Seven of Vancouver City Hall's 11 floors sit empty while undergoing eventual upgrading. (CBC)

A taxpayers watchdog group says the City of Vancouver is wasting millions of dollars moving whole departments out of city hall while seven of its 11 floors are unoccupied.

The city engineering department is moving out permanently and is settling into new offices two blocks away, at a total cost of $48 million for the move and a 10-year lease.

The city's social development, housing and cultural affairs departments have moved out to occupy three city-owned floors in the trendy new Woodward's Building, nearly four kilometres away by road.

The news angered Maureen Bader of the Canadian Taxpayers Federation.

"There's no reason why the city should be spending on locations for staff outside city hall when they've got seven floors that are available," said Bader. "This makes no sense whatsoever."

The city says the landmark building is old and in dire need of renovation and that's why so many floors sit empty.

"It's a 74-year-old building," assistant city manager Sadhu Johnston told CBC News on Monday. "You need to make the upgrades in order to make it up to code and ensure people can work there safely."

There are now rules that prevent departments from deciding independently to move out of city hall and sign leases elsewhere in the city.

"I think in the past, people did business the way that they did," said Johnston. "We recognized there was a problem with that, and its been changed."

Renovation is underway on the sixth floor, which will become the city manager's office, while the third floor will be reworked into an expanded office for the mayor.

There also are plans for a dining room for city councillors at a cost of $260,000.

"One of the reasons taxes go absolutely nowhere but up is because we have these perverse spending priorities," said Bader.

The renovations come amidst a $61 million budget shortfall for this year, which the city has dealt with by laying off 158 staff members and raising property taxes by 2.26 per cent.