BMO Field expansion plans update. $30m of public money requested.

Soon to be retracting from a stadium near you! - Harry How

The plan is going to council's executive committee on March 19th, then presumably on to a full council meeting on April 1st. Here I struggle to make sense of some details.

At the public meeting held last week, some basic plans were revealed, some concerns were heard and the rubberstamp was applied, moving the BMO Field expansion process on to it's next phase, a meeting of council's executive committee on March 19th. That will no doubt end up with another rubberstamp lovingly applied and then it's on to city council on April 1st for final funding approval.

You can see the full details of the proposal going to the executive committee here. It's a lot of the sort of complicated (to the layman at least) legalese you'd expect from this sort of thing, but I'll try and pull out a few highlights. The first one, red meat to any self respecting Toronto Sun reporter is the corporate welfare, the public money being asked for. Here's self respecting Toronto Sun reporter Don Peat on twitter:

More officially, from the document itself

City Council direct that the $10 million City contribution towards the proposed expansion of the stadium be debt-financed with full recovery from the guaranteed annual payment provided by Maple Leaf Sports and Entertainment Ltd.

and

The Federal and Provincial governments have expressed interest in matching the City's investment in order to provide a total public sector contribution of $30 million. Maple Leaf Sports and Entertainment Ltd. ("MLSEL") will provide the balance ($90 million) of the total estimated $120 million funding required for the project.

Tim Leiweke mentioned at last Wednesday's meeting that most of the money would be coming from the private sector, giving the impression the various public purses would barely be bothered. I guess this more or less fits in with that, it will be intriguing to see what sort of sponsorship annoyances we all have to put up with in exchange for the private money that will be offsetting MLSE's $90m share.

If you're somehow holding out hope that this could all fall apart, then the always controversial corporate welfare aspect of it is probably your best bet. I personally don't mind the investment, I'm generally ok with governments investing in things and I think it's a good investment, they'll get their money back. But there are definitely people out there who can't stand the idea of money being given to MLS and bloody E, let's hope they're vocal about it. Also I'm looking forward to Rob Ford defending all this taxpayer money being given away. I have no doubt he will, he only argues against spending on things he doesn't like, but the philosophical contortions to justify it should be fun.

Other highlights (or at least the 'highlights that I understand', seriously if you're good at these documents, give it a read and point out your own highlights in the comments section').

The City Manager and the Deputy City Manager and Chief Financial Officer recommend that:

City Council transfer the balance of the funds in the Soccer Stadium Capital Maintenance Reserve Fund (XR3601) to Exhibition Place on December 31, 2014 so that these funds can be used to offset reduced parking income during the stadium expansion construction and also to fund the cost of additional wayfinding signage for the parking lots.

The soccer stadium capital maintenance reserve fund? Didn't know that existed, but apparently we're giving it away to cover lost parking fees, presumably from the extra 90 feet of East stand footprint.

The City Manager and the Deputy City Manager and Chief Financial Officer recommend that:

City Council direct that the $10 million City contribution towards the proposed expansion of the stadium be debt-financed with full recovery from the guaranteed annual payment provided by Maple Leaf Sports and Entertainment Ltd.

MLSEL has agreed to modify the financial terms that govern income-sharing for the stadium in order to provide additional revenues to the City/Board and to reduce the potential variability in these revenues. As a result of these changes, City Finance staff forecast that, even under adverse market conditions, the proposed $10 million investment will be fully recovered from incremental revenues generated during the term of the extended agreement with MLSEL.

More details on that last bit later, but increased revenue (from increased events of course) will be where the money comes from.. Also, extended agreement?

As indicated in Table 1, Exhibition Place has forecast that the City will recover more than its $10 million investment plus interest during the extended term of the agreement (extended from 2027 to 2037) from the incremental revenues that will result from the proposed expansion and renovation. Therefore, this capital investment can be treated as recoverable debt.

So MLSE are locked in for another 23 years. Be still my beating heart.

MLSEL also anticipates that the expanded seating capacity of the stadium will allow the stadium to attract major new events to the City such as the Major League Soccer ("MLS") Cup, the MLS All Star Game and the NHL Winter Classic.

An All star game? Well that'd be fun again, though an MLS Cup is really in no way dependent on this being put through, but that's a minor quibble I guess, good bluffing by MLSE that City councillors will have no idea how MLS Cup hosts are decided now.

The table 1 referenced above is found in another document with even more fun detail. There's a few tables of financial predictions, charts that don't copy well to this format so I won't reproduce here, but go check them out.

There's also other tables:

As indicated in Tables 2 & 3 below, a detailed quantitative analysis of the economic impact of this project has been prepared by PriceWaterhouseCoopers LLP for MLSEL and this analysis forecasts that the Federal and Provincial governments will each earn incremental tax revenues as a result of the stadium expansion that will greatly exceed the value of their proposed capital contributions to this project.

Greatly exceed, well that's nice. There's more on BMO Field's original financing and the proposed financing for this one, including this tidbit:

MLSEL is forecasting that construction of the first phase of the project (with an estimated cost of $77 million), which will include the seating expansion and the lengthening of the field to meet CFL standards, can be completed by the beginning of the 2015 MLS soccer season. It is also MLSEL's intention to have the stadium available to host certain events for the 2015 Pan Am Games.

So then, optimistically, if the forecasts go to plan (and construction projects never get delayed right?) the start of the 2015 season shouldn't be affected. But it's not just the east stand being done that winter, they're also doing the south and north end pitch extensions as well, with only the roof to be added in 2015-2016.  Which leads to the question:

What's stopping the Argos coming in in 2015? If this whole deal is so much of a win win for all concerned, there's no reason to delay, I'm sure the skydome would be happy to be rid of the Argos, and vice versa, so this might well be our last season untainted by the other football.

In negotiating the terms for the proposed City capital contribution of $10 million, a key City objective was to realize reliable incremental revenues from the expanded stadium which can be used to recover this investment.

MLSEL has responded with an offer to provide a guaranteed annual payment of $865,000 to the City (adjusted annually in accordance with the increase in the consumer price index) which would replace the current stadium revenue-sharing arrangements.

As shown in Table 6, Exhibition Place has realized an average annual income of approximately $397,000 from the existing stadium income sharing arrangements over the last five years. The proposed guaranteed payment from MLSEL would, therefore, represent an increase over this average amount of approximately $468,000 annually.

So, that plus an extra $3.5M extra projected parking revenue is how they're planning to 'pay the money back' MLSE gambling that they'll make more from stadium revenues, they'd rather give a guaranteed amount than share it. Interesting (also, if you want to do a no beer no gear type boycott, it'll hurt MLSE more than it did previously, so that's something).

There's a lot of detail on this parking revenue, optimistic and pessimistic predictions, problems with overlapping events etc etc, but apparently even if TFC's 2013 average attendance of 15,000 stay the same, and Argos actually drops to 17,500, the city thinks they'll do alright.

Also, yes there'll be more parking revenue here, but surely there'll be parking revenue near the Skydome lost? Is that included in this, you'd hope so, but still, surely more of a shuffling of revenue than an increase.

Here's an interesting one

MLSEL indicated that the National Home Show will not be impacted in 2015 and 2016 by BMO Field games as the Toronto FC will not be playing at home in March during the construction period.

The home show is scheduled for March 13th to 22nd in 2015, and March 11th to 20th in 2016. So, when they said 'the beginning of the MLS soccer season' above, they didn't mean March, or they meant the very end of March. Going by the letter of that, we're looking at long road trips to start the next 2 seasons. It may be a bit of confusion and Skydome games are a possibility, but either way, not ideal.

Site Plan Control Process

Exhibition Place and the BMO Field improvements are regulated by the City's Site Plan Control process and all issues raised at the Community Liaison Committee meeting will be considered during this process. The process commences with an application by MLSEL to the City which cannot happen until MLSEL has finalized a proposed design which is likely to happen by the end of April. All materials submitted by MLSEL are public documents and can be obtained by the public. Exhibition Place will also establish on its website access to any documentation and update on timelines.

The Site Plan Process takes from four to six months with building permits being issued once all approvals have been received and MLSEL entering into agreements setting out
conditions for development.

So, final design submitted for all to see by the end of April, then 4-6 months for permits to be issued, which I guess more or less fits with their 'construction starts after Labour Day' talk from last week. Though it doesn't really fit in with the next bit.

Summary of Principal Agreement Terms

Timing

 Term of agreement extended 10 years so term expires in 2037 rather than 2027
 Phase 1 of construction (seating expansion and stadium renovation) to be carried out between July 1, 2014 and May 1, 2015
 Phase 2 of construction (partial roof) to be carried out between May 1, 2015 and May 1, 2016

Those are some alarmingly vague timelines, basically July 2014 to May 2016, hopefully the September - April ish construction times they previously talked about are the real ones rather than this. I can't see them starting construction until the Indy and the ex are done so I'll look on the bright side of that for now. A bit concerning though.

Pre-Conditions for Final Agreement

 Commitments shall be secured from the Federal and Provincial governments for their respective $10 million capital contributions
 Both the City and MLSEL must be satisfied with any terms required by the Federal and Provincial governments in return for their capital contributions
 MLSEL shall secure a commitment from the Toronto Argonauts for the long-term use (i.e. 20 years) of the stadium as the home facility for the Argos
 MLSEL shall reach an agreement with the Canadian National Exhibition Association (CNEA) with respect to construction disruption and removal of lands or building from use by the CNEA, including negotiating a satisfactory arrangement in lieu of the 2 years notice requirement regarding any redevelopment of the Ex Place grounds

Other:

 MLSEL responsible for securing all Planning approvals
 Event timing constraints placed on MLSEL in order to minimize impacts on other
special events at Exhibition Place

Couple of interesting bits there, one we'll be stuck with the Argos for 'long term use (i.e. 20 years)! sigh.

The one about compensating the CNE for construction disruption, hopefully that's just a formality in case things go awry, but my confidence on when the construction will happen is now a bit diminished.

Anyway, there you go, some clarifications on how this will all happen and some new details. Give the whole thing a read for the full details. It's all very wordy but this is quite the civics/democracy lesson isn't it?

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