The Arena Shoot-Out

You knew it already didn't you. You were expecting it. You would read the first detailed and thorough analysis of the City's Arena Report right here on this BLOGsite with your Monday morning coffee.

Do you remember a BLOG I wrote about Megaprojects: April 13, 2006, Windsor's "Big Dig." You ought to reread it before reading through this BLOG.
http://windsorcityon.blogspot.com/2006/04/windsors-big-dig.html

Honestly, after reading Administration’s Report on the arena, I did not know whether to laugh or cry. It’s Beztak all over again. It chases the Raceway away this time (Ironically, the Raceway was used to eliminate Beztak. Will the same fate happen to PCR?) and leaves the whole arena debate wide open. It decides nothing until after the election but it eliminates a possible contractor to whatever happens. If you were the Toldos or Rosatis, would you bid on a City arena deal again?

You remember Beztak don’t you. They were going to build an arena downtown on the Western Super Anchor site in the West End where Council wanted a complex to be built to help revitalize the downtown ie you know in the Ward of Councillors Jones and Postma. It was to be the start of the urban village errrrr, new urbanism to make Ward 2 bustling; that plus the Keg, the funky bus terminal and St. Clair students. There was an Arena Inquisition at Council and Beztak was run out of town.

Seriously, to save time and effort, why doesn’t Eddie just tell us what he wants to do and we can all rubberstamp it. We need not go through a charade like this any more.

I thought we were supposed to have, according to Gord Henderson’s column, a process whereby "According to Francis, councillors at the end of this process will choose among three options: the status quo, a $55-million go-it- alone arena complex and community centre on the east side and the raceway proposal." That to me means that each of the proposals would be put under the microscope and analyzed intelligently by Administration using the same criteria. Then Councillors could make an intelligent decision. Adn what happened to the status quo option even though Council rejected it before?

But we are not getting that. Instead, it is acceptance, sort of, or rejection of the Windsor Raceway proposal and a gift to PCR Contractors Inc.:

Option A—Council supports in principle the Raceway proposal and authorizes to negotiate for land in the East end to develop a twin ice pad

Option B---Council thanks the Raceway for their proposal and tells them the City “is not interested in continuing further discussion,” authorizes to negotiate for land in the East end to develop a Recreational Complex, undertake due diligence of the proposal of PCR for the purpose of finalizing the construction of the Complex.

With both Options, reports are to be completed within 90 days so that this Council cannot do anything about anything since the election is November 13. The obvious question then is why is this Mayor and Council doing anything other than pretending they are taking action while what they are doing is usurping the role of the new Council.

The Options are hilarious---even if the Raceway is supported, nothing happens. Yuppers, no negotiations for a deal. You got our support guys, whoop de-doo!

However, note that they are to move forward on an East end deal in Option A. In Option B, they are to move forward on an East end deal as well AND “undertake due diligence of the proposal of PCR for the purpose of finalizing the construction of the Complex.” Strange difference eh!

So obviously, no matter what, someone in the East End will sell some land to the City or swap land or have their option to purchase bought out or whatever has to be done depending on the land title. And some contractor will build something. Exactly what the final deal is to be, we mere mortals do not know yet.

What bothers me is how PCR became the contractor of choice in the Administration Report merely because they sent in an “unsolicited” letter. So whatever happened to the Tender process in this City? As I read it, it is NOT a public/private partnership and "goods" are not being offered for sale. Building of an arena is not sale a "good." The Construction Association ought to be fuming and demanding fairness! Every contractor in the City ought now to send in an "unsolicited" letter. It should be a level playing field for everyone to get the prices even lower for taxpayers.

I know that PCR has Windsor experience---their website says, as an example, that it contracted to demolish a large portion of the existing structure of the Windsor Tunnel Duty Free, then build the new addition that including adding a second floor to the entire building. But still, aren’t there other companies that should have the right to bid.

There is something odd about PCR's numbers that needs explaining to me—or else Council get received a bill of goods re the funky Bus Terminal. Remember just a week ago, we learned that the terminal was 35% over budget for a variety of reasons. One of the key ones was that the terminal estimates were developed in 2000 and now we were in 2006 and a lot had changed.

The Port Huron project of PCR was pre-2000. I did research on it and have some idea what happened. PCR quotes a number for the cost of the Port Huron deal of $60 million in 1999 and that they will build an arean here for around $47-48M. Now part of the structure was built before that project went broke so it would be interesting to see what components exactly PCR has kept for 6 years. I would think that the carrying costs that PCR has are pretty steep if there are a lot of components.

Wait a minute, how can this be? Let’s use the same increase factor as the terminal. (Didn’t PCR bid on the terminal and was disqualified as incomplete? I wonder what their tendered price was.) If we increase the arena cost to today’s dollar costs based on the terminal figures, we are looking at a cost of about $81 M. How can they drop the price to $47-48M? That’s one big discount even with components.

PCR talks about their Port Huron deal which was an arena and 4 ice pads. Their August 31 letter is interesting though. They are proposing to design-build a Greater Windsor Recreation and Sports Centre that includes a “spectator arena” and within the structure “provisions have been made for 3 recreational ice pads and a community centre.” "Provisons" is not actually building is it?

Here though is the language that I do not understand:

“PROJECT CONSTRUCTION PHASE—“All items included within this listing are for the Arena area only; all other work beyond the arena footprint is by the City”

There is a Schedule “A” attached that is Arena only as far as I can tell and the price is good for only 60 days from August 31! So it does not fall within the 90 period that Administration needs. It would no longer be binding and would be open for re-negotiation when the Raceway deal was long gone.

I do not understand if PCR’s proposal is arena only or if it includes the cost of the additional ice-pads. If the ice-pads costs are additional, then the Administration Report seems to be incorrect and their go-it-alone number seems very suspect as well.

I have gone through all of the documents presented by the City in great detail and could bore you to death with pages and pages of comments. But I won’t. Let me give you some highlights:

1) As with Beztak, the Raceway proposal was scrutinized under a microscope. Look at the Report itself and see how detailed the examination was and how many pages were involved. For PCR, hardly anything was analyzed. Administration is to “undertake due diligence of the proposal of PCR for the purpose of finalizing the construction of the Complex.” Why hasn’t this been done by now. After all, PCR sent in their unsolicited letter on July 6 and otehr details have been provided long before the Report date! Better to get rid of the Raceway first I guess (and then perhaps PCR down the road so NO arena is built and the Casino is safe???)

2) Why weren’t we given all the information about the “status quo” option? Come on, it would NOT surprise me if we are being set up for that in the end with the Barn. Look at the Star front-page story on Saturday “Fans love arena's magic" dealing with the Barn and Henderson’s Saturday column “Could the $400-million Casino Windsor addition be the elephant in the living room that everyone involved in the arena debate is choosing to ignore?”

3) Poor Councillors Jones and Postma and their Ward 2 constituents. They lose out if a 4-pad arena gets built in the East End. I thought they were the fighters for the West End that this Report seems to ignore. It seems that just the East end needs facilities as a priority. Weren’t they only going to support at one time the Super Anchor site in their Ward and now have switched it seems? Where have the Budgeteers gone with their fiscal responsibility or the Councillors who thought we had priorities other than an arena? Perhaps Alan and Fulvio could offer a ticket or two to a game for those of their constituents who keep getting flooded out when it rains. Better to build an arena than fix sewers with all of that freed-up cash after projects are paid off.

4) Isn’t it interesting that the City got a 2-page letter from a consultant on May 31 extolling the virtues of an East End complex several days AFTER the Raceway talked to the City about their proposal.

5) The Report talks in great detail about how much extra Slots revenues the City might forego under the Racetrack deal but no numbers are given about how much extra the City would receive. Foregone revenue is somehow transformed into another contribution by the City to the Raceway project that increases the City payment of $15 M dramatically. It's called weird math.

6) There seems to be little discussion about the operating costs and the City’s responsibility to cover them and to keep the arena operations going. If the City could not run the Cleary and make a profit, how can they operate an arena (Yes yes, I know the City has already lined up a management company for the arena part but they have not revealed that yet publicly….You don’t show all of your cards yet.)

7) So much discussion about the Raceway project going bankrupt and protecting the City. Is this Eddie learning his lesson from the past where he did NOT do this? Strange, no discussion of the City arena losing money hand over fist and the taxpayers being required to bail it out year after year by increasing taxes as it seems we will now have to do with the Tunnel!

8) If Council approves the Raceway deal, then Administration would try to bring the Raceway and Spitfires together to negotiate a deal. That may prove to be impossible since we learned already that the City and the Spitfires have been talking re the East End arena “Through preliminary discussions with the Windsor Spitfires, a framework for a new agreement with the City has been reached.” Isn’t that a 5 minute major and a game misconduct for cutting off the Raceway at the knees! No wonder the Raceway is looking at an AHL team when the City negotiates with their possible prime tenant! Is this an ethical way for the City to act? I wonder who negotiated on behalf of the Spits. Was it their lawyer?

9) If Administration is concerned about the amount of work involved by it with the Raceway deal, imagine the effort at the East End owned and operated complex.

10) Administration presented a number re an East End arena of $55M. Is that figure as good as the Bus Terminal number where the actual was 35% over estimated?

11) Interestingly, there is a proposal to construct the East End arena in phases…just as the Star predicted months ago!

12) I am very curious to know why the Mayor did not tell the Community about the PCR deal when it was received in early July. I did not see anything that said that it had to be kept confidential. Is this why so-called public meetings on the arena have been postponed until October?

I read on July 17 that,

• “Windsor Mayor Eddie Francis promised Sunday that city councillors will quickly get details of the two arena proposals now under consideration to replace the 81-year-old Windsor Arena.
  
  Some councillors hoped that could happen as soon as Thursday, when a special meeting is already scheduled, but Francis doubts detailed reports will be ready that soon.…
  City staff have been previously asked to develop a business plan for a municipally financed, $55-million, four-pad arena complex, including one with 7,200 seats, at a site yet to be chosen on the city's east side. “
  
  

Don’t you find that bizarre considering the PCR proposal was already made! Why didn’t Eddie tell us about it and ask Administration to make it part of the review?

13) Now the City has to undertake partnerships with the East End deal to enhance the Facility. Perhaps Ernie Lamont can be involved in this as the City’s negotiator since he has interesting ideas about advertising. Not only are our municipal Government officials going to be operating a Tunnel but now they are going to operate an arena. Who will run the City?

14) Isn’t a twin pad East End structure less costly than the East End Arena extravaganza and needs less land thereby putting doubt on what Administration has said in the cost comparisons. Speaking of comparisons, which proposal for an arena is the better one with better facilities, furnishings and design?

15) I am not going into the Debt Levy Funding discussion since it ignores serious issues relating to the huge increase in debt in 2007, the $200 million employee benefits issue and we still do not know what is wrong with the Tunnel and Enwin. Perhaps someone could consider REDUCING TAXES with all of that freed up money as an alternative to spending on a monument to ego. It seems that the politicians think that is their duty an d obligation to spend the money they have not give it back to poor taxpayers.

16) I’ll let the accountants pour over the numbers since I find it boring but the key phrase used by Administrations that gives me heartache is “Assuming all projections and assumptions hold true over time…” What if they do not as with the Bus terminal or Huron Lodge!

17) Frankly, if I were a downtown business person I would be furious at both the Raceway deal and the PCR deal. Could this story be one for Windsor as it was in Port Huron:

• "Downtown frets about its future
  Border Cats' departure expected to cost stores
  By JESSIE HALLADAY Times Herald September 12, 1999
  
  The recent announcement that the Border Cats hockey team are leaving McMorran came as downtown Port Huron vacancies were reaching their highest rate since 1996."

Anyway, do not get worked up over this. There will be no arena. Gord Henderson told us so on Saturday and certain obedient Councillors will follow suit:

• “Call me a raving conspiracy theorist but I have a sneaky suspicion that assurances given to OLG, formerly the Ontario Lottery and Gaming Corporation, prior to its Valentine's Day, 2005 casino expansion announcement, could be a key factor in this struggle over who gets to build a replacement for Windsor Arena.
  
  I was told months ago that the city persuaded the province to go bigger than it originally intended -- a 100,000-square-foot convention centre and a 5,000-seat entertainment facility -- by agreeing to get out of the convention business and not compete with the new facility.
  
  A big part of that was fulfilled with the decision to take the Cleary out of the convention business and transfer the building to St. Clair College.
  
  All well and good. But what if that same city then turned around and invested $15-million of public money in a privately operated arena/entertainment complex at Windsor Raceway, just a few kilometres to the west and in a prime location to attract U.S. patrons? Would that violate the spirit of any no-compete commitment, verbal or otherwise, that the city might have given the province?…
  
  What if they [the OLG and casino management] believe there's a finite entertainment market here (in a city that can't even support the Capitol Theatre without big injections of bingo money) and fear that a raceway operation could siphon off business and make their $400-million dollar investment, which was condemned by the Tories at Queen's Park as outrageous political favouritism, look like a remarkably dumb decision? I wouldn't want to be an OLG official trying to explain that to a Conservative government headed by John Tory after the 2007 election.”
  
  

I wonder if this is the sort of assurance that Gord was talking about and guess who would have given it:

• New casino boss, mayor talk shop;
  Veronique Mandal 01-28-2004
  
  The city's involvement in the convention business could be on the chopping block if consultants recommend Casino Windsor expand to include a convention facility.
  
  That was the message Mayor Eddie Francis gave the chairman of the Ontario Lottery and Gaming Commission Tuesday. Stanley Sadinsky and Francis met to "get acquainted" and discuss common issues.
  
  Francis said he was impressed with Sadinsky. "I like him. I find him open and pleasant and we had a great discussion," said Francis. "I wanted him to understand that we also have a commitment to improvements in the city and the future of the casino."
  
  Francis said topics discussed included improving access to the tunnel and the marketing expert's report and recommendations for the casino, due in late February. "If one of those recommendations is that the casino develop a convention centre, then it may not make sense for the city to be in the convention business," said Francis, referring to the Cleary International Centre.
  
  "We want to be partners with the casino, not compete with them or duplicate services they offer. I made it clear that city council will work with the province to do whatever we can to turn things around."
  

Don’t you find it weird though. The attack by Henderson is just against the Raceway. Isn’t the PCR/City deal effectively the same since it is an Entertainment Destination but only in a different location. There will be a need for entertainment to pay for the East end arena too.

Gord’s final remark says it all “I won't be jumping off the fence until I see more details as to how the numbers crunch. How does the Collavino proposal stack up against $15 million for the raceway project plus the cost of replacing Riverside and Adstoll arenas and building a new community centre?”

Nothing is going to happen. It’s all election show a month before the big day. Wow is Eddie ever scared of David Wonham after all!