The $16-million line was real. So are the questions.

The city has confirmed the missing $16-million line was in an unpublished version. But the review that relied on it never said the budget hadn't been approved, never mentioned a second version, and left key questions unanswered.

Last week we reported that the city's published version of a November 2019 financial report did not contain the George Street Parkade line the 2021 Young Anderson review relied on. The city has since provided documents showing the line was in a revised version, handed out at the meeting but never published.

On the morning of the Finance and Audit Committee's November 18, 2019 meeting, a city financial analyst sent the finance director a report "updated for the Parkade." At 10:33 a.m. it went to legislative services, copied to the city manager: "Please use this version of the report… for our F&A meeting at 12:00 today." The revised version was handed out at the meeting to the finance committee, but the online agenda was never updated.

When the review was announced in January 2021, then-mayor Lyn Hall said it would "fully understand where it went wrong and why." On five points, it didn't.

1. A budget shown as approved - it wasn't approved

The review names just one occasion when the former city manager brought the rising cost to council: a finance committee meeting in November 2019. At that meeting, the committee was shown the budget as approved. It hadn't been. The review never says so.

The handout showed the parkade exactly on budget: $16,372,186 approved, $16,372,186 spent, no variance.

It wasn't on budget. Council had approved $12.6 million in March 2019, and nothing more until February 26, 2020, when the city manager added $5.35 million herself. So on November 18, 2019, the approved budget was $12.6 million, not $16.4 million, and the project was about $3.8 million over.

The review notes the report gave no explanation for "the increase in the budget amount" from the March 2019 financial plan, and says the escalation wasn't "readily apparent" in a report covering "a broad range of projects." It calls the lack of disclosure "troubling." But it never says plainly that the figure shown as approved hadn't been approved.

It mattered. Because the report showed no overrun, the committee had nothing to act on. Yet two months earlier, the developer had put the cost of finishing the parkade at $22.5 million. Council didn't hear of the overrun until August 2020.

The record shows only that the report was "updated for the Parkade" the morning of the meeting, signed by the finance director and approved by the city manager. Was the figure an error, an accepted practice, or a decision? The review never addresses why the one report that could have shown the parkade over budget said it was on budget.

2. Two versions, only one mentioned

As previously stated, there were two versions of the November 2019 report.

The first was signed by the finance director and the city manager and published with the committee's agenda. It left the parkade out entirely. For almost seven years, that was the official public record.

The second version was put together on the morning of the meeting, "updated for the Parkade," and handed out at the table. It included the parkade, with the misstated figures.

The review mentions only the second version. It never says the first existed.

Why was the parkade missing from the signed report? Who decided to add it hours before the meeting, and on what figures? And did the reviewers know there were two versions? We asked Young Anderson whether it was given both. It had not responded by publication.

3. The city manager's increased spending power

Before May 2019, the city manager could add up to $1 million to a project's budget without council's approval. Anything more went to council.

In April 2019, the finance director proposed replacing that with a single yearly limit: 5 per cent of the operating budget, at the time about $7 million to $8 million a year, across all projects. It capped the total but dropped the per-project limit, so the whole amount could go to one project. The review says 5 per cent was chosen to "impose an overall limit, but not erode the delegated authority" of the city manager.

The report, approved by the city manager, didn't mention the parkade, or that she had known since July 2018 that it was expected to run about $7 million over. And the new rule itself didn't require large amendments to be reported to council. That was left to the city manager's judgment.

When council approved the change in May 2019, the review says, it was told that it meant "greater Council oversight of budget amendments," and that the city manager "would likely inform Council of large budget amendment items if she felt Council needed to know." Council agreed.

In February 2020, the city manager used the new power to add $5.35 million to the parkade's budget herself. Under the old rule, council would have had to vote on it. Instead, council wasn't told.

The review says that, regardless of approvals, the city "was obligated at this stage to pay all cost overruns." That is true of the bill. It is not true of the decisions: what council could have asked, planned for or told the public, had it known.

A reader might ask: the city manager had the power to raise the budget herself, so did it matter that she hadn't yet? It did. Until she used that power, the approved budget was $12.6 million, and that is what an accurate report would have shown. When she did use it, in February 2020, the review says it was "to reflect the actual costs incurred to the end of December 2019." The budget was raised to match money already spent. Whether she could have done so before the November meeting, and why she didn't, the review doesn't say.

The review gives one reason for the change to the city manager's spending authority: the finance director's concern that there was no overall limit. By then, the city manager had known for nine months that the parkade was expected to run about $7 million over. The review itself says the change "allowed the former City Manager to authorize budget amendments to address the escalating costs of construction, which would otherwise have required the City Council's attention." It says what the change made possible. It doesn't say whether the parkade's expected overrun was part of the reason for it.

4. What the mayor and council were told

On July 4, 2018, the city manager emailed Mayor Hall about expected cost increases and told him he "would be informed as more information was available." Later that day, the developer put the increase "in the order of $7 million," and the city manager was "immediately advised." The review found "no record" that she told the mayor, or any other council member, that figure.

Eight months later, in March 2019, council approved the parkade's $12.6 million budget. The staff report it was given, approved by the city manager, made "no reference" to the expected $7 million increase.

The review says she appears to have decided to cover the increase through "a reprioritization of current and future capital projects." It concludes that, apart from the November 2019 report, "at no time" did she bring the escalation to council's attention.

What the review doesn't say is why council wasn't told. Nor does it say whether the mayor was kept informed as she told him he would be, whether he asked, or what he did with what he had been told.

5. The reviewers' advice - no audit warranted

The city paid about $22.5 million for the parkade. Its agreements with the developer provided for a quantity surveyor to audit the costs the developer claimed. The city never hired one to do it. It relied instead on its own staff's review of the developer's payment claims.

The review said checking those costs was outside its scope, but still concluded that they "have not necessarily been unreasonable."

Following the review's release, the city turned to the same firm that undertook the review, this time as "its legal counsel," to find out whether the parkade had cost a reasonable amount. The firm hired a quantity surveyor. But the surveyor wasn't asked to check the developer's claims. It was asked for an opinion of what the parkade should have cost, and the documents it lists are drawings, the contract and emails from the firm, with no invoices or payment claims. It put the reasonable cost at $20.7 million to $20.8 million, about $1.7 million less than the city paid.

After further discussion with the surveyor, the lawyers adjusted that estimate to $21.6 million, to allow for the project finishing a year late, which cut the gap to about 4 per cent. In light of that, the firm advised that "an audit of the Parkade, both from an administrative and financial standpoint, is not warranted given the costs of such an audit." The letter doesn't say what an audit would have cost.

A reasonable price answers one question: whether the city overpaid. It doesn't answer another: why council wasn't told the costs were rising.

An administrative audit would have examined how decisions were made and recorded; a financial audit, what was actually paid. Neither was done, and the question of why council wasn't informed has never been publicly examined.

What would answer the outstanding questions

The review did explain much of what went wrong with the city's processes: weak due diligence, a contract that left the city carrying all the risk, and a lack of disclosure it called "troubling." Council acted on those findings and tightened the rules. But rules that are written to prevent a repeat don't explain why council wasn't told the first time. New rules still rely on what staff report, and until it's known why council wasn't told, no one can say the new rules would catch it next time.

The council at that time also had a role. Councillors can ask questions and look beyond what they're given, but they are dependent on staff for accurate information. Under provincial law, it is the city manager's job to advise and inform them. The review records what council was and wasn't told, and faults the city's early decision to take on all the risk. But it doesn't say whether council should have asked more.

We are not suggesting wrongdoing by any official. The point is that the reason council wasn't told has never been established.

The review established that serious failures occurred. It did not establish why council was left uninformed, or who decided what it would see. Answering that would take what the city was previously advised it didn't need: an administrative audit of how decisions were made and recorded, and a forensic audit of what was actually paid, both carried out by people not involved in the project or the review.

The council elected on October 17 will have the power to order both. Voters may want to ask candidates whether they would.

Responses

The city provided the handout and related emails. Asked to confirm that no budget amendment was approved before February 2020, it said the review "speaks to the findings regarding the budget amendments." It did not provide the review's terms of reference.

Young Anderson had not responded by publication to our questions, including whether it was given both versions of the November 2019 report, or to our request for the review's terms of reference.

The former city manager had not responded by publication to our questions.

Councillor Cori Ramsay, a member of the finance committee in November 2019, told us she recalled the parkade listed with no variance but could not locate the document. Councillor Garth Frizzell, also a committee member at the meeting, had not responded by publication. We sought comment from then-mayor Lyn Hall, who also attended, through Northern Health, where he is board chair. We don't know whether Northern Health passed our request on. Mr. Hall had not responded by publication.

Editor's note: The review and the documents referenced here relate to earlier council terms (2014–2018 and 2018–2022). Several current council members were not on council at the time and were not party to the decisions taken during that period.

Documents

• City of Prince George staff report, "George Street Parkade" (Dec. 31, 2020): Item E.6, Regular Council, Jan. 11, 2021. Gives the September 2019 estimate of $22.5 million and "Total Actual as of November 5, 2019 at $16,372,186".
• Young Anderson, "Review of the George Street Parkade Project" (June 3, 2021): PDF on the City of Prince George website. See paras. 19–37 and sections H and I.
• City of Prince George, "Archived – George Street Parkade Review": the city's review page, setting out the purpose of the review, the reforms, and the documents released with it.
• "Sustainable Finance Guidelines" staff report (April 15, 2019), with the proposed guidelines: April 29, 2019 Finance and Audit agenda package.
• Young Anderson covering report, "Quantity Surveyor's Opinion as to Reasonable Cost" (Dec. 20, 2021): PDF, with the SSA Quantity Surveyors opinion of Dec. 10, 2021.
• City of Prince George media release, "George Street Parkade final review released" (Dec. 21, 2021): on the city's website. Describes Young Anderson as "its legal counsel".
• "Financial Report on Significant Capital Projects" (Nov. 5, 2019): pp. 15–17 of the Nov. 18, 2019 Finance and Audit agenda package.
• Mayor Lyn Hall's press conference, Jan. 25, 2021: video. Reported by the Prince George Citizen as "Hall outlines steps city taking in wake of parkade cost overrun", same date.
• Prince George Citizen, "Prince George city council frustrated as George Street Parkade is $5.3M over budget" (Sept. 1, 2020): read it at the Citizen.