Saturday, January 5, 2013

Roof rip 6 years ago caused costly domino reaction

B.C. Place's roof ripped and collapsed Jan. 5, 2007
UPDATE (Jan. 14): NDP Critic Spencer Chandra Herbert complained to Auditor General John Doyle on Jan. 11, seeking an investigation of the cost of B.C. Place Stadium renovations. Read my story in The Tyee here and see the letter to the Auditor General at the end of this blog post.

UPDATE (Jan. 18): Auditor General John Doyle responded to Chandra Herbert on Jan. 16 and will conduct a fact-finding exercise. A very important first step. See his letter at the end of this post. Here's my latest story in Business in Vancouver. 

Was the skyrocketing cost of B.C. Place Stadium renovations the product of simple scope change or its evil twin, scope creep?

Government has refused to release a business plan or cost/benefit analysis for the renovation of B.C. Place Stadium, begging the question: does one exist? 

When it comes to B.C. Place, there are always more questions than answers. 

Ultimately, there is one question about B.C. Place that needs to be answered, after the half-billion-dollar project. It is this: did taxpayers get value for their money? 

The only hope may be for the Office of the Auditor General to step-in and investigate the blizzard of spending that happened at the 1983-opened stadium after its roof ripped and collapsed on Jan. 5, 2007 in a disaster that was deemed preventable. (It happened, whether by coincidence or convenience, after a drastically censored, 15-page, June 20, 2006 report to the Tourism Ministry by B.C. Pavilion Corporation that proposed major improvements at the stadium because it had "worn out assets which are critical to basic tenant operations.")

John Doyle’s predecessors investigated the NDP’s controversial Fast Ferries project (which was supposed to cost $210 million but rose to $462 million) and the Liberals' Vancouver Convention Centre expansion (which was supposed to cost $495 million but rose to $883.2 million). So why not put B.C. Place under similar official scrutiny? Why not before voters go to the polls to elect a new provincial government on May 14, 2013? 

In a Sept. 28, 2012 interview with Bill Good on CKNW AM 980, outgoing B.C. Pavilion Corporation chairman Podmore maintained “there’s only one budget, that’s the $563 million.”
"What government did is they authorized an expenditure of $12 million to allow us to completely design and engineer the building. To go out and obtain firm prices from contractors and subtrades. 
“And then we bundled all that together and went back to government and said OK, we completed the engineering, this is going to cost $563 million, we can get a fixed price contract to cover that work, do you want to proceed?”
Podmore also maintained the final price tag was $514 million. His math and chronology are a tad too simple for both you and me. 

What is now known is that he told Vancouver city manager Judy Rogers in a Jan. 22, 2008 letter that the cost was “in the order of $100 million, which includes replacement of the roof.” Podmore did not use modifiers, qualifiers or asterisks in his confidential letter. He didn’t mention whether the roofing cost for the stadium "rehabilitation" included an updated inflatable top or a new retractable system. 

By late April 2008, PavCo internal documents estimated the cost of a renovation with a "spoke-wheel" Frankfurt-style retractable roof would be $253 million. Application of such a roof before the Vancouver 2010 Winter Olympics was nixed, because the best estimate for completion was less than two weeks before the Feb. 12, 2010 opening ceremony.

Podmore and Premier Gordon Campbell announced the project in a May 16, 2008 news conference at B.C. Place, but both steered clear of telling taxpayers how much it would cost for that Frankfurt-style retractable roof. 

On Jan. 9, 2009, PavCo issued a news release announcing a $365 million funding envelope for top-to-bottom renovations. 

The budget was updated to $458 million on Oct. 23, 2009. Government eventually admitted the all-in price would be $563 million. On Aug. 15, 2012, the ruling BC Liberals claimed it was $514 million -- or $49 million under budget. (Still, that’s $414 million more than what Podmore said in his 2008 letter to Rogers.)

Along the way, Podmore said the sale or lease of PavCo lands around the stadium and a naming rights sponsorship would help lessen the burden on taxpayers. The sale option was tossed and the name remains the same. 

Paragon Gaming’s proposed casino/hotel complex west of the stadium was put on hold indefinitely when Vancouver city council denied an expansion bid in April 2011. Edgewater Casino is staying put at the Plaza of Nations until at least 2015, but Paragon is talking to PavCo about using city council authority to move the existing licence to a scaled-down complex. 

Telus had a $35 million to $40 million, 20-year deal to rename the stadium Telus Park, but government cancelled the agreement in February 2012. Evidence suggests the sponsorship was scuttled because of ongoing complaints and legal threats by competitors Bell, Rogers and Shaw over the June 2011 direct award of a $1 billion, 10-year government-wide telecommunications contract to Telus. 

Instead of giving Telus a second tier, official or exclusive supplier designation in exchange for goods and services already provided, government did a straight supply-without-recognition deal with Telus in August for an undisclosed sum. Yes, the government doesn’t want to tell us how much it paid Telus for goods and services that were supposed to be provided under the sponsorship. 

And, finally, the trial of the year is scheduled to begin in B.C. Supreme Court on Oct. 21, 2013 and it's all about the roof. Cable installer Freyssinet Canada sued steel contractor Canam Group for nearly $6.5 million. Canam fought back with a $26.15 million countersuit. PavCo and general contractor PCL are listed as defendants. The legal battle has been complicated by the grease that leaked from the Geobrugg-supplied cables which stained the fabric roof. The next procedural hearing is Jan. 10 and will involve applications to add more defendants and third-parties. (Meanwhile, B.C. Place workers represented by B.C. Government and Service Employees' Union local 1703 voted 96% in favour of striking. Contracting out and scheduling are the big issues.)

Recent legal filings by a lawyer for Canam suggest the cost of damage to the roof from leaking grease may be worth $15 million and it may not be covered by insurance. PavCo knew the leaks existed more than six months before roof fabric installation.

Apologists for PavCo and those desperately hoping to keep the B.C. Liberals in power and the NDP out of power after May's election will try to play-down any concerns about B.C. Place costs by claiming stadium-related economic activity rose from $58 million to more than $100 million after the renovation. But they have no real evidence to show you or me. This is par for the course around North America, according to The Stadium Gambit and Local Economic Development by sports economists Dennis Coates and Brad Humphreys. They say that stadium and arena developments never do for a local economy what the boosters say. 
“A stadium is a public investment in real capital, as such, the rules for sensible public investment apply to stadium finance as much as they apply to public provision of highways, schools and airports... 
“Unlike most studies commissioned by stadium advocates, the consensus in the academic literature has been that the sports environment has no measurable effect on the level of real income in metropolitan areas.”
The money that’s spent on B.C. Place is spent. It’s like toothpaste that cannot be stuffed back into the tube. But now is the time to analyze what went right and what went wrong. The public has a right to know how its money was spent and whether it was spent properly. Look what happened to Quebec’s construction industry because of opaque government tendering and spending. Revelations of Mafia involvement and resignations of mayors have been among the results so far of the Charbonneau Commission inquiry into that province's construction corruption.

Lessons can be learned which can be applied to future government mega-projects in B.C. New ideas can and should be floated to make the stadium a daily revenue generator, so that it can deliver dividends to government instead of rely on annual subsidies. It is a building with great potential. 






3 comments:

GeeBee007 said...

The next time anyone mentions "the NDP's Fast Ferries" they need to 1) read this story, 2) get kicked in the nuts.

The NDP at their worst pale in comparison to these lying thieves that call themselves Liberals.

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