Letter for the March 17/2014 Council Meeting Agenda

In the later part of 2009 when the suggestion of building a new facility to replace the FW Gardens was proposed, I was supportive of the project. On Jan 16/2010 I wrote a letter to the CJ suggesting Innova Park to be a great location for such a facility, and that location could likely attract a major hotel chain to partner in it, with “convention facilities”. The original price suggested was in the $50-60 million range for a 5500 seat facility. I thought this to be a fair price range, when St Catherine’s ON was building a 5500 seat facility for $50 million. Since that original figure, this project has gone completely off the rails, now ringing the register at $106 million plus before the inevitable cost over runs that always occur during building. As this project has rolled on, serious concerns of the public have been ignored, and quite clearly, reality and common sense has vanished completely! As a tax paying citizen of Thunder Bay, I cannot support this project in its present form at any location and urge this “runaway train” project to stop before it hits the wash out its quite clearly heading for! Should this project continue, the end result will not be pretty, creating long term financial woes for our city! I have several concerns about this project, which concern me immensely!

1/ The cost of this proposed facility has escalated drastically to a prohibitive point! While initially $50-60 million as previously stated, it has pretty much doubled in price to $106 million before the cost over runs during construction and surprise “revisions”.  The Water Street location, which the people largely reject, yet city powers seem to choose to deny and drive down the people’s throat, is the primary reason for this prohibitive price! When the price jumped from $80 million, it was because additional parking facilities would need to be constructed at Water Street. In the reports, I saw no significant changes to the Innova Park site which already included parking lot costs, yet it jumped up that extra $20 million as well, how? I can only believe it is because city powers already decided on the location, and the public consultations were nothing but a complete sham! At the meetings I was able to attend, as well as in local media the sales pitch for Water Street was quite obvious. One councillor I met at one meeting was stressing to me “It’s gotta go to the waterfront”. Public opinion & preference be damned, it’s going to Water Street! The Consultants report charged up things to Innova Park I believe to be “bogus” in an effort to inflate the Innova Park cost and make Water St more attractive regardless of the real cost there! Claims such as four-laning the roads inside Innova Park and the addition of two entrances are both mis-allocated and unnecessary. Interestingly the two additional entrances have since be added on Golf Links Rd and the Harbor Expressway after Council’s coronation of Water St. Why would we have needed to four lane Innova Park roads when patrons would be traveling in two lanes of traffic in the former downtown? I believe the public knows the answer to this, as does council and city administration. Councillor Boshcoff  states that the 2010 municipal election was a de-facto vote on building this facility. Since that time, both the cost and scope of this project has changed dramatically. To make such a claim now is completely irresponsible in my view! Denying the public the choice, as council has chosen to do, and proceeding further is dreadful and will have a long term damaging effect that will contribute to its failure! Ultimately, the people will have a vote on this, by either supporting it or not! I think it makes far more sense for the people to vote, before more than $106 million is spent, than after it is spent! 

2/ The projected annual operating deficit of this proposed facility, is stated as $1.198 -1.4 million annually, $540 thousand in the convention facility alone! This loss is in addition to the operation of an idled FW Gardens, presently with an operating loss of approximately $600,000. With the FW Gardens quite likely to become a non-revenue producing facility, what will its operating costs then be? With lofty projections of 180 events in the convention center and 82 in the spectator arena, there will be a significant increase in the operating deficit should those objective’s fail to be met. A major factor, the consultant’s report failed to address is, what competitive advantage does Thunder Bay have that will lure conventions etc from where they are being held to here? With a “glut of convention facilities in North America”(Macleans Jan 16 2012), Thunder Bay will be in tough competition to achieve these numbers! Supporting facilities being in close proximity to a center is of great importance to the success of the facility, council’s chosen location is not. Hamilton chose to locate its convention facility away from their “supporting facilities”, Hamilton is in Ontario’s “Golden Horseshoe” yet suffers. An independent KPMG study (Hamilton Spectator June 22/ 2011) identified Hamilton as having the “least attractive hotel package in an increasingly competitive Ontario market”. With 1331 hotel rooms in downtown Hamilton it struggles, Thunder Bay has 589, hardly a strength but rather a severe handicap! A City of Thunder Bay Corporate Report (2011 105)  states that, “a critical component of the project is the proposed convention multipurpose space and the close proximity to hotel accommodation will be a very important consideration”.  This is clearly absent in this project and will greatly impede any likelihood of these lofty objectives being met, or likely even close to being met! Following a failing model such as Hamilton, is more so a road to failure than any type of success and the likelihood of the operating deficit being drastically higher than forecast!

3/ The proposed entrance of the City of Thunder Bay into the hospitality business, already adequately served by the private sector is of great concern, most particularly when it is at a loss estimated at $540,000 the first year! This clearly makes no sense whatsoever, and should be dropped immediately. These private facilities pay taxes to the city, the proposed facility will not. This gives the city facility an unfair advantage over the private operators, which could prove lethal to some leading to their closure. The loss of one or more of these facilities will leave a shortfall in our tax base, which no money losing facility can fill. In the March 3/2014 council meeting, Councillor McKinnon questioned why the city was in the day care business, after getting out of the money losing golf business? Why then is city council more than willing to enter into a bigger money losing business that can damage local tax paying businesses? Without question, the convention center facility of this project must be deleted, as it truly does not serve a positive purpose.

4/This project fails completely in providing parking for the expected patrons, and convenience accessing the facility. Despite claims of adequate parking for the Water St location, there is not. A March 2012 recommendation for a 500 car parkade at a cost of $16 million, was later reduced to a 200 car facility, how will that answer the parking question, it won’t! There have been suggestion’s that, the parking problem could be solved with patron’s parking at other large lots in the city, such as Lakehead University and be shuttled to the facility. This would require a significant number of shuttles, at what cost to transport the expected large number of patrons, to and from and navigating through the congestion would hardly leave the feeling of joy, but rather leave a bad taste with patrons. Claims of parking within 10 minute walks from the facility, may be welcome in summer months, but we have lengthy periods of unpleasant weather. A night of entertainment, followed by a walk through snow & cold can easily convince one that staying home “to watch the Leafs” would have been a better choice. It would be wise to understand,“If there ain’t no audience, there just ain’t no show”! I have no doubt that should this facility proceed at that location, the parking will be dealt with by almost immediately pushing the parkade number back to 500. With the problem still existing as attendance is less than forecast, surrounding properties will be purchased to develop additional parking in an attempt to salvage a majorly flawed and disastrous plan. This will add a substantial amount to an already overly expensive location. Recall, Innova Park’s cost included 2000 parking spots at $80 million!

5/ The expectation that having an AHL team as the principal tenant long term is quite unlikely. Franchise history in the AHL shows at least 22 AHL franchises have relocated in the past 13 years, with only 3 franchises remaining in the same locale for more than 20 years! A consultants reports states a break even number for an AHL team is 4200. The LU Thunderwolves average 2500-3000 fans with a $12 ticket price, one of the best attendance averages of any local hockey team in our history. AHL ticket prices in Canada range from  $20-40, to expect an additional 12-1500 fans at a60-100% higher ticket price can hardly be considered a recipe for success! Team owners are not in the business to break even, ownership is in it to make money! In efforts to secure professional sports franchises, communities are sometimes expected to cover team losses, is this an avenue Thunder Bay is heading down? The use of tax dollars should absolutely not be considered to cover any team losses should this suggestion arise! This same principle also applies to concert/theatre promotion, promoters are in it to make money, not break even. Abbotsford BC is the red flag to these lofty ambitions that are devoid of reality, and are delusional thinking! Abbottsford covers their AHL team’s losses to the degree of $2-3 million each season, I would think it is a fair expectation that team is a likely candidate for relocation when its deal with Abbottsford expires. Left with an empty rink, what will be the burden to the taxpayers? By all appearances, city powers are more than willing to travel down this “yellow brick road”. Interesting to note that Vancouver BC was a community that warned this city against our perennial white elephant Victoriaville. Will Thunder Bay city powers again ignore the experience of another BC community and lead the city down the “yellow brick road”? Sadly I am afraid they will, with disastrous financial peril to our community!

6/ Forecasts of “Economic Impact/Spinoff , claims of being “Economic Drivers” and “job creators”, are in my opinion nothing more than “snake oil” to make these projects sound more attractive and something they really are not! I find in most cases these forecasts are usually overstated and go largely unfulfilled. The reality that occurs when the “honeymoon” period ends is usually a further burden on already strained budgets, both of the community and its overburdened tax payers, to satisfy delusions of a select few feeding an “appetite for destruction”! The construction of any facility does provide work short term, is this a selling point I think not, and any long term jobs created are likely nothing more than low wage. Any common sense cost/benefit analysis would conclude that in its present form and cost, this project should be halted and rethought much more sensibly! Spending in excess of $106 million and rising is a dangerous gamble Thunder Bay should not proceed any further with. We are looking at a location that is quite clearly cost prohibitive, with likely cost over runs that will drive the final cost in my estimation in excess of $150 million by the time the parking situation is reasonably addressed! I believe the expected annual operating costs are understated, as unfulfilled projections will drive the costs in excess of $2 million annually quite quickly, and grow! Thunder Bay’s “contribution” to this projected, presently claimed to be in the neighborhood of $35, is to come from the “Renew Thunder Bay” fund which presently has only $20-21 million in it, where will the additional $14 million come from? Should city powers choose to proceed with this, I believe our city is headed towards a financial tsunami which will cripple Thunder Bay financially! In closing I say, “Be careful what you wish for Thunder Bay, it might come true”!