Vaughn Palmer
Sun
VICTORIA – The B.C. Liberals are still struggling with the Vancouver convention centre expansion, amid reports that the over-budget project is headed for another huge jump in cost.
The waterfront project was launched as a $495-million undertaking back in the days when the Liberals said “yes” to several billion dollars worth of Olympics-related infrastructure.
Since then, it has undergone a steady escalation in costs, with taxpayers on the hook for virtually the entire tab.
The expansion was initially touted as a partnership with the private sector. But there were no private sector takers, investors knowing too well that convention centres are chronic money losers.
The expansion faced other challenges as well. Vancouver city council, dominated by the left-of-centre majority during the approval stages, insisted on some expensive additions.
Once construction got underway, there were the usual cost pressures — rising price of materials, shortages of skilled workers and construction cranes — and some unusual ones as well.
Driving piles through the shoreline mud to construct the waterfront platform for the building, crews ran into everything from deeply mired boulders and discarded concrete to the shell of a long-gone customs house.
For those on budget watch, the dollars just kept climbing. To $550 million … $565 million … and in September 2005 the project crossed the $600-million threshold.
Supposedly, that was to be the last of it. The then cabinet minister in charge, Olga Ilich, had worked in the development industry. “I come from that business,” she said. “I’ve been all over this file.” She was confident “we won’t be seeing any further increases.”
As of last September, project managers were still saying the project was “on budget” at $615 million. Mind, “on budget” meant 24 per cent and $120 million more than the initial estimate.
But there were rumblings that the expanded convention centre couldn’t possibly be delivered for that figure.
Project chair Ken Dobell, a senior adviser to Premier Gordon Campbell, all but confirmed another overrun in a November interview with The Vancouver Sun’s Jeff Lee.
“It’s big, it’s complicated, it’s challenging and it’s being built at the worst possible time in the marketplace,” Dobell said. “It is being built at what the construction industry would call the time of the perfect storm.”
Dobell confirmed he was preparing an update on the project for treasury board, the cabinet committee that vets the provincial budget.
Meaning the project was over budget? “I am not going to speculate about where we will be and what we will be reporting to government,” Dobell said. “That is something for the government to report after we’ve talked to them.”
Looking for specifics, reporter Lee went to the minister in charge. By then Ilich had moved to a new portfolio. The new minister, Stan Hagen, a 20-year political veteran, wasn’t inclined to make take-it-to-the-bank pronouncements before project managers had delivered their latest.
“I don’t think they know whether they will need more money until later,” Hagen said. “At this point they are trying to be mindful of the costs and they are trying to keep them under control.”
The new numbers were supposed to be in by early this year. Treasury board wants to put the revised estimate in the budget, slated for tabling in the legislature Feb. 20.
But Hagen is still looking for a firm number. “One number,” he emphasizes. Not a range. Not one more subject-to-revision forecast that will guarantee more negative stories like this one.
Perhaps the challenge is getting Dobell’s attention. At last report, the convention centre chair was also on hire as senior adviser to the premier, coastal forestry czar, finance committee chair on the Olympics and consultant to Vancouver city council.
The joke around government is that he’s had to hire someone to sit in meetings and remind him who he’s working for today.
But until the many-hatted Dobell and the folks at the convention centre project weigh in, the rumour mill is alive with guesses.
The $700-million mark has already been passed, I’m told, and $750 million is not out of the question.
With Ottawa nixing further contributions beyond an already-promised $222 million, with Tourism BC capped at $90 million and revenues maxed out at $30 million, the provincial government would probably have to cover the entire overrun.
Budget day will tell the full story. But I’m hearing that B.C. could be on the hook for as much as $400 million, almost double what provincial taxpayers were initially going to put into the Vancouver convention centre expansion.
© The Vancouver Sun 2007
