Rink review: Events centre plan shows City of Nanaimo expects no tax-rate increase

NANAIMO - Not everyone agrees with framework to finance debt on proposed event centre.

The City of Nanaimo is on its own to break ground on its $80-million multiplex project, but taxpayers won’t feel a hit in the pocketbooknor see programs and services sacrificed, according to city chief financial officer Victor Mema.

Nanaimo residents will decide March 11 if they approve of the city borrowing $80 million for a sports and entertainment centre.

If the answer is yes, it will be the largest debt the city has shouldered for a capital project in recent times, next to the Port of Nanaimo Centre at $50 million and $23 million for the water treatment plant.

The borrowing plan for the events centre has $10 million for utility services and $70-million for the event centre. Debt servicing of $5.4million annually will be paid with existing revenue sources and operations fully-financed by internally generated resources, so Mema said the event centre will not require a property tax increase or program and service cuts.

There is an approximately $5-million contingency for construction of the project, but Mema sees the potential to redirect money in other areas. If the project looks like it will be more expensive, he said council will be advised not to proceed.

Debt financing will come from future payments of $400,000 of taxes in lieu from the Nanaimo Port Authority and $1.6 million will betaken from current property taxes. There will potentially be $240,000 from a hotel tax. The city will speak with the Nanaimo Hospitality Association about increasing the hotel tax from two to three per cent, but has a buffer through current property taxes if unsuccessful.The remainder of the debt payment will be $2.4 million from casino revenue, according to Mema.

The city gets a 10-per cent share of revenue from slots and gaming tables, which in the past has helped pay for policing, social and cultural grants, and debt servicing of the conference centre. Council redirected that casino money into a new strategic infrastructure fund last year, which equated approximately three per cent in property taxes.

The city will also see a $200,000 annual cost for property insurance.

Mema previously said as the model sits, the centre would not require the city to provide an operating subsidy going forward, althoughhe recently told the News Bulletin it was never stated that there would never be a subsidy.

Consultants anticipate, in the worst-case scenario, subsidies to be $200,000 for the first two years and Mema said he’s provided for thatin his financing model.

The city plans to finance operations with internally-generated sources like ice rental and ticket charges, and will set aside money forasset management and revenue stabilization.

The Western Hockey League hasn’t come to council with what team is slated for Nanaimo. Mema said the hope is when councilnegotiates with a WHL team, one condition is the team is a winner so that the ticket surcharge used to pay for operations is notimpacted by declining attendance.

Mayor Bill McKay said there needs to be a sense the city is dealing with serious business people who intend to succeed.

“The league goes from the bottom dwellers who are losing money that are essentially just a play thing for billionaires then you’ve gotthe other group at the Ottawa 67s-level that said, ‘look, we’re running a business here,’ and they’ve created one of the most valuableteams in the Canadian Hockey League by having that attitude,” McKay said. “We need someone in between.”

The city will not use all of its debt limit to finance the project, which is about $40 million a year, according to Mema. Debt servicing ofthe centre would put the city’s total current borrowing to just more than $10 million a year.

The financing framework was agreed to Jan. 25 in a 6-2 vote by council, with councillors Wendy Pratt and Diane Brennan opposed. ButCoun. Ian Thorpe tells the News Bulletin he also can’t support the framework.

The $80-million debt will reduce borrowing power in the future and that’s money the city could have used for other capital projects inthe same way, Thorpe said, adding he’s afraid projects, such as the Northfield intersection, replacement of the Bastion Bridge,waterfront walkway and downtown revitalization along the Terminal Nicol corridor, will be indirectly impacted by putting eggs in onebasket.

“It’s a project that it’s easy to say, ‘yeah, this would be a neat thing to have’ and if there was a private partner involved in it I thinkpeople would be a lot more comfortable, but that hasn’t developed,” said Thorpe. “I am just not really comfortable with the fact thatwe’re still getting different quotes on what it might cost, what it might look like. To me, all of that needs to be in place before we moveforward, but instead we are rushing to complete this basically so we can hopefully attract a Western Hockey League team.”

The city has not picked a specific model of event centre. A Coast Salish longhouse-inspired design was part of consultants’recommendations, but according to Tracy Samra, city manager, the city isn’t requesting the longhouse design and it will be left to the building contractor to look at the theme.

 

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