - Allocation to Tenants
For 2000 Budgeted Costs

   

Proposed Budget

2000 Budget

E-Comm
53.14%

VEOC
35.23%

PEP
4.56%

Ports
0.71%

RECC
6.36%

Total

Security

*

69,600

236,684

170,138

50,030

6,476

1,008

9,032

236,684

Facilities Maintenance

  

207,900

218,634

116,176

77,033

9,976

1,544

13,905

218,634

Emergency Systems

  

117,000

20,000

10,627

7,047

913

141

1,272

20,000

Janitorial

*

203,200

203,477

146,264

43,015

5,571

862

7,764

203,477

Electrical Utilities

*

75,000

74,000

51,928

18,890

1,175

172

1,835

74,000

Heat Utilities

*

52,000

52,365

31,585

15,456

2,124

316

2,884

52,365

Water Utilities

*

5,000

3,530

1,954

1,185

153

24

214

3,530

Sanitation

*

  

3,750

2,262

1,107

152

23

207

3,750

Insurance

  

70,000

13,830

7,349

4,873

631

98

880

13,830

BC Tel Trunk

*

81,100

71,000

53,757

13,186

    

4,057

71,000

Telephone Switch Maintenance

*

  

94,800

78,110

12,763

    

3,927

94,800

Computer Cleaning

*

  

5,000

2,875

1,625

    

500

5,000

Property Taxes

*

231,300

273,664

151,786

93,106

11,618

1,396

15,758

273,664

Total

  

1,112,100

1,270,734

824,811

339,316

38,788

5,584

62,235

1,270,734

* non standard allocation method

cs000420.htm

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