Where will the $450,000 come from the “deal” shortfall?
Answer: Our Taxes.
I made an address to Council in September of 2010, for I could not help but criticize what I knew would be a predictable vote on one critical piece of the new arena’s funding formula, passed by Council last April in a similar, predictable vote. I chose a lighter-hearted approach to get my point across (the full text of my address is below) for I guessed there would be no shortage of negative criticism of this taxpayer giveway.
And I was right.
Trick is, it’s easy to get sidetracked by the name proposed itself; or the fact that Trisan, an established local contractor, was the only respondent to the Township’s Expression Of Interest (EOI); or the fact that the original “deal” was for the effective life of the facility (50 years or more – Mayor Pellegrini reduced this to 25); or, the fact that the “deal” is for only $300,000.
These facts all degrade what I refer to as the “ART” of the matter here: the presence (or lack) of A ccountability, R esponsibility, and T ransparency of these critical Council decisions that so affect our taxes moving forward.
Why, you ask?
Because Council made its narrowly-passed decision to approve the new Arena facility based on a formula, spelled out on Page 34 of in Parks Recreation & Culture Department Report PR-2010–6 based on several funding sources, several of which bear little resemblance to reality.
BOTTOM LINE:
Any shortfall in funding AND/OR cost overruns of the new facility, will have to be borne 100% by our property tax base, and at the time they’re incurred unless Council can find scarce debenture room.
Why, again, you ask?
Because with the Township’s now approved Ontario Municipal Board debt increase approval (that will skyrocket the Township’s debt load to over $60 million from it’s approximate current $27 million level, to finance the Nobleton sewer completion), the Township now has little to no room to borrow funds.
Issuing debentures to bring down effective property tax increases, as in previous years, is a difficult and limited option. And in case you were wondering: any arena project cost overruns or funding shortfalls were specifically excluded in the Township OMB debt increase application.
The “Trickle Up” effect:
- The funding formula calls for $750,000 in Naming/Sponsorship rights. A Council majority has instructed Staff to enter into a deal with Trisan for $300,000. Shortfall: $450,000.
- The funding formula also calls for the “old” Schomberg Arena to be sold for $1,385,000. Forgetting the severe lack of “ART” in how Council slipped this one by us (I’ve written extensively on this elsewhere if you care to read more)we’re at the beginning of a real estate cool-down period: any shortfall in the net sales price will similarly impact our taxes.
In addition:
- Fitness membership pre-sales: $100,000 is called for (Pre-sales have exceeded this figure! Well done).
- Community Fundraising: $400,000.
- Development Surcharges: nearly $2.5 million.
Any net shortfall in realizing these figures will have to be made up for by us taxpayers. THIS is why I’m quoted in the King Sentinel for saying that, ” This proposed signage arrangement you will approve tonight, with a predictable vote, is the finishing touch on what I must say, is one of the worst displays of ‘ART’ I have ever seen.”
ADDRESS TO COUNCIL September 13, 2010
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Madame Mayor and Members of Council, I want to appeal to you to bring more of something I believe is critical to the future of our Township: ART. ART and lots of it.
You likely think I’m talking about what’ll be displayed for sale by 28 juried artists on Main Street Schomberg next weekend.
No, the ART I’m even more passionate about is something more dear, and it’s hard to put a price on: ART is 3 things: Accountability, Responsibility, and Transparency. And it is, or should be, the standard operating approach by public institutions we as citizens and taxpayers expect.
Trouble is, if you didn’t already know, there’s a shortage of good Accountability, Responsibility and Transparency and we need as much as we can get. I LOVE A R T. ART guides my approach to daily life. And I’m always on the lookout for more. Yet in my 4 1/2 years of living in this wonderful natural, heritage and artistic playground we call “King”, I’ve been dismayed by what appears to be a lack of ART in how as a Council, you have conducted your approach to our scarce tax dollars and how they are invested in our communities.
The funding formula for the new Schomberg Arena, soon to be “The Trisan Centre”, when I read it earlier this year, confirmed to me just how much we need more good ART in King, and fast.
I’m referring to Parks, Recreation and Culture’s April 2010 Report No. PR-2010-6, Page 34, which details the funding formula for the Township’s $4.7 million share of the debt for the $14.5 million facility.
And this proposed signage arrangement you will approve tonight, with a predictable vote, is the finishing touch on what I must say, is one of the worst displays of ART I have ever seen.
You must likely complete this agreement for without it, as taxpayers we’ll have to absorb $750,000 in unrealized Township investment, not $450,000 as with this deal.
Please: stop dressing up your ART – Accountability, Responsibility, and Transparency – as cheap knock-offs and selling them to us as originals. We deserve better. Thank you.
MORE:
1) The Best Kept Secret In Schomberg
2) I discuss the fate of the Schomberg Arena further in STIMULATE: Economic Development.
3) By Councillor Cleve Mortelliti: King City BLACK and Blue over Schomberg Rec Centre King Council Digging Us All Deeper Into Debt
Schomberg should just have amalgamated with King/Nobleton. They have nice arenas and great teams. Then we wouldn’t need to spend money on a new building and be able to fix our roads which is a much greater concern!
KING DEBT UPDATE:
The OMB approved King’s request to double its debt level on September 30th, an added $30M to complete Nobleton sewers.
READ THE DECISION HERE
In essence:
- The OMB approved King’s request to use debentures (loans) to fund 22.5 million in capital costs and $7.5 million in anticipated interest costs over 15 years, a total of $30 million.
- The $22.5 million includes Capital Costs of $16.2 million and $6.3 million in “Concurrent Works”.
Concurrent Works are indirect costs to the project that will be borne by ALL King taxpayers.
The Township will eventually recover the Capital Costs. These are, “… costs to be recovered from benefitting landowners”, as many homeowners are expected to choose the Township financing option for their sewer hook-up.
We now have a substantial mortgage of sorts to pay down over the next 15 years. Is this a problem? Not for some.
IT IS FOR ME:
We now have little to no room for utilizing debentures to finance economic infrastructure projects, opportunities to retain and repurpose Township assets (such as the Old Schomberg Arena), repair our over $80 million road repair backlog, or deal with an emergency.
We will now have to rely on our tax base, higher levels of government and creative public-private sponsorships to finance our future.
It is a sad day when we have to inherit a 60 million $ debt and Mayor Black will be out and not have to account for this King Township mess! She should be held accountable even after we taxpayers throw her out of office.
The tax impact is even worse than you state. Correct me if I’m wrong, but making a donation to a project like this, to buy naming rights or not, gives the donor a substantial tax writeoff. This has two results:
1. the actual investment by the donor is much smaller than it appears, so they get the naming rights and the public relations for even less, and
2. the rest of us have to pay more on our taxes to make up for what the donor is not paying.
Hi, David,
I didn’t consider the positive tax impact to the donor (Trisan) – thanks.
I also didn’t consider that there’s nothing in the MOU that defines who pays for the signage and their upkeep, further eroding the real contribution to the facility.
Greg,
Your address to Council was great, and the points made on this issue are all extremely important for voters of King to understand. We’re at a critical time, with debt exploding, development threatening to smother us, and with little or no ART evident in some of our elected officials. Let’s hope voters see the light before it’s too late.