SUPPORTS ITEM NO. 5  
                                               CS&B COMMITTEE AGENDA
                                               JUNE 1, 1995         


                         ADMINISTRATIVE REPORT


                                                 Date:  May 24, 1995


   TO:       Standing Committee on City Services and Budgets

   FROM:     Director of Finance

   SUBJECT:  Pacific Space Centre Society - 
             Canada-BC Infrastructure Project


   RECOMMENDATION

       A.  THAT  Council approve  a repayable  grant of  up  to $1.2
           million to  the Pacific  Space Centre  Society to  bridge
           finance the  Canada-BC Infrastructure  Project, with  the
           source  of funds to be Revenue Surplus.   The grant is to
           be   repaid  with   the  proceeds   from   the  Canada-BC
           Infrastructure Program.

           FURTHER THAT  the Director  of Finance  be authorized  to
           disburse the  funds to the  Pacific Space Centre  Society
           generally as discussed in the report.

       B.  THAT  the City be responsible for  50% of the cost of the
           necessary  upgrades and modifications to the building, as
           a direct result of the Canada-BC  Infrastructure Project,
           up to  a  maximum of  $100,000;  source  of funds  to  be
           Capital Reserve. 

           FURTHER THAT  any cost  in  excess  of the  City's  share
           would be the  responsibility of the Pacific Space  Centre
           Society.


   CONSIDERATION

       The Director of Finance  submits a choice between C  or D for
       consideration,  noting that  it is  normal  policy to  charge
       interest  on  loans  for  internal  projects  financed   from
       Reserves or Special Funds.

       C.  THAT  Council forgive  the  interest  loss to  the  City,
           estimated  to be $28,000,  during the  term of the bridge
           financing  of the Pacific  Space Centre Society's Canada-
           BC Infrastructure Project.

           OR






       D.  THAT Council  charge interest on  the repayable grant  to
           the  Pacific   Space  Centre  Society,  estimated  to  be
           $28,000 during the term of the bridge financing.

   GENERAL MANAGER'S COMMENTS

       The General  Manager of Corporate Services RECOMMENDS A and B
       and submits  a  choice  between C  or  D  for  CONSIDERATION,
       noting  that  this project  will  likely  generate additional
       building  maintenance  costs  which  may  impact  the  City's
       operating  budget in future years.  Approval of A and C, both
       of which are grants, requires eight affirmative votes.


   CITY MANAGER'S COMMENTS

       The  Federal-Provincial Infrastructure  Program requires that
       funds be expended prior to  payment of infrastructure grants.
       During  the evaluation of infrastructure grants, the Province
       expressed  concern  about  the  Planetarium's  capability  to
       finance the  infrastructure portion of  the grant.   In order
       to provide the Province with  some comfort in this  regard, I
       agreed to recommend to  Council that the City provide  bridge
       financing for  the infrastructure component,  where repayment
       is assured. 

       The Planetarium  has not requested  capital funding from  the
       City.  Further, they have agreed  to bear 50% of the cost  of
       any  renovations  to  the  Planetarium-Museum  complex  as  a
       result of their  changes.  (These adjustments relate to areas
       where the  building does not meet current code.)  Under these
       circum-stances, their  request for an  interest free loan  to
       cover the  period between expenditure  of funds and  recovery
       from the infrastructure program seems reasonable. 

       Accordingly, the  City Manager  RECOMMENDS approval  of A,  B
       and C.


   COUNCIL POLICY

   Approval of grants requires eight affirmative votes.


   BACKGROUND

   City Council, on September  13, 1994, approved a report  from the
   City  Engineer endorsing  the  application by  the Pacific  Space
   Centre Society to the  Canada-BC Infrastructure Program for 'soft
   infra-structure' capital project  funding.  The project  involves
   construc-tion  of a  27,000  square feet  education, tourism  and
   entertainment facility, within the existing city-owned structure,
   to  provide a showcase for  some of B.C.'s  advance technology in
   space exploration and astronomy.
   DISCUSSION

   On  February 1,  1995,  the  Pacific  Space  Centre  Society  was
   notified by the Canada-BC Infrastructure Program that $5,706,158,
   representing 2/3 of the  cost of the project, had  been approved.
   The remaining 1/3 of the cost of the project, $2,853,079, will be
   raised  by   the  Society  through   fundraising,  donations  and
   corporate sponsorship.    At  this time,  the  Society  has  $1.1
   million in confirmed donation funds which will be received over a
   three  year period.    Plans are  being  finalized to  raise  the
   remaining  $1.75 million.  The Society has not requested the City
   to provide any capital funds towards the project at this time.

   The  project will be managed by the  Society and the project team
   will  include staff  from  Facilities  Development, supported  by
   other  City staff  as  required.   To  provide control  over  the

   project expenditures, the Pacific  Space Centre Society Board, on
   March 27, 1995, passed the following motion:

       Expenditure  commitments shall not  be made and/or bridge
       financing  used until a community  donation or commitment
       has  been  received  equal to  1/3  of  the  contemplated
       expenses and also  provided that 2/3 of the  contemplated
       expenses  shall  remain  uncommitted  in   the  available
       Infrastructure Work funds.


   A preliminary cash flow  analysis has been prepared based  on the
   information provided by  the Society.   The analysis provides  an
   overview of the financial  issues facing the Society and  is very
   conservative.    It  will be  refined  when  the  Master Plan  is
   finalized and approved,  then updated on  a regular basis  during
   the life of  the project.   The analysis  indicates that  outside
   bridge financing is needed to keep the project afloat, due to the
   timing   differences  between  expenditures  being  incurred  and
   proceeds  being  available   from  the  Canada-BC  Infrastructure
   Program.

   Consequently, the  Society has  submitted a  request to  the City
   seeking the necessary  bridge financing on  infrastructure funds,
   without interest, during the term of the project.

   The  Director  of  Finance  proposes  that  the  required  bridge
   financing to the Pacific  Space Centre Society could  be provided
   in the form of a repayable grant,  for up to a maximum amount  of
   $1.2  million.  This  will  allow  for  the  anticipated  project
   expenditure/revenue pattern as  detailed in the  preliminary cash
   flow analysis.  The source of funds for the repayable grant would
   be Revenue Surplus, to  be repaid from the proceeds  of Canada-BC
   Infrastructure  Program  funds.     The  interest  cost  of  this
   repayable  grant is estimated to be $28,000.  It should be noted,
   however,  that with  the  limited information  available at  this
   time, this estimate may be on the high side. 


   Once the Master  Plan is  finalized and approved,  the cash  flow
   analysis can be refined.  Steps  will then be taken to adjust the
   timing and amount of the cash advances to the Society to minimize
   the interest cost to the City. 


   Other Issues

   Based  on the project plan  provided by the  Pacific Space Centre
   Society at  this  time,  the project  has  triggered  some  basic
   service improvement  and safety  issues that should  be addressed
   before the Canada-BC Infrastructure Project is to proceed.  Staff
   from  Facilities Development  Division is presently  working with
   the  Society's project  staff  as well  as  other City  staff  to
   finalize the scope of the work.   The preliminary estimate of the
   cost  is $200,000.   The  Director of  Finance believes  the City
   should  share the cost of these  improvements and is recommending
   that the City will fund 50% of the cost of the improvement, up to
   $100,000, with  the Pacific Space Centre  Society responsible for
   the remaining portion  of the cost.  The source  of funds for the
   project is Capital Reserve.  

   The  initial  review  by   the  Manager  of  Building  Management
   indicates that there will be  an increase in building maintenance
   cost as well.   Presently,  the Pacific Space  Centre Society  is
   meeting  with  City  staff  on  the  terms  of  a  new  operating
   agreement/lease,  including the  issue  of the  ownership of  the

   assets.   I therefore recommend that all the financing and policy
   issues  around this  new operating  agreement, together  with the
   terms and conditions of the new agreement, be reported to Council
   later this month for consideration and approval as a package.



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