Examining the parkade situation, the cost of construction is $34 million, for 351 stalls, around $100k per stall. Assuming a 50 year life, the parkade needs to make $1,800 a day to break even. Current stall rates are monthly maximums of $120.
At full occupancy to recoup the costs of construction only, these lots would be $160 a month. Vacancy rates (higher now with coronavirus), are around 20 per cent in the city, so that would push the price up to around $200 a month for each stall in the parkade.
Taking maintenance into account, the city spends around $550 per lot in ongoing maintenance, which adds another $9.5 million to the price of the lot. Rates would now need to be $260 a month just to account for the cost of maintenance and construction minus the staffing costs, which would be a dead net loss.
Assuming $100 per parkade spot per month over 50 years, gets us to around $17 million in revenues, minus $9 million or so in maintenance. The budget should have been set at no more than about $8 million in construction, not $34 million. The original budget of $12 million would have lead to a parking spot price, including construction and maintenance, of about $130 per month per parkade spot assuming 20 percent vacancy rates, $10 above the currently most expensive lots in the city and not taking into account staffing costs.
Two problems emerge from this analysis.
One, the original budget did not adequately factor in maintenance costs or vacancy rates. The original budget would have rendered these parking spots uneconomical at the time of construction, which leads to the question.
Should the city have embarked on this project at the start? My numbers show that in order to break even the city could only have spent about $8 million on the construction of this parkade to price the lots at around $100/month for each stall, not $12.7 million as was budgeted for this project.
With a 50 per cent built in overrun, this project was not currently economical in Prince George at the outset. This falls on city council. Of the $34 million spent, only about $8 million will be recovered in 50 years, with a loss of $26 million to Prince George.
Sean Ollech
Prince George
