[Halifax] Nova Centre | 65-58-58 m | 16-15-14 fl | Completed

[someone123]

Originally Posted by Jstaleness

If it is such a huge money maker down the road then why aren't other companies jumping in there to get their name on it.

This line of reasoning is far too oversimplified to be useful.

Part of the government's mandate is to promote economic activity, not necessarily to turn a profit (the government always loses money - it is not a business). Often things that are great for the economy at large would not be particularly profitable for a single business owner because of an inability to capture spinoffs and taxes. There are also plenty of things that are good for the public but do not generate income and so would not be undertaken by private enterprise (e.g. assistance for people with no money). Finally, some industries are also natural monopolies and so are uncompetitive and unfair to consumers without government intervention. In all of these cases, government involvement might be justified regardless of what the private sector is doing.

It is normal in North America for the government to be involved in funding the development of convention centres. There are private convention centres but they are much more limited in terms of scale and in terms of where they are located (you might find big ones in places like Las Vegas, but they're not going to magically spring up in Halifax). If Halifax wants to be a regional centre for this industry, it needs to invest in public convention infrastructure. Otherwise, governments in PEI and NB will continue to invest and Halifax will be left behind. There would still be private convention spaces in such a scenario (e.g. Cunard Centre). These would be more profitable individually but would not be as large and would not generate as much activity for the economy at large.

[Jstaleness]

Originally Posted by halifaxboyns

They wouldn't post my comment lol. I guess saying "would all you nay-sayers please stand up and now shut up" wasn't politically correct lol. I had to go back and repost something far more neutral lol.

Don't feel bad. My last 3 attempts at comments failed to make it. They weren't even that bad. Too censored.

[Jstaleness]

Originally Posted by someone123

This line of reasoning is far too oversimplified to be useful.

Part of the government's mandate is to promote economic activity, not necessarily to turn a profit (the government always loses money - it is not a business). Often things that are great for the economy at large would not be particularly profitable for a single business owner because of an inability to capture spinoffs and taxes. There are also plenty of things that are good for the public but do not generate income and so would not be undertaken by private enterprise (e.g. assistance for people with no money). Finally, some industries are also natural monopolies and so are uncompetitive and unfair to consumers without government intervention. In all of these cases, government involvement might be justified regardless of what the private sector is doing.

It is normal in North America for the government to be involved in funding the development of convention centres. There are private convention centres but they are much more limited in terms of scale and in terms of where they are located (you might find big ones in places like Las Vegas, but they're not going to magically spring up in Halifax). If Halifax wants to be a regional centre for this industry, it needs to invest in public convention infrastructure. Otherwise, governments in PEI and NB will continue to invest and Halifax will be left behind. There would still be private convention spaces in such a scenario (e.g. Cunard Centre). These would be more profitable individually but would not be as large and would not generate as much activity for the economy at large.

opps. I meant to put that in quotations. After reading my post again it looks like it was my personal opinion. However I still am curious if a hotel had been contacted for the site.

[Keith P.]

You have to remember that the CBC is run by left-wing people who are supporters of positions like Epstein's, and that Epstein supporters are hardcore CBC types. It is not surprising that any CBC site is showing comments that are in line with Epstein's views and censoring those that oppose it.

[halifaxboyns]

I was giving this some thought as I was taking the train back from the Jubilee Theatre here in Calgary (I went to see Margaret Cho - funny, but not as funny as she had been in the past).

Anyway, I believe the project should go forward. Design wise, tweaks can happen to make it better - I've been reading in this huge urban design book I bought that the design has to taken into account the market you are trying to attract and that typically the exhibition hall mingling area is where a view should be, not the actual meeting rooms and exhibit halls because natural sunlight can cause issues with overhead projectors/screens (too much light). My hope would be the design take that into account. The Telus convention centre has a lot of the meeting rooms underground - only the mingling space has big windows (was there for a westjet party; what a bash!).

While I'm not happy with loading docks on the street - I don't think you can get away with it in the spot chosen; it has to be somewhere and this book I have suggested its a good idea to provide a means to get things from the street to the exhibit hall as directly as possible (if not a direct ramp).

I will be sad if this gets torpedoed, yet another reason to not move home. I wonder if (because office demand is down) they could switch out an office tower or the hotel for residential? Probably not wise to take out the office part since the plan was it to be a 'financial centre' - I guess I answered my own question.

[fenwick16]

Roger Taylor has a column on the convention centre in Saturday's edition. http://thechronicleherald.ca/Business/1204986.html . I hope people will show support for Roger Taylor by posting comments on his colomn since I am sure that he must be getting a lot of hostility from the anti-development fringe groups.

[Jstaleness]

Aside from a few most comments seem to be very positive.

[someone123]

Interesting. So Roger Taylor is suggesting that Howard Epstein's figures are from adding up the annual payment, not that the $2.28M annual payment was derived from the $57M contribution. If this is correct then it means that the effective cost is much lower than $57M up front and that Epstein was being somewhat dishonest, which is not a surprise.

This sort of deal seems to make a lot of financial sense. It is a reasonable cost for the government and allows the developer to leverage a guaranteed tenant in order to get financing for a hotel and office tower. Both will be more attractive above a convention centre than they would be by themselves.

[worldlyhaligonian]

Definitely!

[Keith P.]

But it's (altogether now) TOO TALL!!!!!!!

[worldlyhaligonian]

Pfffft.

Also, saying Nova Scotian taxpayers are on the hook for the 160 is a flat out lie. You can't really count the federal money as being total in its part of the equation.

Lets take a situaton whereby federal money accounts for 1/3 of this project. That means that approximately 53 million is federal funds and 107 is the province/HRM.

Nova Scotia is 1/34 of Canada's population. By simple per capita math, 51 million of that 53 could be derived from NS.

Basically, everybody else in the country is paying for 1/3 of this project.

With the business models for downtown hotels, office towers, and convention centres being largely capital intensive initially and profitable down the road we cannot turn down essentially free money.

Instead of our profit curve starting at zero, we would already be up into the cost of the development.

I'm sure it wouldn't be too long before the city and province would both recoup the cost.


Additionally, the purpose of this development is to spur business by hosting relevant industry conferences which will better enable local companies to spread their networks and grow their businesses here.

I know some of you don't agree that this actually happens... but I've seen the deals happen and its mostly at the larger trade shows that we just can't host at the moment.


The belief that this will somehow ruin Argyle is a joke... its currently an empty lot! The infusion of people into the bars and restaurants for side meetings will definitely bolster the area.

Its just an overall attitude of being against economic growth and prosperity, even though its not an evil thing in this case. I don't get this whole crowd... they act like they are better than everybody in the city, yet they really haven't even furthered the positives of their own beliefs.

[someone123]

Another way to look at federal funding is that, rightly or wrongly, if NS does not come forward with projects that garner funding the money will be spent elsewhere. Either way, Nova Scotians still pay federal tax.

A little while ago there was some kind of survey looking at federal funding for projects in Canadian cities and, surprise surprise, Halifax was dead last.

[fenwick16]

It will be interesting to see what the real numbers are for the Nova Centre. Various people are using the $160 million dollar figure as if it is the capital cost of the convention centre and are comparing it to the new Ottawa Convention Centre. Comparing it to the $170 million dollar Ottawa Centre is the same as comparing apples and oranges. For one thing, not even the province of Nova Scotia can get a 0% interest rate.

Let's assume that the province could get an interest rate of 5% (maybe they could do better, I am not sure). In order to pay for a convention centre similar to the $170 million dollar Ottawa convention centre with an interest rate of 5% then the annual payments would be $12,061,918 per year. However, based on Howard Epstein's numbers, the province of Nova Scotia is only paying for 35.625% for the Halifax convention centre (57/160 = 0.35625). Based on a share of 35.625%, Nova Scotia would have to pay $4,297,058 per year at 5% interest for 25 years to pay for a 35.625% share of a $170 million dollar convention centre like the one being built in Ottawa. HRM's share of the Nova centre will be the same as the province's share (based on Howard Epstein's numbers). The federal government is contributing the balance, which works out to 28.75%. To do the mortgage calculation, here is the formula - http://en.wikipedia.org/wiki/Mortgage_calculator.

However, the province isn't buying the Halifax convention centre; it is leasing it for 25 years. Leasing is a cheaper option than buying since at the end of 25 years the HRM doesn't own the building and thus the residual value can be deducted from the amount paid through monthly lease payments. Personally, I think leasing is a good option. At the end of 25 years, the HRM will probably be considerable larger and will want a larger, more up-to-date convention centre at that time.

If the HRM and Nova Scotia reject this project then not only will they be rejecting thousands of jobs, they will once again be rejecting federal money. As someone else stated (I think worldlyhaligonian), $2.28 million a year to lease the Nova convention centre sounds like a sweet deal (a very sweet deal in my opinion); it is far less than what would be required to build the $170 million Ottawa convention centre. Another reason for liking this deal is that there won't be a large capital payment and thus more money available for a stadium. I wonder if the HRM and province could work out a similar deal for a stadium?

PS: It is no wonder that Howard Epstein is so concerned, it sounds like Rank Inc. offered the province a deal that is too good to refuse.

[halifaxboyns]

I saw your comment on there KeithP and you too Fenwick. I loved your comment Keith about 'godzilla-like buildings', that made me almost choke on my coffee.

I purchased this book from the American Planning Association on urban design standards (that is typial in the US). When I look at some of the comments they make about designing these centres, I'm forced to rethink my comment about 'the view' to a certain extent.

Here is a section I found interesting on convention centres:

"STREET-FACING FACADES
As with any urban building type, it is important to ensure that a convention centre fits comfortably within its context and adds positively to the experience of walking and street-level ambiance. There are some challenges with convention centres, however. They generally do not require windows, and there are often rows of extit doors that allow emergency egress from large assemby spaces. Thus, the nature of convention centres often results in a perimeter that lacks active uses or pedestrian entries. Nonetheless, it is possible for a convention centre to incorporate features that cause it to be a more natural extension of the streetscape.

Windows along Key Pedestrian Streets
Lobbies, prefunction spaces, and retail tenants can be placed at the outer perimeter. If there is codevelopment, such as a hotel, the lobby and restaurant can accomplish this.

Entrances
Convention centres have taken on the role of civic buildings. As such, they deserve to have entrances that have a grand scale. Like large civic buildings, the entrance is often pushed back somewhat from the street edge to give it a greater prominence and quality. This is an appropriate location for big architectural gestures, large-scale works of art, unique graphics, and lighting.

Ground-Level Features
Along major pedestrian streets, the facade design should incorporate elements that breadk down the scale, create a sense of openness, and add richness to the experience on foot. This can involve well-detailed storefronts, interesting glazing, overhead weather protection, unique street lighting, street furnishings, sidewalk seating for restaurants and coffee bars, and public art."

(from "Planning and Urban Design Standards", published by the American Planning Association - Part 4 - Places and Placemaking, Convention Centre Districts, Pages 438 and 439).

[sdm]

Originally Posted by fenwick16

It will be interesting to see what the real numbers are for the Nova Centre. Various people are using the $160 million dollar figure as if it is the capital cost of the convention centre and are comparing it to the new Ottawa Convention Centre. Comparing it to the $170 million dollar Ottawa Centre is the same as comparing apples and oranges. For one thing, not even the province of Nova Scotia can get a 0% interest rate.

Let's assume that the province could get an interest rate of 5% (maybe they could do better, I am not sure). In order to pay for a convention centre similar to the $170 million dollar Ottawa convention centre with an interest rate of 5% then the annual payments would be $12,061,918 per year. However, based on Howard Epstein's numbers, the province of Nova Scotia is only paying for 35.625% for the Halifax convention centre (57/160 = 0.35625). Based on a share of 35.625%, Nova Scotia would have to pay $4,297,058 per year at 5% interest for 25 years to pay for a 35.625% share of a $170 million dollar convention centre like the one being built in Ottawa. HRM's share of the Nova centre will be the same as the province's share (based on Howard Epstein's numbers). The federal government is contributing the balance, which works out to 28.75%. To do the mortgage calculation, here is the formula - http://en.wikipedia.org/wiki/Mortgage_calculator.

However, the province isn't buying the Halifax convention centre; it is leasing it for 25 years. Leasing is a cheaper option than buying since at the end of 25 years the HRM doesn't own the building and thus the residual value can be deducted from the amount paid through monthly lease payments. Personally, I think leasing is a good option. At the end of 25 years, the HRM will probably be considerable larger and will want a larger, more up-to-date convention centre at that time.

If the HRM and Nova Scotia reject this project then not only will they be rejecting thousands of jobs, they will once again be rejecting federal money. As someone else stated (I think worldlyhaligonian), $2.28 million a year to lease the Nova convention centre sounds like a sweet deal (a very sweet deal in my opinion); it is far less than what would be required to build the $170 million Ottawa convention centre. Another reason for liking this deal is that there won't be a large capital payment and thus more money available for a stadium. I wonder if the HRM and province could work out a similar deal for a stadium?

PS: It is no wonder that Howard Epstein is so concerned, it sounds like Rank Inc. offered the province a deal that is too good to refuse.

The numbers taylor has used are wrong, and over the weekend he too explained in his article how he got to those numbers (57million divided by 25 years = 2.28 million).

Your work is very good fenwick. However heres a few points you need to factor into your equation.

A completion mortgage is taken out a few years from now, therefore it is likely the mortgage rate would be somewhere's north of your numbers. You took a great starting point, but no one knows where the bond rates will be 3-4 years from now. A good assumption is they will not be as low as they are today. some of the best commercial rates out there today at around 5%, but that is considered extremely low.

There is no 25 year mortgage rate. Therefore the project is based most likely on a 10 bond rate and would have term extentions. Even the lease payments that will be proposed for the first 10 years are subject to change as the rates (bond) will likely change before the funds are drawn down.

So say, if the centre is built and completion mortgage is drawn down in 2014 there would be a lease payment rate reset 10 years from then, and would be based on the mortgage rates in 2024. Subsequently there will be another rate reset in the next 10 years following, and again another reset in 2034. There could be options to look at 15 year terms, but the banks are very uneasy on those terms because of the uncertainty of where the bonds rates will be.

In this day and age i doubt very much a financial entity would agree to finance the whole development without some equity down, even with a province providing a gurantee. Its possible, one can assume, but if not that requires factoring.

The numbers above assume that 100% of the development is financed, which again i doubt would happen. If there is an equity placement then someone will be putting capital down. In an case (developer or province) they will then factor in a rate of return on their equity (most likely in the range of 8-15%). That number would be additional to suggested 160 million.

Finally, the lease payments do not cover operating centre, captial maintenance on it and therefore one needs to add these to the numbers to get the true meaning of the annualized costs.

[beyeas]

Editing my initial posting to reflect my decreased lack of enthusism for the headline. LOL

according to AllNS bulletin...

Convention Centre Has a March Construction Date


however that headline is deceiving. It doesn't mean it has a green light necessarily... the article says that IF the government funds it, a rep from Public Works says that they plan to have the contract signed by Jan 14 so that construction can begin in March.
Talk about a misleading Breaking New Headline to be mailed out!

[DigitalNinja]

We rule, now lets see some renderings.

[halifaxboyns]

Holy blinding red batman!
Between the red text and the sun in my window; I think I need sunglasses.

Interesting...construction in March.
Well...well...well...

[beyeas]

ARG. Wait.

The emailed headline is deceiving. @#$%.

They are only saying that IF the government gives it the greenlight that it will start in March. ARG!

Sorry guys.

[PoscStudent]

Hopefully the current design of the centre isn't used because it's pretty ugly.