The cost of converting the former Canada Post building into new police headquarters has ballooned by $28 million in two years -- eating up any potential savings the city hoped to gain by abandoning a plan to repair the existing Public Safety Building.
On Thursday, council's downtown development committee approved additional spending to create a new Winnipeg Police Service headquarters on Graham Avenue after the cost of renovating the 10-storey structure rose to $155 million from $127 million in 2009, a 22 per cent increase.
City officials blamed the increase on more detailed designs that show the original estimate for construction was too low. The initial designs pegged the renovation cost at $164 per square foot. That figure is now $246 per square foot.
When the plan was first approved in 2009, city real estate managers argued buying and renovating the Canada Post building was more cost-effective than renovating the existing Public Safety Building in the long run. City finance officials now say the Canada Post renovation will cost about the same, over the long term.
Plans to include an indoor shooting range in the Canada Post building have been scrapped due to rising costs. A 35-lane outdoor shooting range and a new administrative building are now planned for land near the West End Water Pollution Control Centre, on the outskirts of the city.
St. Norbert Coun. Justin Swandel, city council's downtown-development chairman, called the price increase "troubling" and said the city has to do a better job of ensuring consultants hired to develop plans and estimate costs are closer to the actual number.
But this would be difficult because the city would then have to spend more money at the beginning to create detailed project plans, he said.
Mayor Sam Katz called the cost increase "extremely reasonable," noting detailed designs on construction projects of this scale are not conducted at the start. Officials expect the final price to be anywhere from 20 to 30 per cent lower or higher, Katz said.
The potential price-range variation, however, should be made public when projects are announced so citizens better understand how the process works. Katz said he will make sure that is done in the future.
"That's the way I can assure you you'll see it done in the future on (project) estimates," he said. "But in the meantime, I still think there is significant value in this, there's no question about it."
Cost overruns on the old police headquarters led to the current situation. The Winnipeg Police Service struck a deal to purchase the Canada Post Building for $30 million in 2009, after abandoning a plan to repair the limestone cladding on the existing Public Safety Building on Princess Street. That project's price tag ballooned to at least $65 million in 2009 from $19 million in 2006, partly because of the unanticipated cost of moving police into secure, temporary offices in other buildings while the crumbling Tyndall stone exterior was being replaced on the 46-year-old Public Safety Building.
The Winnipeg Police Service spent 18 months examining whether the 10-storey Canada Post building could house a variety of offices, including evidence rooms, the stolen-auto unit, crime analysis, community relations, criminal investigations and a police museum. But police officials did not discover serious problems with the building envelope -- the physical barrier between the interior and exterior environment -- as well as the foundation, senior city hall sources said Thursday, speaking under condition of anonymity.
The city has enlisted construction expert Ossama AbouZeid, the Winnipeg Football Club's new CEO, to assist with the police headquarters conversion. AbouZeid was selected because of his experience with the new football stadium underway at the University of Manitoba.
The Winnipeg Police Service contends the PSB is too small for police operations but the cost of building a new facility would be even more expensive. Consolidating police units and about 1,200 officers in the Canada Post building will give the service a stronger downtown presence, the service maintains.
Canadian Taxpayers Federation Prairie director Colin Craig said the police station is the latest in a long list of Winnipeg projects plagued by cost overruns, including the new football stadium, airport and human rights museum. Craig said government officials need to ensure their agreements with developers are "iron-clad" and agree on a fixed price so big projects come in on time and on budget.
"If you agree to a price on a project why are you letting them off the hook when the price goes so much higher?" Craig said. "If you agree to build a house for $300,000 and the contractor comes back and says it'll cost more, a lot of people say, 'Well, see you in court.' "
Katz said the city is still getting a good deal compared to the East District police station, slated to cost $379 per square foot.
Transcona Coun. Russ Wyatt said the city should consider ways to offset the additional cost, including consolidating additional district stations into the new building.
"If the price has shot up this much why aren't we finding efficiencies elsewhere?" he said.
The cost escalation at the police headquarters is the worst for a major city project since 2006, when the price tag for upgrades to the West End Water Pollution Control Centre ballooned to $47 million from $26 million. This overrun led the city to pursue a private partnership for future waste-water upgrades.
Katz called the comparison between the police headquarters and the sewage-treatment plant an apples-to-oranges comparison.