At yesterday’s council meeting, the annual “State of the City” address by Mayor Wayne Wright and the 2013 Highlights and Accomplishments review by CAO Lisa Spitale were overshadowed by the announcement that the office tower on top of the Anvil Centre has been sold.
For people not paying attention, The Merchant Square office building is the 137,000 square feet of LEED Gold Class-A office space being built next to the New Westminster SkyTrain station. When the deal between the City and the UpTown Property Group (who were supposed to build and own the office tower) went south around last year’s election, the City made the bold choice to go ahead and build the tower itself. To the chagrin of some.
At the time, there was much speculative financial discussion on the internet about what the different aspects of the Anvil/Merchant Square cost, and where that money was coming from. Using the City’s info at the time, I drew these two sandwiches:
|Where the $94 Million Budget was being spent.|
|Where the $94 Million was coming from.|
As all of those were budget projections from three years ago, they can now be updated based on the new data released yesterday, (and please note, I have not had much time to look these over – so all the normal short work caveats apply) with a new calculation of the “shell cost” vs. the fit-out cost of the tower, and can include the cost of selling the tower:
|Revised cost of the Anvil / Merchant Square project.|
The sale of the tower will cover the top bun of the sandwich. The deal put the cost for fit-out of the building on the purchaser, so the taxpayer is off the hook for that. The most important part of this is that all of the money the City borrowed from its Capital Reserves (budgeted at $33 Million, turned out to be $30 Million) to fund the construction of the tower will be returned to the reserves. The clear point made by City staff: No taxpayer money went into building the tower.
The Casino funds will still pay the $41.5 Million for the Anvil construction. The cost of listing and facilitating the sale is about $0.5 Million, and that will come out of the proceeds from the sale.
The parking structure cost $12.5 Million to build. This will be $1.5 Million from Casino funds, and $6 Million from the proceeds of the sale. The rest will need to be debt-funded from the Municipal Finance Authority. The short version is that the City is spending $5 Million to build a $12.5 Million parking structure. The Office Tower tenants will have first dibs on the parking, but will pay the City, at full market rates, to use it. That revenue will be used to pay for the parking structure. The new revenue sources look like this:
More importantly, the City will receive tax revenue from the 137,000 square feet of office space (estimated at $50 Million over 50 years), they will keep the revenue from the restaurant and coffee shop leases, and all of the spin-off economic benefits of having an office tower with 500+ workers downtown, and we got a spectacular Community Centre out of it all.
Sounds like a good deal to me.