Council receives preliminary report on multiplex

NANAIMO – Mayor concedes council, community have not shown much support for a new facility.

Nanaimo city council now has in its lap information on how other mid-sized multiplexes in B.C. function, how much they cost, and how they’re operated.

City staff spent more than a month probing other municipalities with multi-event centres to gain a better understanding of how one might fit in Nanaimo after representatives from the Western Hockey League, RG Properties, which leases Victoria’s Save-On-Foods Memorial Centre and owns the Victoria Royals, and the Nanaimo Clippers approached mayor and council to discuss building one here.

The WHL has expressed interest in starting a Nanaimo franchise, but league policy requires a host community has a minimum 4,500-seat arena.

Frank Crane Arena has a 3,000 seat capacity.

The idea of a multiplex has circulated for years, and in 2004 Nanaimo’s Parks, Recreation and Culture Master Plan suggested looking into a multiplex, not necessarily to build immediately, but simply for information.

With the adoption of the 2012 Corporate Strategic Plan, a multiplex would meet several priorities including waterfront enhancement and community building partnerships, among others.

Council, however, has yet to show any enthusiasm.

“I think we’ll have to call a meeting, sit down with all of council and ask ‘what are your thoughts?’” said Mayor John Ruttan. “I don’t know where it’s going, I haven’t seen an overwhelming indication of council or community support.”

To gain an idea of cost and scope, the city talked with CEI Architecture, which advised a 5,000-seat facility, with parking, would cost around $50 million, depending on site, land and servicing costs.

A feasibility study on its own would cost $150,000.

In B.C. there are 11 mid-sized event centres that meet WHL standards, including Prince George, Kelowna, Kamloops, Cranbrook, Chilliwack and Victoria, with operating subsidies ranging from $232,000 to $1.9 million. In Victoria, the municipality carries the $30 million carrying cost on its facility, with lease payments of $250,000 made by RG Properties.

Chilliwack’s Prospera Centre, however, might be the closest comparable situation Nanaimo can relate to. The 5,000-seat (6,000 for concerts) arena opened in 2004 and in 2005, it was announced that the city would be getting a WHL team.

The league’s Chilliwack Bruins took up tenancy in 2006, but after being sold to RG Properties, moved to Victoria for the start of the 2011-2012 season, leaving a WHL-calibre facility with a B.C. Hockey League team – the Quesnel Millionaires moved to Chilliwack to reboot the Chilliwack Chiefs – as its main tenant.

Chris Crosman, deputy chief administrative officer for the City of Chilliwack, said due to the public-private partnership and even without a WHL team, the Prospera Centre has been a positive experience for the residents.

“It’s been a very successful partnership,” said Crosman. “The owner of the building owns the hockey team, so it’s a good synergy. We got a quality arena at what we think is a good price with an operator and a guaranteed fixed contract.

‘We know we’ll always have a team there because the owner of the arena owns the team so we don’t have to worry about those kinds of things.”

In 2004, the Prospera Centre cost $20.3 million. The City of Chilliwack pays an annual operating subsidy of $400,000, as well as payments for capital expenses, though at the end of the term the building returns to the city for what Crosman said is expected to be $1.

“We think that’s a really good deal,” said Crosman. “You look at some of the newer ones being built today and some of the (other municipalities) are paying a lot more than that.”

By building a secondary sheet of ice, the Prospera Centre generates revenue through bookings and it draws more people from the community to use the facility.

Due to the public-private partnership, however, the risk mostly fell on the arena owners, not the city. Even with a BCHL team, enough revenue is generated to make the Prospera Centre a positive factor in Chilliwack.

While the Bruins (now the Victoria Royals) were the WHL’s 21st franchise, the league has stated it is not interested in adding anymore franchises, which means Nanaimo’s gain would be another community’s loss – Prince George and Cranbrook both only draw about 2,500 fans per game, and the WHL would be keen to move them.

Conversely, if a WHL team in Nanaimo was not meeting standards, the WHL would not hesitate to find a better market somewhere else.

“If a [city] owns an arena on its own, it’s a challenge with these teams because sometimes they’re getting wooed from different communities and if you don’t offer them virtually rent-free existences and all the rights to advertising and all these things, they’ll go to another place that will,” said Crosman.

Regardless of the partnership agreement between a municipality and the owner of the main tenant, in this case a hockey team, across Canada it is common that taxpayers pay for the capital costs of a facility less any senior level government grants, as well as operating subsidies.

Capital reserves for the building – at least $300,000 annually – must also be accrued to pay for building maintenance, according to the staff report. It also notes that economic spinoff from these facilities is marginal, because 80 to 85 per cent of the users would be local, and if they didn’t spend their money on event tickets or facility use, that money would likely be spent on something else in the community.

The report also notes that many mid-sized event centres, even with an anchor tenant like a WHL team, are not meeting their objectives for event and concert bookings.

“In the absence of having strong support for it, when Coun. Bill Bestwick, who is still in hockey today, is on record and pooh-poohs the idea of a multiplex, I would think we’ll be hard pressed to find somebody else on council to lobby aggressively for it,” said Ruttan. “I’d need to see more of a business case to support it, though I’m interested.”

The WHL is reportedly looking for a response from Nanaimo by mid-June.