IS IT POSSIBLE TO FIND A PRIVATE INVESTOR TO BUILD A NEW ARENA FOR SUDBURY? A question was asked by one of our members about a rumour she heard about a private investment company wanting to build a new arena at no cost to the city. Let me explain the one that I was involved with. About 20 years ago a local developer and I met through our mutual interest in hockey. He and I toured a number of facilities in Southern Ontario and we found an investment company that was willing to provide ALL of the financing for a 10,000 seat arena with two smaller practice ice pads attached. The developer was also going to attach a 400 room hotel to the arena complex. It was going to be built up on top of the hill in the area where Silver City Movie Theatre is currently located. Not a penny was going to have to be provided by the city in order for this structure to be built. And after 20 years, the arena would be turned over to the City and the city could operate the facility and keep all revenue. The initial terms that the investor proposed were as follows: 1. They needed the city to guarantee the mortgage on the facility since the City was a AAA borrower. It would be easier to get a loan with the city acting as a guarantor. 2. The city would have to close the Sudbury Arena. The developer I was with indicated that he was willing to take over the Sudbury Arena and convert it into a convention/exhibition centre. 3. The city would also have to close two of the existing arenas in the outlying area. 4. In order to ensure that the new arena would be competitive with the rest of the ice space in the region, the rates for all ice time across the municipality would have to be at the same level as the new arena rates. This would have required a significant increase in hourly rates for all users, not just those people using the new arena. The investors wanted to make sure that people would rent their ice and knew that if ice rates were lower elsewhere, people might not be willing to pay the higher price to use the new arena. 5. All profits from the operations, including concessions and advertising would go to the investment group for the 20 years of the term, including all profits from special events, concerts, etc. that used the arena. 6. The Sudbury Wolves would have to guarantee to remain in Sudbury and play out of the new arena. 7. The City would commit to allowing an American Hockey League professional team to operate in Sudbury if one could be encouraged to locate a franchise in this city. So the bottom line is that we could have had our new arena complex, but in my opinion the cost to the users was going to be too great. The City would not have had to come up with any tax money to build or operate the facility, but everyone who uses ice time would have paid more per hour, so in effect that would have been a hidden tax. The City did not wish to pursue the agreement. This is the dilemma that City Council is facing when we talk about finding private investors to partner up and build a recreation centre, and an arts and culture centre. The investor must be guaranteed to make a profit from the investment. They are not going to put up tens of millions of dollars just to benefit the city. As a member of Council, I would not be willing to blindly agree to any terms and conditions without examining them carefully and making sure that the development would be in the best interests of the city without negatively affecting any of our residents.
Posted on: Fri, 17 Oct 2014 14:46:26 +0000