We have touched on the documents behind the convention centre proposal before. Part 2 and Part 3 of this series looked at the new jobs and tax dollars that are supposed to come with a new convention centre—what the consultants’ reports say the benefits will be, and how centre supporters overstate these benefits. Those earlier articles assume, for the sake of argument, that the numbers in the documents are valid. But in this post, the documents themselves come under scrutiny, and in the final analysis they are essentially worthless. They appear to be written for the precise purpose of over-selling the convention centre.
The wrong sized convention centre
The documents I examined are all found on the website Trade Centre Limited has created to argue for the convention centre.
First is a “Phase 1 Report” compiled by Criterion Communications, a Vancouver firm, at the request of TCL. This report, finalized on April 9, 2009, examined the need for a larger convention centre. The president of Criterion Communications is Rod Cameron who, Criterion’s website explains, is the “Executive Director of Convention Centres of Canada and Director, International Development for the Brussels-based International Association of Convention Centres.” He is, in other words, in the business of pimping convention centres. Supporters would no doubt say that bringing in someone with Cameron’s vast knowledge only makes sense; I’ll simply note that there’s an implicit conflict of interest and leave it at that.
Let’s just cut to the conclusion of the Phase 1 Report (page 7):
A preliminary estimate based on the apparent business opportunity and comparisons with other Canadian centres suggests that a facility designed to accommodate 1800- 2,000 delegates and configured to be able to efficiently manage multiple, simultaneous events would be justified. In general terms this would roughly equate to a facility of between 150,000 and 170,000 square feet of rentable function space comprising a combination of exhibition / multi-purpose space and meeting, ballroom and pre-function spaces. This would in turn suggest a minimum overall building size of some 300- 340,000 gross sf, assuming a 50/50 net/gross space ratio which is again typical.
So, according to Criterion, what Halifax needs is a convention centre with 150,000-170,000 square feet.
That size centre becomes important in the next study commissioned by TCL, the HLT Advisory Assessment, produced by HLT Advisory, a Toronto firm whose managing director is Lyle Hall. “Prior to forming HLT Advisory in 2005 with Rob Scarpelli, Lyle was the National Director of KPMG Canada’s Hospitality, Leisure & Tourism practice, based in Toronto,” explains his website. At KPMG, Hall produced the projections for the new Vancouver convention centre, which has famously failed to live up to KPMG projections.
In Halifax, HLT studied the market potential for the larger convention centre and prepared “an order of magnitude revenue and expense estimate” for it. The HLT reported was submitted in May, 2009, and was based on the projected need outlined by Criterion. As noted on page 41 of the HLT report:
While the projections [of the potential increase in the size of events to be held in the larger convention centre] are based on exhibit hall size, a key assumption is that meeting space will also be available within the expanded WTCC so that total meeting space, as identified in the Phase 1 report in the order of 1:1, with an appropriate array of break out rooms.
[emphasis added]
In other words, all the projections in the HLT report are based on a convention centre of between 150,000 and 170,000 square feet called for in the Criterion report. And, in turn those projections are brought forward into four subsequent reports, which we’ll get to soon. But the actual proposal for a convention centre—the proposal we have before us now—has just 120,000 square feet.
So, all the studies are looking at the potential increase in business, the potential increase in delegates travelling to Halifax and the potential economic and tax benefits of a convention centre that’s from 25 to 42 percent larger than the convention centre we’ll actually end up with, should it get built.
Clearly, a larger convention centre is going to be able to hold bigger conventions and more delegates than a smaller one, and more delegates coming to Nova Scotia should mean more “spinoff activity” in the economy. But none of the reports examining the supposed benefits ever mention that they’re basing their conclusions on a convention centre that’s much larger than the one we’re talking about.
We’re being told about all the supposed benefits of a golden convention centre, but they’re only giving us an aluminum convention centre. It’s classic bait-and-switch.
But wait: it gets worse.
Ballooning delegate numbers
Based on that larger 150,000-170,000 square foot convention centre that is not in the proposal endorsed by premier Darrell Dexter, HLT made some pretty specific projections about how many conventions the new convention centre would attract, and how many delegates would attend those conventions. HLT summarized those projections in a table on page 42:
This table is sloppily constructed—the “delegates” numbers are actually “average delegate per conference” and so the subtotal and total figures are confusing. Also, the “future” figures reflect not the full number of conferences and delegates going to the new convention centre, but rather the incremental increase above the existing convention centre—the actual full future figures are the subtotals and totals.
Therefore, the real total delegate figures are found by multiplying the number of events by the average delegate figures in the subtotal and total lines, with these results:
HLT explains the “projected stabilized year average” like this:
The projections [in the table] reflect a stabilized operating year. Other Canadian convention centres have experienced a “honeymoon” period after opening as pent up demand and anticipation of a new facility combine to create greater interest. Therefore for modelling purposes the stabilized year for convention activity should be viewed “Year 4,” with Years 1, 2 and 3 generating 85%, 115% and 110% of Year 4 activity.
Trade and consumer show event load projections for the stabilized year are applicable for Years 1 through 3.
So, according to HLT, once the new convention centre is open, there will be an initial big burst of conventions which will settle down in the fourth year of business. Beyond that, HLT makes no comment—Year 4 is the “stabilized year,” and HLT makes no predictions of future increases in business beyond Year 4.
But the next document tells a different story.
The province and HRM jointly commissioned Deloitte, a New York-headquartered firm, to look at the business case for the proposed convention centre. Deloitte delivered the report July 12, 2009.
Deloitte also came up with some delegate projections, and while nowhere in the report does it state exact figures, there is this chart on page 21:
Notice the increase from Year 4 to Year 10 operations. Where’d those numbers come from? The chart itself says the source is “TCL Attendance and Economic History – 1997-2009” and the “11 Year Highlights and ESD Economic Impact Report 2008”—but neither document is accounted for on the TCL website.
The text accompanying the graph gives this explanation:
The data used by the ESD, was based on total events and attendance from the 2006 study reallocated into categories on the basis of the 2002/03 to 2006/07 WTCC actual historical figures for events and for delegates. This is the data that underlies the economic impact analysis. The projections are provided for year 4 and year 10 of the proposed expanded convention center. Year 4 of the operating period represents a “stabilizing” year. This is due to the fact that other Canadian convention centers have experienced a “honeymoon” period after opening as pent up demand and anticipation of a new facility combine to create greater than normal expectations. It is expected that years 1, 2, and 3 would generate approximately 85%, 115%, and 110% of year 4 event activities respectively. Year 10 was the last year of the pro forma by the ESD.
So, for past history they used numbers provided by Trade Centre Limited. For the Year 4 figures they took numbers (and used the exact text) of the HLT report. For the Year 10 figures they used “the pro forma” created in-house by the Economics and Statistics Division of the department of Transportation and Infrastructure Renewal. That is—the Year 10 projections, which look to be about 25 percent higher than the Year 4 projections—are not based on any market analysis or business case, but rather created out of whole cloth, apparently just for the sake of adding an inflator.
But that imaginative Deloitte projection is carried forward into the next document, an economic impact study of the proposed convention centre, conducted by Gardner Pinfold, a Halifax firm, and delivered in December 2009.
The economic impact projections of the proposed convention centre boils down to this question: if this number of delegates came to Nova Scotia and each delegate spent this amount of money, what would be the impact on the provincial economy? It was not up to Gardner Pinfold to determine the number of delegates or the money spent per delegate—those figures came from the previous studies.
The first Gardner Pinfold analysis (as we’ll see, there is a second) pulls a lot of information straight out of the Deloitte report, going so far as to plagiarize part of the introduction, word for word, without attribution (compare the second paragraph on page 12 here with the second paragraph on page 1 here). That heavy borrowing is carried over to the delegate projections. As explained on page 14:
The projections for attendance presented by Deloitte are the foundation for delegate impact analysis. Deloitte indicated that other Canadian convention centres were reporting delegate attendance in the first three years that was 85%, 115%, and 110% of the stabilized year levels. They provided stabilized year four estimates for the proposed WTCC in Halifax as well as year ten estimates. Based on this information, the following figure shows the combined delegate attendance for each of the origins that is expected over the first ten years after opening. The estimates for years 5 to 9 assume straight-line trends between the stabilizing year and year ten of operations.
And it is illustrated by this chart:
Also like Deloitte, Gardner Pinfold never explicitly states what the delegate number is, so we’re left eyeballing a chart, trying to best guess what the numbers are. But whatever the delegate numbers, Gardner Pinfold uses them to calculate exact economic impacts.
Before we get to those economic impact projections, let’s pause for a moment and consider what’s happened so far. Criterion issued a report saying there should be a 150,000-170,000 square foot convention centre. Then HLT said that that-sized convention centre would accommodate a certain number of conventions and delegates, a figure that would stabilize in four years. Next, Deloitte took an arbitrary inflator supplied by the Economics and Statistics Division and came up with a higher number of delegates for 10 years out. The next step was for Gardner Pinfold to use the Deloitte numbers to calculate the economic impact—that is, the economic impact from arbitrarily inflated delegate numbers attending a convention centre 25 percent larger than the one proposed.
Gardner Pinfold addresses the size issue on page 2:
The WTCC II will be a world-class facility that contributes to the sustainable future of downtown Halifax and creates a contemporary public space unique to the region. The detail set out below is illustrative. The final configuration will be set through the formal request for proposal process. The impact analysis in this report flows from this illustrated information. Actual impacts associated with the facility will correspond to what is actually built.
[…] The net usage space would be about 150,000 sq. ft….
There is a chain of delusion through the reports, with a bad assumption (the wrong sized convention centre) getting incorporated into calculations that are fudged, then fudged again. But what happens next is even more remarkable.
Trade Centre Limited’s fictional delegate count
Six months after Gardner Pinfold’s first economic impact analysis was submitted, Trade Centre Limited created its own report “Market Projections For A Proposed New Convention Centre,” completed in June 2010. This document forecast wildly increased delegate numbers—far larger than the numbers predicted in the consultant reports. Then, TCL gave the new numbers back to Gardner Pinfold to recalculate the economic impact based on “updated delegate projections.”
To say TCL’s projections are improbable is an understatement. More disconcerting, some of TCL’s projections are grouped in categories that are incompatible with categories used in the consultants’ reports, so it’s impossible to compare the two side by side. But even where the categories agree, the numbers don’t.
Let’s compare TCL’s base year event figures with those of HLT, above:
HLT calculated its base year numbers on the average annual events in each category from 2006 through 2009—figures HLT obtained from TCL; but TCL used event numbers from just one year—the 2008/09 fiscal year, which was evidently more successful than the previous four years. So we have different starting points. HLT says there two international conferences a year in Halifax, TCL says there are seven. HLT says there are 14 national conventions a year in Halifax, TCL says there are 24, which it splits into two subcategories. HLT says there are 15 local/regional conventions; TCL says there are 64 provincial and regional. Apparently, TCL is using a broader category of “events” rather than “conventions,” even though the consultants state that they are using the only relevant gatherings. (“Local events and associated delegates will be excluded from the economic impact analysis since these are not considered incremental to the provincial economy,” Gardner Pinfold says in a footnote.)
The TCL delegate projections are found on page 21:
We can now bring in TCL numbers to the HLT delegate chart we created above:
Recall that HLT made delegate projections based on a 150,000-170,000 square foot convention centre, and that HLT determined Year 4 is the “stabilized year”—that is, it forecast no increase in delegates beyond Year 4.
But when TCL made a projection for Year 4 in a 120,000 square foot convention centre, it came up with a projected delegate figure that is 82 percent higher—nearly double—than that forecast by HLT.
TCL’s Year 10 projections are even more outrageous. Eyeballing the Gardner Pinfold chart that includes the arbitrary Deloitte inflator to Year 10, we see a Year 10 figure of somewhere around 120,000 delegates (the total 250,000 minus the excluded 130,000 “local event” delegates); TCL’s Year 10 number, however, is 176,390— about 46,000 greater than Gardner Pinfold’s figure, and 120 percent greater than HLT’s “stabilized year” figure—two-and-a-quarter times as much.
Nowhere in the document does TCL note these discrepancies, nor does TCL give any explanation for how its numbers were created.
Recalculating the economic impact
Having produced its greatly inflated numbers in June 2010, TCL gave them to Gardner Pinfold to run a second economic impact analysis, which was completed the next month, in July 2010.
Reading the second Gardner Pinfold report, you can almost hear the pain in the voice of the author as he or she dances around the elephant in the room—that they’ve been handed a bunch of inflated numbers that aren’t supported by any evidence: “This study extends the assessment of economic impacts attributable to WTCC II conducted in the previous study by including the economic impacts resulting from direct expenditures of updated delegate projections, event planners, consumer and tradeshows and smaller local events remaining in the local economy…The economic impact analysis in this report is based on the estimated number of events and subsequent direct expenditures attributable to delegates, planners, and O&M projected over the 10-year period, as reported in the Trade Centre Limited (TCL) report, Market Projections for a Proposed New Convention Centre: 10-Year Projections By Market Segment, 2010.”
The differences between the first and second Gardner Pinfold reports are profound, and I will look at them in more detail in Part 5 of this series. For now, though, I merely want to give an idea what TCL accomplished by creating its own inflated delegate numbers.
Gardner Pinfold was in an unenviable position, having to rework numbers it had already compiled. The company never lies—so far as I can see, its calculations are reasonable, given the assumptions it had to work with. And never mind that those assumptions changed because of the new TCL delegate numbers—Gardner Pinfold never assesses whether the changed assumptions are warranted.
Still, for whatever reason, the two Gardner Pinfold reports aren’t directly comparable—the firm never says “here’s what the first economic impact report said and here’s what the same numbers are now that we used the new delegate counts.” But if we dig through the two reports we can find two charts that give an indication of the effect of the new TCL numbers.
From the Gardner Pinfold’s first economic impact report comes this synopsis (page 22):
Then, after it ran the second economic impact report using the revised delegate counts provided by TCL, Gardner Pinfold has this synopsis (page 6):
As compared to the first Gardner Pinfold report, the second report shows an economic impact that’s about two-and-a-half times bigger.
Let’s recap: We had four consulting firms doing an analysis on the need for and potential economic impact of a proposed convention centre, basing all their projections on a 150,000 square foot convention centre, as opposed to the 120,000 square foot convention centre that’s proposed. Along the way, the firms added in an arbitrary inflator that made the future delegate count much higher than was justified, and then that figure was used by Gardner Pinfold to forecast the economic impact of the convention centre. But Trade Centre Limited evidently wasn’t happy with even those inflated results, and so did their own in-house delegate projection that was more than double that projected by the consultants; those higher figures were then given back to Gardner Pinfold to run a second economic impact analysis that showed a supposed economic impact two-and-a-half times the first.
And convention centre supporters expect us to take all this seriously.
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This article appears in Oct 21-27, 2010.
Wow, you and the Save the View types are suddenly experts on the convention biz. What are you all doing writing for free weekly newspapers, producing art films, and planting organic heirloom tomatoes? You ought to all go into business together since you all know so much about the industry after 2 weeks. Imagine what you could do once you actually learn the business.
It would be nice to see CC supporters read through this and try to refute what has been written. This is a review of the reports that form the basis of the justification of the CC. If this review is in error, please point out how. Facts and figures please.
Bo,
I’m an engineer and I oppose this convention centre. Is that adequate qualification, or do I need to attend business school before I’m allowed to comment on the waste of my tax dollars? It only takes high school mathematics (or perhaps just a functioning calculator) to see that the numbers simply don’t add up.
I don’t oppose a new convention centre in general. I think the development would be positive for the city. But if it’s such a great business deal, why does it need a huge public subsidy to be built? There are a lot of problems in Halifax that could be addressed with this money instead, all of which would help grow the city and provide return on investment. This convention centre will not provide the growth required to justify the initial investment and annual cost.
It’s unfortunate that the debate gets muddled by the Luddites who want Downtown Halifax to look exactly like it did in 1842, but you have to understand that some of us just oppose throwing all our eggs in one basket and assuming this is the solution to all our problems. This is a huge gamble, and we can’t afford to rely on bad information before we bet with all our chips.
I hate living here! The constant bickering, the constant battle between the forces of progress and those that oppose it. 10 years I’ve lived in this place and not one substantive improvement, not one crane in the skyline just countless projects, endless debate and a complete lack of leadership at City Hall and Province House! I love the civic minded free speech of bright citizens and reporters, but where are the alternatives, where is the balance in your argument; why don’t you use your big brains to bring compromise to the table, show some leadership if that is what you fear is missing!
I support building a convention centre, a stand-alone purpose built facility (not the basement of an office tower) that I’m convinced will generate sufficient revenue spread through-out the economy of NS. Governments (and in this case Province & Feds) need to help, the benefits simply accrue to a wide audience and won’t show up on the P&L of one entity. By it’s nature this is economic infrastructure; the argument that private enterprise should build this, is simply uninformed.
For fear I will become just part of the rattle&hum of the endless debate, I need to go look at the national job listings and find a real estate agent. Good Luck Halifax….when I come back to visit, it will be nice to see that nothing has changed.
Obviously Bo Gus (there’s a handle that inspires me with confidence:) belongs to the “Can’t debate the ideas so Trash the person” school of debate. I always appreciate the work you do to support your ideas.
Bo Gus, why don’t you attack the author’s analysis and instead of his credentials?
How can you argue that the numbers were inflated after the $60 million tax revenue in the first report got bumped up to $170 in the second? And do you dispute that the first report was based on the wrong floor space?
People are missing the point.
Cliques of opposition is the best way to keep the power in the hands of the ‘precious few’ here in Halifax. Learn something. Listen to the debates. Add your concerns. Support those who’re saying what you’re thinking, or what you’re feeling.
Everyone wants that gratuitous one up. Tim sticks his neck out day after day… posting that you think he’s stupid really isn’t that.
Let’s take a step back here. These reports are all projections, based on assumptions and estimates. They have to be. In the real world, these things work within ranges and things can change because it is all directional, not an exact P&L statement based upon a look back at what happened before. This stuff is not a matter of exactitude. By disparaging the authors of the various reports and questioning their motives in producing the numbers they have, Tim is practicing yellow journalism of the first order. We all know Tim is opposed to this project. He has made a career over the last few weeks demonstrating that. But that is all he has proven, and in doing so in the way he has, he has shredded his own credentials as a credible journalist.
Thanks Tim,
Journalists and citizens should not have to be doing this work. Other people were paid to do it and they did not. It’s a testament to our community that so many people care enough to work through this. Even the online boosters of the project are helping hold the critical analysis to good points. This is how a democracy is supposed to work. It’s awesome!
I’ve personally never been more proud of Halifax. The level of citizen engagement in this issue, in spite of the fact that there is no formal or official way for it to happen is so impressive.
We all love our friends, home, family and community and we all want to be happy. I am very proud of all the amazing efforts and ideas that are being put forward to government and the media. We must be setting records and new benchmarks for online citizen involvement with local government. What incredibly broad based engagement there is in this issue. I sure hope the people of Nova Scotia are recognized for their efforts in this adventure.
I believe this is what democracy is. A battle of ideas. Never done. Never settled. It’s not pretty and it’s not quiet. In fact, it’s messy and the only thing it has going for it is that it is better than all the other systems of government we know about. Particularly, it’s better than government by an unaccountable bureaucracy.
I appreciate all your digging through the reports but let this quote be the end of the whole matter. It’s from the Gardner Pinfold report and the title Main Findings.
“MAIN FINDINGS
In interpreting the findings associated with the impact analysis it is important for the
reader to understand the nature of economic impact assessments. Economic impacts
demonstrate overall impacts on the economy associated with a major investment. The
analysis is not intended to assess the Business Case for the project from the perspective
of ensuring viability as measured by project revenues being sufficient to cover costs of
development and operations. “
That at least is clear.
What is also clear is that all the consultant’s reports presuppose every single thing the government and TCL are saying they prove. They’ve all been developed from numbers and ideas given them by the proponents and make it very clear they are not in the business of questioning any of the assumptions TCL has made including the assumption that if we build it they will come. I know that’s old hat, but it bears repeating.
My conclusion is that there actually is no business plan written down anywhere that includes a straight accounting of: the assumptions about sales and who estimated them, capital costs, carrying costs, operating costs and revenue and expense projections, like any normal business or even government department would have to produce.
It seems unfair to ask HRM staff to create one in the next two weeks. It would prudently take a year or two to do this properly. If there is a written business plan, it still remains secret and it’s difficult – impossible – to move forward (pro or con) without one. The closest I’ve come to hearing anything about this is Mr. Ferguson’s comment to a councilor at the last session that they would not be able to say who would come to the new convention centre until after it was built and people had a chance to look at it. I would say this is the definition of high risk.
The plan as it now sits does not accomplish any of the goals it was supposed to. It doesn’t create jobs, boost the economy or “save Halifax”. It doesn’t provide an inspiring vision for the future. It doesn’t help the rural economy. The reports say outright that it is unknowable if it will impact tourism at all. It certainly costs a lot of money over a long time and undermines a lot of other businesses and ideas. And it does not have the support of the general public.
Could we not just stop here and at least consider the possibility that we are going in the wrong direction. A business plan and some unbiased independent advice is the minimum I would settle for.
What I would like is to get out of this big risky biased bet and break our plan down in to lots of smaller less risky plans to help more people improve Nova Scotia in more different ways.
jw
Mr. Gus,
Tim has not disparaged anyone. In fact, he has gone to great lengths to explain that the consultants were clearly doing what they were asked to do with the information they were given. That is the heart of the problem and the crux of the matter.
I strongly encourage you and all the remaining anonymous folks who would write from the position of being proponents for this convention centre at this time, in this spot, organized and financed in this manner, to stop framing your remarks as ad hominem attacks.
I believe we all have something to offer in this debate and all the assumptions, plans and visions should be analyzed widely. But it is of no help to say that Tim or Mr. Epstein or the Save The View folks are bad people and therefore the Convention Centre is good. That form of argument (ad hominem) doesn’t make sense.
Regarding this notion of not speaking out unless you have a better idea. Lots of people have contributed lots of ideas big and small. I’ve written dozens. There is actually a group of girls working as online aggregators of these ideas. Trust me – the government has heard them all. But also remember that many of the people writing here believe, and I think reasonably so, that in this case disagreement is in itself the counter-argument. They are simply asking the proponents to just stop it as this idea is FUBAR and it is hurting Nova Scotia.
To provide a simple example. If I caught you kicking your dog and wanted you to stop I would be under no pressure at all to help provide you with a better way to beat him. I would just ask you to stop doing the stupid thing you are doing. Disagreement is in itself the counter-argument and it is not just a right but a responsibility to speak out.
jw
I’m constantly amazed by the sort of ad hominem attacks on the writer that pop up here. Bousquet has done his homework, and presented actual facts and numbers to back up his concerns, which are also the concerns of many others who live, work, and pay taxed in this province. Yet the “naner naner boo boo”, name-calling and insulting type of comments his articles elicit do nothing to inspire confidence in this project.
How about, ‘Bo-Gus’, presenting us with some facts–not pie in the sky numbers pulled out of a lottery machine or from consulting the entrails of a chicken–in order to win over those of us who are worried about this project?
It amuses me how the pro-con set like to trot out the viewplane/historic Halifax argument. I don’t live in Halifax, and don’t give a damn about the view plane. Come up with something beautiful–like the Ottawa centre–and do some number crunching that will make sense, and I’ll be totally for it. But this thing is a white elephant crossed with an albatross crossed with an Olympic Dome…it’s neither fiscally responsible nor beautiful.
Tim Bousquet is correct in pointing out that the various studies pertaining to the proposed convention center are not without contradictions, ambiguities, or lacunae. There are three main points in the article.
1. Convention Centre Area
It’s true that Criterion April, 2009 study calls for a center with 150,000 to 170,000 sq ft of rentable space whereas the present WTCC II proposal has a projected rentable area of 112,000 sq ft. Bousquet juxtaposes these facts to argue that the economic impact projections are based on a design that is 25-42 % larger than what’s presently on the books. So far so good.
The economic impact, however, is actually based not so much on sq. ft. of rentable space as they are on how many delegates can be accommodated (since individual delegates pay fees, book hotel rooms, spend money on meals, etc.). Criterion bases its projections on being able to accommodate 1,800 to 2,000 delegates, whereas, the current WTCC II design can potentially accommodate 3,000 delegates, i.e., 50 – 60% more than what is assumed by the Criterion study. Based on this single criterion (no pun intended) one could therefore argue that the economic impact of the current design would very significantly exceed what Criterion projected. ;-> [Note: such a simple analysis is itself inadequate since the number of delegates that can be accommodated is dependant on the kind of event and hence the layout of the space; theatre style, banquet style, reception style, etc. The same floor space can accommodate different numbers of delegates depending on the layout.]
2. Growth of Convention Business
It is true that the HLT May, 2009 report projects business only as far as year 4 after the opening of the centre. It’s also true that the Deloitte report contains year 4 and year 10 projections. These are based on data supplied to Deloitte by the Economics and Statistic Division of the NS Department of Finance derived from their “NSIO model” that “produces incremental values for categories such as additions to household income, employment created, and tax revenue generated.” It is the case there’s next to no information in the Deloitte report on what assumptions are fed into this model to produce these derivations, and that this information is certainly germane. These assumptions could be reasonable or questionable, and it would be useful to know more about them in order to determine their accuracy. It is not, however, correct to conclude, as Bousquet does, that they are “created out of whole cloth, apparently just for the sake of adding an inflator.” The fact that there is little information on their derivation does not necessarily mean that they are bogus or erroneous. This isn’t necessarily an “arbitrary inflator”, as Bousquet calls it. It’s simply the case that more information is required to critically evaluate them.
Note: Bousquet appears to misunderstand the usage of term “stabilized year” in these reports. The reports point out that in the case of other convention center facilities, event growth is not linear in the first three years of operation because of startup and then a “pent up” demand for capacity. By year 4 this initial up and down pulse has worked its way through the system and growth stabilizes to become linear. There is no suggestion in the Deloitte report or elsewhere that by year 4 (the stabilization year) the usage will flat-line and there will be no further growth.
3. Trade Center Ltd’s delegate projections
In my view Bousquet is entirely correct in pointing out the unsupported basis of TCL’s June, 2010 delegate projections. While the assumptions made in the delegate projections in TCL’s market projections document are clearly stated, there’s no supporting evidence provided as to whether they are reasonable or not. For example, the report simply says: “The WTCC share of the Canadian international market is projected to grow from 3.5 % in the base year to 6.5% in year 10 of operations.” This may or may not be a reasonable projection, but there is no evidence adduced one way or the other to support it. Is this a realistic projection or wishful thinking? Who knows?
Bousquet is correct in saying that the revised numbers supplied by TCL to Gardner Pinfold make a significant difference in the calculation of economic impact between their first and second reports. It may or may not be the case that the June, 2010 numbers are better: but substantive evidence to support this is lacking. The reports says that “This information is based on primary and secondary research, industry trends, and customer feedback.” That’s a pretty vague basis on which to build a business case.
Bousquet fails to notice, however, that the TCL June, 2010 report is explicitly based on a 120,000 sq ft. facility (page 3), and that these numbers, based on this size facility, then roll over into the second Gardner Pinfold report – counter to his claim that all the projections from Criterion to the present, are based on a 150,000 sq ft. facility.
all the nay sayers will be the death of business in nova scotia…just keep it up,maybe you can stop all developments so halifax will become another sleepy,backward waterhole and the rest of canada will be laughing how we love to eat our own ,spit them out and then complain that our tax revenues are falling and we won’t be able to get an outhouse built .
ill be moving to new brunswick if this falls through,at least they are for making money and have cheap business taxes…my business will suffer here ,thus i and my employees will be force to relocate…
Hey, Bo, you should have written your second response first and forgotten the first one. CashGordon’s right on the money: we need to be convention experts suddenly to do basic math around the presented numbers? And he’s also bang on with another point: not every opponent of *this* convention centre proposal is an opponent of *a* new HRM convention centre.
To address your second reply, as soon as this or any other proposal entertains the use of public money it had best not be dancing around in the clouds. “This stuff is not a matter of exactitude”? It had better be a matter of some credibility though, and TCL isn’t inspiring me with a sense of that.
As for Tim Bousquet and his “yellow journalism”, last I checked journalists are allowed to have opinions on things they report. What we expect is that they don’t falsify or slant based on that. And a disclaimer from a journalist about their personal opinions is not a sign of bias. You see any falsification in Tim’s reports? If you do, call it out specifically. I’ve been cross-checking his numbers against the reports he’s using – reports which are available to all of *us* – and I don’t see any errors in the reasoning. You do? Then highlight them.
I’m a taxpayer, and I don’t doubt that you are one too. You’re comfortable with forking out or diverting 6 or 7 million a year for the next 25 years, at just the municipal level, for this new convention centre that may or may not do any better than the existing one and is still proposed for a lousy location (i.e. downtown). I’m not.
Save The View my ass. I couldn’t care less if there were a forest of skyscrapers around Citadel Hill. But I still think this convention centre proposal stinks, and it’s being pushed on us by politicians who know they’re gone in a few years, government bureaucrats that get something else to manage, and business types who will absolutely get some cash out of this one way or the other. If I worked for Office Interiors I’d be pretty keen on this project too, even if it was crap for 99% of the rest of the population.
Halifaxmentor: if your business is going to suffer if *this* new convention centre isn’t built then I suggest that maybe you’re a bit too tied to the construction of new convention centres, and perhaps you *should* move. Oh, you meant high business taxes in general? Well, yeah, they *are* high. They’re not helped by stupid things our governments do, like building unnecessary twinned highways or subsidizing resource industries or relying on finite offshore natural gas. Or building idiot developments that temporarily help developers but have no lasting strong revenue stream.
If this thing gets built don’t expect business taxes to go down, old boy. Not with the municipality and the province having to provide 13 or 14 million a year just to pay for their portions of it.
I would like to make a couple points:
1 – the “pro-dev at any cost” people attack Tim, readers of the Coast, and citizens who oppose them as small minded and anti-future but most of the commenters here have just attacked the people, not the facts, of the posts on this page, and USUALLY they attack from the pseudo-safety of anonymous posting. I appeal to your better natures to actually rejoin this debate under your real name and address facts rather than just attack people you disagree with.
2 – It is poison to try and push all anti-convention centre people into the STV camp. Clearly there is a wide range of people in the middle who might support a convention centre if they had all the facts, but also, and this is REALLY important, they may NOT support the convention centre because of the facts. CWG and CC2 boosters need to rise above and try and bring some respect to the fact that this is a debate, we are a democracy, we can disagree. That said, we need the facts, not TCL massaged nonsense, and certainly not papers showing demand, but no actual business plan. Please show me how this thing will operate and what the real cost is, so I can modify my NO to a MAYBE or even a YES.
3 – Personally, I do not support this proposal, this secret, P3, convention centre socialism that is going to see the downtown hotel and office space market completely warped by $160 million in taxpayers money going into this multi-use facility. Twisted Towers, the Armour Development, the Roy, the Sam’s property? All will face even harder times finding tenants and financing if Ramia get’s his 17 story towers, as there simply is NOT ENOUGH DEMAND to fill that kind of supply. As Peter Kelly said, there is 1 million SF of office space APPROVED TO BE BUILT right now in downtown. No private developer is building because there is not sufficient demand to warrant it. We have 10% commercial vacancy downtown, 1 mil approved and not being built. Do some math.
Our political leaders should never ever approve anything like this project without full public disclosure prior to approval and debate. Shame on the NDP for approving this without full, free, fair and informed debate.
I think, regarding business planning, that in the end Mr. Bo Gus is right generally. Business plans, no matter how detailed are built around a Sales Estimate and projections of capital, operating and management costs. The whole plan is only as good as these inputs.
C.Majka discussed the details of Tim’s conclusions about capacity. I would argue that simple capacity, big or small, is not the best guide to use to make sales estimates. The building could end up big and empty or it could end up over capacity and spilling out in to the community.
Past experience and comparisons to other similar experiences along with the use of clear benchmarks are the best way to make sales estimates; not just because they may give the best numbers but because it is easy to explain where and how you got the numbers.
Either way this would be how to start the process of making a real business plan for any project and I wish they would do it for this idea.
More generally, I wish they would put away the idea of mega-projects and mega events and concentrate on more small ideas, small business in general.
Small Business: shares the wealth, fits more easily in the community, diversifies risks, creates more adaptable enterprise, has better growth curves, creates richer jobs, encourages more entrepreneurial spirit, focuses more on new ideas and technology, is more resilient to change and, in my opinion, is more fun and creative.
jw
I suggest the TCL board revise the contract of Scott Ferguson to a base salary of $75,000 per annum plus or minus a share of the increase in business beyond the 2009 year.
If the new CC is such a great deal I am sure he is willing to tie his future earnings to such an enterprise.
I also suggest the CC be touted to the hotels in the downtown and invite them to share in a small amount of the cost and benefits of the project. Between them I am sure they would be good for 20% of the cost.
Whenever any group jumps up to say ‘It is a great project and I support it’ ask them what is their level of personal financial investment.
I think investing in bank shares is a great project, and my portfolio will show that i have put my money where my mouth is.
Perhaps Preem DD can sell revenue bonds to finance the new CC.
With a 3% coupon and a profit sharing enhancement we can all be sure Valerie Payn, Bo Gus and others will rush to put money where their mouths are. Fred MacGiilivray is another probable buyer.
Hi John,
You are indeed correct that potential capacity is not the end of the story and that past experience and comparisons are very important. Area is a salient factor when it comes to construction costs (i.e., $ per sq. ft.) but it’s delegate capacity that’s the operative factor in calculating economic impact. This isn’t straightforward since, as I point out in my earlier post, a given area can accommodate a varying number of people depending on the event layout (theatre style, banquet style, reception style, etc.).
In all fairness, the various reports pertaining to the convention center proposal do go significantly beyond simply considering these two criteria and do look at past experience and comparisons. There is considerable credible information on past delegate spending (according to various categories) in Nova Scotia that is highly relevant to a business plan; and is used as such. The Deloitte Report does survey the convention center business in Canada in terms of capacities, governance and management models. A comparative look at profitability is conspicuously lacking, however, it is possible that it’s not easy to come by such information since it may be considered “commercially sensitive.”
Area is an important topic in this discussion since Bousquet (to a significant degree) bases his argument in this article on the contention that that all the economic forecasts from Criterion on are based on a 150,000 sq. ft of rentable space capacity, whereas the present WTCC II proposal is based on 120,000 sq. ft. (actually, 115,000 sq. ft. according to the Technical Briefing). The TCL Marketing Projections report (June 2010) (and hence the subsequent Gardner Pinfold Supplementary report (July 2010), are however, based explicitly on 120,000 sq. ft. capacity. Thus, this significantly undermines the points he is trying to advance.
CGM
Thanks,
Here’s some convention centre comedy just for fun.
http://www.youtube.com/watch?v=6KTvzGzVGWw
Thanks for the notes C.
It seems to me that space – rentable capacity – is only interesting to the extend that we know other information.
I know my house could easily hold 100 friends at a party. But that doesn’t speak at all to: the number of friends I have, how good I am at throwing parties, how much the friends I have like parties, what my parties will be like in the future and how many of my friends will actually come to my party and how much they might pay to be my friend at my party. It sure doesn’t help me know how many parties I can afford to have.
I think the analogy is apt because, dress it up as you like, conventions are parties for business people… often not very good parties, but parties none the less. The silly questions in the analogy above parallel the real questions one would ask when business planning for a convention centre. And each of those answers would need to be supported well because these would form the basis of the business plan and projections.
I wish we could stop and do this work.
Everyone is now clear that the people of Nova Scotia, for many reasons, don’t want to do this deal. They don’t like it. They don’t like the direction it takes us. They don’t believe hardly any of the premises used to support it or any of the things the proponents say it will do. They don’t like the contradiction of the new debt. They don’t like the risk. They don’t like the way it looks or the way it makes the city look. They don’t like the process or the way it is being handled. They don’t like it. They don’t like the “Story” of the new convention centre.
Using the numbers given by the proponents this is a horrible deal. If the proponents have a stronger case and better information they should release it. If they have ANY information about operating projections they really should put that on paper. It’s the wild card that I’m most worried about and the last place that we might find a reason to support the plan. It is where the most volatility and hidden risk lies.
My feeling is that this particular CC, under this deal is a terrible vision for Halifax and Nova Scotia with bad economics and I would really like to see something that made it seem better.
I’m glad to see there is still some investigative journalism alive in Halifax. Even if you don’t know it in your gut, this project is bad news and these articles confirm it. Spin is just spin as this article clearly points out. Seems to me this project should already have been dropped. No one is against sustainable development, but subsidies for bad development ideas, especially when the province needs to tighten spending, and still meet the needs, that governments were created to meet, like education, health care, transportation infrastructure, to name a few, just don’t make sense. Not now, not ever. When are the “no-brainers”, the supporters and cheerleaders of this lurking disaster, going to get a clue ? Halifax doesn’t need it, the people don’t want it, and it is neither a feasible nor viable use of taxpayer money. Give it up already !
Excellent article, thank you for your hard work.
I myself do not believe this new Convention Centre is all that its cracked up to be.
I don’t believe the attendance numbers ,nor do I believe its going to make the impact those who sing its virtues…& I have some experience , about 25 years worth, setting up Trade shows, and many different conventions. I do lighting ,sound systems,video set up etc. Even the most basic set up has a podium & a mike ! I’ve gone in & set that up as well as shows with 54 tractor trailers…done in an huge airplane hanger, because no other building exists here big enough besides those for it to fit in !
I’ve done 4 conventions in the last 5 days & I am doing 3 more in the next 4 days.
Not one of them is in the TCL.
Not 1.
Although there was one loading in there this morning ,load in started at 4am. It wasn’t huge, but 1 did set up in the TLC today.
The reason I am against it, is as a tax payer ,I don’t want to pay for it. IF a businessman, or groups or conglomerate wish to build it, then do so. Make it as tall as you want, make it as Grand as you can afford. I will be very happy to work in it.
I don’t wish to own it, I certainly don’t want to rely on it as my only possible place of employment, because in Halifax 1000 + people conventions are not happening every day or even every weekend of the year. There are a lot of places where hundreds of people can meet, you can get 2000 people in the Cunard Centre for a dinner, an event, both. All the major hotels have small to large convention rooms & they are quite busy. That is where the majority of the work I do gets done.
We simply do not have the location (our winters SUCK), nor do we have the population to drive the amount of conventions that would have to take place to warrant this present proposal.
BUT
If the business community thinks its so great…why don’t they do it themselves ?
When I see they are not all trying to get in on this deal…I just have to wonder why.
The only answer that makes sense, is that they know that it isn’t a winning idea.
I’m sorry for the double post, but I forgot to add, I am really , really tired of hearing how 3 levels of Government are paying for this !
Those 3 levels of government are getting their money OUT OF MY POCKET ! So I , along with you dear reader & all the other tax payers are the ones who will truely be paying for it !
So if the business community doesn’t want to pay for it on their own, I’d say we are being very foolish to do this deal.