I think that most Penticton taxpayers are aware of the ramifications for the building and operation of the South Okanagan Events Centre. However, let’s do a basic review of things. The original estimate for this building came in at about $33 million. With delays, labour problems and cost overruns, this ended up at about $80 million as we’ve all come to realize.
The whys and wherefores have been dragged out over and over. Many armchair quarterback discussions have been held and touchdowns scored. However, to get a better grasp on things, let’s do a mini recap. First, there was the final cost, which rose from $33 million to about $80 million.
Then there was the Global Spectrum contract put into place. The idea being that Global would foster between 60-85 events annually. I am wondering if this total took into account each individual game of our own hometown champs, the Vees? Was each game part of the proposed 60-85 events. From January to May 2012, there have been 34 events, of which 16 have been Vees games. Don’t misunderstand my intent here, as the Vees’ accomplishments have put Penticton on the national map. From June to December 2012, there seems to be only three events scheduled thus far. I realize that hockey games will be scheduled in that interim.
Let’s look a little deeper into the financial aspects that Global was expected to boost. In one year, there was a $1.6 million deficit. Including all three venues overseen by Global, there was a deficit of $2.1 million in that year. Mayor Ashton would chalk that up to a fledgling businesses not showing a profit out of the gate, but it should show promise a year or two down the road. OK, maybe he’s right, to a degree. In May 2010, the mayor was directly quoted as saying: “The SOEC was a significant drain on city financial resources.”
On May 30 in a press release, we see statements made as to the efficacy of the debt reduction of this so-called boon to the Penticton economy. We are told that the City of Penticton’s debt load decreased significantly in 2011, according the city’s audited financial statements. Sounds good doesn’t it?
The city’s chief financial officer said no single project accounts for the overall debt reduction, but much of it is related to the South Okanagan Events Centre. That’s strange isn’t it? How does a white elephant reduce the debt load? The original borrowings of that project were $33 million, and by the end of 2011 there was $20.48 million left. How did it happen? Did the city win LottoMax or does it have a secret printing press that we don’t know about? An $8 million portion of the SOEC debt (borrowed over a five-year term) is due to be retired in 2013, with two other loans (10-year terms) due to be paid off by 2017-18. A related $7 million loan for site servicing at Queen’s Park will be retired in 2027. Annual debt payments on the SOEC in 2012 will amount to more than $4.2 million, much of that financed through casino revenues. The question is how much? It will take longer for the city to pay back the $7.4 million it borrowed for the recently completed $23 million pool upgrade at the Penticton Community Centre. That debt is scheduled to be repaid by 2030 with payments of $581,000 budgeted for this year. More smoke and mirrors, you think? No mention is made as to how these monies are to be paid down.
I guess that my main query would be, if the events centre is running a deficit each year, how is it helping to pay down the city debt load. What kind of creative accounting is this? I’ll bet that this is not part of an MBA program at the Harvard School of Business. What do you think?