The price of Ottawa’s new central library jumped $131 million – an increase of nearly 75% – to $306 million, leaving the city on the hook for another $65 million, according to a report released Thursday. .
Known as Ādisōke, an Anishinaabemowin expression meaning storytelling, the new super library is a joint project between the Ottawa Public Library and the federal Library and Archives Canada (LAC), costing $60 and $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 of the project was to be set at $175 million, with the federal government paying $71 million. The city would then recoup the remaining $104 million, plus an additional $18 million for the 200-space underground garage.
When the two shortlisted bidders sent in their proposals last month, each was well over budget. PCL Construction had the lowest bid at $334 million: $306 million for the library and an additional $28 million for the garage, the price of which increased by $10 million.
The city’s share of the project has now increased by $64 million to $168 million. And, according to the report, an additional $1.2 million will be needed to fit out restaurant operations in the new library.
That means the city needs to find more than $65 million to keep the project alive, an issue it will discuss at a special finance and economic development committee meeting Oct. 19.
Treasury Board has already approved the cost increase for the federal portion of the project.
City staff are recommending that the City borrow an additional $36 million, as the additional debt does not exceed the council’s self-imposed cap of 7.5% of tax revenues for debt servicing.
The library would contribute $28 million: $16 million would come from the library’s surplus fund (it has saved millions over the past 18 months due to COVID-19 restrictions) and $12 million would come from a development fee fund that pays for the expansion of public libraries.
The city would also borrow an additional $10 million to pay for parking garage overrun costs. The underground garage must 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 pushed back another year – again. The original completion date was in 2023, but has now moved to 2026, assuming the council approves additional money for the project.
Construction inflation to blame: report
The report attributes the giant leap in the project’s budget to skyrocketing construction costs.
In 2016, when estimating the cost of the library, the city’s purchasing staff included a 10% “escalation contingency,” but that has now ballooned by 55 percentage points, the report said.
“Actual inflation observed in construction in Ottawa, as described by Statistics Canada up to the construction midpoint, is currently over 65%, which was confirmed by a third-party quantity surveyor,” the report said.
The report goes on to say that COVID-19 is driving up costs due to material shortages, supply chain pressures, labor impacts, and “an overheated market.”