Ottawa's new main library $131M over budget with city on hook for half
Report blames escalating construction costs for price tag that has increased by 75 per cent
The price tag for Ottawa's new central library has shot up $131 million — an increase of almost 75 per cent — to $306 million, leaving the city on the hook for an additional $65 million, according to a report released Thursday.
Known as Ādisōke, an Anishinaabemowin phrase that means storytelling, the new super library is a joint project between the Ottawa Public Library and the federal Library and Archives Canada (LAC), with the cost split about 60-40 respectively.
The building will stand — some excavation and soil remediation has already begun — on Albert Street at the east end of LeBreton Flats.
The cost for the project was supposed to be fixed at $175 million with the federal government paying $71 million. The city would then pick up the remaining $104 million, plus an additional $18 million for the 200-spot underground garage.
When the two short-listed bidders sent in their proposals last month, each was way over-budget. PCL Construction had the lowest bid at $334 million: $306 million for the library and an additional $28 million for the garage, which has increased in price by $10 million.
The city's portion of the project has now increased by $64 million to $168 million. And, according to the report, an additional $1.2 million will be required to fit up the food and beverage operations in the new library.
That means the city has to find more than $65 million to keep the project alive, a problem it will discuss at a special finance and economic development committee meeting on Oct. 19.
The Treasury Board has already approved the increased costs for the federal part of the project.
City staff recommends the city borrow an additional $36 million because the extra debt falls within council's self-imposed ceiling of 7.5 per cent of tax revenue going toward debt servicing.
The library would contribute $28 million: $16 million would come from the library's own surplus fund (it's saved millions over the last 18 months due to COVID-19 restrictions) and $12 million would come from a development charge fund that pays for expanding public libraries.
The city would also borrow an additional $10 million to pay for the overrun costs for the parking garage. The underground garage is to be paid for by parking fees. The additional $10 million for the parking garage is not included in the total increase.
The completion date has also been put off by another year — again. The original completion date was in 2023 but that has now shifted to 2026, assuming council approves the extra money for the project.
Construction inflation to blame: report
The report blames the giant jump in the project's budget on soaring construction costs.
In 2016, when it estimated the cost of the library, the city's procurement staff included a 10 per cent "escalation contingency," but that has now ballooned by 55 percentage points, according to the report.
"Actual observed construction inflation in Ottawa, as outlined by Statistics Canada to mid-point construction, is currently in excess of 65 per cent, which has been confirmed by a third-party quantity surveyor," the report said.
The report goes on to say COVID-19 is increasing costs due to material shortages, pressures on the supply chain, impacts on labour and "a superheated market."