Portfolio organizations: Standing Committee on Government Operations and Estimates—November 24, 2022

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Canada Post financial stability

Key messages

Key data points

Background

Canada Post’s long-standing mandate is to serve every Canadian address while maintaining financial self-sustainability. The pandemic has changed the needs of Canadians dramatically, putting further pressure on the corporation’s existing business model and operations. To grow the business and better meet these evolving needs, Canada Post is investing to expand capacity, improve the customer experience and innovate its operations.

Key results

Note

The operations of Canada Post are funded by the revenue generated by the sale of its products and services, not taxpayer funding.

Rehabilitation of National Capital Commission assets including 24 Sussex, Rideau Hall, Stornoway, and Harrington Lake

Key messages

If pressed on preliminary functional requirements study—24 Sussex:

If pressed on cost of transition of leaders in the official residences:

Key data points

Background

In 2017, the National Capital Commission commissioned in-depth building condition reports for the largest and most complex buildings in the official residences portfolio. These reports, made public in 2018, found that 58% of the assets in the official residences portfolio were considered to be in “poor” to “critical” condition, including half of the main residences. This analysis was refreshed in 2021 using the same methodology. The findings are laid out in the Official Residences of Canada: 2021 Asset Portfolio Condition Report, which details the state of all 6 official residences and their secondary buildings under the stewardship of the NCC. The latest findings confirm that the overall condition of the portfolio continues to deteriorate with only 24% of the assets considered to be in “good” condition, down from 34% in 2018. The report was presented to the NCC’s Board of Directors on June 23, 2021, and subsequently published on the NCC’s website.

The report highlights the shortfall in funding required to restore and maintain the heritage buildings in this asset portfolio. Since the 2018 report, the NCC has invested approximately $26 million in capital funding on rehabilitation work. Despite these investments, 61% of the assets in the official residences portfolio remain in poor or critical condition. The cost of addressing the portfolio’s deferred maintenance deficit has increased and it is now estimated that a one-time injection of $17.5 million per year, over 10 years—for a total of $175 million—is needed to close the deferred maintenance gap, along with code and legislation compliance modernization, including universal accessibility and sustainability. In addition to this sum, the report identifies a need for $26.1 million in annual funding to cover ongoing maintenance, repair, and renovation costs.

24 Sussex

Over the last decade, the NCC has completed some work related to health and safety at 24 Sussex including the rehabilitation of chimneys and fireplaces, fire compartmentalization, stabilization of escarpment, and the removal of hazardous materials, such as asbestos, from the main building. However, the NCC has not been able to proceed with the extensive rehabilitation of the residence and has been limited to undertaking repairs that were urgently required for health and safety.

Since the property has not seen significant investment in over 60 years, the additional work required would include the rehabilitation of the building envelope, replacement of mechanical and electrical systems, and construction of universally accessible entrances and washrooms. All buildings on the site would require extensive recapitalization and the NCC would need prolonged access to the residence. The NCC is working with its federal partners to develop a plan for the future of 24 Sussex Drive and is ensuring that issues related to security, functionality, environmental sustainability, universal accessibility, design excellence, and heritage preservation are taken into consideration in its preparations.

As part of its duties as steward of the official residences, the NCC is renewing various studies, including functional program options for the building, site surveys of the grounds, the main building and the 4 secondary buildings, asbestos testing, and other life cycle evaluations. This includes completing a preliminary functional requirements study for the Prime Minister’s official residence. Drafted based on input from various federal partners as well as several previous occupants, the study supports the development of a thorough and appropriate functional program, which will act as a guide in the planning and design of potential future solutions for the official residence of the Prime Minister. The purpose of the study was to determine the spatial requirements suitable to address both their governmental and personal functions. Later stages may address issues of site or design.

There are health and safety concerns with the residence, including electrical safety concerns, the presence of designated substances such as asbestos that pose air quality risks, as well as considerable pest control issues. Further to these risks, which endanger the health and safety of current users, the overall integrity of this classified heritage asset is also at risk. In addition to the fire risks associated with the obsolete electrical systems, there is also a risk to the residence of water damage caused by mechanical system failure. Should these risks materialize, this important national heritage asset could be lost.

Due to the continued decline in the state of the buildings at 24 Sussex Drive, and the resulting risks to human health and safety, the NCC’s Board of Directors directed NCC staff to plan for the closure of this site at its meeting in June 2022. This decision was subsequently communicated to the Minister of Public Services and Procurement in July 2022. In August 2022, the Minister responded acknowledging the NCC’s planned decommissioning of this site.

In fall 2022, the NCC will begin the process to decommission the site. This will include the abatement of designated substances, as well as the removal of obsolete systems, preparing the asset for next steps. In doing so, this project will address the health and safety and asset integrity concerns being faced by the NCC.

Rideau Hall

Since 1986, the buildings and grounds of Rideau Hall have been managed by the NCC, which is implementing a long-term rehabilitation project to ensure that the valuable heritage buildings on the estate remain in optimal condition.

The NCC assists the Office of the Secretary of the Governor General of Canada (the office) in delivering their program of work at Rideau Hall, recognizing that it is an official residence, a public destination, and a workplace for over 200 federal public servants, including employees of the office and the NCC, the Royal Canadian Mounted Police (RCMP) and other agencies.

Since 1988, development plans, supported by asset condition reports, for both the buildings and grounds have been completed and several upgrades have been made. The NCC also completes projects on behalf of the office in support of its programming at Rideau Hall. Some projects undertaken at Rideau Hall fall outside NCC’s scope to furnish, maintain and rehabilitate the property. These are commissioned and paid for by the office, including a recent feasibility study examining multimedia options for the ballroom and installing an access control gate in the Monck Wing.

All NCC projects that are planned or underway at Rideau Hall are coordinated in collaboration with the office in order to ensure effective implementation.

Overall, the Rideau Hall main residence was determined to be in “fair” condition in the NCC’s Official Residences of Canada: 2021 Asset Portfolio Condition Report.

Stornoway

Stornoway holds a “recognized” federal heritage designation. The main residence functions primarily as a private residence for the leader of the opposition and their family. Since 1988, development plans, supported by asset condition reports for both the building and grounds, have been completed and several upgrades have been made. Currently, elements of the main residence that need to be upgraded or replaced include the building envelope, fire alarm, as well as the electrical and heating and cooling systems. Aspects of the residence also need to be renovated to permit universal accessibility. Overall, Stornoway was determined to be in “fair” condition in the NCC’s Official Residences of Canada: 2021 Asset Portfolio Condition Report.

Harrington Lake

While the main cottage at Harrington Lake is 95 years old, most of the buildings were built between 1850 and 1925. Harrington Lake, the official country residence of the Prime Minister, is used for both official and private functions, with buildings that can accommodate official business as well as state visits. The Harrington Lake property was deemed to be in “critical” condition in the NCC’s Official Residences of Canada: 2018 Asset Portfolio Condition Report.

As part of a broader long-term program to preserve, maintain and restore all the official residences under NCC management, the NCC allocated $8.6 million to rehabilitate the Harrington Lake property. This project improved the condition of the farmhouse (formerly known as the caretaker’s cottage) from “critical” to “good”, and the condition of the main cottage, from “critical” to “fair”, and it was completed under budget:

This project began in the fall of 2019 and was substantially completed in December 2020. The overall cost of $5.792 million was under the initial $6.1 million budget. This investment falls short of addressing all of the required renovations at Harrington Lake and does not include modern building improvements such as universal accessibility and environment sustainability.

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