‘Dubious’ benefits in Nelson’s proposal to RDCK: consultant

A consultant
A consultant's report released today by the Regional District of Central Kootenay raised many red flags about the City of Nelson's proposal to share space in the White Building.
— image credit: Nelson Star file photo

A consultant's review of the City of Nelson's proposal to share space with the Regional District of Central Kootenay in the White Building didn't explicitly recommend against the idea but did raise many doubts, suggesting the costs may outweigh the benefits.

The 11-page document from Omicron Canada, a Vancouver design and construction firm, was released this morning along with an analysis by regional district staff, less than a day after the City of Nelson released its full proposal.

Last Thursday the board voted 19-1 to renovate their current building at 202 Lakeside Drive instead of moving.

The city's offer, submitted on January 7, was forwarded to Omicron, who five days later produced a document consisting "only of initial thoughts, comments, and questions."

Under the terms of the proposal, the city would have paid $1.23 million for its share of the city-owned White Building, and the city in turn would have bought the regional district's present headquarters for its assessed value of $1.73 million, leaving almost $500,000 for tenant improvements.

However, Omicron doubted the value to the regional district of co-locating with the city was really $1.8 million, suggesting "some of these benefits seem dubious," such as $600,000 for not adding on to the existing RDCK building, something that is not currently planned.

The firm also questioned several assumptions in the city's proposal, such as whether 310 Ward Street is actually a more desirable and accessible location than 202 Lakeside, and the cost per square foot of tenant improvements.

Other questions included: why was the city offering to buy 202 Lakeside at assessed value rather than market value? And does having both local governments in one place present a major benefit to the public?

"[U]nless the existing facilities that RDCK occupies are deficient in some major way or the operational benefits of co-locating with the city are very compelling why would the RDCK incur this initial cost and, in all likelihood, other significant future costs related to the tenant improvement and planned major capital expenditures?" they asked.

They concluded with a warning to "proceed cautiously" and investigate further if the board wanted to pursue the idea.

However, RDCK chief administrator Brian Carruthers recommended declining the city's proposal rather than investigating further at an estimated cost of $25,000.

He said the regional district's financial analysis found the proposed costs of moving to the White Building were "underestimated and suggest a high degree of risk."

"The proposal speaks to a range of cost savings resulting from shared services but does not provide detail to substantiate how those savings will be achieved and which party benefits," he wrote.

Where the city estimated the move would cost about $845,000, the regional district believed higher tenant improvement costs and design fees would push the total to $1.45 million, of which $230,000 would be required through additional taxation. That was weighed against an estimate of $535,000 to renovate the present RDCK building.

The analysis also said that while annual operating and maintenance costs at 202 Lakeside are about $50,000, they would increase to $89,000 in the White Building.

Further included in Carruthers' report to the board was an assessment by RDCK staff on both buildings based on a wide range of criteria. The White Building scored 42 of a possible 70, while the RDCK's current office scored 58, suggesting "the proposed space at 310 Ward is inferior to the renovated 202 Lakeside."

(In part the White Building lost points for splitting staff over several floors whereas the current RDCK office is on a single floor.)

RDCK chair John Kettle told the Star this morning he is inviting Nelson's mayor, council, and administrator to meet with the full board to discuss the issue. "There's a disconnect in how 19 people see things so differently than the one proponent yet be scolded for it. We need to cure that disconnect and we're not going to do it through competing press releases."

Kettle says the city probably should have come forward with its proposal sooner, while an RDCK committee was looking at options back in 2012, rather than after it had already decided to stay put.

However, he hoped there would be no hard feelings. "I am willing to sit down and hammer this out. We need to get this behind us and move on."

The consultant's full assessment and the staff analysis is below.

(CORRECTION: An earlier version of this story stated that the regional district believed moving to the White Building would cost $230,000 more than the city indicated. In fact, the figure is $600,000)

RDCK Review of Co-Location Proposal

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