Kingston Concerned About
Currently known as the "KROCK Centre"
Formerly the "Kingston Regional Sports and Entertainment Centre" or KRSEC
Formerly the "Large Venue Entertainment Centre" or LVEC
LVECs In Other Cities: No Tax Burden?
The proposed LVEC has been promoted as something which can be financed without adding to Kingstonians' tax burden. But a little research on LVECs in other southern Ontario cities suggests that supporters of the LVEC are dreaming if they think that Kingston can have its LVEC without a significant increase in the tax burden. Here are some sobering facts about other LVEC type projects: Over the past 8 years, there have been nine either newly built or extensively renovated OHL facilities in
Guelph, London, Sarnia, Barrie, Brampton, Mississauga, Owen Sound, Kitchener and Peterborough. Of these nine, at least seven have involved substantial taxpayer contributions to construction and in many cases, operating costs.
- In Guelph
, the city contributed one half of the $21million cost and has had a rocky relationship with the private partner: the city wound up assuming an extra $3.76 million in mortgage payments which the private partner has been unable to make. (Guelph Mercury, April 1, 2004)
- For London's
much touted Labatt Centre
, the original estimated cost was $40 million, but the actual cost was $47 million, plus $10 million to buy the land and another $1 million to finish the parking lot--adding up to $58 million. The city paid 77% of the cost, but according to the terms of its public/private
partnership, the city receives only 20% of the revenue for the first five years and nothing is allocated for repairs for the first three years. The City's debt load for this project alone translates into a tax increase of at least 1.5%: this doesn't include other increases necessitated by other capital projects. Altogether, according to London councillor Sandy Levin, Londoners face a double digit tax increase. (Kingston Whig Standard, February 16, 2004, Windsor Star, April 19, 2003). And
remember--this is spread through a population three times that of Kingston's.
also chose public/private partnerships and financed a significant portion of the costs upfront. Sarnia paid $6.9 million of its $15.9 million project and also co-signed a
$7.5 million loan. Barrie supplied $12.5 million of its $15 million cost (estimated cost was $13 million). Reports differ on whether the operation broke even in the first years, but it incurred an operating loss in 2003. (Kingston Whig Standard, Feb. 17, 2004
paid for all of their $22 million facility, choosing to do the project alone because it felt that the city's risks would have been the same had it partnered with the private sector. In addition to Barrie, Mississauga and Brampton wound up picking up operating losses. (Windsor Star, April 10, 2004)
) $11.9 million Memorial Centre
renovation is now $735,000 over budget, while another $1.3 million in outstanding claims have yet to be settled with the project's head
contractors. The city has recently been told that the arena would not break even. It is covering operating deficits of $650,000 for this year and expects deficits of $450,00 and $301,400 for the next two years. A former councillor commented that councillors were "pretty darn naive" to believe the arena would eventually break even. (Peterborough Examiner, May 27, 2004), also found in Kingston electors website
One lesson from these tales is very clear: public/private partnerships are risky. The less risk for the city, the more it has to invest upfront, and the more it has to be prepared to fund operating shortfalls. An "ironclad" agreement with a private partner, fully protecting the city from risk, would come at quite a price.
On another note: according to the OHL Arena and Travel Guide
, all of these arenas have plenty of parking on site, or within a block or two. And neither of the two located downtown (London and Guelph) are within two hundred feet of a residential area.
See also this letter from Mary Louise Adams.
Last updated 20.10.2004