Kingston Concerned About the LVEC
Currently known as the "KROCK Centre"
Formerly the "Kingston Regional Sports and Entertainment Centre" or KRSEC
Formerly the "Large Venue Entertainment Centre" or LVEC
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Whig Standard July 13 2004

More Economics 101: LVEC benefits outweigh costs

The letter from Norman Macintosh and Stewart Fyfe regarding the economics of the Large Venue Entertainment Centre ("Cost to taxpayers double what report says," July 6) contains an accurate, but incomplete and shortsighted, analysis. The concepts they use, as pointed out by the writers, are basic ones, but they are subject to considerable interpretation.

If their motivation was to spur debate on the merits of building an LVEC or any recreational project, then their points are well- taken, albeit a little late: Whether to have an LVEC was, I believe, established during the mayoral election and the subsequent LVEC public hearings. However, if their intent is to comment specifically on the LVEC, then their arguments are incomplete and shortsighted.

The issue raised by the authors centres around the opportunity costs associated with the sale and development of the Memorial Centre property. As they correctly point out, the $5 million in proceeds from the sale and the $7 million gained from the use of surplus tax dollars do represent an opportunity cost to the city. However, it should be noted that all alternative uses of that property also involve opportunity costs, including the current uses of the property.

That said, a different view is that the swimming pool (which could be retained even if the Memorial Centre site were developed), the Hockey Hall of Fame and the Sports Hall of Fame (which, the Mayor's Large Venue Entertainment Centre Task Force proposed, could be housed in the new LVEC), the two soccer fields and the ball diamonds (which could be part of the proposed recreation multiplex) are currently "costing" close to $12 million.

So the issue is whether Kingston is better served "spending" $12 million on ballfields or an LVEC.

It is my belief that the relocation of the ballfields to a less prime location, coupled with the economic benefits of an LVEC, make the LVEC a clear choice. Indeed, perhaps the letter writers might want to review their Economics 101 notes under the heading "economic development."

The opportunity costs of greatest concern to me are the loss of revenue and employment (not to mention spectator enjoyment) that occur every day that Kingston is without an LVEC. In this regard, Macintosh and Fyfe might also look up the concept of "multipliers" (i.e., I spend a dollar, a portion of which is spent by the recipient of that dollar, another portion of which is spent by the recipient of the recipient's expenditure, and so on so that the total economic benefit is much greater than the original dollar) to understand that economic benefits to the city extend far beyond what is spent at the LVEC itself. Not to mention the multiplier effect of a council decision to spend as much of the LVEC's $28.5 million cost on the services of local companies, trades and individuals.

Suffice it to say, I think we can afford to relocate ballfields.

The bottom line is that opportunity costs are inevitable even if the LVEC is not built. The question is, which set of opportunity costs are greatest, and which alternatives can offset those costs with revenues?

One thing I do agree with, as is stipulated in the task force report, is the need for a more concrete business analysis now that location and character of the facility have been narrowed down. Indeed, we made that point at the public consultation meeting at Memorial Hall in response to Mr. MacIntosh's question.

Ken Wong

Ken Wong was a member of the Mayor's Large Venue Entertainment Centre Task Force.