Public aiding Schooners’ CFL dream
Stadium plan calls for a hefty sum of provincial funds
The proposal from the owners of the prospective Atlantic Schooners football team for a stadium partly built with public money is a masterpiece of the genre.
It imagines an “epicentre for world-class entertainment and cultural events” on the shores of Dartmouth, N.S., one that would increase participation in local sports, raise property values, drive tourism and make all of Atlantic Canada feel better about itself. And all at very little risk to the taxpayer.
Like any good story, it comes with a surprising twist. But not too surprisingly, it pertains to the funding of the stadium, which is where these things reliably become tricky.
When last we heard, the plan was for Schooners Sports and Entertainment, the company fronted by three businessmen that has the blessing of the Canadian Football League, to buy a chunk of land at the former Shannon Park military base, where $120 million of public money would be used for a “community” stadium of 12,000 seats. The Schooners group would use its own money to build less robust stands totalling another 12,000 seats, bringing it up to CFL size, which could eventually be replaced with something more permanent. This plan, announced in early spring, was itself a marked departure from what was envisioned a few months earlier, when the ownership group unveiled the Schooners name at the Grey Cup and said it wanted a 24,000-seat stadium with the costs split about evenly between itself, the municipality, and the province.
The scaled-down version was a response to local concerns about the costs and risks involved with building the whole thing at one go, SSE said. Details to come.
Those details came in the form of a proposal submitted to Halifax Regional Municipality last month, most of which was released on Thursday. And the surprise twist is the bulk of the funding would come not from the city, but from the province, in the form of an increased hotel tax and a new car-rental tax.
The financing proposal assumes an institution would loan SSE up to $110 million to acquire the federally owned land and cover construction of the permanent 12,000-seat structure. This would then be repaid over 30 years at $5 million to $6 million per year. The hotel tax, doubled from two to four per cent, and the unspecified car-rental tax, would bring in $3 million to $4 million per year, and the city and the Schooners would cover the rest of the annual loan repayments.
The proposal also provides a range of options for Halifax to provide its share, much in the same way one might buy an appliance set at an outlet store: from a lump-sum, one-time payment to a no-money-down approach that could end up costing much more. One of the options suggests a ticket surcharge that, if all goes well, would cover Halifax’s annual payments. Sounds great. FREE STADIUM.
It was around this point while reading the document that I went from raised eyebrow to furrowed brow.
Why would the province now be expected to provide $90 million to $120 million of the debt repayments while the city would pay something like a third of that? The most likely explanation is it is the only way to make the numbers work on paper. Sports stadiums are often built with something called tax-increment financing. The idea is the city takes out a big loan to build the thing, and then the increased property taxes earned in the surrounding area are used to pay off the loan. But people are wise to that scheme now: often the imagined new development doesn’t materialize, and if it does then it turns out those new property taxes are actually needed elsewhere.
In the case of Shannon Park, there was already an approved plan for residential and commercial development on the site, making it much harder to promise a tax-base windfall as a result of the stadium. The opposite is true: that plan now has an eight-hectare, stadium-sized hole where expected development won’t happen. Instead, increases to the tax base would have to come from imagined higher real estate values and the addition of “premium” businesses that would be attracted to a neighbourhood with a football stadium. Even by the standard of such proposals, and that is a low bar to clear, those are big assumptions.
And so comes the more straightforward solution, which is to increase taxes the province collects, in this case from people who stay at hotels and rent vehicles. It’s simpler, although it punishes the tourism industry. And, as always needs to be said with stadium construction, it’s wrong to claim that revenue collected from new levies is simply found money Nova Scotia would not otherwise have had. The province could double its hotel tax tomorrow and use that money for education, health care, or an opera house. A stadium-specific tax increase is still a use of public money.
The Schooners group said in April one of the reasons for the pivot to a smaller stadium was to avoid the toxic issue of giving a big public handout to a wealthy sports franchise. Five months later, I’m not sure what else you would call this.