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Total cost of new city hall nudges $150M
Surrey's new city hall is going to cost taxpayers almost $150 million by the time the city has finished paying for it, The Leader has learned.
The new 180,000-sq-ft. building at 13450 104 Ave., complete with marble walls and stone-tile floors, opened this week. Civic officials have said the price tag for the new space is $97 million.
That figure also included a $10-million contingency fund, but The Leader has learned that money has been spent.
In addition, Surrey paid an additional $2.5 million to turn council chambers into a dual-purpose performing arts space by adding catwalks.
That brings the total construction cost to $99.5 million.
However, Surrey borrowed $97 million from the Municipal Financing Authority, a lending agency for cities. Two mortgages were taken over 25-year terms. The first $52 million is financed at 4.2 per cent, while the remaining $45 million is being financed at 2.9 per cent.
That makes the annual interest payments on those loans $1.936 million. Over the 25-year term of the mortgages, Surrey will have paid $48.4 million in interest, bringing the total cost of Surrey's new city hall to $147.9 million.
Construction costs for an outdoor civic plaza ($9 million) and a parking facility ($32 million) are being shared by the City Centre Library and the 3 Civic Plaza hotel, and are not included in the $150 million price tag.
Mayor Dianne Watts said Wednesday the parkade will be paid for through parking fees and the plaza will be funded by the city's development arm, the Surrey City Development Corp.
B.C. Director for the Canadian Taxpayers Federation Jordan Bateman said $150 million is a lot of money to be spent on a civic building when Surrey has so many needs.
Watts pointed out it is important for the city to invest where it is asking others to. She also said the city has attracted $3 billion in private-sector investment since announcing the new hall.
Bateman said it's impossible to say how much of that investment actually came about because of the new city hall. He noted Surrey had already built a public library at the site, which could have served as the city's commitment to the area.
Watts added that the cost of the new city hall will be offset by the leasing of the old city hall in Newton.
However, as of yet, no one has committed to occupying that building, which is now largely empty.
Watts has said the province has expressed interest in leasing 45,000 square feet of the old building. But there are no immediate plans in place.
Even if the city was able to rent out all of the former city hall, the annual income from the lease would be $2 million. That's just enough to cover the annual interest being paid on the loans for the new building.
And renting business space in this city is becoming a challenge, according to a recent study.
An Avison Young report examining the region's office market painted a dark picture for Surrey at the end of 2013.
"Surrey's office vacancy rate hit a record high of 17.3 per cent, from 11.5 per cent at year's end 2012 as a soft leasing market combined with a handful of large tenants leaving the market or moving into build-to-suit projects," the Avison report says.
The report also indicates throughout the region, suburban lease rates will remain flat for the next six months to a year because of the heightened vacancy. The report also notes "Surrey rental rates will likely face compression (a decline in lease rates)."