Arena Project
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Arena Project 1 The vision? Original concept for Westwind was to create a regional entertainment and hospitality destination. More recent discussion has been on a more limited scope built around a hockey spectator facility. Or a twin pad facility which likely should be located on less expensive land. Overall broader/alternative regional facility concept. 2 Three options: 1. Twin pad 2. Hockey facility with spectator seating and second community ice pad 3. Entertainment facility with a hockey/sport tenants and second community ice pad Other recreation considerations: 1. Recreation facility including all or most of the elements from the Indoor Facility Study. 3 Other Recreation Considerations • Town of Stony Plain aquatics with other recreational assets • The Indoor Facility Study identifies the following facility types as most needed for the region: 1. Leisure swimming 2. Ice arenas 3. Indoor adventure 4. Fitness/wellness; and 5. Fieldhouse/dry floor areas 4 Existing community expectations • Ice • Multi-use indoor space • Other recreation (indoor facilities strategy) • Some of these could be built within the sub-region (Stony Plain and Lewis Farms) • Demand for entertainment venues • Space for larger community gatherings (ie. Remembrance Day, grads) • Continued presence of the Spruce Grove Saints (Junior Hockey) 5 Current State of Existing Regional Entertainment Facilities • Sub-regional • Hall D: future uncertain; old facility; 2,828 seats; 4,628 capacity incl. floor • River Cree: approximately 2100 seats for concerts • Regional (metropolitan) • Rogers Place: there have not been any events under 7000 since opening • Metropolitan market opportunity for a facility in the 3,500 – 5,000 seat capacity to host multiple events. 6 Context Catchment Area: • Sub-regional: Stony Plain, Parkland County, Spruce Grove • Metropolitan: Edmonton, Devon, St. Albert, Leduc, Sherwood Park Trade Area: • Edmonton metro: 1 million plus • Spruce Grove: 100,000 plus Facility Uses: • Community events (ie. School grads, Remembrance Day): Sub-regional • Conferences, Expos and Trade Shows: Sub-regional • Junior Hockey: Sub-regional • Lacrosse: Sub-regional • Other flat floor events (ie. cheer team competition, dog shows, virtual gaming): Sub-regional • Sport tourism events: Sub-regional or metropolitan • Major concerts (3000-5000) and live performances: Metropolitan • Basketball: Metropolitan (single team) 7 Current Fiscal State • Development activity: • The first six months of 2020 shows a 9% decline in number of building permits over the same time period in 2019. In 2019, the total number of building permits reflected a 14% decrease in activity from 2018. 2019 was the lowest permit activity experienced in 10 years. • Provincial Funding (MSI): • MSI funding is due to end in 2022 and the province is implementing a new local government fiscal framework. In the years between 2019 and 2022 MSI will be reduced a total of 9%. We anticipate a further reduction in estimated MSI funding of 20% in 2022 and following. • State of the general Edmonton economy: • Conference Board of Canada predicts a decline in Alberta’s real GDP of 6.8% in 2020 with a predicted increase of 6.5% in 2021. TD Bank predicts a decline in Alberta’s real GDP of 7.9% in 2020 with a subsequent increase of 5.7% in 2021. The net effect is zero growth from 2019 to 2021. 8 Current Fiscal State • We moved into a net debt position as of 2016 – this means the future pays for past decisions. • 2019 met the policy statement on accumulated surplus being 20% of expenses. 2020 is also projected to meet this policy standard. • In 2019, debt service costs were 8.2% of tax revenues and 4.0% of overall revenues. • In 2020, this is projected to rise to 8.95% of tax revenues and 4.2% of overall revenues. • For context, in 2015 debt service costs were 5.6% of tax revenues and 2.3% of overall revenues. • Debt limits: • Spruce Grove debt in 2019 is at 32.7% of Provincial Debt Limit. • Spruce Grove debt in 2020 is projected to be at 30.47% of Provincial Debt limit. • Each of the options would increase the debt limit. Existing Spruce Grove policy limit is 50% of Provincial Limit. 9 Twin Ice Facility • Primary purpose: To meet local ice needs • Capacity: 250-500 per sheet • Event Days: • Community: 3-5 days • Commercial: 3-5 days • Location: • Location is flexible 10 Twin Ice Facility • Costs: • Facility: $30 million • Land: $1.8 million (serviced industrial) • Financing: • MSI: $23,550,000 • Debt: $8,250,000* • Impact to provincial debt limit of 6.4%** • Operating model: • municipally run • operating deficit = $450,000 - $500,000 per year (stabilized) *$1 million debt cost is $63,000 per annum on 20 year debt (current rate 2.33%) ** If regional funding is achieved, debt will be reduced accordingly 11 Twin Ice Facility • Pros: • Flexible locations • Addresses ice shortage • Least costly • Could be integrated with other recreational uses • Cons: • Not a sub-regional or metropolitan attraction • Does not resolve other expectations other than ice • Not a multi-purpose solution on its own • Minimal economic impact • Potential loss of Spruce Grove Saints 12 Hockey facility with spectator seating and second community ice pad • Primary purpose: • Home for Spruce Grove Saints and sub-regional events • Capacity: 2500 seats • Event Days: • Community: 16-20 days • Commercial: 6-10 days • Junior A Hockey: 40 days • Location: • Multiple locations 13 Hockey facility with spectator seating and second community ice pad • Costs: • Facility: $52 million • Land: $3.5 - $4.75 million (serviced) * • Financing: • MSI: $23,550,000 • Debt: $31,950,000 - $33,200,000 • Impact to provincial debt limit of 24.8% - 25.8%** • This would exceed the City policy of maintaining a debt limit that is 50% of the provincial limit. • Operating model: • municipally run • operating deficit = $900,000 - $1,100,000 per year (stabilized) • Includes annual revenues from ticket surcharge ($64,300 to $72,200) and naming rights ($70,000)*** * If Municipal Reserve land is used, actual dollar outlay may be reduced. Numbers include recoveries, gross number is $4.5 - $6 million. ** If regional funding is achieved, debt will be reduced accordingly *** Ticket surcharge and naming rights could also be applied to Capital with associated operating impact 14 Hockey facility with spectator seating and second community ice pad • Pros: • Sports attraction asset • Addresses ice shortage • Host sub-regional events • Provides continued presence of Spruce Grove Saints • Property assessment uplift vs twin pad • Cons: • Minimal metropolitan attractions • Does not differentiate Spruce Grove from others in the metropolitan region • Limited capacity to host commercial events, particularly higher-value events. • Higher operating deficit than twin pad or entertainment facility. • Expected property assessment uplift is modest vs entertainment facility. 15 Entertainment Centre with hockey/sport tenants & second community ice pad • Primary purpose: Metropolitan and sub-regional events • Capacity: 5000 (3500 fixed seats; 1500 floor) • Event Days: • Scenario 1 (ie. Sierra) • Community: 16-23 days • Commercial: 30-40 days • Concerts: 6-10 days • Junior A Hockey: 40 days • Scenario 2 (ie. Basketball, 12-15 concerts) • Community: 16-23 days • Commercial: 30-40 days • Concerts: 12-15 days • Junior A Hockey: 40 days • Basketball: 10 days • Location: • Westwind lands 16 Entertainment Centre with hockey/sport tenants & second community ice pad • Costs: • Facility: $63 million • Land: $4.7 million (serviced) • Financing: • MSI: $23,550,000 • Debt: $44,150,000 • Impact to provincial debt limit of 34.3%* • This would exceed the City policy of maintaining a debt limit that is 50% of the provincial limit. • Local Improvement option (estimated average value): $630,000 per year = debt servicing of $10 million • Operating model: • Contracted out • Scenario 1: Operating deficit = $800,000 - $900,000 per year (stabilized) • Includes annual revenues from ticket surcharge ($400,00 - $535,000) and naming rights ($150,000)** • Scenario 2: Operating deficit = $500,000 - $600,000 per year (stabilized) • Includes annual revenues from ticket surcharge ($535,000 - $680,000) and naming rights ($150,000)** * If regional funding is achieved, debt will be reduced accordingly. **Ticket surcharge and naming rights could also be applied to Capital with associated operating impact 17 Entertainment Centre with hockey/sport tenants & second community ice pad • Pros: • Entertainment and events attraction asset • Addresses ice shortage • Significant economic impacts • Differentiates Spruce Grove in the metropolitan region • Better operating performance than 2500 seat arena (excluding capital) • Cons: • Capital Cost • Risk (debt limits, events) • Possible extension of Westwind Dr to Pioneer Road (to be determined with TIA) 18 Potential Arena Location Options • A review of arena location options including estimated site costs was completed. • Multiple sites were reviewed ranging from 5 to 13 acres depending on project configuration. • Site costs ranged from $4.5 to $6.5 million (may be reduced by using City assets) for land acquisition, servicing and roads. • Park and Ride • Costs for the 2 City-owned sites include the value foregone if the City chose to sell the land instead (opportunity cost). 19 General Tax Implications Option Operating Tax Impact Capital Tax Impact Total Twin Pad 1.19% 1.24% 2.44% Spectator Arena 2.63% 4.81 – 5.00% 7.44 – 7.63% Entertainment Centre Scenario 1: 2.15% 6.65% 8.80% Scenario 2: 1.43% 8.08% * The numbers do not include Local Improvement options or regional funding. 20 Council Direction • Preferred option? • Budget and long term planning? • Public Engagement? 21 Questions? 22.