A Terminally Classic Mega-Project

I had hoped to hear a good debate on the new Bus Terminal last night. I did not.

The result was inevitable when you heard that we paid already $1.7 million for the land and $500,000 plus for architectural and engineering fees. As well, we would lose $2 million in Provincial funds. We were so far into the deal that what else could Council do but approve the building of the bus terminal even with the huge cost over-runs.

What a fiscal disgrace. This mini mega-project financial mess fits into the Danish Professor's book perfectly. Original cost of building was $6M less the cost of land at $1.7M or $4.3M. Actual cost is $1.5M higher than original building cost. Doing the math, $1.5/$4.3 equals a project 35% over budget. Can you imagine what the arena extra costs will be on our City "go it alone" extravaganza!

I normally do not reprint large parts of a previously written BLOG but I am doing so this time because the deal is such a bad one for the City economically in my opinion. I wish these questions had been answered at Council so citizens could see how poor this deal is. I listened to Councillors trying to justify what was being done and was disgusted. Did you hear anyone talk about the costs of running the terminal last night? It is all a City issue now since it is our terminal. How are those costs shared over time?

We need some real business people on Council. What scares me is that the same people who negotiated this deal and approved it may still be around to negotiate other business transactions for us after the election. I wonder what the Keg parking deal is or the sub-lease at Canderel or the negotiations over land for the East End arena. It troubles me even more when they talk about Public/Private Partnerships because that allows negotiations with a "Single Source."

1. Francis said the old bus terminal will most likely be sold. To whom and at what price? (Perhaps Burger King can now move here since their other land purchase deal fell apart) But what if the $800,000 value for Greyhound's land is wrong and less is received. Who makes up the short-fall, the City?
2. For Greyhound's remaining $1.4 million , they pay $48,000 per year for 30 years. It looks like no interest is paid by Greyhound. Now someone has to pay for the construction costs upfront so who does that? Perhaps one of the math geniuses can figure out the present value of that sum of money to see if there is a shortfall too
3. But wait a minute, some of that capital amount is going to pay the terminal's operating costs. How can that be done? So we are NOT receiving $48,000 per year for the cost but less.
4. The City gets a 7.5% commission for selling bus tickets. Is that the same rate as travel agents or lower? (I have seen that in some Greyhound promotions, the rate is 10%). Can Greyhound cut commission rates?
5. $64,000 is the building operating costs. What are the total operating costs?
6. If operating costs go up over the 30 years, who pays for the increase
7. Does Greyhound have exclusivity in the building for bus service and how much did they pay for that?
8. To become a 50-50 partner, isn't Greyhound's contribution less than 50% and the City's more

This is another example of amateurs playing entrepreneurs with taxpayer money and not understanding what they are doing.

• We are told that the private sector is a better negotiator than the public sector, especially when the City ran after Greyhound to do this deal. So that means taxpayers will be taken in every single P3 deal we do . And this is something to be proud of!
• Who negotiated a deal that if costs increased, as they have, Greyhound pays none of them
• Who negotiated a deal that gives 50% of the building to Greyhound even though they pay less than 50% of the cost (forgetting now about the Province's contribution)
• Do you mean to tell me that Council is so naive not to undertstand that 2000 estimated costs would not be the same in 2006 actual and that the amount to be paid out was much higher. Where was Administration in not providing this information in a timely fashion?
• Can you believe that this project took 6 years to achieve...6 years! At this, pace with an arena deal taking 20 years as another example, we will never do a border deal until our grandchildren's days.

I was most amused at the Mayor speaking on this subject. He rarely speaks at Council. However, he had to fit this project into his pretend economic revitalization of the downtown that has not achieved anything for 3 years. He talked "soft costs" language to justify a financial mess so it won't stick to him. But as Councillor Zuk said--a big checkmark, so that all is now well with the world!

Oh and the new buzz word---who dreams up these things at City Hall---is no longer the urban village but "the new urbanism." Eddie cannot have Bill Marra's words haunting him for four years if by chance Bill should win in Ward 4.

But do not worry if it is a dumb deal. According to the Star, Mayor Francis "said the bulk of the city's cost will come from the federal government's gas tax subsidy and not from Windsor taxpayers." Whew, that makes me feel so much better now. We are wasting instead other money that we could have used for other works in the City.

My goodness, if the best we can show for the growth of a new Downtown urbanism is the Keg and a bus terminal, then we are in serious trouble. How many bus terminal patrons will be able to afford dinner at the Keg anyway? I am not sure that the Casino brings in their big spenders on Greyhound buses do they. And don't even get me going about the Cleary and St. Clair students as the salvation of Downtown and the "they need a bus terminal" justification.