Questions re: Event Centre Presentations
Ron Bolin: Feb. 21, 2017
The following questions arose out of presentation by City Staff regarding the planning for the Event Centre which will see a Referendum which will approve or deny the City the authority to borrow up to $80 million dollars for the Event Centre development. It has been sent to those indicated today. Responses will be posted in the comment area of this post.
Mayor McKay, Councillors and City Staff:
I would appreciate your insights and comments on questions which were raised last night in discussions regarding the proposed Event Centre.
1. A statement from CAO Samra seemed to indicate that the matter of the operation of the VICC with the Event Centre was still open while the City’s Bid site indicates that the bidding closed over a month ago. Has this been reopened or superseded?
2. The City appears to be quite sanguine about the geotechnical conditions of the proposed area. The geotech report prepared by Tetra Tech and dated Dec. 13, 2016, appears to be significantly more ambiguous:
“Geotechnical
– Settlement: The overburden soils of this site are highly variable comprising largely coal waste fill and other dredged material. The performance of these soils would be inconsistent over an area the size of the proposed sports complex and therefore specialized foundation options and/or ground improvement considerations would be required.
– Liquefaction Potential: Even where fill is not encountered, marine sediments (i.e., silty sands) are generally loose to compact and could liquefy during a seismic event.
– Depth to Competent Bedrock: Highly fractured bedrock was encountered near surface with residual soil/coal underlying it before competent bedrock was encountered. This could require piles to be advanced deep into bedrock for competent bearing and lateral restraint.
– Coal Workings: Although not mapped directly below the proposed sports complex, the area was heavily involved in the industrial mining industry and anecdotal evidence has suggested an unmapped mine shaft could exist near the northern edge of the building. Therefore, coal mines could extend under the site.
– Existing Utilities: The City has a main sanitary sewer alignment thought the area of the proposed structure.
If this development is to proceed, it is recommended that a detailed geotechnical site exploration be carried out to assist with detailed design.” (end quote)
Has a detailed geotechnical site exploration been carried out? And if so, what does that report indicate to be the cost of any necessary actions? Where can this study be found?
3. Various Councillors have repeatedly asserted that it would be foolish to expect a venue such as the Event Centre to make money, or even to break even, as it provides some non-economic services to the public. But in a presentation at Council on February 20 at 1:14:46 into a presentation (see video), it was asserted that the EC’s Operating Results would provide a surplus of $176,205 dollars in the third year.
What is the source of this apparent discord? Is it an overly optimistic estimation of operating income?
4. Has the cost of risk been sufficiently accounted in the projections provided by the consultants? While I agree that it is not possible to make a judgement on the decision which might be made with the Snuneymuxw, or the Port Authority or any of the others who may have rights of way or other rights on the DTWF lands, it should be possible to estimate the risks associated with a complex deal in which the City may make a contingent commitment, apparently without the benefit of any committed partners and over a period of contingent liability which could take years.
What is the potential cost over time of tying up $80 million dollars (admittedly not in direct debt, but in contingent debt which depends on the convenience of others)?
What power does the action of passing such a referendum take from the City and give to its potential partners? As an example what is the contingent liability to the City if the Port Theatre Society were to suddenly come forward with their designated funding amount and demand the $4.6 million dollars in contingent liability that has been granted by the City?
5. How are the opportunity costs to the City of committing land which has the economic potential of generating property tax to the City calculated in this or any project, but particularly in the case of land uses which are not among those defined as among the fundamental functions of municipal government?
6. Where have the asset management/asset replacement costs of this facility been built into its projections? Councillors often suggest that old buildings need to be replaced and therefore we should build new ones. That may be true, but it is only significant if we have not set funds aside for the structures replacement. While ignoring asset management/replacement has been very common in government operations at all levels, it needn’t be in the future if funds are set aside for that future. Where in these projections is the set aside for the replacement of the Event Centre to be found?
It can be wise to heed the advice of Warren Buffett to the effect that there is no need to chase deals. Buying companies, he has observed, is like hitting a baseball. Don’t swing at one that’s out of your comfort zone.
The risks which seem not to have been adequately addressed in this project to date lead me to believe that this “opportunity” is not worth swinging at, at least not at this time and without much better information.
Convince me that I need to re-evaluate…
Ron Bolin
End
Posts and Comments on Nanaimo Governance 
As always, thanks for your wise and reasoned thoughts. However, all may be lost. Councillor Bestwick has dangled raw flesh in front of the rabid hounds — ‘WHL a certainty’ . And I’ll bet no on one attempts to explain what it means that the WHL ‘will seek the necessary approvals’ or why no private investors are fighting for that raw meat.
Perhaps a letter to the editors of our local media might be in order. Who knows the difference between the WHL and the Clippers, our team of the last 50 years? Is there no loyalty in hockey?
And who has checked the attendance stats to find that attendance at BC WHL games has declined almost everywhere in BC by from 20 to 50 % over the last 10 years…
Very good questions, all, Ron. Any answers? Eric
March 1, 2017: As of this date and time, no responses to these questions have been received. The City apparently has little interest in revealing the basis for their “Business Plan” on these or other definitive questions.