Last week, infrastructure minister Bill Estabrooks told the Chronicle-Herald that he’ll announce a decision about provincial funding for the proposed convention centre in downtown Halifax later this month.
I’m guessing from the tenor of his public pronouncements so far that, despite a provincial budget shortfall that will soon loom to perhaps a half-billion dollars, Estabrooks will announce over $100 million in government financial support for the convention centre project. Such is the power of the unelected, but well-paid Trade Centre Limited lobby that manages and feeds off the unprofitable convention biz.
Regardless, we should hope that a real business case, as opposed to the sideshow house of mirrors that has been used to hype a new convention centre, will accompany Estabrooks’ announcement.
Consider the issue of office space. The convention centre complex will consist of the publicly owned convention centre in the basement, then two privately owned towers above—one is a 500-room hotel, the other office space. How much office space will be in the complex? We aren’t being told yet. But Joe Ramia, the private developer, told me earlier this year that he has “verbal commitments” for leasing 75 percent of the building. “These are big, international companies,” he said. “We’re talking 100-, 200-, 300,000 square feet each.”
I don’t find that claim credible. Last week the downtown office vacancy rate went over 10 percent. There are empty spaces in most downtown towers. Ben McCrea has suspended work on the relatively small (100,000 square feet) Waterside Centre for lack of tenants—but when McCrea presented his case before Halifax council last year, he explicitly made claims similar to Ramia’s —that he had the building entirely rented, et cetera. Worst for the downtown real estate market, the future looks even more bleak: Emera is moving out of Duke Tower and over to its new waterfront headquarters, meaning another 125,000 square feet of empty space. Louis Reznick has changed his plans for the Roy Building rebuild, switching from the original office building to residential. The Empire Corporation has had approval to build a 600,000 square foot office building on Barrington Street since 1978; in 2008 the company announced work would soon begin on a building half that size, but those plans have gone the way of trillions of dollars in American mortgages.
So how is it Ramia can throw up an office tower and have it leased out? Well, the only thing that makes sense is that the Trade Centre Limited offices—118,000 square feet—will move from its existing building over to the new building. That’s reasonable, of course—you’d want the convention centre offices close to the convention centre. Otherwise, Ramia’s “verbal commitments” likely amount to still more reshuffling; that is, he’ll poach existing downtown offices into his shiny new building, courtesy of a taxpayer subsidy.
When TCL offices move into the new building, what happens to the existing TCL building? One rumour is that city offices in Duke Tower will be moved over to the TCL building, leaving Duke Tower pretty much completely empty. But the city only rents 50,000 square feet in Duke Tower, and the lease doesn’t expire until 2021. So unless the lease is broken, or the new convention centre won’t be completed for another decade, it still begs the question: what happens to the existing TCL building?
I put that question to Suzanne Fougere, who speaks for TCL. “It is too soon to know the specifics of future operations should a new facility proceed,” she replies. Well, I’m sure Fougere’s merely relating what she’s been told by TCL execs, but how is it possible to assemble a business plan for the new convention centre without also figuring out what to do with the existing office tower?
If the future of the existing TCL building isn’t incorporated into the business plan for a new convention centre, then we can simply laugh the proposal off the stage and move onto some substantial issue where we can have a productive and informed debate.
The point is that a new convention centre, being sold as the salvation of downtown Halifax, may actually pull the rug out from under the market, making the situation downtown even worse than it is now.
This article appears in Sep 9-15, 2010.
The current convention centre loses between $2-$4 million each year. The carrying cost on a $144 million investment is $8-12 million every year. That means, assuming each conventioneer spent $300 a day, it would take the tax from an additional 235,000 hotel nights from conventions, just to break even. That’s beyond unbelievable. The only idea these guys had that is even less believable is that tourists from 3rd world Commonwealth countries were coming here to spend millions on the Commonwealth Games. These ideas are just plain nuts.
Tim must have been feeling a little Glenn Becky again when he was writing this piece.
It’s completely unprofessional and misleading for you to state that the Province is thinking about subsidizing the office tower. Aren’t you tired of having your editors publicly apologize on your behalf to avoid law suits yet?
It’s written as plain as day light in every piece of official literature that the office tower is privately owned and financed by Rank Inc. The proposed funding is for the convention center only.
If Mr. Ramia and Rank were sure that this project would make profits they wouldn’t need our taxes to go ahead. Let’s see what happens if our government asks them to act like real free market players. Taxpayers must not end up paying the price tag for this P3 disaster project of a convention centre. We’ve already seen it in the case of the P3 schools, when the private sector ‘partner’ makes windfall profits and the majority pays.
The developer can still go ahead and build his hotel and office building without a publicly funded convention centre. Only, he will not be allowed to go above the restricted height of 7 and 9 stories. For some reason the city allowed him to double the heights if there is any public funding, for a convention centre.
People who come to conventions rarely stay more than 2 days and usually do not bring the family. They usually do not plan a vacation around a business trip. None of the reports have any evidence to support such assertions. Convention centres do not put a town or city on the map and don’t not create significant spin-offs for the local economy. P3 convention centres are ponzi schemes where the tax payer is on the hock.
Mr. Premier, please don’t waste our taxes on this nonsense project!
I agree with rapallo. If the convention center has a good, sound business case, why doesn’t the developer go ahead and build it without our funding?? I know they cannot exceed current height limitations without a building which partially serves public interest, so the choice seems obvious to me: build your half-sized double tower with office and hotel, or build full sized with the financial burden of the convention center taken by the developer.
The public subsidy is height.
Without the convention centre, Ramia can’t build as high. Those are the rules with HRM By Design– with the Convention Centre, they can build higher. Without, not. Simple as that.
Glad you decided to clarify, since your article deliberately implies that part of the $100 million of ‘tax payer dollars’ is going to subsidize the office tower.
If your argument is about height, why isn’t that mentioned anywhere in the article?
P.s. Checked on your claim. The height bonus in HRM By Design guidelines is not tied to the convention center. He can keep that space as a public parking lot and still be able to claim a bonus.
http://www.halifax.ca/capitaldistrict/docu…
The Ramia site was specifically exempted from HRM by Design height limits:
“Council should be mindful of the possibility that the partnership negotiations may not be completed for any number of reasons. The project should therefore not receive carte blanche approval allowing it to be constructed as proposed without the convention centre. If the partnership agreement for the creation of a new World Trade and Convention Centre is not approved for the site, the owner has indicated his intent to develop a retail, hotel and office complex on the lands. The project, without the convention centre component, should receive the same treatment and consideration that any other project or property will under HRM by Design. “
http://www.halifax.ca/council/agendasc/doc…
Repeatedly, at the council approval of the convention centre exemption, councillors made clear that the added height was allowed *only* because of the convention centre complex in the basement. Even though the convention centre will be below grade level, the additional height for the private-profit towers is granted in exchange for the “public benefit” of the convention centre.
Regardless, it’s disingenuous to separate the convention centre from the towers above. They are one project, conceived that way, planned that way. The public money is indeed a subsidy to a private business, no matter how you parse it.
I don’t understand, are you re-asserting that the public money is, in fact, subsidizing the office tower?
The blocks that the Convention Centre proposal would occupy are in Upper Central Downtown (precinct 6) of the Downtown Halifax Secondary Municipal Planning Strategy, the result of HRMbyD for downtown.
You can see on the Map 4, page 83, that the maximum pre bonus height for each block is 22 meters. So the most you would see would be 7 3 meter storeys, though probably more like six storeys. Hotels and residential usually need less space per floor than offices.
Policy 18 of the SMPS says “HRM may consider a variety of public benefits when assessing site plan approval applications seeking a height bonus in exchange for the provision of public
benefit”
So if the property had a lot of bonusable items – some low income housing, for example, it could gain up to 28 meters more in “bonus height”. This is outlined on the bonus Map 5 on page 84. So if these were 3 meter floors you’ed be looking at 13 storeys max, but really a modern building is going to be more like 4 meters, so you are looking at 10 storeys.
What Tim is talking about is Policy 89. It reads in part “Notwithstanding the foregoing policies, where a proposed amendment addresses unforseen circumstances, or is deemed by Council to confer significant economic, or social, or cultural benefits to HRM beyond the bonus zoning provisions of this Plan, such amendments shall be considered by Council at any time regardless of
the schedule for reviews.”
Policy 89 overrides the 40 meter height restriction and is designed to be the extra big bonus for someone doing something like the Convention Centre. With out it, 10 stories. With it, 17 stories. That is a hell of a subsidy. Then you pile in $100 million dollars for the Convention Centre. Even more of a massive subsidy.
It frustrates the hell out of me when pro-WTCC2 supporters say “only a couple dozen people support the “Save the View” people”. That may be true in terms of facebook support, but thousands of people participated in HRMbyD, the consensus policy document on how to move downtown forward.
I thought then and think now Policy 89 is a horrible mistake, but if we are going to use it to override all the good work on height and design in HRMbyD can we at least call a spade a shovel, and admit that 7 extra stories of height is in fact a subsidy?
You can read the SMPS here: http://www.halifax.ca/capitaldistrict/docu…
Longwalker: I believe your statement represents the sentiments of many Nova Scotians. “If the convention center has a good, sound business case, why doesn’t the developer go ahead and build it without our funding??”
Unfortunately, despite many public attempts to clarify this, it seems a good many people still seem to think that convention centres are supposed to be profitable. They aren’t. They exist to bring people to a city who spend money and create other positive effects. Nobody is pretending they are profitable by themselves. That’s why private owners, such as Rank, wouldn’t do this without public investment. This isn’t just Halifax making excuses. A quick survey of convention centres across canada reveals the same thing – government operated, not private.
Metro Toronto Convention Centre – Crown corporation
Vancouver Convention Centre – Crown corporation
Ottawa – Agency of the Government of Ontario
Calgary – Calgary Convention Centre Authority
Edmonton – Managed by Edmonton Economic Development Corporation,
Winnipeg – volunteer Board of 15 Winnipeg citizens, through provincial legislation under The Convention Centre Corporation Act.
As the people of Halifax’s Trade Centre have been saying – it’s about the spin-off impact more than anything. Again, this is not Halifax making excuses. See, for example, Winnipeg Convention Centre’s mission:
The prime function of the Winnipeg Convention Centre is to generate economic benefits for the City of Winnipeg and the Province of Manitoba, through the efficient operation of a unique, superior, multi-use facility, which attracts international, national, regional, and local events.
Yes, the almighty tax dollars are sacred. But far too many Nova Scotians get up-in-arms the minute we might invest in infrastructure that has the power to actually increase our tax revenue (and maybe someday lighten the burden on taxpayers).
In order to assist where I can with reading comprehension I will draw your attention to the last two sentences of this article which neatly summarize the point being made:
“If the future of the existing TCL building isn’t incorporated into the business plan for a new convention centre, then we can simply laugh the proposal off the stage and move onto some substantial issue where we can have a productive and informed debate.
The point is that a new convention centre, being sold as the salvation of downtown Halifax, may actually pull the rug out from under the market, making the situation downtown even worse than it is now.”
You can tell this is the point the writer is trying to make because he says “The point is…”. That’s usually a pretty clear sign that this article – like the entire debate – is not about height or heritage or tax spin-offs or office tower subsidies. The point is that this debate is about whether or not a second convention centre is a good thing or not. Does it make the future better or worse for Nova Scotia?
Will Halifax be a better city if it has a public debt financed, money losing, bureaucracy run, pin-stripe pleasing, second convention centre in the basement of a hotel in the very heart of our downtown core?
The 1600 or so people who have been coaxed and cajoled (and let’s be frank, bought) into believing the answer is yes simply have not put forward any information that would indicate to the other 939,000 of us that this plan would be preferable or more economically stimulating than simply using $200m in new public debt to offer free beer to the world.
What could be better than a second convention centre? Seriously, I’m asking.
The arguments used to support building a second trade centre could be used to support literally any idea but just for fun here’s a dozen ideas about what else we could do with the (likely) $200m or so that appears to be burning a hole in our collective pockets:
1/ Move the airport closer to the city saving over 10 million a year in wasteful transportation and energy costs and hundreds of thousands of wasted person-hours of travel time.
2/ Underwrite student debt for the top 20% of all students to free them to build a better Nova Scotia
3/ Create mirco-financing to create 10,000 new small business jobs
4/ Create an entrepreneurship accelerator to start-up 400 new small businesses
5/ Teach kids math, civics and business so the next generation will have a real entrepreneurial class
6/ Build an indoor water park downtown that will redefine our vision of Halifax in Nova Scotia and around the world
7/ Build a hub-based transit system that would organize HRM into a constellation of small walkable communities
8/ Buy enough solar cells to power Nova Scotia
9/ Import enough entrepreneur immigrants to kick-start a whole new economy
10/Create a Nova Scotia Youth Corps that would pay 4000 kids for four years work in cash and university years tuition to improve Nova Scotia and help out where we can around the world.
11/ Re-establish a community-scaled farm food processing system that could feed Nova Scotia year round with hundreds of millions of dollars left to export.
12/ Reduce the HST by 2% for a full year to stimulate the economy.
And of course crazy idea 13… keep the money in pocket and let the free market take care of whatever real demand there is in Nova Scotia for convention space.
I’m sure there’s lots of other new ideas out there too that look more like tomorrow and a lot less like yesterday, but they will never get through if we go in this convention-al direction. And that is the worst aspect of all of this.
Ask yourself – ten years from now, do you want to live in a town dependent on the scraps from the table of… well, whoever you imagine might still be going to conventions in places like this ten years from now. It’s almost too dreary a vision to put in one’s mind.
John Wesley Chisholm
Musquodoboit Harbour
Report from CBC on 15.9.2010 – Charlottetown convention biz down 20% this year, this on top of a decline from the year earlier.
Kicker,
You obviously haven’t done much to inform yourself regarding the generally accepted business case for civicly funded convention centers. Yes, convention centers are money losers…they almost always require public capital to boot-up and they generally lose gobs of money on an operational basis going forward. The economic argument is made that convention centers attract visitors from out of town, who stay and spend money and generate economic activity; however, as Dr Heyward Sanders aptly presented during his recent visit to Halifax…this argument only holds water if the visitors come from far away…thus bringing “new” money into the local economy, otherwise, you end up spending *alot* of public money to simply churn money around the provincial economy. This is why it is important to consider the new convention center’s ability to attract (ideally) international conventions or large conventions from out of the province or the maritimes region. As Dr Sanders pointed out, this is an increasingly tough proposition due to two important points:
1. Many major cities in the US and Canada have recently built or added to their convention centers. The supply is large and the market is becoming very competitive.
2. The business of large conventions seems to be in decline in NA, regardless of the effects of the recent recession. Check out the numbers for large convention centers in Boston (whose convention centers is beautiful and makes our new proposed convention design look like a real turkey, imo) or Vancouver. The numbers are not pretty and show a downward trend.
And don’t get me started on the shockingly optimistic numbers that have been presented in consultant’s reports used to justify a business case for Halifax’s center. In my opinion, there is no believable business case for throwing 150+ million bucks of *public* money into a basement convention center…but if you think there is…then don’t you dare complain about high municipal and provincial taxes in future.
NoOne