The debate is over: it is abundantly clear that the NDP government has decided to move forward with the proposed convention centre complex in downtown Halifax. Those opposed to the proposal, myself included, have lost the debate.
The details of the proposal were spelled out this afternoon via a press conference at the World Trade and Convention Centre. Press conferences are always ridiculously scripted affairs giving one-sided presentations, and this one was no exception; infrastructure minister Bill Estabrooks played emcee while department staffer Jane Fraser and Trade Centre Limited CEO Scott Ferguson sped through a PowerPoint presentation of the specifics. Ferguson’s unquestioning support was expected, but the lavish praise gushed upon the project by Fraser, an employee of a government that coyly says it hasn’t yet made up its mind, leaves no doubt that in fact Estabrooks and premier Darrell Dexter are on board, and are merely trying to limit intra-caucus conflict.
But deciding to build a convention centre and actually building a convention centre are two different things.
I’ll leave it to other media outlets to regurgitate the deets of this afternoon’s dog and pony show—they unveiled a website!— and I’ll of course drill down into various aspects of this story into the future. What I find most interesting today is the prospect that government support notwithstanding, the project may not get built.
First is the issue of government financing. Fraser confirmed the numbers I first reported last week: The public portion of the project will cost $159 million, with the federal government paying $46 million upon completion of the project in 2014, and the city and province splitting the difference, amortized over the 25-year life of the program. (I was told $160 million last week.) Additionally, there’s a $2.9 million annual cost to Trade Centre Limited ($1.2 million for “facility upgrades” and $1.7 million for taking out the garbage and spraying for bed bugs), which will presumably be covered by all the additional revenue a bigger convention centre brings in, but hey, if not, there’s always the special Fred MacGillivray bailout fund at Province House.
But, says Estabrooks, no one has actually asked the feds if they’re even interested in ponying up that initial $46 million [Insert your snide comment about Harperland disdain for the NDP-voting culture of defeat Haligonians here], so it’s anyone guess if that dough will ever show up.
There’s no doubt that the city’s director of financial wizardry, Cathie O’Toole, can wave her wand and summon up $57 million amortized over 25 years without breaking a sweat. And Halifax council will probably initially buy into the notion that hotel tax receipts, which is where a lot of the money will come from, aren’t “real” taxes, but the bevy of community arts groups that also rely on those hotel tax receipts might have a different opinion. So, it’s by no means certain that the city side of the convention centre financing scheme is any more solid than the federal side.
On the private side of the of the convention centre complex plans sits Joe Ramia’s Rank Inc. The four-year construction price estimate put forward at the press conference includes a financing charge of $19 million as part of the $159 million public portion: Rank has to build the centre first, and then get the public cash, so the $19 million reflects the cost of Rank’s covering a $140 million construction project for four years. That is money the taxpayer will be reimbursing to Rank, said Fraser, based on the rates available to Rank. I’ll leave it to people smarter than me to figure out what Ramia’s loan costs are.
But keep those financing costs in mind as we consider the rest of the complex—the hotel tower and the office tower rising from the convention centre. Beyond a rather vaguely wide target of $400-500 million for the entire project, it’s not clear what kind of money Ramia will have to come up with, but whatever the exact figure is, he probably doesn’t have it sitting in an offshore bank account; he’ll have to borrow it. And judging by the Twisted Sisters, Waterside Centre and Alexander buildings—images of which are sitting as masturbatory aids on the skyscrapercity.com bulletin board, but which don’t exist anywhere in the real world—securing financing for downtown Halifax high-rises is a bit of an issue nowadays.
“What happens if Rank can’t get financing?” I asked Fraser.
“Then there’s no project,” she replied.
According to a schedule Fraser provided, all these details are to be settled by January 14, 2011, just three months from now, when the province and Rank will sign a contract. And the “financial close” date is February 28, less than five months away.
That’s a remarkably tight timeline. We’ll see, I guess, but it’d be hilariously ironic if, TCL having won the political debate, the convention centre fails because economic reality raises its ugly head.
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This article appears in Sep 30 – Oct 6, 2010.
Today’s government presentation was vapid, disingenuous, jargony and in places just plain wrong.
But the truth is out.
The pitch is “no money down, no payments until… whenever”. The government was not working out how this proposed second convention centre would create a healthy economy – nothing of the kind – they were working out if the economy was healthy enough to support this new and additional burden.
By amortizing it well in to the days when most of us might be hoping for Grandchildren they’ve found a way.
Parasites never want to kill their hosts – they just drain everything they can short of that. It’s a calculated science.
Down the road – *if* this project does somehow go ahead, and my gut feeling is that if it does the good ol’ taxpayer will be chipping in more cash – we need to keep the original supporters of this project accountable. Translation: archive their current full-of-shit website for when they start to change it.
The near-lies that they present at https://conventioncentreinfo.com/about/faq… are stunning in their brazenness. CBC in a note yesterday used one estimate from the FAQ, that 12,000 jobs would be created over the first 10 years. The FAQ also says that the overall construction impacts will be 4,900 jobs, and that the 10-year total economic impact will be 27,000 jobs. For the latter two, for any level of meaningful context, you’d have to dive into linked Gardner Pinfold reports, but the government and Trade Centre Ltd know that exactly 99 percent of people will never do that. For the first number the website doesn’t even provide justification – it just says “it is estimated”.
To put the jobs estimates in perspective, HRM states that Burnside Business Park has about 15,000 employees. *If* you read the Gardner Pinfold reports you’d also find that where the Convention Centre FAQ says “job” it really means “person-year” under the most optimistic Gardner Pinfold scenario…and furthermore these are TCL numbers that combine direct and spin-off employment.
In other words, in their rosiest scenario, they estimate maybe 2,700 jobs per year over a 10-year period. In no uncertain terms the wording they used in the website FAQ amounts to lying, because that in no way is the same thing as 27,000 jobs (even if you stick in the weasel qualifier “10-year impact”).
It’s an entirely different story as to whether this new WTCC would generate one fifth as many total jobs as the Burnside park has employees. Different matter entirely, and while I happen to think that they are incredibly optimistic (as in, on strong drugs) this is another problem.
For my part I’m contacting my MLA to see about getting some of the wording changed on that website.
This has turned into a disgusting charade. The bullies in Halifax have won and the hard working taxpayers have lost.
Politically, we’ve been abandoned by our so-called Opposition Parties.
If this is a done deal, I hope Mr. Epstein and a group of NDP mla’s leave the NDP and form their own splinter party. It would only take a handful of Members to remove Dexter’s majority and hold the balance of power.
Here’s my tally based on the numbers straight from the Herald’s editorial page
Operating costs are are a lot more than a million!
Here’s the math as added up directly from the editorial page of this paper:
$46.7 m from the federal government
$10.2 m per year for 25 years from the the province and Municipality
$2.9 m per year for 25 years for maintenance – also from the provincial and Municipal government
Add to that an estimated operating loss of $1.6 m per year (probably low… this is what the old centre has been losing on average per year for the last 25)
And add the accumulated deficit already on the books at Trade Centre Limited of a little over $40M (if they were a real business they would have been bankrupted long long ago.
Plus the continuing loss from the current trade centre… maybe they can get that down to a million a year. ($25m total)
I’ll leave it to the reader to add in the cost overages that will inevitably come on the project and the amounts that will be spent “marketing” the excess capacity and empty halls PLUS the hidden costs like giant golden parachutes to executives, political “donations” and “complimentary” perks.
So that is a total estimated 25 year cost (before financing charges… we don’t actually have the money so it will be added to our accumulating debt of:
46.7 + (25 x 10.2) + (25 x 2.9) + (25 x 1.6) + 40 + 25 =
$479.2 million cash loss from the wealth of private Nova Scotians.
I think it would be more than fair to say $500m in our lifetime sunk into this corruption.
Some economic engine!
I recently organized a symposium at the current convention center, where I had to cram 100 people in a room made for 80 due to lack of space. I work for a local non-profit association and I expect to be able to conduct business and host meetings in appropriate facilities in the city where we are located.
The scarcity of space is an issue that plagues the convention centre all through the convention season in Halifax. If even small businesses in the local community are struggling to find appropriate space in the current convention centre, I hate to imagine how much business they’re loosing from outside the city.
This convention centre needs to be treated like any other community facility investment. It’s a place that can host events by any community group, not just businesses. We invest in libraries, hockey rinks, community centres, and other projects in the city all the time… and they all have similar cost/benefit arguments to the convention centre – where the costs are clear but the benefits are largely understood (and accepted) to be social, not financial. Most people accept this, even if that rink/library/multiplex facility is not in their geographical area or doesn’t cater to their specific interests.
It’s just not fair to turn around and look at the convention centre, which is obviously not in the geographical or interest area of most opponents, and apply a different measuring stick when it comes to the benefits side of the analysis. Just because it will benefit a different slice of the community doesn’t render this an abomination.
If people are going to oppose the convention centre and argue that it doesn’t turn a profit, then why not apply the same argument to the new library? it can be easily argued that libraries are a relic of the pre-Internet era, when information was concentrated in a few select locations that everyone had to go to if they wanted to sip from the well of knowledge.
The Library is a cost center that provides a service that the majority of people don’t use and can easily obtain through a variety of alternatives. Renting old DVDs, reading books, and flipping through magazines can be done online or through a ton of other mediums and providers. Using subsidized space for community groups to meet can be done by subsidizing existing meeting spaces (that are actually equipped for meetings, like convention centres) rather than building a library and using some of its rooms as makeshift meeting spaces.
But, we support that library investment (nearly $60 Million split between the Province and HRM). We support it because we acknowledge that there are intangible benefits to having a public library. There were some questions about how this library would contribute to a healthy economy, but the majority accepts that the contribution can’t be directly measured in dollars and cents on a balance sheet.
So, let’s not get lost in the minutia of the numbers and instead look at the overall impact. Is it positive or negative? Will there be more jobs created? Yes. Does it matter if it’s 1000 jobs or 2000 jobs? Not really. Will the new center meet the needs of the community better than the old centre? Just ask the community that uses it or plans to use it. Is being able to bring more out-of-towners to Halifax a good or a bad thing for the economy? It’s a good thing.
Is having an indoor Water Park downtown a good idea (@JWC)? Absolutely. And all the same people who currently support the convention center will also support government assistance for a Water Park downtown. So when that proposal comes around, you can at least count on my support.
Nova Scotia has the highest sales tax in the Country, and the second highest income tax rates after Quebec. We are already getting charged up the nose to live in Halifax and have very little to show for it. For the high cost of living here, you’d think we have some urban public structures that we can point to and say “at least we have this world-class stadium here” or “look at that Guggenheim Museum by the waterfront. It costs money to take care of that!”
My opinion is that if it comes down to it, I don’t really mind paying a few extra dollars on top of my already sky-high tax bill, as long as it goes to something other than miles of asphalt throughout the Province or subsidizing commercial tax rates for suburban big box stores. And if that Water Park can create a few extra jobs and make a little money, that will be nice too.
And the new twist? The province wants the city to buy the old centre (to be used as what, who knows) and to partner in the new one. The scary part is that the knuckleheads on council will probably fall for it. Everybody hold on to your wallets and purses tight.
Issmat, I’m with you on the “miles of asphalt throughout the Province or subsidizing commercial tax rates for suburban big box stores”, as in, neither one of us wants to see too many tax dollars being spent on those things. Just goes to show that any two people can agree on some things.
I understand what you’re saying about cost centres. I don’t think any of us expect every building or service funded in whole or in part by public money to turn a profit. We don’t expect that from city sports facilities, nor from libraries, nor from public transit, nor from schools. And I do accept that a convention centre doesn’t have to pay for itself directly either.
I just don’t think we need *this* convention centre. Let’s face it, Halifax isn’t, hasn’t been, and will never be in the Top 100 of destinations for conventions…we’re lucky if it’s in the Top 500 for North America…and apart from a facility that can cater to modest regional conventions, the occasional national one, and keep local event organizers happy, we don’t need more. The current centre is adequate.
People don’t go to conventions because the convention centre is awesome. They go because it’s in a city that the majority of folks would love to visit.
While we’re at it, let’s rethink the kind of buildings we propose to keep or put into the core downtown area. Big monolithic buildings that attract thousands of people for events are not really appropriate there, and that was evident decades ago.