Philip Mcleod

The McLeod Report - London, Ontario

A regular commentary on civic affairs in London, Canada by journalist Philip McLeod.

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TUESDAY, JULY 22, 2014

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More tough questions for the PAC

TODAY’S REPORT #1,018: There’s still a lot we don’t know about the proposed performing arts centre and time is rapidly getting short for finding the answers. A city council committee on Monday declined to endorse the project, at least until some important business plan issues are resolved.

Tuesday, July 22, 2014 – London

If you’re still following along, here’s what we still don’t know about the performing arts centre being pushed by Music London (a.k.a. Orchestra London) and Grand Theatre (somewhat timidly these days), as outlined in a report to city council’s investment and economic prosperity committee on Monday (July 21).

This list was prepared by Martin Hayward, the city treasurer, and apparently was based on a draft report from theatre consultants Novita Interpares. What makes it curious, at the least, is the questions emerge from Novita’s examination of what purported to be a business plan for what is (was) to be called Celebration Centre.

The concept of a performing arts centre to replace the 50-year-old Centennial Hall was first offered more than two years ago as two separate proposals by today’s ‘partners’. The current proposal, for one concert hall worth about $55 or $60 million, emerged last November.

Adjacent to Celebration Hall would be a parking garage and two condo towers, to be built by York Development. The projects would be constructed by Ellis Don and the centre would be managed by Global Spectrum. None of these partnering arrangements were tendered.

So seven months at least has gone by but still gaping holes remain in this idea. You should care because Music London et al believes you should pay for the whole shebang – $15 million each from your federal tax and provincial tax pockets, and the remainder from your city taxpayer wallet.

The good news is the list of questions is getting shorter; the bad news for those involved is the questions are getting much more difficult. Here’s the list:

    What are the proponents (i.e. the partners) corporate profiles and bona fides?
    What are the key terms and principles of third party agreements (e.g. management agreement, mixed-used development agreement)?
    What does the site plan look like with all key issues resolved?
    What are the key facility design criteria?
    What are the faculty’s schematics (plans and sections)?
    What are the functional program descriptions and relationship diagrams?
    What are the system and equipment programs and descriptions?
    Where is the analysis of the southwest Ontario performing arts market with five to 10-year forecasts?
    What are the market development strategies and sample program projects for the first three years?
    Where is the cost analysis for the general contract related to physically building the structure?
    What is the comprehensive project budget for capital development including cash flow?
    Where is the comprehensive capital development plan and timetable?
    Where is the pre-opening operational plan and budget?
    Where are the pro-forma financial statements including cash flow?
    Where are the operational revenue forecasts, the operational cost forecasts and the operational cash flow forecasts in spreadsheet format for the first five years with line item notes?

Now you might think (yawn) all this is so much insider baseball – and you’d be right. However, it is the necessary stuff a financial analyst would expect to find in a competent business plan, such as the business plan city council asked Music London for some months ago.

Their excuse on Monday for what seemingly was a shoddy first try? We couldn’t afford a better one. They estimated it would cost them $500,000 to $1 million for a proper business plan; Mr. Hayward responded it would cost much, much less. One might ask, why couldn’t the commercial partners pony up some cash?

So already you can see the dollar sign danger lurking behind this idea.

Indeed, as Mayor Joni Baechler put it succinctly: “At a minimum we need to know what the annual operating grant would be from the city and all of the circumstances around the money you are asking for.”

Exactly.

So now the city’s contract with Novita is to be expanded “to perform a thorough review of the business plan,” and to also include a market analysis, facility program and design criteria, and site analysis and criteria to “assist in the development and evaluation of a business plan.”

The city’s approval of the project will be subject, “at a minimum,” to provision of a business plan that is satisfactory, that is one that answered adequately all those questions above.

And that’s a pretty tall order with but seven weeks left before this council is unable to make any decision involving big money.

Sensing that, Councillor Paul Hubert tried to convince the committee to make a stronger recommendation to council.

“We’ve got to clearly say we’re prepared to move forward on this now, or shut it down. My vote goes with moving forward.”

The mayor shot that down too. Although she supports the idea of a performing arts centre, she’s undecided still about this particular version. But she worried that a premature council vote on showing support could backfire, as happened in 2004. Back then, and before all the facts were known, a vote was forced at council that turned the project down.

Time, though, is rushing against this proposal now. Council becomes lame duck at 2 p.m. Sept. 12, nomination day. Lame duck status restricts council’s ability to spend more than $50,000 on any one project.

After next week there is only one scheduled council meeting, on Sept. 2, before this duck goes lame, although a special meeting could be called. 

Even then, if all the t’s get crossed and i’s get dotted, it’s not a slam dunk council will approve this project, especially if the required annual civic subsidy is significantly more than the current $500,000 commitment.

Based on performing arts centres elsewhere in Canada, it’s a pretty safe bet the required support payment will be more than that.

NOTE TO READERS: With city council now on a summer schedule and many people at City Hall on vacation, The McLeod Report reverts to once-a-week publication, unless events merit. You can also find a second, and separate, column each week in London Community News or on their website.