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KEDCO Report, Whig Standard, April 30, 2005
The KEDCO report suffers from much of the same weaknesses as the Business Plan in its claims of economic benefits.
Certainly there will be some spinoff effects. The question is whether for 40 million dollars of capital expenditure and several millions of operating costs, the benefits justify the expenditure of public money and assuming associated risks?
LVEC’s combining of sports franchises and entertainment facilities is the current flavour of the year. Before that conference centres were to be the generator of economic growth. A number of public projects have been financial disasters such as the Skydome ($600,000,000 written off), the Sydney Opera House (over budget by a factor of more than ten), Montreal’s Olympic Stadium and Cornwall.
Closer to home, Kingston’s magnificent City Hall was built in 1842 as more than a place to pay your taxes. It was the Civic Centre of its day with assembly halls, shops, offices, taverns, the indoor market and civic offices. This happened mostly by design and partly of financial necessity on the removal of the capital. It was not until 1960 that the City was large enough to occupy all the space.
There is a plaque in Memorial Hall stating that City Hall was “built for the public accommodation and ornament of the city”. It is a wonderful descriptive phrase and the LVEC is conceived in that same tradition. So was the Memorial Centre on York Street.
No one would argue with the fundamental desirability of better facilities. The questions are in the how to: size, location, design, capital and operating costs.
Around the how questions has swirled more controversy and confusion than any other in recent memory.
Some of this is inevitable given the size, complexity and diversity of interests affected. Many of the difficulties arise from limited quality of the information, what is perceived as haste in the process, and limited public information and participation.
The result is a good deal of heat but sometimes not much light, with positions on the one side “of let’s get on with it, how can you argue with such an obvious project?”, and on the other finding deficiencies in the facts and location.
There is truth in both sides, and the flaws in making decisions go back to at least 2003. That fall there were problems at the Memorial Centre with a leaking roof and soft ice which made it temporarily unusable. There were headline stories in the media about the terrible crumbling state of the Memorial Centre. It was election year and almost every candidate promised to do something about the Memorial Centre. Certainly there were problems. It was fifty years old and built for another era. The address system had never been satisfactory given that it was installed when sound equipment was primitive by today’s standards and the interior was tired. The building and grounds were on a shoe-string budget. However, there was a new roof and compressors and engineers reported that it was structurally as good as the day it was built.
However once an idea gets out it can take a long time for truth to catch up, particularly if it conflicts with other priorities.
The mayor was elected with a mandate to do something about the Memorial Centre, a Task Force was pointed down the track and a chain of events started which led to the present state of affairs. That state can be defended as the result of a chain of actions, each of which is defensible.
However, there is nothing more dangerous than logical decisions being taken to an illogical conclusion.
Kingston is now at the point of committing $40,000,000, and much of the how to is based on limited and debatable facts.
The KEDCO report based as it is on the LVEC Business Plan, confirmed in some manner by consultants, estimates a $13.5 to $22.5 million increase in economic activity. These facts are based on attendance numbers and ticket and food sales, when the only relevant numbers are the increases. Similarly, one cannot include attracting weddings and some other functions and trade shows which otherwise could go to other Kingston businesses, and of attracting businesses to locate near the LVEC which are located or would otherwise locate elsewhere.
There is no provision for negative spin-offs. Two obvious losses are 52 employees and $70,000 in city taxes paid by Metalcraft Marine, and possibly some from the marina, and a loss of revenue from both hockey games and some events from the Memorial Centre to the LVEC. There is no supporting marketing evidence of the LVEC’s capacity to attract patrons.
A difficulty in drawing significant numbers from outside the immediate Kingston area is that it is thinly populated. The only nearby sizeable urban areas, Belleville and Brockville, are almost an hour away by car.
One wonders at the tourists figures.
Forty percent of the estimated revenue and forty-percent of the attendance is hockey (52 of 97 events). Hockey at the Kingston level does not attract fans from away other than the one or two buses for avid supporters who follow the team. These are not spending large tourist dollars. One would want some evidence that there would be much more spending especially as tickets cost $2.00 more albeit for a better facility.
For Kingston, tourism is primarily a summer business when the LVEC will have the lowest activity level.
Putting the date through the Ontario Tourism computer does not add much to its credibility for this purpose. Tourists are notoriously difficult to count. Applying the broad band Ontario program to a particular area is difficult. The tourism estimate is of 300,000 annual LVEC attendees, 75 percent will be from out of town, i.e. 75,000.
The Business Plan (p. 12) shows 309,000 visitors of whom 173,000 will be for hockey and 136,000 for other events, if out of town attendance for hockey averages 100 per game, a total of 5,200, this leaves 70,000 for the tourist attendees out of 136,000 attending non hockey events – an implausible majority.
The figure of 750 construction jobs for 18 months would result in an anthill of a construction site.
With reference to the Arkansas study of multipliers why this particular study was chosen is not stated. The opinion of that well-known radical periodical, the London Economist, carries greater weight.
To sum up, this is an expensive project that involves large present and future costs.
Much of the information today is soft and should be developed more fully before more money is committed.
As well, commitments are being proposed before important studies have been made public or even received. A large part of the financing is still at the proposal stage, and there is no twenty year contract with the Kingston Frontenacs.
Not least, a large part of the population is unhappy with the recommended line of action. The best evidence is the Whig-Standard poll that those against are about two and a half times those are firmly in favour. Comment at the open meetings and letters to the Editor seem to point in the same direction, but this is all “soft”.
What should take place is an analysis setting out the pros and cons, the opportunities and the constraints as the basis of a full debate and reasoned decisions. This is a major public project which must be managed transparently and accountably according to the best rules of public stewardship.
Otherwise discontent will fester and is almost certainly to end up with an Ontario Municipal Board hearing, delays of many months, and unnecessary expenses for all parties.
Why the rush?
April 30, 2005