City council gave the go ahead for staff to proceed with preparing a report on potential sites for an arena/events centre at a cost of up to $125,000.
The costs associated with the report will be designated to acquiring third party expertise from PricewaterhouseCoopers, with the report to be brought back to council on June 16 of this year.
As has been the case with many decisions centred around the arena/events centre, Tuesday's discussion wasn't short on contention, with Ward 11 Coun. Bill Leduc opening the discussion by reading from a letter from Gateway Casinos and asking that the motion be deferred and push the date back for the report to be received to September.
"Our development timelines for our portion of the overall KED project will be reviewed and adjusted once the city has finalized its own plans for the other components of the project and we can be confident that there will be no further challenges to the project moving forward on the part of the city council," said Leduc, reading from a letter from Gateway Casinos.
The Gateway letter also noted that there is an assumption that the impacts of COVID-19 can be mitigated and that the companies other properties can reopen and return to full operation without capacity restrictions.
"We note that in the event that the overall KED project scope is revised as an outcome of the PWC analysis, for example by removing the arena or hotel component, Gateway will need to reexamine the feasibility of gaming property at this location," said Leduc, still reading from the letter.
"I want the public to please understand that this is an important issue today. We are dealing with COVID (and) I don't believe we as a city are in any position right now to be using taxpayers' dollars to support information that's already provided to this council. I'm asking to defer this to a later date, to Sept. 28."
Ward 5 Coun. Robert Kirwan backed Leduc's motion to defer, pointing to the city's current situation with the COVID-19 pandemic.
"It seems as if we're trending in the right direction and start opening things again," said Kirwan. "If we could delay this for seven months, it would put us in a better position to know that we're getting closer to post-pandemic time. It would give all of the parties a better idea of projecting into the future. There's no advantage to doing this report at this particular time."
Ward 4 Coun. Geoff McCausland brought forward some financial data, indicating that money the city had already borrowed for the project was accruing interest and pushing the report further down the road would end up costing the city in the long run.
According to McCausland's numbers, which were vetted by the city's executive director of finance Ed Stankiewicz, the financing of the event centre was planned at above three-per-cent interest.
Over the 30-year borrowing period of the $200-million loan, the difference in the interest to be paid over the entirety of the loan was nearly $18 million, as the rate that the city secured the loan at was 2.4 per cent, and the current best rate today is 2.7 per cent.
"That's a significant saving that staff was able to save for the city over the original expense that was expected in 2017," said McCausland.
"Between March 2020 and March 2021 because we were able to secure favourable interest rates on one-year GICs, it's my understanding that our cost of interest was only the difference of what we made on our loan versus what was being charged to us was about $1.2 million, so it reduces that $18 million savings by a little bit, but not too much."
Going forward from March 2021 to March 2022, the city won't have the same favourable interest rates on loans that are available, and annual costs will increase, effectively increasing the overall cost of the events centre.
"Do we want to give the money to the bank and do everything slower and wait, and start this process seven months from now at the cost of close to $1 million, or do we want to give that money to a consultant to make sure that we're making the right $100-million investment," said McCausland.
Ward 1 Coun. Mark Signoretti wasn't in favour of deferring the motion, but also voted in opposition to the report itself, as he was unable to stomach the cost associated with hiring a third party expert to assist in compiling the report.
"To spend up to $126,000 of taxpayers money, comments were brought to me that we have staff that are supposed to have the expertise or the knowledge, so why aren't we using staff's knowledge in conjunction with information that's dated back as far as Mayor (John) Rodriguez's days," said Signoretti.
Ian Wood, the city's executive director of strategic initiatives explained that the city does not have an architect working in-house and that the goal of staff was to acquire the best possible expertise.
"Staff use consultants for expertise that does not reside within our own building, within our own staff resources," said Wood. "This is a recommendation from staff (and) our recommendation is that we get the best information possible. We believe that this is the best way to be in touch with the most current information that's going on with event centres across North America."
Ward 3 Coun. Gerry Montpellier inquired if the report would include possible avenues to secure government funding for the project, to which Wood replied that there is an intention on the city's part to pursue financial support from other sources.
Leduc chimed back in after his deferral motion had been defeated, wading into the debate on the report itself, asking if the report would even be up for discussion had the KED decision not been put through the LPAT and Superior Court hearings.
Wood was blunt in his response, telling Leduc that speculating wouldn't be appropriate.
"In this report, I guess it's going to show the scoring once again that the first report showed, what's going to happen to the $2.6 million, should the downtown score high again," said Leduc, in reference to the expenses related to the Kingsway Entertainment District to date.
Wood clarified that the report was not about weighting options against one another, but rather providing the full scope of information on all three sites.
"This report does not suggest that we are doing a weighted site evaluation or putting one against the other," said Wood. "What we're doing is updating the basis information for council to consider and then adding a layer of additional information based on current context, on risk and that type of thing. We're not proposing to come back to council with a recommendation, this is an information report."
Council voted in favour of staff's recommendation to have the report prepared at a cost of up to $125,000 and be provided to council during a special city council meeting on June 16.
Voting in favour: Vagnini, McCausland, Kirwan, Lapierre, Jakubo, Sizer, McIntosh, Cormier, Landry-Altmann, Bigger.
Opposed: Montpellier, Leduc, Signoretti.
Full report can be found here.
