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Municipal Vermouth
Sandy Hickman seconds motions like he’s driving a truck and acknowledging someone on the shoulder of the road. I love it so much.
Anyway: the KPMG report: Mile One Centre Sale Implication Review, was mentioned and is now available to the public. You’ll get a high level overview of this today, in preparation for a deeper analysis from Rob Nolan and I in the next couple of weeks. There was also an application for personal care home apartments in the East End that I’ll break down.
First Word on Mile One Report
On January 14th, 2021, international consulting firm KPMG released their take on whether the city should hold onto Mile One, or sell it off to a private entity (i.e. Dean McDonald / Deacon Investments, who has already made a public offer to buy).
In the report, Mile One was described as “aging, [and] mid-sized,” “requiring significant retrofits,” and “dependent on the success of its two anchor tenants — the Growlers and the Edge.” There are a lot of liabilities.
Couldn’t help but have a little chortle at the idea of our arena being a symbol of town in general. Crowd loves to hate it. It flourishes and deflates in line with the mono-industrial performance of the day. It could stand to be younger, and more efficient. But it’s ours dammit, and when push comes to shove, we’re glad it’s here. (Most people anyway.) We just don’t want to pay for it.
To set the scene: St. John’s Sports & Entertainment Ltd. (SJSEL) is a non-profit corporation that operates Mile One, and the St. John’s Convention Centre on behalf of the City. So, the two facilities have some overlap with respect to building operations (like hot water provision and electrical service) and staff.
In an effort to understand possible implications of privatizing Mile One, SJSEL paid KPMG $35,000 for a report that essentially tells us to do another report. Surprise! No real recommendations, and it doesn’t take a side.
SJSEL is pleased with the report, and agrees with continuing on with more reporting on a Building Conditions Assessment. It wants to see this completed, and receive public feedback, before making a decision about selling.
This report does give us lots of information though, which is a start. Cllr Korab says it’s useful, even if the City doesn’t move ahead with the sale. It accomplished the following:
- Review of the Canadian marketplace for comparable arenas, to find others that are privately owned
- Analysis of building systems
- Review of labour relations
- Review of past agreements (to find potential restrictions)
- Analysis the impact on the City’s tourism and event strategy
- Summary of valuation methods to figure out an accurate selling price
Cllr Korab highlighted that “of the 58 comparable arenas in Canada surveyed by KPMG, there is only one example of a privately owned and operated arena, that being in Manitoba [home to the Manitoba Moose and the Winnipeg Jets].” This makes it a bit hard to compare to Mile One, as we do not host an NHL team.
There are four cases of Public-Private Partnerships, where a City holds ownership of an arena but contracts a private partner for operation and maintenance. The Cities of Brampton, Kelowna, Victoria, and London use this model.
Of all arenas included in the scan, regardless of ownership model, 34% are operated by private companies. An interesting option!
The report notes that a private owner / operator could take risks that are not afforded to the publicly funded SJSEL, which could increase the local community’s ability to attract “large scale significant sporting events and concerts.” This could have positive economic impacts.
Several parts of the report are redacted, which Cllr Korab said were done “according to the ATIPPA regulations… to protect information particularly in relation to staff and contracts.” This isn’t unusual. But I’m left with questions, especially around historic agreements and how they’d impact a possible sale. Why would that need to be redacted?
The City’s outstanding debt of $2.3 million from the construction of Mile One Centre—scheduled for full repayment in 2022—would need to be considered if a sale took place. The report also states that “the sale has the potential to remove approximately $2 million in subsidy from the City’s obligations,” because of the running deficit that has to be taken care of every year. (Some people prefer the term ‘operating grant’ to subsidy, but at the end of the day, it’s the municipal coffers bridging that gap to the black.)
A listing price was not included. It was recommended that an independent appraiser use three valuation methods and compare. However, “these assets typically trade for their income-producing potential, rather than for owner occupancy.” For context: Mile One’s 2019 revenue, less operating expenses, was -$2,972,000. Even with the operating grant from the city, it’s STILL running a deficit. Take from that what you will.
City finances are not as simple as comparing an expenditure in one place to a possible investment in another. There are often broad-reaching and diverse implications to tweaking numbers on each budget line. However, as we saw in December when the City budget dropped, the way it shakes out is according to Council’s choices. Those choices are based on priorities. Saving $2 million a year from the Mile One operating grant would not guarantee an improved level of service of that amount somewhere else (for example, sidewalk snow clearing).
It will be interesting to see how this information, and the further reporting, influences how Council members develop their priorities going forward.
Personal Care Homes Possible on Tiffany Lane
77345 Newfoundland and Labrador Ltd. / KMK Capital Inc. has requested a rezoning for the property at 11 Tiffany Lane—the lawns and gardens of the Bryn Mawr designated Historic Home at 154 New Cove Road—in order to build two 6-storey assisted-living facilities. These buildings would offer 237 units and 2 levels of underground parking.
Right now, the property is zoned Residential Medium Density (RS), which doesn’t allow Personal Care Homes. The applicant is asking for Apartment High Density (A3), but staff are recommending Apartment Medium Density (A2).
Beyond written submissions, about thirty people showed up to a public meeting back in January to discuss all this, and there were several concerns raised.
If a rezoning to A3 were to take place, a maximum height of 10 storeys would be possible, which raised a lot of hackles. Even at 6 storeys (allowed within A2), people were worried that the size and density of the buildings would create “negative impacts” like shadowing on adjoining properties.
As part of a Land Use Assessment Report, the applicant actually did a ‘shadow study’. The photo below shows their work for the Spring Equinox, but drawings were also prepared for Summer Solstice, Fall Equinox, and Winter Solstice! Neat.
In their submission, Heritage NL raised the point that if these towers were built, Bryn Mawr would fall under shadow for much of the year. This would be detrimental to a wooden structure in need of sun exposure to remain dry.
Increased traffic was also brought up. The City’s Transportation Engineering staff had no concerns for Personal Care Home usage. With that said, the rezoning alone could trigger a traffic study and possible traffic improvements, if the proposed use should change (such as an Apartment Building).
“There are too many Personal Care Homes in this neighbourhood” was another concern raised by residents. They’re worried it wouldn’t promote a diverse neighbourhood, and younger families looking to buy would be scared off. I don’t know if they realize this, but at the rate things are going, Town will probably become one giant Personal Care Home in the not-so-distant future.
The applicant noted that, “based on the demographic profile of St. John’s, there will be an undersupply of this type of housing in 5 years, which shows a need for new Personal Care Homes.”
Cllr Burton moved to reject staff’s recommendation to move forward with A2 rezoning to allow the buildings, and was supported by the rest of Council. She said it would be “too much for the area, and not really representative of the best use that could be possible as infill in that neighbourhood.”
Council would like to see the applicant come up with something else less intensive that would make the neighbourhood more complete. Cllr Hickman mentioned that it would be best to have the Historic Home reused or refurbished in some way, and included in the redevelopment of the property.
Municipal Brandy
Recommendations for the 2021 Pedestrian Mall are coming on March 22nd! Something to look forward to. FYI, there are active discussions between Council and business owners on this topic right now, including the desire from Duckworth Street shops and restos to be part of the mall. Contact the Downtown Development Commission at (709) 579-4139 if you’re interested in sharing your thoughts.
Photo by Graham Kennedy.
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