Victoria allows $33.7M for new fire HQ

Mindful of costs for new Johnson Street Bridge, councillors endorse spending a fixed price for building

With past Johnson Street Bridge decisions still fresh in their minds, Victoria councillors Thursday unanimously endorsed spending a fixed price of $33.7 million to build a new fire department headquarters downtown.

“Today I am whole-heartedly in support of this project,” Mayor Lisa Helps said. “I think it’s a good deal. I think all the work has been done. I think the risks have been mitigated as much as possible.”

She couldn’t say the same in late 2012 when she voted against the Johnson Street Bridge contract, Helps noted.

“The contingency was too low. The design wasn’t far enough and I didn’t support it,” she said.

Victoria plans to partner with Dalmatian Developments Ltd., a joint venture by Jawl Residential and Nadar Holdings Ltd., on the fire hall project, to be built on Johnson Street between Cook and Vancouver streets.

“I’m confident that this project will get done for the price that’s stated here, as long as — and this is for us — that we don’t decide to add things further along the road,” Helps said

Five years ago, it was then-mayor Dean Fortin touting a “fixed-price” contract to build the replacement for the Johnson Street Bridge for $63.2 million, with an overall project cost of $92.8 million. The bridge is scheduled to open at the end of this month — three years behind schedule and at a cost of more than $105 million and counting.

Coun. Jeremy Loveday said the city was “guilty of using the term “fixed-price contract” to hide cost inflation” on the bridge replacement project, and wondered how the fire hall project was different.

“This isn’t a bridge. It’s a commercial building. So there aren’t areas that you are perhaps doing for the first time,” explained Peter Rantucci, head of strategic real estate.

Susanne Thompson, the city’s director of finance, said the fire hall project is at a much more advanced stage of design. “We are at a different stage than when the Johnson Street Bridge was done. They were at conceptual design that was less than 10 per cent.”

The public-safety complex, which will lease space to B.C. Emergency Health Services for paramedics and ambulances, will take up the first two floors of the facility. The mixed-used development could include affordable housing or commercial outlets up above.

Total project cost to the city would be $35.9 million, including $33.7 for the building and $2.2 million for features such as sidewalk improvement and project management.

The project will not require external borrowing or a property tax lift, as the city plans to borrow from its debt-reduction reserve, which functions as an internal loan fund.

City staff say the cost of internal borrowing — $39 million over 15 years — can be repaid at an annual cost of $2.8 million. The borrowing will draw down the reserves (with an estimated balance of $50.6 million at the end of 2018) about $3.3 million below the target balance, but staff say it will take less than two years of repayment to bring it back up.

The city will also recover about $2.6 million from B.C. Ambulance over the term of the lease.

Rantucci said the agreement with the developer is structured so that the city pays the developer a small deposit up front, with the bulk paid on completion and acceptance.

The developer now has six months to go through the rezoning and development permit process. It is estimated that construction will take 28 months after the permits have been issued.