As a rule, your trusty correspondent has never been a big fan of public money going to private arenas, which tend to be monuments to the rich. But I’ve also maintained that the decision whether or not to use taxpayer money depends solely on those whose money is being spent. And when it comes to the proposed GTA Centre in suburban Toronto – and possible future home of an NHL team – I have always maintained that if the politicians there don’t like the deal in front of them, they should kill it.
With that in mind, the politicians in Markham threw the gauntlet down over the summer, essentially challenging GTA Sports and Entertainment chairman and CEO Graeme Roustan to come up with a better deal for his proposed rink. And it worked, judging by the announcement Tuesday that Roustan has forwarded a new proposal that will see the facility be essentially funded 100 percent by private money.
Even Markham deputy mayor Jack Heath, who issued the challenge over the summer when he announced his intent to table a motion to kill the project this October, is impressed.
“The devil’s in the details, but this is very encouraging,” Heath said. “It’s good to see. We’ve said all along that if there were a private proposal to build, we would be interested and co-operative. It certainly makes the Oct. 8 meeting (the one in which his proposal will be voted on) a very important meeting.”
Originally, the deal called for the City of Markham to borrow the $325 million needed for the project, with half of it ($162.5 million) to be paid back by GTA Sports and Entertainment and the other half raised by a voluntary levy on developers of new condominiums. But Roustan’s group has received the backing of two big investment banking firms for his half of the total, meaning the city likely won’t have to borrow any money. Roustan claims $20 million of the $162.5 million from the developers has already been collected and the remainder, he said, could be raised fairly quickly.
That money will come from a levy on developers of between $2,000 and $4,000 on each condominium that will be built near the arena. That cost will undoubtedly be passed on to those buying the condos, so technically there is some taxpayer money being contributed. But it’s not money that would otherwise be going to schools or hospitals because it has been established solely for this project. And the difference is those people have a choice and can choose to live somewhere else if they don’t want to pay it. Over the course of a 20-year mortgage, that amount would be a few dollars a month.
“I’ve listened very carefully to all of those who have opposed this project and the one thing they’ve said to me is, ‘I don’t want my tax dollars going to pay for this arena,’ ” Roustan said. “That’s what they care about. They don’t want to see in five years that we didn’t make our payments and the city is left holding the bag.”
The problem here is that even though Markham is a fair-sized city, there is some small-town politics at work here. The thing is, there has never been a proposal to use taxpayer money to build the arena. Rather, the city had agreed to be a guarantor for $162.5 million if everything went south. But there are those who think there is significant political capital to be gained in portraying the arena as a drain on public funds and to lead the charge to kill the project.
“There are still some people getting the impression that we are going into the till and putting taxpayer money into the arena,” said Markham councilor Howard Shore, who voted for the original financial framework, but has remained neutral on the issue. “That is not the case and it has never been the case. What we did was agree to take out a debenture, which we would ultimately be liable for if everything collapsed.”
So now that Roustan has given the city a deal that will be very difficult to resist, he’s beginning to talk about the NHL for the first time since he initiated the project. Roustan has insisted the building can be sustainable without ever having an NHL team as an anchor tenant, that it can survive financially on concerts and trade shows. He still believes that, but make no mistake, he wants an NHL team. He has been a finalist to purchase the Montreal Canadiens and Tampa Bay Lightning, so he’s not building this thing to host Macklemore and Ryan Lewis every night.
“Once we get a signed agreement, I will contact every league, every promoter, every act in the world,” Roustan said. “And that includes the NHL. I will say, ‘We’re open for business and if you have interest in being a tenant in our facility, we’d love to have a meeting.’ I will fly to wherever to meet anybody.”
If the financial framework for the GTA Centre gets approved and Roustan and his group can get shovels in the ground soon, that’s when the NHL would begin taking them seriously. And considering that Toronto is the most underserviced hockey market in the world, it’s only a matter of time before the NHL succumbs to the temptation of tapping into another major revenue source.
“This (new framework) is the single biggest development in the entire three years,” Roustan said. “But it has always been up to council to decide whether a public-private partnership is going to work for them. It’s in their hands. It’s completely in their hands.”
Of course, if someone else comes along with a plan to fund the facility entirely and pay all $325 million without charging any levy to developers, Markham council would, and should, be all ears. But chances are this is the best deal they’re going to get. As Roustan said, it’s up to them now.