Prov­ince wants ex­tra $300,000 from HRM for new Con­ven­tion Cen­tre

Mar­ket­ing and tran­si­tion ex­penses go above and be­yond what city hall (in­for­mally) agreed to pay two years ago.

The Coast - - THE CITY -

The

prov­ince wants HRM to re­im­burse it for $301,500 in tran­si­tion costs for the new Hal­i­fax Con­ven­tion Cen­tre that it says was the mu­nic­i­pal­ity’s re­spon­si­bil­ity to pay. City staff, how­ever, aren’t so sure about that. In a some­what tau­to­log­i­cal state­ment to The Coast, fi­nance man­ager Brice Fisher says city hall is re­view­ing the bill’s va­lid­ity.

“Re­gard­ing out­stand­ing in­voices from the prov­ince, we are re­view­ing these ex­penses to de­ter­mine if we do in­deed have out­stand­ing com­mit­ments,” says Fisher.

At is­sue is an in­for­ma­tion re­port that went be­fore city coun­cil in 2015, which is now “evolv­ing into a piv­otal doc­u­ment,” ac­cord­ing to a brief­ing sent to the CAO’s of­fice.

Un­like con­struc­tion and op­er­at­ing costs, mar­ket­ing and tran­si­tion ex­penses weren’t out­lined in the orig­i­nal MOU signed be­tween HRM and the prov­ince to cost-share the new con­ven­tion cen­tre.

So two years ago, the prov­ince came to the mu­nic­i­pal­ity ask­ing for help with those ad­di­tional ex­penses.

The afore­men­tioned in­for­ma­tion item went to coun­cil, and sub­se­quently staff be­gan bud­get­ing tran­si­tion funds for Trade Cen­tre Lim­ited (now Events East) as­sum­ing a 50-50 split with the prov­ince.

But while there was some dis­cus­sion on the is­sue by coun­cil­lors, no mo­tion was put for­ward and no vote oc­curred.

“No for­mal agree­ment on tran­si­tion costs was ever made with the prov­ince or Events East,” writes Fisher in an in­ter­nal re­port.

Nev­er­the­less, over the last few years HRM has dumped more than $3 mil­lion into up­grad­ing soft­ware and other prepa­ra­tions for the con­ven­tion cen­tre’s launch. The prov­ince has kicked in over $5 mil­lion dur­ing the same pe­riod.

All of that money is in ad­di­tion to the gov­ern­ments’ reg­u­lar op­er­a­tional sub­sidy to Events East.

Back in Au­gust, only a few months be­fore the con­ven­tion cen­tre was set to of­fi­cially open, the prov­ince sent a bill for over $300,000 in tran­si­tion costs above and be­yond the scope of what HRM had orig­i­nally agreed to pay.

The re­quest in­cluded two items—$38,000 for ICT pe­riph­er­als and $108,000 for “gov­er­nance”—that weren’t in­cluded in the list of ex­penses brought to coun­cil two years ago. The prov­ince also wants an ex­tra $156,000 in ad­di­tion to the $633,000 for sales and mar­ket­ing HRM paid Events East last year.

“Staff have not agreed to pay these amounts,” writes Fisher, who adds that those same staffers are con­cerned the mat­ter “lies at the mar­gins of their au­thor­ity un­der the HRM bud­get.”

Erin Esiyok-Prime, spokesper­son for Events East, says the $108,000 for “gov­er­nance” that HRM owes was re­quired to “sup­port the tran­si­tion” of Trade Cen­tre Lim­ited to Events East.

“This in­cluded es­tab­lish­ing our new board of direc­tors, de­vel­op­ment of our strate­gic plan, de­vel­op­ment and im­ple­men­ta­tion of our Events East brand and new web­site.”

The down­town con­ven­tion cen­tre of­fi­cially opened last month af­ter sev­eral lengthy de­lays. It’s be­ing leased by the prov­ince from Joe Ramia’s Rank Inc. through an an­nual pay­ment.

The mu­nic­i­pal­ity agreed to split that $117.8-mil­lion cost with the prov­ince, but how much the two lev­els of gov­ern­ment will have to shell out each year is still be­ing ne­go­ti­ated.

Ini­tial con­struc­tion es­ti­mates and op­er­at­ing costs would have slot­ted the an­nual lease pay­ment in at $13.3 mil­lion—half of that cov­ered by HRM. But with con­struc­tion de­lays and in­ter­est pay­ments still be­ing fi­nal­ized, the ac­tual lease pay­ment will likely be higher, writes Fisher.

The fed­eral gov­ern­ment is also com­mit­ted to pay out $51.4 mil­lion to Ramia upon “sub­stan­tial com­ple­tion” of the con­ven­tion cen­tre. When that will hap­pen is also still up in the air while fin­ish­ing touches are added and the prov­ince ne­go­ti­ates its lease.

To help cover the costs, sev­eral years ago city hall estab­lished a Con­ven­tion Cen­tre Re­serve to save up all the prop­erty taxes from the sur­round­ing Nova Cen­tre—in­clud­ing its of­fice tower, re­tail, park­ing and ho­tel.

But see­ing as how most of the Nova Cen­tre still sits empty and un­fin­ished, staff are pre­dict­ing those taxes won’t off­set HRM’s lease pay­ments for sev­eral more years. The prov­ince has agreed to de­fer Hal­i­fax’s share of the lease pay­ments for the next 10 years (with in­ter­est) if taxes aren’t suf­fi­cient, as a way to mit­i­gate that fi­nan­cial risk.

Ac­cord­ing to Fisher’s brief­ing to the CAO’s of­fice, the $300,000 the prov­ince wants now might be bet­ter placed in the con­ven­tion cen­tre re­serve, and used for any up­com­ing short­falls in lease pay­ments.

Any fi­nal de­ci­sion on whether to pay the money will still need to be de­bated at a fu­ture coun­cil meet­ing.

Un­til “sub­stan­tial com­ple­tion” of the Hal­i­fax Con­ven­tion Cen­tre, the orig­i­nal MOU says the prov­ince car­ries all costs and risks as­so­ci­ated with de­layed con­struc­tion.

A wel­come week­end for mem­bers of the pub­lic to tour the ex­pen­sive Ar­gyle Street project they’re pay­ing so much for will take place next week­end, Jan­uary 12.

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