City council poised to explore ‘next steps’ on downtown arena plan
(Hamilton Spectator, Matthew van Dongen, Sept 5 2019)
The city appears poised to explore private-sector interest in partnering on a potential $130-million new arena and entertainment facility somewhere in the downtown.
But that won't stop Coun. Esther Pauls (Ward 7) from pitching a separate evaluation next week of a Lime Ridge arena plan from the owners of the Mountain mall and the Hamilton Bulldogs.
Councillors spent hours behind closed doors discussing aspects of a consultant recommendation to investigate private-sector interest in helping build a new 10,000-seat sports arena paired with "high-density" development somewhere in the core. Prospective core locations were also kept secret.
But Mayor Fred Eisenberger emerged from the meeting early and expressed confidence councillors are willing to take "the next steps" to test the viability of a public-private partnership.
Ernst and Young consultant Zack Pendley earlier argued the $130-million plan would give the city the best bang for economic buck and even permanently end the need for annual taxpayer subsidies.
City staff have suggested such a multi-sport facility could also benefit from federal or provincial grants if Hamilton opts to pursue a 2030 Commonwealth Games bid.
The catch?
Pendley said he "can't emphasize enough the importance of an anchor tenant" to the financial sustainability of a new arena.
But the current arena tenant, the Hamilton Bulldogs OHL hockey team, have pitched a separate and smaller arena at Lime Ridge Mall on Upper Wentworth Street.
Mall and team officials attended Wednesday's meeting to watch part of the debate, but they did not comment publicly before the end of a hours-long private session.
Team owner Michael Andlauer, who is in the last year of a two-year lease, has previously indicated he is willing to work with the city on a viable downtown option if it can happen soon.
Pendley told councillors Wednesday a private-public facility could be operating within four or five years.
Andlauer did not respond to questions Wednesday about whether that timeline could work for him or whether the city's decision would affect any ongoing lease negotiations at FirstOntario Centre.
Read it in full
here.
Thoughts:
The City is looking at spending $85 million toward a $130 million 10,000-seat facility whose prime tenant draws less than half that and operates on two-year lease increments.
Closing FOC is projected to save as much as
$26.3 million in expenses over the next 30 years. So spending that $85 million will potentially help the city avoid $26.3 million in costs by 2049. Of course, a new facility would possibly need additional upgrades during that time — FOC itself is 34 now — so it's hard to know how much of that "as much as" estimate the City can actually claim as a savings.
The Commonwealth Games is being floated as a way of defraying the cost to the City, which would be true if there wasn't a push from said tenant to have this new facility completed yesterday.
"
We can't wait five years," Andlauer said a year and a half ago. "People are going to lose interest."
He may not have much choice. The City's consultant on this project, Ernst & Young, projects that a private-public facility could be operating within four or five years. Pushing that timeline forward will presumably increase the total cost, most of which will be borne by the municipality (the current formulation assumes 2/3 of capital costs will be absorbed by the City.). A projected 2024-2025 arena occupancy would see the Bulldogs sign and run out two more facility leases at FOC before the lights go on at the new arena.
The Commonwealth Games hypothetical, which would allow the City to tap money from senior government, requires additional patience. They aren't even planning to award the 2026 CG until next year, and for the City to successfully enlist senior government for cost-sharing would likely require them to wait until after the 2030 CG have been awarded to break ground. So let's say four or five years before the City will even know if they'd have the 2030 CG card to play.
For comparison, Hamilton voted to come aboard the 2015 Pan Am Games in the spring of 2008, the games were awarded in November 2009, the $146 million stadium broke ground three years after that, and opened around two years after that. Assuming that council can agree on and hold to a facility location , they can maybe shave three years off that timeline, but even so, that's another two years from groundbreaking to occupancy.
So depending on how optimistic you are, this will either cost the City $85 million and be open in 2024 or cost the city far less and achieve occupancy in 2027. (Andlauer has previously pledged to
match the City's share dollar-for-dollar, so there may be a rosier interpretation, if you assume that he's not counted in the projected $45 million of private funding.)
Cost, of course, is relative. The silver-bullet scenario, hosting the 2030 Commonwealth Games , is thought to carry a hosting cost to the City $300 million or more (by way of an example, the 2022 games are projected to cost
Birmingham £184m — $300m CAD even after accounting for the value-engineering of that event and a Brexit-panicked pound).
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