IT's Back....Again! The Turf Facility Project

 

Like a zombie that keeps coming back to life, the multi-use indoor turf facility project is back on the agenda at Thunder Bay City Council this evening as a report is received on the eight outside proposals that were commissioned.  And in an apparently blatant disregard for transparency, the details of the discussion will not be shared with the public.  However, the decision has been further complicated by a new application for federal funding on which the City awaits an answer with the funding apparently tied to building a facility that conforms to green and inclusive community building conditions.  This of course raises the question as to what the actual price tag for such a facility will ultimately really be.

 

This application is for approximately $22 million dollars and that is expected to cover about half of the costs so we are looking for a total price tag of about $44 million of which half would supposedly come from federal funding.  And yet, the question is whether the costs of the new building will now change substantially given that it must conform to the requirements of the federal funding program.  City council rejected the proposal to build the facility when it was $39 million so getting it for substantially less in terms of City dollars may be attractive to those on council who like to pay lip service to the Zeller's Rule - the lowest price is the law. 

 

At the same time, the application process for the new funds is competitive and Fort William First Nation has also asked for $25 million from the fund to build a long-term care home.  As elastic as the federal budget constraint seems to be these days one suspects it is unlikely Thunder Bay’s cabinet representative is going to be able to swing both projects.  After all, Minister Hajdu’s star seems on the wane given what some might interpret as a demotion from Health. 

 

The minister was not even able to use her clout to secure a return to international flight status for Thunder Bay’s airport for the coming winter getaway travel season meaning no return to direct flights to places like Cuba and the Dominican Republic in January and February.  And as Indigenous Services Minister, it would be awkward to say the least to have funding for the turf facility approved in her hometown while the needs of indigenous long-term care are neglected. 

 

So, Thunder Bay seems to be about to embark on another divisive and argumentative round of talks over a project that many in the community are now opposed to in the wake of numerous other city issues with good odds that nothing is going to happen.  Even if a project is approved, often it does not happen as those waiting for the transitional housing project on Junot Avenue have discovered. 

 

Still, the fact that this project still resurfaces and has its proponents begs the question of why so many members of council are so devoted to seeing it go ahead and staking so much political capital on the project considering the other problems this city faces.  There is a lot going on here. There are homeless encampments in the city, there are homeless people wandering the streets of major thoroughfares at peak traffic times soliciting funds at intersections, there are hundreds showing up for meals at the local soup kitchens.  Homes are still having their front lawns dug up in the wake of the sodium hydroxide leaky pipes fiasco that has affected thousands of homeowners.  And tax rates having been rising over the last few years well in excess of the amounts necessary to fund City services.

 

With so much on its plate and an election coming soon, who benefits from continuing this discussion?  Good question.

 

 

Serving up a Multi-Use Pig's Breakfast

 

Well, the goings on at Thunder Bay City Council are about to take another interesting turn as the options regarding the Multi-Use Turf Facility are about to be reserved as a re-warmed back to the future option.  As we all know, Thunder Bay City Council voted 7-5 against awarding a tender for construction of the project which with a debenture and interest would have cost $46 million.  Many in the community balked at this type of expense coming at a time when economic prospects are uncertain given the pandemic as well as the incidence of other infrastructure issues including the ongoing leaky pipe saga and a new police station.

 

In the wake of this setback for the proponents of the project, there has been a regrouping to consider further options including perhaps relocating to the area near the Canada Games Complex given the better soil conditions as well as access to municipal infrastructure.  The previous project was quite expensive in part because of the need to extend some municipal infrastructure (such as water) as well as drive piles more than a few stories underground to support the structure. 

 

Now the options include going back to a bubble dome concept at the CLE Grounds as articulated by one councillor in an op-ed which essentially amounts to rebuilding what was there in the same manner.  Apparently this might cost about $5 million on the part of the City of Thunder Bay (which is indeed substantially lower than the previous $46 million fixed roof option) and has even garnered nearly 60 percent support in a TBNewswatch Poll.  Needless to say, there will likely be pushback from the Mayor and other supporters of the fixed roof option.  And while the new proposal for reconstituting the bubble on its former site makes a lot of sense, the question remains why spend $5 million on that when private interests would have built it out of their own money – an option the city of Thunder Bay did not support.  Indeed, this alternate proposal now seems to have lapsed.

 

This has become a veritable pig’s breakfast of a policy issue and in the end a lot of time has been wasted in this discussion coming full circle like this.  Apparently vehicular roundabouts are not the only circular projects Thunder Bay City Council likes, as policy roundabouts and turns are also another specialty.  While this is the most sensible option, it has become pretty clear that it is was not a more expensive turf facility per se that was the preferred option of Thunder Bay City Council but any option that involved spending municipal money rather than allowing a private sector solution.  Still, at $5 million, this may swing over a number of others on Council.  This type of facility is actually something that should occur  by the current needs of the recreation community in Thunder Bay. 

 

If this is really about providing a venue for soccer, then this is probably as good as it gets. The savings of going with a bubble dome option are substantial and needed.  After all, the City of Thunder Bay faces numerous expenses from assorted lawsuits in the years to come over issues with its water system going back to the 2012 flood.  And there are likely more lawsuits to come from insurance companies as they quietly collect samples of leaky pipes from assorted households and do their own analysis before launching massive suits to recover their costs.  If Thunder Bay City Council really wants to get a facility in place before other unforeseen expenses pile up, they might want to act quickly before they are diverted again on the policy roundabout.

 

Higher Taxes AND Higher Debt: Municipal Finances in Thunder Bay

Thunder Bay’s per capita municipal debt rose from $1,618 in 2015 to $1,839 in 2018 – an increase of 14 percent.  Over the same period, its provincial municipal counterparts on average went from $699 per capita to $758 – an increase of 8 percent.  As a result, by 2018, the per capita municipal debt in Thunder Bay was essentially more than twice that of the average in Ontario.  One might creatively argue that a reason for our higher debt levels is that we have been keeping our property taxes below the provincial average in an effort to be competitive with other municipalities.  However, it turns out that is really not the case once you adjust for population.

The accompanying figure takes data from the Ontario Financial Information Returns and past City of Thunder Bay Budgets to make a comparison of average per capita own purpose municipal tax revenue for Ontario and Thunder Bay.  For Ontario as a whole, between 2009 and 2020, per capita property taxes rose from $1,176 to $1,492 – an increase of 27 percent. (Note that the Ontario tax revenue numbers for 2019 and 2020 are estimates based on linear extrapolation as the FIR provincial numbers go to 2018. Population was obtained from Statistics Canada).  Meanwhile, Thunder Bay’s per capita municipal tax revenue over the same period goes from $1,320 to $1,879 – an increase of 42 percent.  Thus, Thunder Bay not only has more municipal taxes being paid per person in every year since 2009 but it has increased faster than the provincial average.

 

In 2009, the average municipal taxes per person were $144 higher than the provincial average whereas by 2020 they were $387 higher.  Put another way, Thunder Bay’s per capita municipal taxes were 12 percent higher than the provincial average in 2009 and are now 26 per cent higher.  It has not helped that since 2009 Thunder Bay’s population – that is the City of Thunder Bay and not the CMA – has declined by 1 percent whereas Ontario’s has grown 13 percent.  Total municipal tax revenue (as opposed to per capita) between 2009 and 2020 has actually grown 44 percent in Ontario and 41 percent in Thunder Bay but Ontario’s increase in being spread over a larger population while Thunder Bay’s is being spread over a stagnant population base – hence the surge in per capita municipal taxes. Creative councilors and administrators at the City might reply that municipal property taxes are not paid per capita, that they are paid per "bungalow" and we are "mid ranked" there.  My response to that is ultimately, people pay taxes and not their bungalows.

So, not only are we a higher debt municipality but we are also a higher tax municipality and a slower growth municipality.  The sustainability of rising taxes on essentially a stagnant resource base given the dearth of major industrial and commercial development is a serious issue but one that rarely seems to be at the fore of debate at municipal council.  City Administration now is apparently on the basis of “new and emerging information” recommending that the vote on the new $33 million Indoor Turf Facility be postponed until November 2021.  Given that there is an anticipated COVID-19 budgetary shortfall, economic uncertainty, a failure to date to obtain financial support from higher levels of government for the facility, a high debt level and a program spending review under way (not to mention the private sector is already building a similar facility) it stands to reason that they take a pause on this one - for now.

It is not that Thunder Bay would not benefit from new all season sports facilities for its population but at what price?  Are we willing to accept even higher debt and taxes at a time when we already have more of both relative to the provincial average?  Do we want a “special one-time tax levy” to deal with COVID-19 and an indoor turf facility?  Our municipal finances are already quite special when compared to the provincial average as are our other problems ranging from crime to our water system travails.  How much more special do we want to be?

Should the Turf Facility Be Turfed?

There is an old joke about universities that goes as follows: When it comes to spending money, Department Chairs like new hires, Deans like new programs and Presidents like new buildings.  We can extend this to municipal governments.  Municipal Administrators like new staff hires, City Councilors like new programs for their neighborhoods and Mayors like new buildings.  Indeed, with the proposed multi-million dollar Indoor Turf Facility our current Mayor Mauro is continuing the practice of seeking a legacy build that marked previous Mayor Keith Hobbs’ terms as he sought and ultimately failed to bring about a new Events Center. 

There is nothing wrong with building a new events center or a new indoor turf facility.  They are both projects that will find users and will bring about benefits to the community.  The indoor turf facility will no doubt find many users in the Thunder Bay’s growing soccer community.  Indeed, there are private developers quite eager to provide these facilities – which incidentally would add to the tax base – and yet their plans seem to face a lot of obstacles from the City.  For whatever reason, the City does not seem to like competition from the private sector even if it enables them to save money.  As much as city councilors and administrators hate to hear it, it is ultimately about economics and financial sustainability.   

The Thunder Bay Chamber of Commerce is correct in wanting more detail on the finances as well as a financial plan given that the facility was going to cost $30 million, now costs $33 million and given the proposed new $15 million debenture (should federal and provincial support not materialize) will add a further $8 million in interest costs bringing the total to $42 million.  Given the history of construction projects in Thunder Bay, the final bill will probably not end there and I would not be surprised to see the costs of the facility exceed $60 million when all is said and done.  And then of course, there are the annual operating costs.  Given the City has been closing pools and considering other closures as part of its expenditure review, it is odd to see them happily adding new potential operating costs.

This whole business is also about process and one begins to think that despite the talk about deliberation and consultation and consideration of this project, this is probably a done deal.  The August 24^th meeting will be one of feigned concern about city finances followed by approval of the project.  Only one councilor appears to have raised any reservations at the last council meeting.  Stantec Architecture has been retained to design the facility and they have provided a glowing public presentation. 

In lieu of public meetings given COVID-19, public input is being accepted via a comment form requiring registration until August 3^rd.   The form simply asks one question – ‘Please provide your comments”.  In that sense, it is free form enough for people to provide whatever comments they want.  Yet, it is still not sufficient for a full public debate and the survey does not provide any type of costing options.  If you are opposed, your comments will likely receive a smaller weighting in Council’s deliberations as they will be very free form and judged “inconsistent” or “not focused” while supportive comments will be “passionate” and “effective.”

Indeed, the impact of COVID-19 on public meetings and public debate is I think secretly welcomed by many politicians – including our municipal councilors.  After all, no more pesky face to face meetings with unhappy constituents.  You can receive input electronically and the beauty of that is you can choose to respond to what you want and ignore the rest.  After all, expert consulting advice is being provided to  Thunder Bay City Council on this matter and experts know what they are talking about.   Except, the only expert advice that City Council usually wishes to hear is from paid international experts who bid for a project with parameters that essentially result in them presenting how to do what City Council wants to do as opposed to whether the project should be done in the first place.     

Local experts with differing points of view and local knowledge are avoided and if too vocal are essentially derided – sometimes during council meetings themselves.  As Councillor Aldo Ruberto remarked about yours truly during a 2015 council meeting on the proposed events center – "You want to listen to economists? They record history. They don't make history." For the record, I supported a downtown events center as long as Federal and provincial funding could be secured for the project but such support was not forthcoming.  When the funding or circumstances change and new information becomes avilable, I change my mind.  Such nuances are lost on “passionate” politicians.

Thunder Bay City Councilors do not like to talk about history much – unless it is a celebration of their own glories – because it reminds them of mistakes that have been made.  Indeed, Thunder Bay City Council continues to make history as it approves decisions that add more and more spending with the buck being passed on to residential ratepayers who are now paying 70 percent of the tax levy and face rising user fees.  There are certainly a lot of potential bills coming due with past decisions made on the city’s water supply.  The City has been remarkably silent on pinhole leaks in the wake of the sodium hydroxide experiment to reduce lead even in the wake of direct queries.

 

So, should we turf the turf facility?  The city has earmarked funds out of reserves for this project.  For it to go ahead in a responsible fiscal manner, the project requires that upper tiers of government provide at least half of the upfront capital costs with the remainder coming out reserves – not a debenture. Yet, the talk of a debenture means Thunder Bay City Council and Mayor already suspect there is not going to be federal or provincial grant support so they are making alternate plans.  After all, why would the federal government or province commit to yet another northern Ontario construction project that is not essential infrastructure and seems to have such flexible and changing construction costs?  Moreover, given Thunder Bay is lamenting their $13 million COVID-19 budgetary shortfall should not reserves also be used for this rather than have a steep tax increase in 2021?  The decision is pretty obvious. In the absence of upper tier grant support, you turf the turf facility and go with the private sector individuals who were ready to build and hope they are still interested.