- Trade Centre Limited CEO Scott Ferguson
But deciding to build a convention centre and actually building a convention centre are two different things.
I'll leave it to other media outlets to regurgitate the deets of this afternoon's dog and pony show---they unveiled a website!--- and I'll of course drill down into various aspects of this story into the future. What I find most interesting today is the prospect that government support notwithstanding, the project may not get built.
First is the issue of government financing. Fraser confirmed the numbers I first reported last week: The public portion of the project will cost $159 million, with the federal government paying $46 million upon completion of the project in 2014, and the city and province splitting the difference, amortized over the 25-year life of the program. (I was told $160 million last week.) Additionally, there's a $2.9 million annual cost to Trade Centre Limited ($1.2 million for "facility upgrades" and $1.7 million for taking out the garbage and spraying for bed bugs), which will presumably be covered by all the additional revenue a bigger convention centre brings in, but hey, if not, there's always the special Fred MacGillivray bailout fund at Province House.
But, says Estabrooks, no one has actually asked the feds if they're even interested in ponying up that initial $46 million [Insert your snide comment about Harperland disdain for the NDP-voting culture of defeat Haligonians here], so it's anyone guess if that dough will ever show up.
There's no doubt that the city's director of financial wizardry, Cathie O'Toole, can wave her wand and summon up $57 million amortized over 25 years without breaking a sweat. And Halifax council will probably initially buy into the notion that hotel tax receipts, which is where a lot of the money will come from, aren't "real" taxes, but the bevy of community arts groups that also rely on those hotel tax receipts might have a different opinion. So, it's by no means certain that the city side of the convention centre financing scheme is any more solid than the federal side.
On the private side of the of the convention centre complex plans sits Joe Ramia's Rank Inc. The four-year construction price estimate put forward at the press conference includes a financing charge of $19 million as part of the $159 million public portion: Rank has to build the centre first, and then get the public cash, so the $19 million reflects the cost of Rank's covering a $140 million construction project for four years. That is money the taxpayer will be reimbursing to Rank, said Fraser, based on the rates available to Rank. I'll leave it to people smarter than me to figure out what Ramia's loan costs are.
But keep those financing costs in mind as we consider the rest of the complex---the hotel tower and the office tower rising from the convention centre. Beyond a rather vaguely wide target of $400-500 million for the entire project, it's not clear what kind of money Ramia will have to come up with, but whatever the exact figure is, he probably doesn't have it sitting in an offshore bank account; he'll have to borrow it. And judging by the Twisted Sisters, Waterside Centre and Alexander buildings---images of which are sitting as masturbatory aids on the skyscrapercity.com bulletin board, but which don't exist anywhere in the real world---securing financing for downtown Halifax high-rises is a bit of an issue nowadays.
"What happens if Rank can't get financing?" I asked Fraser.
"Then there's no project," she replied.
According to a schedule Fraser provided, all these details are to be settled by January 14, 2011, just three months from now, when the province and Rank will sign a contract. And the "financial close" date is February 28, less than five months away.
That's a remarkably tight timeline. We'll see, I guess, but it'd be hilariously ironic if, TCL having won the political debate, the convention centre fails because economic reality raises its ugly head.