THUNDER BAY – “We have a city to build,” stated Mayor Keith Hobbs. Today at City Hall, the Mayor, Westfort Councillor Joe Virdiramo the Chair of the Intergovernmental Affairs Committe, Tim Commisso and from the Finance Department offered an in-depth briefing on the Phase 4 Planning of the Thunder Bay Event Centre.
The Mayor and Councillor Virdiramo expressed confidence that the project will move forward.
An Update on Phase 4 of the Proposed Thunder Bay Event & Convention Centre (TBECC) will be coming to City Council for information on March 23, and for a decision on next steps March 26. The purpose of the Report is three-fold to:
1. Provide a Status Update on Phase 4 – Capital Funding confirmation,
2. Seek approval to extend the Letter of Intent (LOI) with the Thunder Bay Live Consortium
to April 30, 2015, and
3. Recommend next steps including proceeding to Phase 5 – Detailed Design and Construction, subject to confirmation of Provincial and Federal funding, and approval of Definitive Agreements with Thunder Bay LIVE
“Thunder Bay is respectful of the fact that unfortunately we cannot control the Federal and Provincial governments decision making timelines, but we have reason to be positive as both governments complete their review of our funding submissions, and remain hopeful that confirmation of funding will be forthcoming in short order,” said Mayor Hobbs. “Our Intergovermental Affairs Committee has been actively engaged with the Federal and Provincial Governments and has been working extremely hard to secure funding. We have an obligation to the community and our Thunder Bay LIVE partners to bring this update forward and get all our ducks in a row should we get that confirmation in April.”
“Essentially we are asking Council for conditional approval to move forward, which is subject to confirmation of Federal and Provincial funding and approval of the Definitive Agreements,” said Tim Commisso, City Manager. “The overall total capital financing is proposed at $114.7 million, closely in line with preliminary estimates in September 2014, of which 40% relates to City funding sources (including Thunder Bay Hydro) and 60% from Provincial, Federal and Private Sector sources “Thunder Bay’s municipal share compares very favorably to the majority of other Canadian Cities with similar facilities that have been built over the last 20 years, where 90 – 100% is the norm for Municipal share. Debenture financing is often the largest source of capital financing for similar projects in most municipalities.”
Administration is seeking Council’s approval to extend the Letter of Intent with Thunder Bay Live to allow the funding process to unfold. Definitive agreements with the consortium are being finalized and will be brought to City Council for approval in closed session, subject to confirmation of funding and approval of the Phase 4 Report.
The Report recommends, subject to confirmation of Federal and Provincial funding, the City proceed to Phase 5: Detailed Design and Construction based on the full-scale Phase 3 Schematic Design (i.e. 5,730 fixed spectator seats and 66,000-square-foot multipurpose convention, trade and event space).
Should members of the public wish to make a deputation to Council at the March 26 Meeting, they are welcome to do so by registering through the Office of the City Clerk.
Phase 4 Project Update Key Questions
Why is the Report Coming Now?
We have always been working toward a March 31, 2015 deadline and hoped to have confirmation of funding by this date. Unfortunately, we may not have final response from the Provincial and Federal Governements until April. We have an obligation to keep the community apprised of the status of the project, as well as an obligation to our private partner consortium that had a March 31 deadline attached.
Has the design scale of the Proposed TBECC changed?
The proposed project is the full approved design as per the Phase 3 Feasibility Study: a contemporary multipurpose City owned facility with 5730 fixed seats and 66,000 ft² of combined convention, trade and exhibition space. Overall, with approximately 190-200 different events hosted at the TBECC each year, the facility will contribute significant economic benefits and will serve as a major community asset and destination attraction for decades to come.
What is the Projected Economic Impact?
Should the proposed TBECC project proceed, the projected overall economic benefits are significant to the City including incremental job creation as follows:
- 1050 – 1140 person years employment related to construction
- 255 – 270 new person years of employment annually related to facility operations
In addition to the job creation benefits, the TBECC will provide direct and indirect increased GDP spending impacts to the City and the entire Northwestern Ontario region, incremental direct tax revenue to the Government of Canada and Province of Ontario and increased visitor spending in Thunder Bay based on an increase of 32,000 new visitor days from convention/conference delegates alone.
What Is the Updated Cost Estimate?
Total capital cost estimate for the project is $114.7 million, comparable with the $114.1 million estimate in September 2014 (Phase 3).
What Is the Status of Funding?
The Federal and Provincial governments are completing their final review and due diligence. Confirmation is not expected by the end of March; however, the City remains hopeful of confirmation in April 2015.
What Is the Proposed Capital Financing Plan – Where Will the Money Come From?
Subject to confirmation of Federal and Provincial funding, the overall total capital financing is also proposed at $114.7 million of which 40% relates to City funding sources (including Thunder Bay Hydro) and 60% from Provincial, Federal and Private Sector sources. The municipal share compares very favourably to other major Canadian facilities that have been built over the last 20 years.
In summary, the multi-faceted proposed Financing Plan (Attachment A) is comprised of the following:
• Provincial Funding ($36 million)
The City expects a response from the Province will be received in the near future and has received positive feedback and significant assistance from our Members of Provincial Parliament.
• Federal Funding ($23.0 million)
The Federal funding is recommended largely to be allocated from the Build Canada – Gas Tax Fund, which has recently expanded the categories for eligible infrastructure to include sport, cultural, tourism and recreation infrastructure. Even with a recommended allocation to TBECC of $21.1 million, the 10-year agreement for Gas Tax will see an increase in funds to Thunder Bay, which will continue to mean additional investment in Roads and other infrastructure, as has been the case in recent years.
• City’s Renew Thunder Bay Reserve Fund ($23 million)
These funds have been earmarked for this project since 2009 and are available in an interest bearing reserve fund.
• City Debenture Funding ($16.9 million)
Tax-supported debenture funding is required for the project, based on a 25-year
term. Debenture financing is often the largest source of capital financing for similar projects in other municipalities. The proposed $16.9 million debenture is $2.0 million higher than in the preliminary financial plan presented in September 2014. Overall, the proposed debenture for the TBECC can be accommodated within the City’s approved Debt Management Strategy.
• Private Sector ($9.5 million)
Similar projects have shown that private sector funding, secured through a formal Corporate Naming and Sponsorship Program, can generate major one-time contributions.
• Thunder Bay Hydro ($4.3 million)
Relocation and construction of a new Thunder Bay Hydro Substation is a key element of the project in order to provide a clean site for the TBECC. This report recommends partial redemption of Hydro’s outstanding note payable to the City (the sole shareholder) and for the average residential Thunder Bay Hydro customer paying $110.00/month, the impact would be approximately 50¢/month on an ongoing basis. Unlike most of the larger municipally owned hydro utilities in Ontario, Thunder Bay Hydro does not pay the City, as sole shareholder, any annual dividend from operations.
- What is the impact on Property Tax Payers?
The TBECC’s projected “bottom line” impact on the City’s net tax levy is an incremental increase of 1% or $17.16 per $100,000 of Residential Current Value Assessment and would be phased in over a minimum of three years (2017 – 2019). This impact is slightly less than that presented with the Phase 3 report in September 2014 (1.1% incremental tax impact). The statistically valid survey completed by Ipsos Reid in May 2014 on the TBECC showed the majority of Thunder Bay residents (64%) believe that a potential 1% property tax increase and 58% believed a 1.5% potential property tax increase is acceptable to cover the construction and operating costs for the proposed TBECC.