By Dominic Abassi

Nanaimo council ‘dreaming in technicolour’ on events centre: taxpayer advocate

Jan 26, 2017 | 4:31 PM

NANAIMO — Staff at Nanaimo City Hall are promising property taxes will not increase if the proposed events centre moves ahead, while a taxpayer’s advocate is likening the situation to an episode of The Simpsons.

The City has released their financing framework to pay for development, construction and operation of the project. The report shows the City needs to borrow $80 million over 20 years, with an annual debt payment of $5.4 million.

“We are not placing the city in a tight spot financially,” Nanaimo’s chief financial officer Victor Mema told NanaimoNewsNOW Thursday. “The city still remains with low debt services and high reserves, the funds that we are using now are already available, so it doesn’t require us to increase any taxes…and there’s no cuts to service, there’s no cuts to projects.”

Mema proposes several shifts of existing budget money to be able to pay down the debt without increasing taxes. The existing hotel tax would also be increased and a portion of taxation from future downtown growth, sparked by the events centre, would be funneled towards paying off the loan.

“Nanaimo is dreaming in technicolour,” said Jordan Bateman, B.C. director for the Canadian Taxpayers Federation. “It’s like The Simpsons episode where the guy goes around selling monorails to all these towns. These consultants go from town-to-town and talk people into building arenas and if people stop building arenas, they’re out of a job.”

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Bateman said it “beggars belief” that the City would claim there isn’t going to be a tax increase involved. By spending money on the arena, he said it’s money you don’t have to spend on infrastructure or police, for example.

“It’s a defacto tax increase, it’s just pushing it to something else,” he said. Bateman was also a member of Langley council when the city approved their events centre project.

The majority of the debt payment, $2.4 million annually, will come out of the newly-created Strategic Infrastructure Reserve Fund, which was approved by council last December. The fund triggers a 3.3 per cent increase in property taxes over five years.

Mema insists that tax increase is not directly tied to paying off the event centre debt, noting “we could have built anything else” with the reserve money.

As for subsidies to cover any operating expenses for the events centre, Mema said the chances of the city having to loan up money are “very remote.”

He said the consultants and a third-party financial review shows a “worst-case” scenario would be about $200,000 annually. Mema said the business model has provisions built in, including a ticket surcharge.

Bateman said these types of buildings simply do not make money. He points to Langley’s scenario, where the building receives a subsidy of about $1 million annually, despite being partially a community centre with multiple tenants and daily use.

“The people of Nanaimo should know, there will be a subsidy, probably a large one, paid by taxpayers every single year to operate that building,” Bateman said.

Bateman said multiple partners were involved in the Langley project, including several community groups, Trinity Western University and the provincial government. He notes it is essentially a hub for the community, adding the council of the time accepted the subsidy because centres like this always have that need.

Don Bonner is the spokesperson for NoVote2017, a Nanaimo group opposed to “building a hockey arena for rich WHL teams.” He said Nanaimo staff are taking all of the extra money the city gets to pay for the arena.

“This will then leave the citizens of Nanaimo unable to buy anything for the next 20 years without a tax increase,” said Bonner.

Bonner claims the strategic reserve fund was created with the idea it would be used to pay for the hockey arena.

“Already we are seeing a tax increase and we haven’t even started building the hockey arena.”

The City is proposing a little more than $69 million will be spent on the centre and just under $10 million for infrastructure work on the downtown waterfront land where it would be located. Mema said that will include 5,200 to 5,700 seats for hockey and other sports, 7,100 to 8,300 for concerts and other events. There would also be a multi-purpose space for arts and culture, retail space and an in-door walking trail.

Twitter: @domabassi

dabassi@islandradio.bc.ca

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The proposed events centre financing framework, as explained by CFO Victor Mema:

• The events centre is expected to spur new development in the downtown core. A portion of new tax money gained from future growth would be dedicated to paying down the debt. Mema says funds from this taxation are considered a fallback plan and are not critical.
• The City is proposing to increase the current two per cent hotel tax by one per cent and have the extra income directed to debt servicing. That would require cooperation from the Nanaimo Hospitality Association and approval from the provincial government.
• $2.4 million will be used from the Strategic Infrastructure Reserve Fund.
• $7 million worth of current property taxes goes towards capital projects. Under the framework, $2 million will be used towards the events centre debt. To recoup that, $2 million worth of the $4.3 million the city gets in gas tax grant transfers annually will be used. This will result in $2 million less annually going into the Community Works Fund. That fund is used to pay for general capital projects and has a balance of $7 million right now.

You can view the staff report as part of this agenda package.