1. Tire-burning

The Lafarge plant in Brookfield. Photo: Media Co-op

Jennifer Henderson reports:

“I say to the Dept of Environment: Now that you know, what are you going to do about it?”

Lydia Sorflaten was a talking about an affidavit by an internationally-known toxicologist expert who accuses the province of applying the wrong scientific data to approve a one-year pilot project to burn tires at the Lafarge cement plant near Brookfield. Sorflaten lives near that plant at Shortts Lake and heads a group called Citizens Against the Burning of Tires (CABOT).

CABOT and the Ecology Action Centre were trying to persuade a Nova Scotia Supreme Court judge to admit the expert opinion evidence of  the Ontario toxicologist during a judicial review next March of Environment Minister Iain Rankin’s decision to greenlight the project.

Click here to read “Brookfield residents ask court to consider new tire-burning evidence.”

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2. Convention centre

The Grafton Street Glory Hole, with the convention centre above it. Photo: Halifax Examiner

The new Halifax Convention Centre “opens” today, but that doesn’t mean you can actually go in and walk around or that any conventions are happening or that the province has signed a lease with Joe Ramia for it, or… well, I don’t know what it means, really. I guess someone got a key to the place, and they’re going to start loading it up with canned goods and whatnot. But today’s the day.

To celebrate, a group calling itself Halifax Sane Development will demonstrate outside the facility (on Argyle Street) from 10–11am. According to the group’s press release:

Five years ago, heritage advocates and concerned residents of HRM opposed the misuse of at least $400 million in public funds over 25 years to have a new Convention Centre.

Five years later, the Convention Centre is nearly finished. Though there is no convention hotel which was promised, and event bookings are far fewer than forecasted by Trade Centre Limited (TCL) now called Events East. The Convention Centre has swallowed a public street, and put local businesses in financial peril due to major construction on what were once historic, open and walkable streets downtown.

We still object to the new Convention Centre because it’s the wrong development for the wrong piece of land in the wrong area — we already have a convention centre that’s 35 years old which could have been refurbished, re-appointed, and used at a fraction of the cost. We still
a) want to preserve built-heritage
b) explain to the public the actual cost to the public of this essentially privately-owned building
c) show there is opposition to a trade centre that we all know has and continues to be opposed by many of the public for good reason

From time to time people ask me if I have an accounting of cost for the convention centre. It’s impossible to get an exact figure, and some people will even disagree with me on the parameters for the cost, but here’s the best I can come up with at this time:

Capital Costs

$169.2 million, but this is more complicated than that single figure.

The federal government is committed to paying $51.4 million to developer Joe Ramia when the Nova Centre reaches “substantial completion,” which is a building industry term that (shorthand) means the exterior and interior walls are complete, the electricity and power plant are in place, and so forth. From my understanding, interior office and retail space (the first floor along Argyle Street) doesn’t have to be completed, and obviously no hotel will be operating. I’m not sure about landscaping. In any event, substantial completion is expected in February, at which time the province signs a lease with Ramia for the convention centre and the federal government pays the $51.4 million.

The remaining $117.8 million will be split between the provincial and municipal governments ($58.9 million each). The province will secure financing for the annual payments to be made to Ramia, amortized over 25 years… except maybe not. Maybe the province just pays the money up front and charges the city an annual fee — it’s impossible to know now how the Finance Department will handle this on the provincial end.

But assuming something like a 1.5–2 per cent interest rate, the city will be paying about $2.9 million a year for each of the 25 years. The province may pay an equal amount. Inflation may be greater or less than this. If inflation is higher than the interest rate, then the city actually “saves” money through the loan, but if inflation drops, then the real price to the city is somewhat higher.

Marketing and preparation costs

Over the past few years, both the city and the province have been transferring funds to Trade Centre Limited for “marketing and business development” of the new convention centre — that is, over and above the governments’ normal annual operating subsidy to the old convention centre — and to “prepare to operate” the new convention centre (new software and the like).Those costs have been:

2017 — $890,500
2016 — $1,139,500
2015 — $640,000
2014* — $490,080
2013* — $243,500
Total city costs: $3,403,580

2017 — $3,078,500
2016 — $586,000
2015 — $1,025,00
2014* — $490,080
2013* — $243,500
Total provincial costs: $5,423,080

* The 2014 annual report TCL submitted to Public Accounts does not separate out the 2013 and 2014 provincial and municipal transfers for marketing for and preparation of the new convention centre but instead gives a single combined figure of $980,160 in 2014 and $487,000 in 2013. For the above table, I’ve split those costs equally between the two governments.

Total marketing and preparation costs: $8,826,660

Ramia’s operational costs

$2.9 million annually, to be split evenly between the provincial and municipal governments. This figure comes from a 2010 announcement, and so may have increased since then. This is the amount for simply keeping the physical structure of the convention centre up and running, cleaning it, making needed upgrades and repairs, and so forth. So not for the operation of the convention centre itself.

This is a substantial increase to the city’s past annual operating subsidy to TCL for the old convention centre, which in recent years has been:

2017: $641,439
2016: $633,833
2015: $630,680

So the new arrangement is an increase cost to the city of about $1.3 million annually, and then a new cost to the province of $1.95 million annually.

HCC operating losses

This is the amount the two governments will split to cover the budget shortfalls of the new Halifax Convention Centre. It’s entirely a mystery figure, and will undoubtedly vary from year to year.

We can make some guesses, however.

In the past, the province alone covered budget shortfalls at the old convention centre. Trade Centre Limited has usually had an annual deficit, but the annual reports don’t separate out the convention centre part of the corporation (TCL also operated the office tower, the Metro Centre, Ticket Atlantic, and before it was sold, Exhibition Park). But the total annual deficit over the past few years has been around $1 million annually.

In terms of the new convention centre, because it’s a larger facility requiring greater operating expenses, the potential for deficits is greater. Let’s lay out some scenarios:

Wildly successful: No annual deficits
Mildly successful: $1 million annual deficits
No change in success: $2 million annual deficits
Mildly unsuccessful: $2–$4 million annual deficits
Wildly unsuccessful: Unlimited potential annual deficits

World Trade and Convention Centre

This could have been an enormous expense to the city. Under the agreement for the new convention centre, if no one else stepped in to buy it, the city would have been required to purchase the crappy old office tower on Argyle Street above the old convention centre. This would have resulted in not just the purchase price, but also the costs of upgrading the building and then (presumably) moving city offices into it.

But George Armoyan has committed to buying the building (the sale still hasn’t gone through). So those costs will likely not be borne by the city.

However, there are still costs related to separating the office tower from the city-owned Metro Centre. That’s a tangled mess of logistics, and undoubtedly the city will share some of those costs.

I’m guessing that Armoyan will try to repurpose the building to bid on city offices (the city’s lease for Duke Tower expires in 2020). If so, and if he’s successful, the city may have some relocation costs.

Argyle Street

The new streetscaping of Argyle and Grafton Streets cost the city $6.8 million.

Property taxes

As I understand it, the province will pay the city property taxes on the convention centre part of the Nova Centre complex. According to the  2009 Gardner Pinfold Environmental Impact Assessment, that would amount to $1.2 million a year. That’s a shift from one government to another, so not a true increased cost to the “taxpayer” generally (although taxpayers outside of HRM might view that differently).

But there’s a bigger issue here. The same Economic Impact Assessment broke down the expected property tax payments to the city as follows:

Estimating property tax potential from this new facility is difficult to do in a theoretical way. To illustrate the scale of taxes, we have compared hotel properties and office buildings in the Central Business District. The Prince George Hotel generates almost $600,000 in annual property taxes. The convention hotel will be about double the size in terms of rooms with an estimated 400 rooms that will generate a higher average rate. This suggests the hotel portion could generate HRM in the order of $1.2 million in tax revenue.The office tower component will also generate tax revenue. The larger office facilities in the Central Business District currently, such as Purdy’s Wharf and Maritime Centre, generate between $1.2 and $1.5 million in taxes. The new office complex will have similar square footage and could be expected to generate at least this level of tax.

We estimate the convention facility itself will generate more than double the current Trade Centre, which pays about $600,000 in municipal taxes.

The new convention facility will generate additional business for downtown establishments. In turn, we expect this incremental commercial activity to improve the real estate value of properties in the vicinity of the new convention centre. Based on a review of assessment data in the area, bounded by Brunswick, Barrington, Blowers ,and Duke, tax rate increases attributable to assessed values increasing by 10% and 25% respectively, would be in the order of $150,000 to $350,000.

Based on that report, the best case scenario is an increase in annual city tax revenue in the following amounts:

Hotel: $1.2 million
Office Tower: $1.5 million
Convention Centre: $1.2 million
Nearby increase in assessments: $350,000
Total: $4.55 million/per year.

See the problem here? That’s right: there’s no hotel. Also: the office tower is nearly empty. And: lots of nearby businesses are struggling.

I have little doubt that there will eventually be a hotel operator, so maybe after a year or two or three or four, we’ll reach that $1.2 million in property tax revenue for the hotel, but for now it’s an empty building. Sure, even empty buildings pay property taxes, but we have no way to know what that tax will be.

Same with the office tower.

Property tax receipts for the Nova Centre and surrounding blocks are supposed to offset the city’s operating expense, but that’s looking like an iffy proposition. And even if the full Gardner Pinfold project materializes, that’s still a backwards way of looking at things.

While the city is separating out the Nova Centre and the couple of blocks surrounding it to look at revenue received from property taxes versus costs of the convention centre, that’s not the purpose of property taxes. Rather, we have property taxes to pay for all city services across the municipality — policing, firefighting, parks and recreation, road costs, etc.

In general, residential property taxes don’t “pay for themselves.” That is, the taxes I pay on my house don’t cover the services I receive. Nor should they. And, again generally speaking, commercial property taxes “overpay” for the city services delivered directly to the property, and again, that’s how it should be. We can’t have a functioning city by delineating out costs per property parcel. We have all sorts of collective costs that make it possible for us each to work and live and operate businesses in the city, and so everyone pays into the whole.

Look at it this way: Before the Nova Centre was built, back when the site contained the old Chronicle Herald building and Argyle Street bars were still hip, the area generated a lot more in property taxes than the city spent on services directly for those businesses. But now we’re suddenly saying that all that’s required is the Nova Centre and surrounding blocks generate enough in property taxes just to cover the expense of the convention centre, and nothing else.

It’s doubtful that those property taxes will actually cover the convention centre costs, at least for the first few years, but even if and when they do, it’ll still be a net loss to the city.

Total costs

Total capital costs (in 2017 dollars): $169.2 million

Marketing and preparation costs for new convention centre: $8,826,660

Argyle Street: $6.8 million

Total already spent or committed to: $184.8 million

Annual payment to Ramia for operations: $2.9 million

Annual convention centre operational costs: $2 million?

Effective annual loss in tax revenue: ?

Total estimated annual costs over and above amortized capital costs: $125 million over 25 years

Total cost: At least $309.8 million

I think the actual number, however, will be much larger. More like half a billion dollars. And we haven’t even discussed the effects on the downtown office space market, the destruction of the Argyle Street bar scene, the loss value of the old historic downtown that now has an ugly sentinel in the middle of it…

One thing is certain: moving forward, Events East (the new name for TCL) and the politicians and bureaucrats will spin the numbers positively. Here’s what we should look out for:

Delegate counts: They’ll conflate local conventions with national and international conventions, but in terms of economic impact, it doesn’t matter how many local conventions or events are held at the new convention centre. What matters is the number of people travelling here from out of province.

Downplaying costs: the annual operating costs and the coverage of shortfalls will be hidden deep in budgets, and supposed economic impacts will be highlighted.

Economic impacts: These are always dodgy suppositions, but are made even dodgier with wildly large “multipliers.” Be especially aware of economic impact studies that rely on data provided by or collected by Events East rather than by independent third parties.

Opportunity costs: Never will any politician or bureaucrat talk about what else we could’ve done with the money going into the new convention centre. The hundreds of millions of dollars we’ll spend on this thing could’ve gone to poverty reduction, education, new economic programs, recreation programs, cops, or any number of other public uses. It’s not enough to say “the convention centre resulted in X dollars of economic impact” because it could have been that, say, “lowering university tuition resulted in 2X dollars of economic impact and lowered the debt burden on graduating students besides.” We make political choices, and the choice was made that the highest and best use of our tax dollars was to build the convention centre. This is not self-evident, to put it mildly.

Tim Bousquet is the editor and publisher of the Halifax Examiner. Twitter @Tim_Bousquet Mastodon

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  1. January 31
    I hope the Province and HRM never NEVER make such a horrible series of mistakes with public money again. I knew many fewer details than are thankfully given here, but still I knew just from the basics 5 years ago that this mega project not needed, outdated, and financial responsibility was by FAR slid to the public money side. WHO is watching out for us??

  2. Well, if were making projections, for the record here’s mine…

    Tell me where I might make adjustments:

    All three levels of government and the developer have clearly stated that they do not know the final cost of this project to the public.

    It seems no one knows exactly the final total cost to Nova Scotians over the life of the project and there is a disincentive for the proponents to let these numbers be known in aggregate.

    Still, we can make a pretty good estimate based on what is known. I look forward to any discussion of the premises which I will state as clearly as I can:

    1/ Federal infrastructure funding redirected from other NS projects to the CC construction

    $51 million

    2/ Estimated construction overage (things always cost a little more and somehow, even though they say it won’t, we’ll end up with this bill) – 15%

    ($159m x 15%) = $24 million

    3/ Yearly payments from PNS and HRM for building

    $14 m x 25 years = $350m (this is likely where the STV get their estimate.

    4/ Loss from operation at TCL (assuming they continue to do at least as well as they do now…

    $4 m x 25 years

    5/ General marketing and promotion

    $1 m x 25 years (it ‘s likely higher in the early years and if things don’t go well but this is a low estimate)

    6/ Property Taxes forgone on the space (They’ve exempted the CC from taxes!)

    $480k x 25 years

    7/ Interest on loan from province to finance the “private portion” of the convention centre. This is the recent bit of news where the Province says it will borrow the money to build the centre on the developer’s behalf to “save money”

    $390 m x 4% x 25 years

    8/ Payroll rebates and other inducements to companies to locate in new centre

    $2 m per year x 25 years

    9/ Increase in downtown infrastrucutre and services to support centre

    $300k per year x 25 years

    And add it all up, check it over…

    Total cost to the people of Nova Scotia over 25 years NOT including the ongoing cost of the other convention centre or actually buying or owning the new CC at the end is…

    just a little over $1 Billion DOLLARS !!!


    My view is there are very few things you could do in Nova Scotia that could cost this much over this long and have such little economic benefit to the province or be of such low redeeming quality.

  3. Wait, what? Burning rubber tires is not good for us? We’re gonna need an expert to tell us about this because we are a bunch of backwater fucking hillbillies whom regularly burn tires for fun and sport.

  4. Opportunity costs are the one I’m most upset about. Whenever you talk about affordable housing- just to cherry pick one example- the response is always: “its too expensive”, “not enough resources”, “its a complex issue” or “its not our jurisdiction [HRM]”. But the second a convention centre is dangled in front of politician’s eyes with the vague promise of economic success and tourism suddenly $168 million jumps out of the woodwork.

  5. The new convention centre is really a part of past history for most of the news today. The tax aspects are interesting because it is part of today’s news; but we the public can do little but vent over perceived and real injustices with how this project affects us. Will any of this venting do much to make the downtown core a better place to live or work… probably not; but venting is good entertainment ans a fine way to release stress so by all means keep venting.

    But if on wants to do something to make the downtown core better, it would be to have a 24/7 public transit system. Also the price of bus fares should be reduced to something like a loonie during the day and free after 6pm. Then people would head downtown on the bus to partake in restaurants, bars and other entertainment and hopefully drinking and driving in personal vehicles would drop to nil. And for those that were caught DUI downtown, they should lose their driver’s license for a year. Right now it is hard to understand why one cannot get access to HRM’s hospitals on a 24/7 basis using the publicly subsidized transit system. Time to get creative when looking at ways to make living in the downtown core more inviting and economical.

    1. Anything that makes living downtown better (public transit, nice parks, good restaurants and bars) will raise prices unless density increases. Its just the way it is. Measures which make it harder to reach downtown by car, although there is a lot to be said for that from an environmental perspective and to encourage decentralization will also contribute to prices – the harder it is to get to downtown from the suburbs, the higher the price premium on downtown land.

    2. How does factual reporting of issues that will impact the public interest for the next 30 years and determine the direction of our economy become ‘venting’.

      How about some poetic support for the journalists?

      Speak the truth
      and speak it often
      and speak it come what will
      or those that did
      the wrong they did
      will do the wrong thing still.

  6. “Sure, even empty buildings pay property taxes, but we have no way to know what that tax will be.”

    Are the assessed values of the properties and property taxes paid not public? They are in New Brunswick, and are online in a searchable map. For instance here are the records of the building where I work: with assessments and taxes back to 2013.

    1. There’s a two-year lag on assessments. This year, Ramia will pay tax on the assessment from two years ago.

  7. I wonder if they have done anything with the new convention centre glass to keep it from killing hundreds of birds, perhaps more, in the run of a year. I sure hope so.

  8. I don’t have a problem with a nice big blue building in the middle of downtown but I DO have a major problem with tax money being spent on this. Ramia can get his money from the bank like everyone else. I think the reason government does this is because it creates jobs for people in construction, and also equipment rental spots (see all those cranes?).

    But again, if Ramia or anyone else wants to start a business the government should just get out of the way – don’t corps already get a great tax rate federally?

    And like Tim often writes: where’s his subsidy? What about all the other small businesses employing people?

    I’m sad the NDP put this together and I’m sad none of the other parties tried to take it apart. Really makes you wonder what -exactly – you’re voting for.

    1. I recall the Convention Centre had all-party support when it was approved.

      Frankly I wish Dexter had declined, but the other parties joined by a chorus of the same local hucksters who may soon be pushing an NFL stadium would have howled that the NDP was hostile toward business and had cost us thousands of jobs.

  9. We really should have just put a giant rubber duck in the harbor, or made a statue of that guy who brought the donair to these lands, or had a really cool fireworks display, or even just given a bunch of money to Ramia to make him go away. All of these things would have cost less and wouldn’t have left us with a giant blue eyesore in the middle of town that will look even worse in 30 years once those glass panels start failing.

  10. You cannot get cheap, 1.5-2%, money today.
    In January 2015 the province borrowed $125 million for 30 years with a 3.5% coupon and priced to yield 2.91%.
    At that time Long Term Canada bonds had a yield of 1.84 % and today it is 2.15%
    (Back in the early 80s I read everything I could on bonds as investments.)

      1. That is the 3 month rate. The debt will be long term. Carrying 3 month rollover is taking a guess on rates.

  11. I really enjoyed that this morning file ended after #2, foregoing the usual format. Gives the strong sense of “fuck this, I’m out”, which is a solid response to the convention centre mess.

    1. I just ran out of time. It took a lot of work to get those figure together and double-checked…