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Report from Chief Administration Office, Administration

Date of Report: Nov. 23, 2011 Date of Meeting: Nov. 28,2011

File:

Subject: Spectator Facility Program and Cost Estimates

RECOMMENDATIONThat Council refer the report, Spectator Facility Program and Cost Estimates, to theDec. 5 meeting of Council for consideration.

STAFF RECOMMENDATIONThat Council approve the design and construction of a 5,000-seat spectatorfacility as outlined in this report; and

That Council approve the construction of a 700-seat arena on land currently

owned by the Corporation of the City of St. Catharines; and

That Council approve the demolition of the Garden City Complex once theconstruction of the spectator facility and the new 700-seat arena arecomplete; and

That Council approve the inclusion of $63,124,000 in the 2012 CapitalBudget with sources of funding of $17 million from the Civic Project Fund, $1million from the federal Gas tax Fund and $5 million in fundraising; and

That Council direct staff to pursue funding from the Government of Canada

and the Province of Ontario for construction of the spectator facility; and

That Council direct staff to issue a Request for Proposals to engage a P3consultant; and

Further, that these recommendations be conditional on the City entering intoacceptable licences/leases with the Niagara IceDogs Hockey Club Inc. andthe St. Catharines Junior B Hockey Club.

SUMMARYThis report reviews the program for the proposed spectator facility project, its

financial impacts, and provides a series of options for consideration.

BACKGROUNDIn June 2008, Council established the Downtown Spectator Facility Task Force toinvestigate the possible construction of a 5,000-seat arena and spectator facility. In2009 Council, agreed to submit the project for the Government of Canadas P3funding. Two months later, in November 2009, Council agreed to undertake a


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feasibility study of the proposed spectator facility, the primary tenant of which wouldbe the Niagara IceDogs.

The feasibility study was completed by Deloitte and presented to Council in May2011. The study concluded the St. Catharines market could support an OntarioHockey League average attendance of approximately 4,225 fans per game and afacility with 5,300 to 5,600 seats would service this demand. The feasibility studyalso estimated construction of the facility would be between $45 million and $56

million or $8,500 to $10,000 per seat.

Upon receipt of the feasibility report, Council approved the project in principle onthe basis of satisfactory funding and planning arrangements, the construction of aspectator and entertainment facility in downtown St. Catharines.

Council also agreed to retain a professional event management company to provideadvice on the design and planning of the facility. In September 2011, the Cityretained SMG to provide advice on the design and planning of a spectator facility.The results of this review are contained in this report.

REPORTProposed spectator facility programA successful spectator facility is contingent upon building a facility that meets theneeds of the users and is also flexible enough to host a variety of events, ensuringits long-term financial viability. SMG, through consultation with City staff and primaryusers, and using baseline assumptions from other similar facilities, have developeda proposed program that will meet this goal.

The facility will be able to host a variety of sporting events including: Hockey Basketball Indoor football Curling Speed skating Lacrosse Gymnastics Figure skating Amateur and high school events and tournaments in various sports such as

volleyball, wrestling, indoor soccer and cheerleading.

In addition, the facility can host other non-sports related events. These include:

Family shows Circuses Religious and political gatherings Ice shows Community events, such as fundraising events and banquets Consumer shows Festival events.


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Summaries of each program component are listed below.

Facility sizeThe spectator facility, as outlined by SMG, is approximately 196,000 sq. ft. intotal and will have fixed seating for 5,000 patrons. Of these seats, 4,608 willbe in a shaped bowl formation, 200 will be club seating and 192 will be suiteseating.

Event floorThe event floor, which is the area apart from the bowl and service levelsupport facilities, is 19,845 sq. ft. The event floor of this size will be able toaccommodate the kinds of sports and events listed previously.

Spectator facilitiesSpectator facilities, which include seating, suites, lounges, club lounge forpremium seating, restrooms and miscellaneous amenities, such as first aidand concierge rooms, comprise 56,000 sq. ft.

Food service and merchandising

Food service and merchandising are vital to the patron experience and in anenvironment where discretionary funds for entertainment are sought-after bya variety of competing entities, a spectator facility must provide value.

More than 14,000 sq. ft. will be dedicated to food preparation, commissaryand delivery functions. The main kitchen prepare items to appeal to a varietyof diners.

Food service will only be available during events at the facility.

Circulation

Correct circulation is vital in a spectator facility and the program ensurescirculation beyond the minimum requirements to ensure comfort and ease ofaccess and egress. Circulation includes such items as concourses and isincluded at more than 28,000 sq. ft.

Press facilitiesAs a venue for sporting events, the spectator facility requires appropriatelyappointed press facilities. More than 3,800 sq. ft. has been identified for suchfunctions as media working facilities and editing spaces as well as a multi-purpose room for press conferences and team meetings.

Building operations/supportOften forgotten but potentially the most important items effecting an efficientoperation are building operations areas. These include administrative,security, storage, supplies, maintenance, ice pit and skate rental/dressingspaces for a total of approximately 41,000 sq. ft.


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TicketingA venue that will serve the needs of patrons for a large number of eventtypes over a short period of time will require a fluid ticketing/box officeoperation. In this program, the ticketing area will be designed toapproximately 1,300 sq. ft.

Team facilitiesThrough consultation with the IceDogs, the team facilities have been

programed at 21,110 sq. ft. This figure includes 12,000 sq. ft. dedicated tothe IceDogs with the balance distributed over visiting and three auxiliarylocker rooms, which are critical for tournament needs. In addition, twoconcert/event support facilities that will be able to function as additionalauxiliary locker rooms are included.

MechanicalMechanical includes all necessary physical plant elements such as HVAC,electrical, telecom and ice plant spaces and accounts for 8,610 sq. ft.

In addition to providing suggested program elements for the spectator facility

project, SMG reviewed the feasibility study by Deloitte. Based on their extensiveexperience in managing similar facilities, SMG believe the operational forecastscontained in the feasibility studies are achievable.

At the request of the City, BTY Group conducted a Class D cost estimate of theSMG program and a various options. The estimated cost to construct the spectatorfacility, based on the SMG program is estimated at $52.5 million, not including landcosts or parking.

Lower level siteThe lower level parking and the current Garden City arena site were identified in the

feasibility study as the preferred sites instead of the Church Street site because oftheir better street presence and size. Staff spoke with representatives from theOntario Hockey League, who expressed concern about the displacement of theIceDogs during construction, if the City proceeded with the Garden City site. In lightof this, focus has turned to the lower level parking lot as the leading site.

While it is the leading site, there are a number of issues that must be consideredbefore moving forward with developing a spectator facility on the site. These includesoil contamination, geotechnical integrity, zoning, size, and proximity to a 400-serieshighway.

Soil ContaminationAMEC Earth & Environmental completed phase one and two environmentalassessments on the lower level parking lot beginning in 2007, whichidentified contaminants on site that exceeded Ministry of the Environment(MOE) criteria. In July 2010, a site specific risk assessment to address theseexceedances was submitted to the MOE for approval. The risk assessmentdoes not identify any unacceptable risks at the surface, but does identifyrisks in the subsurface soils (more than 1.5 metres below ground).


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A draft risk management plan was prepared to address these risks and iscurrently being reviewed by the MOE. If approved, the risk management planwould affect future activities at the site with the most significant aspect beinga soil management plan that will require steps to mitigate any impacts fromconstruction activities on site, such as making sure dust or mud from trucksdoes not leave the site. Generally speaking the proposed risk managementmeasures are not considered onerous.

The City has submitted a revised risk assessment report and riskmanagement plan to the MOE that addresses a recent regulatoryamendment that changed some of the risk assessment submissionrequirements. The MOE has indicated that they are willing to work with theCity and our consultants to ensure an expedited review. Acceptance isexpected by spring 2012.

Geotechnical integrityNumerous geotechnical reports have been prepared for this property, whichindicated that, due to the amount of fill and poor geotechnical soil conditions,

any proposed building will require deep foundations. Once a preliminarydesign of the spectator facility is complete, additional geotechnicalinvestigations will be required to re-confirm the local conditions; for example,it is probable that pilings may need to be advanced to the depth of bedrock.

ZoningThe lower level parking lot site is currently zoned Business and Commercial

Holding (BC-H) according to By-law 91-433. This zoning would allow all ofthe uses permitted in Business and Commercial zoning but would firstrequire a number of studies including, slope stability, foundation conditionsand flood hazard that need approval by the Niagara Peninsula Conservation

Authority. The holding provisions could be removed by Council without apublic meeting, upon approval of the studies.

Site sizeStaff have reviewed the site and believe the site can accommodate thefootprint of the spectator facility (see Appendix A). However, there are anumber of site constraints that will limit the buildable area on the site. Theseinclude the locations of sewers and other utilities as well as the tri-cell culvertthat connects the former Welland Canal from Centennial Park to Twelve MileCreek. How these constraints affect the location, orientation and architectureof the facility will not be known until the project enters the design phase.

Proximity to 400-series highwayOne of the advantages of the lower level site cited in the feasibility study wasits location overlooking Hwy. 406. While this is true, its proximity to Hwy. 406will necessitate consultation with the Ministry of Transportation (MTO) andcould affect types and size of signage used on the facility.


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Additionally the City will have to receive a land use permit from the MTO. Theministry may also require a traffic impact study.

Alternative sites outside of downtownAn in-camera report will be presented to Council with other possible locations for aspectator facility.

It should be noted that selecting a location outside of the downtown area will requirea substantially larger site to accommodate parking. Public uses are exempt fromparking requirements anywhere in Zone 5 (downtown.) In some other areas of theCity, public uses are also exempt from zoning requirements. However, there is noother area of the City that has as much public parking within walking distance of theproposed facility or the concentration of transit routes serving all areas of the City.

Therefore, more on-site parking would need to be provided for any other siteoutside of the downtown. A downtown site does not require designated parking forattendees of events at the facility because of access to parking facilities and publictransit. Sites outside of the downtown must abide by the parking requirements set

out in the Citys zoning bylaw.

The number of parking spaces is determined by the number of fixed and non-fixedseats in the facility. Based on the program provided by SMG, the spectator facilitywould require 1,836 spaces. Accommodating this number of spots will require aparking lot between 16 acres and 19 acres in size, plus an additional three acres tobuild the spectator facility. The estimated cost to build the parking lot only is $9.1million, not including land costs.

Licences/leasesStaff have had numerous meetings and discussions with the St. Catharines Falcons

and Niagara IceDogs to finalize the terms of the licences/leases for appropriatefacilities. A report on these discussions will be the subject of an in-camera report atthe Dec. 5 Council meeting.

Condition of Garden City Arena ComplexA building condition assessment was conducted on the Garden City Complex byAusenco Sandwell in August 2011, to determine necessary renovation work to thefacility. This assessment includes a visual review of all exposed structural andarchitectural building components, including walls, floors, ceilings, windows, doors,finishes, building exterior, roofs, pavements and landscaping.

This review identified numerous deficiencies and required repairs. Some of thesewere minor in nature, such paint touch-ups, while others are more major, such asthe replacement of the ice surface lighting systems at both the Rex Stimers andJack Gatecliff rinks.

Total cost to make the repairs to the Garden City Arena Complex is approximately$11.6 million. This does not include the costs of unforeseen repairs that become


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apparent once work begins. This is a definite possibility, given the building conditionassessment is based solely on a visual inspection.

P3A P3 partnership is a long-term relationship between a public authority and theprivate sector for the provisions of a good or service with a specified result.Essentially, this means the public partner defines what they want, in this case aspectator facility, and the private sector determines how to achieve this. The private

sector has the financial risk in the project lifecycle, beyond design and constructionphases of the project.

It is difficult to say exactly how this relationship would function for the City, giventhere are several types of P3 models with varying levels of public ownership andcontrol. The nature of the P3 partnership for the spectator facility would not beknown until the project has gone to market.

A P3 also provides the opportunity to request that proponents include other valueadded components of an overall redevelopment. These could include items such asa public square, hotel development, parking amenities, retail, office and residential

development. The ultimate scope of the project and mix of uses will depend to alarge extent on the marketplace and developer, investor and tenant response.

As a result of the complexities of a P3 arrangement, the city would need to engagea consultant to provide advisory services. The consultant would be responsible fordetermining the best procurement strategy for the project, both in terms of value formoney and market acceptance. In addition, the consultant would be responsible forproviding technical, financial and legal advice with respect to the P3 partnership andproject management services . They would also be responsible for documentpreparation for items such as request for proposals and legal agreements.

The cost for these services is estimated at $1.5 million to $1.85 million, representing2.3 per cent to 2.9 per cent of the capital cost of the project.

In keeping with Councils previous direction, the spectator facility project wassubmitted for consideration to the P3 Canada Fund. The Citys application has beenreviewed and staff received notification dated Nov. 24 that the application will not beconsidered for funding.

The City can continue to pursue a P3 partnership to help fund the spectator facilityproject without the involvement of P3 Canada.

FINANCIAL IMPLICATIONSA project the size and scope of a spectator facility can have a serious impact on amunicipalitys financial situation. While the potential benefits of such a project areencouraging, Council must ensure that the City can continue to meet its financialobligations.


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Municipal Act debt guidelinesOntario Regulation 403/02 limits annual debt charges to no more that 25% of theCitys net revenue fund revenues. According to the most recent Financial IndicatorReview for the City of St Catharines, debt costs represent 7.2% of the Citys totaloperating revenue.

Using this guideline, the City could increase its debt by approximately $78.4 millionbased on an interest rate of 7 per cent, which is the rate which the Ministry of

Municipal Affairs uses for illustrative purposes. Using the Citys current estimateborrowing rate of 5 per cent, this additional debt capacity would be $87.5 million.

The Municipal Act also requires a municipality to have a five-year capital financingforecast. The impact of increased capital borrowing activities over the next fiveyears are listed below. These figures are from the 2011 Capital Budget and do notinclude the construction of a spectator facility.

Outstanding Debt$68.7 million to $117.0 million

Debt per Household$1,171.74 to $1,995.68

Debt Charges$11.1 million to $14.2 million

Percentage of Operating Budget7.82 per cent to 8 per cent

Considering the above statistics, the Citys debt burden is considered a moderaterisk. Any significant increase in debt to build a spectator facility will move the Citys

debt burden into the high risk category. In addition, the debt charges will exceedthe Council-adopted policy of containing the debt charges at approximately 10% ofthe Citys total expenditures.

Spectator facility optionsStaff have considered the many factors related to the construction of a spectatorfacility, including costs, and have provided a series of options for consideration inAppendix B. The options, detailed below, all assume construction of a spectatorfacility will take place in the lower level parking lot and that no additional fundingsources are identified.

Impact to the taxpayer is based on a median house in St. Catharines with a currentvalue assessment of $196,750 and City taxes of $1,165.98 in 2011.

Option 1 Build the spectator facility, demolish Garden City complex, useCivic Project fundThis option will see the construction of a new spectator facility and the demolition ofthe Garden City complex, leaving the downtown property available for


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redevelopment or possible additional downtown parking. However the City wouldhave one less ice surface.Estimated cost of this option is $52.5 million.

By using all available funds from the Civic Project Fund, approximately $17 million,the City will need to issue approximately $29.5 million in debt, bringing the Citystotal debt to $92.5 million. The impact of this on the taxpayer will be approximately2.22 per cent, or approximately $25.92 per year.

Option 2 Build the spectator facility, demolish Garden City Complex arenas,no Civic Project fundLike Option 1, this scenario will build a spectator arena, demolish the Garden Citycomplex, for an estimated cost of $52.5 million. However, unlike the first option, itdoes not use Civic Project Fund dollars.

As a result the City will need to issue $46.5 million in debt, bringing the Citys totaldebt to $109.5 million. The impact of this on the taxpayer will be approximately 2.60per cent, or approximately $30.35 per year.

Option 3 Build spectator facility, build 700-seat arena, using Civic ProjectFundThis option includes the construction of a 700-seat arena on municipally-owned landto accommodate the St. Catharines Falcons and other users, along with theconstruction of the spectator facility and demolition of the Garden City complex. Theestimated cost of this option is $63.1 million which includes costs of the spectatorfacility and the new 700-seat arena.

By using all available funds from the Civic Project Fund, approximately $17 millionthe City will issue $40.1 million in debt, increasing the Citys debt to $103.1 million.Impact to the taxpayer would be 3.33 per cent or $38.87 per year.

Option 4 Build spectator facility, build a 300-seat single padIn addition to building the spectator facility, Option 4 would see a 300-seat singlepad for recreational use built on municipally-owned land. The Garden City complexwill be demolished, leaving the downtown site open for redevelopment. There wouldbe no special purpose space for the St. Catharines Falcons. The estimated cost ofthis option is $62.5 million, which includes costs of the spectator facility and the new300-seat arena.

The City would need to issue $56.5 million in debt -- $46.5 million for the spectatorfacility and $9.9 million for the single pad. This would increase the Citys debt to

$119.5 million. The impact of this on the taxpayer will be approximately 3.54 percent or $41.26 per year.

Option 5 Build the spectator facility, build a 300-seat single pad andSeymour-Hannah additionLike Option 4, this scenario would see the construction of a spectator facility and a300-seat arena on municipally-owned land but would also include a 3,500 sq. ftaddition to Seymour-Hannah to accommodate the St. Catharines Falcons, who will


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be displaced by the demolition of the Garden City complex. The estimated cost is$64 million.

Costs associated with this option will result in the City issuing $58 million in debt --$46.5 million for the spectator facility, $9.9 million 300-seat arena and $1.5 millionfor Seymour-Hannah -- increasing the Citys total debt to $121 million. Impact to thetaxpayer would be 3.65 per cent, or $42.59 per year.

Option 6 Build the spectator facility, build a 700-seat arena, no civic projectfundsLike Option 3, this option includes the construction of a 700-seat arena onmunicipally-owned land to accommodate the St. Catharines Falcons and otherusers, along with the construction of the spectator facility and demolition of theGarden City complex. The estimated cost of this option is $63.1 million.

Debt issuance for this option would be $57.1 million, increasing the Citys debt to$120.1 million. Impact to the taxpayer would be 3.71 per cent or $43.30 per year.

Option 7 Build the spectator facility, demolish the Haig Bowl, renovate the

Garden City complex

This is the only option that contemplates keeping the Garden City complex, whichcan continue as the home of the St. Catharines Falcons. However, it would see thedemolition of Haig Bowl. The estimated cost is $52.5 million.

The city would need to issue $46.5 million in debt bringing the total debt to $109.5million. However, the operational budget impact of continuing to operate the GardenCity complex has the combined effect of increasing taxes by approximately 3.71 percent, or $43.30 each year.

Improvements identified in the condition assessment of approximately $11.6 millionwill be funded through the normal Capital Budget process, spread over up to 10years.

Alternative fundingAlthough the above options assume the City would be responsible for funding themajority of costs associated with a new spectator facility, it is possible that otherfunding sources can be identified.

The largest of these is a P3 partnership, which depending on the results of theprocurement process may reduce the Citys financial burden and the impact on the

taxpayer through potential private equity.

In addition the City can approach the provincial and federal levels of government forfunding.


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Options to reduce costsIn the event that no alternative funding is identified, there are two other options forreducing the costs of a spectator facility. These are:

Reducing the seating capacity.Building a spectator facility with 4,500 or 4,000 from 5,000 seats wouldreduce costs. However it is contrary to the recent trend for OHL arenas. In1996 Barrie was the last OHL host city to build an arena with less than 5,000

seats. Since 1998 10 communities have built arenas, each with 5,000 ormore seats.

Reduce the square footage of program space.A reduction of the program space would reduce construction costs of aspectator facility. However this reduction would affect operations and thetype of events which could be accommodated in the facility. This, in turn,would affect the associated revenue generated.

CONCLUSIONThe construction of a new spectator facility presents an opportunity to replace anaging structure with a more modern facility to better meet the needs of todays users

and audiences. However the construction of a facility of this size represents a largecommitment of resources for a community the size of St. Catharines. Any decisionon moving forward should balance the benefits against the financial burden placedon the City and its taxpayers.

Staff have reviewed each of the options presented and believe that Option 3(building a spectator facility and 700-seat arena using Civic Project Fund)maximizes the benefits to the community by keeping the burden as low as possible.This option maintains the current number of municipally-owned ice surfaces at nine.

If Council is willing to reduce the number of ice surfaces to eight, one less than the

current number, staff believe Option 1 (build spectator facility, using Civic ProjectFund.) is best.

The staff recommendation is based on the assumption that Council wants tomaintain the existing complement of nine municipal ice surfaces in St. Catharines.

Submitted by:

Colin Briggs, CAO


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