Performing Arts Centre “To be or not to be”….Again!

Since the news broke about the likelihood of a new performing arts centre potentially making its way onto the City Budget stage, I have been asked on numerous occasions what the Chamber’s position on it (them) is. Fact is – we don’t have a position……not exactly! What we do have are some very specific recommendations that were forwarded to the Council and Senior Administration that can best be characterized as ‘Due Diligence Guidelines’ for capital projects, including performing arts centres.
For the record, I am a big supporter of the arts and I do appreciate the value and quality of life that performing arts bring to a community. I am however, an even bigger fan of the ‘business case’ that should be applied to any and all such projects before I, or the Chamber can fully air our support or concerns. Basic questions like the number of real net new jobs, the cost of borrowing, the annual cost to taxpayers for upkeep, and the predicted operating losses that all such facilities in Canada have experienced as well as the unintended consequences of lost revenue in existing facilities like the Wolf Theatre, the Budweiser Gardens, the Grand Theatre and yes even good old Centennial Hall – all beg answers.

What the Chamber told Council in its letter of July 12th was that “there exists a real opportunity for some transformational changes for our City. And while the list of potential projects is a long one, we have to begin somewhere and with some guidelines that afford us the best opportunity for success while at the same time ensuring there is a strong business case on which to proceed.”
The letter went on to say: “If a city does not change it does not grow and most experts will tell you that if you are not growing you are dying. The age and condition of some of the City’s buildings will also dictate a need for change – sooner or later. There is also the intangible need for change, which in London’s case can be predicated on our economic circumstances, our need to compete, and our need to continually strive to enhance our reputation both nationally and abroad. These types of changes are fundamental to the wellbeing of any City and in particular, London.”

Back then we indicated that the Chamber is quite prepared to offer its expert technical advice on these projects which ultimately will include more in depth analysis on areas including the due diligence associated with the “Financial and Managerial” elements of these proposed projects. In addition we would certainly want to take into consideration a more rigorous evaluation of the “Economic Spinoffs” that may be forthcoming from these projects.

We urged the City to begin with a set criteria that would act as an Initial Review or “first cut” if you will – in other words a basic formula by which the City could select a project(s) that makes the most sense as a starting point. Kudos, they’ve done that.

It’s the view of the Chamber that the Initial Review should be guided by the following recommendations:

1. All external requests for consideration of a project should specifically detail what the City is being asked to contribute, e.g. direct cash contributions, tax concessions, land offerings, modifications to DC charges etc.
2. Suggested Economic Spinoffs must be validated by qualified and quantified data and supported by third party, bona fide experts.
3. A base line formula that establishes for argument sake, a maximum 25% contribution from City coffers against 75% to be contributed by the proponent(s) must be put in place. This may be adjusted under extraordinary circumstances if the case for Economic Spinoffs is exceptionally compelling.
4. Any project that is proposed which has “Bonusing as a condition” should in our view, not be considered a priority project in the first go-around.
5. Proponents of all projects must be able to justify the investment risks of any projects and be prepared to subject their proposals to expert analysis.

The Chamber believes that these recommendations represent common, accepted practices that can and should be in place in both public and private sector settings.

We also want to be on the record in stating that while some of these proposed projects may indeed be transformational for the City of London, their associated costs must be carefully measured against the need to ensure that our basic infrastructure and other community priorities are well managed, well maintained, and well funded now and into the future.

Transformational or not, we’ll need to be convinced that a performing arts centre (if approved) will in no way jeopardize or threaten these basic needs which represent the future economic health of our community. As for the other priority projects being considered which include a $10-million medical research fund aimed at commercialization, the sale of London Hydro land to private developers for commercial and residential use, and the servicing of industrial lands along the 401-402 corridor (long supported by the Chamber) – we will comment on these during the January consultation process.


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