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  #241  
Old Posted Sep 25, 2019, 7:09 PM
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ScreamingViking ScreamingViking is offline
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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.
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  #242  
Old Posted Sep 25, 2019, 7:10 PM
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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.
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  #243  
Old Posted Sep 25, 2019, 7:55 PM
thistleclub thistleclub is offline
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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.
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Last edited by thistleclub; Sep 25, 2019 at 8:29 PM.
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  #244  
Old Posted Sep 25, 2019, 8:14 PM
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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?
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  #245  
Old Posted Sep 25, 2019, 9:16 PM
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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.
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  #246  
Old Posted Sep 25, 2019, 9:41 PM
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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.
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  #247  
Old Posted Sep 26, 2019, 1:08 AM
Djeffery Djeffery is online now
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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.
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  #248  
Old Posted Sep 26, 2019, 1:49 AM
thistleclub thistleclub is offline
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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
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Last edited by thistleclub; Sep 26, 2019 at 2:11 AM.
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  #249  
Old Posted Yesterday, 2:33 PM
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Andrew Dreschel: Renovation option elbows its way into arena debate
10,000-seat arena too small for growing city like Hamilton

https://whttps://www.thespec.com/opi...-arena-debate/

A third option besides building a smaller arena downtown or on the Mountain is elbowing its way into the ongoing arena debate.

Why not renovate the aging FirstOntario Centre (FOC) instead?

City staff is currently exploring private sector interest in building a new 10,000-seat arena in the core, while simultaneously looking at the feasibility of Hamilton Bulldogs owner Michael Andlauer's proposal to partner on a smaller facility at Lime Ridge Mall.

But Coun. Terry Whitehead argues the city also needs to take a serious look at doing a major overhaul of FOC, noting that the renovation option has never formally been taken off the table.

Whitehead believes Hamilton is too big a city to quietly settle for the kind of smaller venues being proposed.

"There is no future in a 10,000-seat arena in a city that's growing like Hamilton."

Enter development consultant Jasper Kujavsky, who is co-ordinating a local consortium's push to redevelop the city-owned Hamilton Convention Centre.

Speaking on his own behalf, Kujavsky argues that the 17,000-seat FOC — formerly known as Copps Coliseum — can be transformed into a state-of-the-art 9,000-seater capable of seamlessly expanding to full capacity when needed.

"The renovation gives you everything you get in a new arena but it doesn't limit you to only those 10,000 seats if you have big shows or the occasional major league sporting event," says Kujavsky.

The reno option originally stems from a 2016 report by international venue experts Brisbin Brook Beynon Architects, which Kujavsky commissioned.

That study pegged the cost of completely rebuilding FOC at $252 million. But it said remodelling the lower bowl into an 8,500- to 9,000-seat venue with premium seats, private boxes and party zone amenities could be done for about $68 million.

According to Kujavsky, when you factor in inflation and reinforcing the load-bearing capacity of the roof to handle modern rigging and drop-ceilings to create a sense of intimacy in the lower bowl, the total cost would ring in at roughly $115 million to $130 million — the same price as building a 10,000 seat arena.

The renovation option largely fell by the wayside in August when consultants Ernst & Young recommended that a new "right size" arena be built downtown to replace FOC.

The consultants, who were hired by the city to evaluate its venue needs and examine divestment options, said a smaller arena will better serve Hamilton's market needs and made more financial sense than maintaining or retrofitting the 34-year-old FOC.

The consultants pointed out that in 2018, only 13 of 98 events used the arena's upper bowl.

Kujavsky agrees that a smaller venue would serve Hamilton's normal requirements. But renovating FOC not only gives the city flexibility for hosting megashows, it keeps the door open for Hamilton one day becoming a major league city. Permanently downsizing to a smaller arena would automatically kill this city's abiding dream of landing an NHL team.

Coun. Jason Farr, who represents downtown, says he's "absolutely open" to exploring the retrofitting concept.

Farr notes, however, that a major renovation could create problems for where the Bulldogs — FOC's crucial anchor tenant — play. "Obviously they would need to be part of that conversation."

For his part, Coun. John-Paul Danko believes there's "definitely some merit" in revisiting renovation, but the driving question for him remains which arena proposal provides the best value for taxpayers.

It's hard to argue with that. Which is all the more reason why council should study the reno option before taking a wrecking ball to FirstOntario Centre.
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