Report from Chief Administration Office, Administration Date of Report: Nov.

23, 2011 File: Subject: Spectator Facility Program and Cost Estimates RECOMMENDATION
That Council refer the report, Spectator Facility Program and Cost Estimates, to the Dec. 5 meeting of Council for consideration.

Date of Meeting: Nov. 28,2011

STAFF RECOMMENDATION
That Council approve the design and construction of a 5,000-seat spectator facility 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 the construction of the spectator facility and the new 700-seat arena are complete; and That Council approve the inclusion of $63,124,000 in the 2012 Capital Budget with sources of funding of $17 million from the Civic Project Fund, $1 million 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 P3 consultant; and Further, that these recommendations be conditional on the City entering into acceptable licences/leases with the Niagara IceDogs Hockey Club Inc. and the St. Catharines Junior B Hockey Club.

SUMMARY
This report reviews the program for the proposed spectator facility project, its financial impacts, and provides a series of options for consideration.

BACKGROUND
In June 2008, Council established the Downtown Spectator Facility Task Force to investigate the possible construction of a 5,000-seat arena and spectator facility. In 2009 Council, agreed to submit the project for the Government of Canadas P3 funding. Two months later, in November 2009, Council agreed to undertake a

feasibility study of the proposed spectator facility, the primary tenant of which would be the Niagara IceDogs. The feasibility study was completed by Deloitte and presented to Council in May 2011. The study concluded the St. Catharines market could support an Ontario Hockey League average attendance of approximately 4,225 fans per game and a facility with 5,300 to 5,600 seats would service this demand. The feasibility study also 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 on the basis of satisfactory funding and planning arrangements, the construction of a spectator and entertainment facility in downtown St. Catharines. Council also agreed to retain a professional event management company to provide advice on the design and planning of the facility. In September 2011, the City retained SMG to provide advice on the design and planning of a spectator facility. The results of this review are contained in this report.

REPORT
Proposed spectator facility program A successful spectator facility is contingent upon building a facility that meets the needs of the users and is also flexible enough to host a variety of events, ensuring its long-term financial viability. SMG, through consultation with City staff and primary users, and using baseline assumptions from other similar facilities, have developed a 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.

Summaries of each program component are listed below. Facility size The spectator facility, as outlined by SMG, is approximately 196,000 sq. ft. in total and will have fixed seating for 5,000 patrons. Of these seats, 4,608 will be in a shaped bowl formation, 200 will be club seating and 192 will be suite seating. Event floor The event floor, which is the area apart from the bowl and service level support facilities, is 19,845 sq. ft. The event floor of this size will be able to accommodate the kinds of sports and events listed previously. Spectator facilities Spectator facilities, which include seating, suites, lounges, club lounge for premium seating, restrooms and miscellaneous amenities, such as first aid and concierge rooms, comprise 56,000 sq. ft. Food service and merchandising Food service and merchandising are vital to the patron experience and in an environment where discretionary funds for entertainment are sought-after by a variety of competing entities, a spectator facility must provide value. More than 14,000 sq. ft. will be dedicated to food preparation, commissary and delivery functions. The main kitchen prepare items to appeal to a variety of diners. Food service will only be available during events at the facility. Circulation Correct circulation is vital in a spectator facility and the program ensures circulation beyond the minimum requirements to ensure comfort and ease of access and egress. Circulation includes such items as concourses and is included at more than 28,000 sq. ft. Press facilities As a venue for sporting events, the spectator facility requires appropriately appointed press facilities. More than 3,800 sq. ft. has been identified for such functions as media working facilities and editing spaces as well as a multipurpose room for press conferences and team meetings. Building operations/support Often forgotten but potentially the most important items effecting an efficient operation are building operations areas. These include administrative, security, storage, supplies, maintenance, ice pit and skate rental/dressing spaces for a total of approximately 41,000 sq. ft.

Ticketing A venue that will serve the needs of patrons for a large number of event types over a short period of time will require a fluid ticketing/box office operation. In this program, the ticketing area will be designed to approximately 1,300 sq. ft. Team facilities Through consultation with the IceDogs, the team facilities have been programed at 21,110 sq. ft. This figure includes 12,000 sq. ft. dedicated to the IceDogs with the balance distributed over visiting and three auxiliary locker rooms, which are critical for tournament needs. In addition, two concert/event support facilities that will be able to function as additional auxiliary locker rooms are included. Mechanical Mechanical 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 extensive experience in managing similar facilities, SMG believe the operational forecasts contained in the feasibility studies are achievable. At the request of the City, BTY Group conducted a Class D cost estimate of the SMG program and a various options. The estimated cost to construct the spectator facility, based on the SMG program is estimated at $52.5 million, not including land costs or parking. Lower level site The 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 of their better street presence and size. Staff spoke with representatives from the Ontario Hockey League, who expressed concern about the displacement of the IceDogs during construction, if the City proceeded with the Garden City site. In light of 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 considered before moving forward with developing a spectator facility on the site. These include soil contamination, geotechnical integrity, zoning, size, and proximity to a 400-series highway. Soil Contamination AMEC Earth & Environmental completed phase one and two environmental assessments on the lower level parking lot beginning in 2007, which identified contaminants on site that exceeded Ministry of the Environment (MOE) criteria. In July 2010, a site specific risk assessment to address these exceedances was submitted to the MOE for approval. The risk assessment does not identify any unacceptable risks at the surface, but does identify risks in the subsurface soils (more than 1.5 metres below ground).

A draft risk management plan was prepared to address these risks and is currently being reviewed by the MOE. If approved, the risk management plan would affect future activities at the site with the most significant aspect being a soil management plan that will require steps to mitigate any impacts from construction activities on site, such as making sure dust or mud from trucks does not leave the site. Generally speaking the proposed risk management measures are not considered onerous. The City has submitted a revised risk assessment report and risk management plan to the MOE that addresses a recent regulatory amendment that changed some of the risk assessment submission requirements. The MOE has indicated that they are willing to work with the City and our consultants to ensure an expedited review. Acceptance is expected by spring 2012. Geotechnical integrity Numerous geotechnical reports have been prepared for this property, which indicated that, due to the amount of fill and poor geotechnical soil conditions, any proposed building will require deep foundations. Once a preliminary design of the spectator facility is complete, additional geotechnical investigations 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. Zoning The 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 of the uses permitted in Business and Commercial zoning but would first require a number of studies including, slope stability, foundation conditions and flood hazard that need approval by the Niagara Peninsula Conservation Authority. The holding provisions could be removed by Council without a public meeting, upon approval of the studies. Site size Staff have reviewed the site and believe the site can accommodate the footprint of the spectator facility (see Appendix A). However, there are a number of site constraints that will limit the buildable area on the site. These include the locations of sewers and other utilities as well as the tri-cell culvert that connects the former Welland Canal from Centennial Park to Twelve Mile Creek. How these constraints affect the location, orientation and architecture of the facility will not be known until the project enters the design phase. Proximity to 400-series highway One of the advantages of the lower level site cited in the feasibility study was its location overlooking Hwy. 406. While this is true, its proximity to Hwy. 406 will necessitate consultation with the Ministry of Transportation (MTO) and could affect types and size of signage used on the facility.

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

Alternative sites outside of downtown An in-camera report will be presented to Council with other possible locations for a spectator facility. It should be noted that selecting a location outside of the downtown area will require a substantially larger site to accommodate parking. Public uses are exempt from parking requirements anywhere in Zone 5 (downtown.) In some other areas of the City, public uses are also exempt from zoning requirements. However, there is no other area of the City that has as much public parking within walking distance of the proposed 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 site outside of the downtown. A downtown site does not require designated parking for attendees of events at the facility because of access to parking facilities and public transit. 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-fixed seats in the facility. Based on the program provided by SMG, the spectator facility would require 1,836 spaces. Accommodating this number of spots will require a parking lot between 16 acres and 19 acres in size, plus an additional three acres to build the spectator facility. The estimated cost to build the parking lot only is $9.1 million, not including land costs. Licences/leases Staff have had numerous meetings and discussions with the St. Catharines Falcons and Niagara IceDogs to finalize the terms of the licences/leases for appropriate facilities. A report on these discussions will be the subject of an in-camera report at the Dec. 5 Council meeting. Condition of Garden City Arena Complex A building condition assessment was conducted on the Garden City Complex by Ausenco Sandwell in August 2011, to determine necessary renovation work to the facility. This assessment includes a visual review of all exposed structural and architectural 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 these were minor in nature, such paint touch-ups, while others are more major, such as the replacement of the ice surface lighting systems at both the Rex Stimers and Jack 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

apparent once work begins. This is a definite possibility, given the building condition assessment is based solely on a visual inspection. P3 A P3 partnership is a long-term relationship between a public authority and the private 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 a spectator facility, and the private sector determines how to achieve this. The private sector has the financial risk in the project lifecycle, beyond design and construction phases of the project. It is difficult to say exactly how this relationship would function for the City, given there are several types of P3 models with varying levels of public ownership and control. The nature of the P3 partnership for the spectator facility would not be known until the project has gone to market. A P3 also provides the opportunity to request that proponents include other value added components of an overall redevelopment. These could include items such as a public square, hotel development, parking amenities, retail, office and residential development. The ultimate scope of the project and mix of uses will depend to a large 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 engage a consultant to provide advisory services. The consultant would be responsible for determining the best procurement strategy for the project, both in terms of value for money and market acceptance. In addition, the consultant would be responsible for providing technical, financial and legal advice with respect to the P3 partnership and project management services . They would also be responsible for document preparation 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, representing 2.3 per cent to 2.9 per cent of the capital cost of the project. In keeping with Councils previous direction, the spectator facility project was submitted for consideration to the P3 Canada Fund. The Citys application has been reviewed and staff received notification dated Nov. 24 that the application will not be considered for funding. The City can continue to pursue a P3 partnership to help fund the spectator facility project without the involvement of P3 Canada.

FINANCIAL IMPLICATIONS
A project the size and scope of a spectator facility can have a serious impact on a municipalitys financial situation. While the potential benefits of such a project are encouraging, Council must ensure that the City can continue to meet its financial obligations.

Municipal Act debt guidelines Ontario Regulation 403/02 limits annual debt charges to no more that 25% of the Citys net revenue fund revenues. According to the most recent Financial Indicator Review for the City of St Catharines, debt costs represent 7.2% of the Citys total operating revenue. Using this guideline, the City could increase its debt by approximately $78.4 million based 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 estimate borrowing 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 financing forecast. The impact of increased capital borrowing activities over the next five years are listed below. These figures are from the 2011 Capital Budget and do not include 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 Budget 7.82 per cent to 8 per cent Considering the above statistics, the Citys debt burden is considered a moderate risk. 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 exceed the Council-adopted policy of containing the debt charges at approximately 10% of the Citys total expenditures. Spectator facility options Staff have considered the many factors related to the construction of a spectator facility, including costs, and have provided a series of options for consideration in Appendix B. The options, detailed below, all assume construction of a spectator facility will take place in the lower level parking lot and that no additional funding sources are identified. Impact to the taxpayer is based on a median house in St. Catharines with a current value assessment of $196,750 and City taxes of $1,165.98 in 2011. Option 1 Build the spectator facility, demolish Garden City complex, use Civic Project fund This option will see the construction of a new spectator facility and the demolition of the Garden City complex, leaving the downtown property available for

redevelopment or possible additional downtown parking. However the City would have 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 Citys total debt to $92.5 million. The impact of this on the taxpayer will be approximately 2.22 per cent, or approximately $25.92 per year. Option 2 Build the spectator facility, demolish Garden City Complex arenas, no Civic Project fund Like Option 1, this scenario will build a spectator arena, demolish the Garden City complex, for an estimated cost of $52.5 million. However, unlike the first option, it does not use Civic Project Fund dollars. As a result the City will need to issue $46.5 million in debt, bringing the Citys total debt to $109.5 million. The impact of this on the taxpayer will be approximately 2.60 per cent, or approximately $30.35 per year. Option 3 Build spectator facility, build 700-seat arena, using Civic Project Fund This option includes the construction of a 700-seat arena on municipally-owned land to accommodate the St. Catharines Falcons and other users, along with the construction of the spectator facility and demolition of the Garden City complex. The estimated cost of this option is $63.1 million which includes costs of the spectator facility and the new 700-seat arena. By using all available funds from the Civic Project Fund, approximately $17 million the 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 pad In addition to building the spectator facility, Option 4 would see a 300-seat single pad for recreational use built on municipally-owned land. The Garden City complex will be demolished, leaving the downtown site open for redevelopment. There would be no special purpose space for the St. Catharines Falcons. The estimated cost of this option is $62.5 million, which includes costs of the spectator facility and the new 300-seat arena. The City would need to issue $56.5 million in debt -- $46.5 million for the spectator facility 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 per cent or $41.26 per year. Option 5 Build the spectator facility, build a 300-seat single pad and Seymour-Hannah addition Like Option 4, this scenario would see the construction of a spectator facility and a 300-seat arena on municipally-owned land but would also include a 3,500 sq. ft addition to Seymour-Hannah to accommodate the St. Catharines Falcons, who will

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 million for Seymour-Hannah -- increasing the Citys total debt to $121 million. Impact to the taxpayer would be 3.65 per cent, or $42.59 per year. Option 6 Build the spectator facility, build a 700-seat arena, no civic project funds Like Option 3, this option includes the construction of a 700-seat arena on municipally-owned land to accommodate the St. Catharines Falcons and other users, along with the construction of the spectator facility and demolition of the Garden 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, which can continue as the home of the St. Catharines Falcons. However, it would see the demolition 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 $109.5 million. However, the operational budget impact of continuing to operate the Garden City complex has the combined effect of increasing taxes by approximately 3.71 per cent, or $43.30 each year. Improvements identified in the condition assessment of approximately $11.6 million will be funded through the normal Capital Budget process, spread over up to 10 years. Alternative funding Although the above options assume the City would be responsible for funding the majority of costs associated with a new spectator facility, it is possible that other funding sources can be identified. The largest of these is a P3 partnership, which depending on the results of the procurement 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 for funding.

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Options to reduce costs In the event that no alternative funding is identified, there are two other options for reducing 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 would reduce costs. However it is contrary to the recent trend for OHL arenas. In 1996 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 or more seats. Reduce the square footage of program space. A reduction of the program space would reduce construction costs of a spectator facility. However this reduction would affect operations and the type of events which could be accommodated in the facility. This, in turn, would affect the associated revenue generated.

CONCLUSION
The construction of a new spectator facility presents an opportunity to replace an aging 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 large commitment of resources for a community the size of St. Catharines. Any decision on moving forward should balance the benefits against the financial burden placed on 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 Project Fund.) is best. The staff recommendation is based on the assumption that Council wants to maintain the existing complement of nine municipal ice surfaces in St. Catharines.

Submitted by:

Colin Briggs, CAO

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