One could only wish that councillor Bruce Beck would practise what he preaches about “…owe it to our taxpayers to tell the whole story, not just the parts that support their own agendas” in his response to the letter from the Canadian Taxpayers Federation citing Abbotsford for “arena envy” and the fact Abbotsford taxpayers are on the hook for the entire cost of the structure.
Let us review a few of the thins Mr. Beck left out of “… the whole story, not just the parts that support their (that is to say Mr. Beck’s) own agendas”.
Mr. Beck chooses to ignore the fact that there were no monies from the provincial government because Mr. Beck and others failed to secure provincial funding before rushing into Plan A. Flagrantly ignoring the fact that during the debate over Plan A, those questioning the management of the entire Plan A process pointed out the need to obtain provincial funds before finalizing plans and financing. Securing provincial funds before or during the process is exactly what Premier Campbell told them should have been done when he said NO provincial funding.
Of course Mr. Beck also chooses to ignore the fact that despite selling taxpayers on a maximum cost of $85 million, costs are well over $100 million and climbing. Which is not surprising considering that he now acknowledges that council was aware of other “incidental” costs such as the close to $10 million dollar cost for land.
In light of these and other facts we had best get Mr. Beck to define what exactly he means by “… tell the whole story…”, since what took place during the Plan A debate and continues to take place vis-à-vis Plan A, certainly does not meet my definition of telling the whole story?
We definitely have to have him define what he means when he states that “…Our approach was more transparent”. I fail to see how you can call a process transparent when taxpayers are required to file and pursue Freedom of Information request to obtain information about Plan A in order to determine facts such as the city spent $140,000 advertising Plan A while telling taxpayers they only spent $40,000 – a small error of only 250%.
Failing to secure provincial grants, failing to disclose incidental costs such as the millions for property, total costs that have escalated past the price “sold’ to taxpayers of $85 million (to $108 million and climbing). This is “enhanced fiscally responsibility”?
While on the topic of fiscally responsibility is it just me who considers it pure smug self-exaltation for Mr. Beck, at this point in time, to be patting himself on the back about “Abbotsford’s model, calls for the facility’s operations to be completely self-funding and profitable within three years of start up.” This without a major tenant or a single performance booked for the arena?
The costs Mr. Beck cites for Chilliwack are actual costs of operation. Not some pipe dream. Public facilities run operating deficits which is why they are public facilities, built by the public for the benefit of the public. If you could make money by building say … a 7,000 seat arena in Abbotsford, would not some entrepreneur do so and make those profits for themselves?
The most disturbing aspect Mr. Beck’s response, especially in light of his statement about “owe it to our taxpayers to tell the whole story, not just the parts that support their own agendas” is that he has chosen to ignore or failed to address the main point of the Canadian Taxpayers Federation letter. Other than dismissively saying they called infrastructure “unsexy” and fatuously speaking about how much the funds the city has to spend.
I say disturbing because his reply suggests that Mr. Beck, as one of those responsible for making important infrastructure decisions and choices, lacks an understanding of what is involved in those decisions.
Mr. Beck, it is not a question of how much you have to spend on infrastructure, even if you are spending $4 million, but of how much you need to be spending on infrastructure. If you need to be investing $10 million a year in infrastructure in order to attract business and high paying jobs or meet the needs of unmanaged residential growth, spending $4 million only gets you into a bigger infrastructure deficit – that at some point you have to make up.
The taxpayers federation’s point was that because they can be completed within a councils term of office and that there is a much “sexier” photo-op with a fancy new arena as opposed to a sewage lagoon, politicians let ego or even “arena envy” cause them to opt for arenas over the “unsexy” infrastructure needs of their cities and taxpayers.
The result of this behaviour is to saddle their cities with a debt load that prevents those cities from being able to build needed infrastructure or infrastructure upgrades – except by imposing heavy tax increases on the taxpayers.
In the case of Abbotsford having assumed $85 million in debt for Plan A, where are the funds going to come from to finance the $100+ million (unsexy) infrastructure needs Abbotsford faces over the next several years? From the mythical profits of the arena or more promises of provincial or federal grants that do not materialize?
Letters refered to:
January 26, 2008 Bruce Beck letter – Abbotsford News
Editor, The News:
I am responding to the letter from the Canadian Taxpayer’s Federation (CTF) in your Jan. 19 edition.
The CTF writes of Chilliwack’s arena: “Private investment and expertise not only saved ratepayers from debt and property tax increases, it ensured the future viability of the facility.”
That’s simply not true.
The majority of Prospera Place’s funding was taxpayer debt. The debt doesn’t show on the books of the City of Chilliwack, because it’s in the developer’s name. However, Chilliwack taxpayers are contractually obligated to make 100 per cent of all debt repayments. They’re also stuck with an interest rate higher than what was available through municipal financing (and a rate much higher than Abbotsford was able to lock in for 25 years).
When it comes to private sector expertise, Chilliwack and Abbotsford both chose ‘for profit companies’ to design, build and operate their facilities.
Chilliwack chose a company who, at the time, had absolutely no experience in building or operating a sports complex.
Abbotsford chose PCL, one of Canada’s largest construction companies to build ours. We hired Global Spectrum, one of North America’s largest operators of sports facilities to operate it.
As for viability, the CTF would do well to review the ongoing operational subsidies Chilliwack taxpayers are forced to make. Three years ago, the annual cost to Chilliwack taxpayers on top of debt servicing was roughly $400,000/year. Today that cost has reportedly risen to above $600,000 per year – that’s a 50 per cent increase in three years.
Abbotsford’s model, calls for the facility’s operations to be completely self-funding and profitable within three years of start up.
Abbotsford could have built the E&S Centre without a tax increase. Over $4 million/year that had been used for servicing other debts was free to fund that project. Instead, Abbotsford chose to seek voter approval (with not one but two ballots) to borrow $85 million, so that $4 million could go towards infrastructure like water, sewer and roads. Things the CTF called “unsexy.”
Contrary what the CTF implied, last year’s 16 per cent tax increase was not solely linked to the E&S Centre. It covered the two other Plan A projects, additional police, firefighters, additional customer service staffing and a host of other new programs for one of the fastest growing cities in all of Canada.
Chilliwack residents are fortunate to have a first-class facility run by a truly outstanding management team. But contrary to the CTF, they got that facility with significant new debt, higher taxes and built-in operational subsidies from local taxpayers.
Abbotsford extensively reviewed Chilliwack’s model. Our approach was more transparent, gave us more private sector expertise, lower debt costs and enhanced fiscally responsibility.
If the CTF and others are going to criticize Abbotsford, they owe it to our taxpayers to tell the whole story, not just the parts that support their own agendas.
Coun. Bruce Beck, Chair
Plan A Steering Committee
January 19, 2008 Canadian Taxpayer’s Federation letter – Abbotsford News
Editor, The News:
It is fairly easy to see why many B.C. municipalities have a so-called “infrastructure deficit.” Infrastructure, like wastewater treatment plants, are unsexy projects that usually can’t be completed in one municipal election cycle. Recreational facilities, on the other hand, are highly visible and appear, at least on the surface, to bring great benefits to the community. But do they?
When a municipality such as Kamloops spends almost $40 million to build a sports facility to attract tournaments from all over Canada – if not North America – it is engaging in a very risky strategy. Kamloops could be left with its own Fast Ferry fiasco.
Why? Because the “if we built it they will come” strategy doesn’t always work. It can saddle local ratepayers with huge bills that can only be paid by higher taxes in the future. Not only may this strategy leave local ratepayers with a legacy of debt, Kamloops now doesn’t have the money to build the wastewater treatment plant it needs.
Kamloops’ $106 million municipal debt, about $1,325 per person, means more municipal tax dollars are being used to pay debt interest every year. The amount of interest Kamloops pays on its debt increased from $8.8 million in 2005 to $11.6 million in 2006 and may go to $15 million in 2007. So instead of building core infrastructure, city politicians are collecting tax dollars to pay bondholders.
Kamloops isn’t the only municipality in danger of a Fast Ferry fiasco. About half of Kelowna’s property tax increase is to build its $44 million Aquatic Centre. Vancouver, meanwhile, set aside $20 million for an Olympic legacy fund and is using $2 million of that to host dignitaries. Now, this probably won’t result in a big new building, but it does give new meaning to the term “legacy.”
Yes, sports facilities can be great community assets. But too often, politics trumps economics and ratepayers end up paying a lot more than what they bargained for. One way to bring these facilities to a community without creating a huge burden on ratepayers is with a public private partnership, or P3.
A P3 is a contract between a government and a private sector company to provide public infrastructure. A good example of how a P3 saved local ratepayers millions of dollars is in the new arena in Chilliwack. Chilliwack built a 5,500 seat arena for $25 million, and used only $6 million in public funds. The private sector invested the rest. The private partner, the Chilliwack Chiefs Development Corp., owned the town’s Tier 2 B.C. Hockey League franchise and was involved with the WHL franchise ownership group. The WHL is a league in Western Canada, Washington and Oregon where junior players with professional aspirations play. Private investment and expertise not only saved ratepayers from debt and property tax increases, it ensured the future viability of the facility – Chilliwack now has a WHL franchise.
Let’s compare the arena in Chilliwack with the arena in Abbotsford, a neighboring municipality. Abbotsford, in a fit of “arena envy” decided to build a 7,000 seat arena for $55 million. Like Kamloops, Abbotsford is doing this entirely with public funds. Abbotsford’s property taxes, unsurprisingly, went up by 16 per cent last year.
P3s are not a magic bullet but they do provide a way to build infrastructure without saddling ratepayers with higher debt and property taxes. Governments’ shift away from their core mandate has created an infrastructure deficit in B.C. Private sector money and expertise can help both remedy that deficit without increasing taxes and make these projects a financial success.
Canadian Taxpayer’s Federation