HomeDiagramsDatabaseMapsForum
     
Go Back   SkyscraperPage Forum > Regional Sections > Canada > Ontario > Hamilton > Downtown & City of Hamilton

Reply

 
Thread Tools Display Modes
     
     
  #241  
Old Posted Sep 25, 2019, 7:09 PM
ScreamingViking's Avatar
ScreamingViking ScreamingViking is offline
Ham-Bur-gher
 
Join Date: Jun 2013
Location: Burlington
Posts: 2,796
Quote:
Originally Posted by thistleclub View Post
As Ernst & Young projects that a new private-public facility could be operating within four or five years, if we assume that FOC will be operational between now and 2024, that $50M bill for deferred maintenance will be borne by the City under both scenarios.
There must be components that could be dropped though, if not needed to preserve the building until a new one is ready.

E.g., I recall talk about a new roof being needed. Is that part of the $50 million? The replacement cost can probably be avoided or reduced to cover critical rehab to last the 5 years.
Reply With Quote
     
     
  #242  
Old Posted Sep 25, 2019, 7:10 PM
king10 king10 is offline
Registered User
 
Join Date: Feb 2009
Location: Hamilton
Posts: 2,594
Quote:
Originally Posted by thistleclub View Post
As Ernst & Young projects that a new private-public facility could be operating within four or five years, if we assume that FOC will be operational between now and 2024, that $50M bill for deferred maintenance will be borne by the City under both scenarios.
The deferred maintenance would not be undertaken at the current facility if an agreement is made on a new facility. The current facility would be "run to failure" with duct tape repairs. You aren't going to sink $50M in deferred capital maintenance for a facility which will close within 4 years. The only reason you do that is if you're sticking with the building for another 25 years.

Direct exeprt from the EY Report.

Capital investment, we understand, is imminently required to ensure the on-going useful life for the next 25 to 30 years.

In order to achieve the on-going operation of these facilities for the next 30 years, capital investment requirements previously discussed in Section 2.4 of this report have beenincorporated from 2019 – 2024.

You'll see the cap maintenance is required in 2019 to 2024 to extend the useful life by 30 years. If a new arena is ready in 2024, that money is not being spent.

Furthermore the report states

As lifecycle maintenance is not expected to greatly improve energy efficiency, the on-going municipal utility subsidy of $1.2 million has been assumed to remain over the forecast period.

So this lifecycle capital maintenance will NOT improve energy efficiency, and will NOT reduce the utility subsidy of $1.2M the City provides the operators. So when comparing keeping the old facility and undertaking capital maintenance(not capital improvements), the old facility will be less energy efficient and still require an operating subsidy from taxpayers, whereas the new facility would not.

Also if there is a new facility, my preference would be to 100% keep it downtown.

Last edited by king10; Sep 25, 2019 at 7:21 PM.
Reply With Quote
     
     
  #243  
Old Posted Sep 25, 2019, 7:55 PM
thistleclub thistleclub is offline
Registered User
 
Join Date: Mar 2008
Posts: 3,561
Gotcha. Makes sense.

So aside from the $4.3 million in capital expenses that they've just absorbed on FOC (which Clr Farr made sound like a legal obligation under AODA), the expectation is that they'll spend nothing more on FOC (aside from the $2M in annual maintenance).

At least until they reach a decision on the arena's size, location, budget, and funding.

The operating subsidy is another issue entirely, and on that count I must confess that I'm not as optimistic as E&Y. Council's current operating agreement with Spectra incentivizes mediocrity, and history suggests that council is capable of driving Costanza-grade deals.
__________________
"Where architectural imagination is absent, the case is hopeless." - Louis Sullivan

Last edited by thistleclub; Sep 25, 2019 at 8:29 PM.
Reply With Quote
     
     
  #244  
Old Posted Sep 25, 2019, 8:14 PM
Jon Dalton's Avatar
Jon Dalton Jon Dalton is offline
Registered User
 
Join Date: Aug 2007
Location: Hamilton
Posts: 1,761
Quote:
Originally Posted by king10 View Post
New build
City Contribution = $85M up front
Land Sale proceeds of current arena= ($10M)
Net cost to City= $75M
Maintenance cost covered by the operator of the arena

Existing Arena
City Contribution = $50M for deferred maintenance within 5 years
City Contribution = $2M a year for annual maintenance over the next 25 years(based on current maintenance)
Total City Contribution = $100M

Difference between two scenarios = $25M
You could also add an opportunity cost for the land the new arena is built on, i.e. what the city could earn if it was sold and then generated development fees and property taxes. That is assuming it would be built on city owned land.

Also, that all operations and maintenance costs will be covered by a private operator over the next 25 years is a big assumption. Is that the case for Tim Hortons Field? Have the Bulldogs and/or Global Spectrum committed to cover these? $1.2 million doesn't sound egregious to maintain a facility hosting international touring acts as well as multiple sports. Would the cost of maintaining a new facility be that much closer to zero?
__________________
360º of Hamilton
Reply With Quote
     
     
  #245  
Old Posted Sep 25, 2019, 9:16 PM
king10 king10 is offline
Registered User
 
Join Date: Feb 2009
Location: Hamilton
Posts: 2,594
Quote:
Originally Posted by Jon Dalton View Post
You could also add an opportunity cost for the land the new arena is built on, i.e. what the city could earn if it was sold and then generated development fees and property taxes. That is assuming it would be built on city owned land.

Also, that all operations and maintenance costs will be covered by a private operator over the next 25 years is a big assumption. Is that the case for Tim Hortons Field? Have the Bulldogs and/or Global Spectrum committed to cover these? $1.2 million doesn't sound egregious to maintain a facility hosting international touring acts as well as multiple sports. Would the cost of maintaining a new facility be that much closer to zero?
I dont think that is the case for THF. The economics for an outdoor stadium vs indoor arena in canada are night and day. Arenas can make money, not stadiums.

The subsidy is for the most part utility costs. The new arena would be smaller and energy efficient negating the need for the subsidized utility costs.

Also it appears some councillors are not on board with continuing to subsidize global spectrum, a billion dollar entertainment company when the city has so many other funding pressures. I think the original Council motion was to “divest” itself of the arena. So theyre looking for someone to essentially run the place on their own dime.
Reply With Quote
     
     
  #246  
Old Posted Sep 25, 2019, 9:41 PM
Jon Dalton's Avatar
Jon Dalton Jon Dalton is offline
Registered User
 
Join Date: Aug 2007
Location: Hamilton
Posts: 1,761
I thought it was part of Global Spectrum's pitch to eliminate the operating subsidy over the course of several years, by bringing more events to the arena and making it profitable. Of course that would have been entirely non-binding.
__________________
360º of Hamilton
Reply With Quote
     
     
  #247  
Old Posted Sep 26, 2019, 1:08 AM
Djeffery Djeffery is offline
Registered User
 
Join Date: Oct 2017
Posts: 711
Quote:
Originally Posted by Jon Dalton View Post
I thought it was part of Global Spectrum's pitch to eliminate the operating subsidy over the course of several years, by bringing more events to the arena and making it profitable. Of course that would have been entirely non-binding.
Probably the same type of deal like they have in London where they are on the hook for any operational deficit. Which they haven't had in the 17 or so years they have operated Budweiser Gardens, and actually give money to the city every year.
Reply With Quote
     
     
  #248  
Old Posted Sep 26, 2019, 1:49 AM
thistleclub thistleclub is offline
Registered User
 
Join Date: Mar 2008
Posts: 3,561
Quote:
Originally Posted by king10 View Post
I dont think that is the case for THF. The economics for an outdoor stadium vs indoor arena in canada are night and day. Arenas can make money, not stadiums.

The subsidy is for the most part utility costs. The new arena would be smaller and energy efficient negating the need for the subsidized utility costs.
E&Y's breakdown (from page 116 of its report) combines the two Spectra facilities. The subsidy is shared between First Ontario Centre and First Ontario Concert Hall, with operating losses accruing mainly to the latter (if I read this correctly).

Status Quo Option - Operating Forecast

First Ontario Centre (2018 Actual)
Total Revenue: $3,347,231
Indirect Expenses: $2,897,194

FirstOntario Concert Hall (2018 Actual)
Total Revenue: $1,488,334
Indirect Expenses: $1,914,638

Net Operating Income (Loss) $23,733

Management Fee: -$450,000
Net Loss Subsidy: -$278,480
Utility Subsidy: -$1,200,000

Net City Proceeds: -$1,904,747


There are no plans to replace First Ontario Concert Hall at this time.

Not sure how the recent motion amending the operating agreement fared, but it gives you an idea how the City has structured the arrangement
__________________
"Where architectural imagination is absent, the case is hopeless." - Louis Sullivan

Last edited by thistleclub; Sep 26, 2019 at 2:11 AM.
Reply With Quote
     
     
End

Reply

Go Back   SkyscraperPage Forum > Regional Sections > Canada > Ontario > Hamilton > Downtown & City of Hamilton
Forum Jump


Thread Tools
Display Modes

Forum Jump


All times are GMT. The time now is 9:47 PM.

     

Powered by vBulletin® Version 3.8.7
Copyright ©2000 - 2019, vBulletin Solutions, Inc.