Build It And They Will Come: Markham Site for 2nd NHL Team in Toronto?
With details emerging daily on the proposed Markham Live project, its time to analyse the wildly optimistic (and sometimes fraudulent) assumptions that are responsible for getting this project off the ground. The ominous details of this proposed venture are sufficient to evoke caution and prudence when discussing the economic validity of $300+Million sports-entertainment facility development, particularly when tax money is garnished for the cause.
Risks are enhanced as always by unethical behaviour of elected officials and influential community members whose operations blend a sordid breed of capitalism in which government hand-outs are accepted willingly by sturdy entities with ample wealth to stand alone.
For a nice video summary, click over to CTV to get up to speed.
- City of Markham, Mayor Scarpitti (who can expense $24,263 per year on taxpayers dime, including $12,255 for a car lease)
- Graeme Roustan, Chairman of Bauer Sports. Mr. Roustan is financially backed by developer Rudy Bratty of the Remington Group. (who is guaranteeing Mr. Roustan’s share of $162.5 million).
- Rudy Bratty, real-estate mogul (who owns the 6-acre site for the proposed $325-million facility via Remington Group)
- Helpless Taxpayers
Now that we’re on a first-name basis lets determine the real cost of putting Markham on the Map. Hidden costs and shady details akin to the financial dumpster-fire that is Glendale, Arizona make the Markham Arena development project a potential cash sinkhole. However council members and citizens of Markham/Greater Toronto would not take to City Hall to impede this deal, the consequence of haste and obfuscation by our civic leaders.
With this prospective subsidy providing a strong wind on their back stakeholders at Remington can await soaring profits to concentrate into their wealthy hands. Few learned that the land dedicated to the taxpayer-funded Arena was donated to the City by Bratty and his organization Remington Group, who devilishly retaining the area surrounding the donated portion. By maintaining ownership they have a significant financial interest this region, and possess explicit intent to develop condos and other commercial/residential buildings nearby.
Lobbying efforts highlighting the alluring prize of an NHL franchise secured a sweetheart deal where Markham would pay half of the proposed construction costs the marque-development on the land. If someone offered to foot the bill for an addition onto your house, would you decline? This is essentially what Bratty has pulled off with the Markhamites on the doll, victims of obvious coercion from Remington, allowing the latter to develop the land adjacent to a tax-subsidized show-piece stadium.
Two honourable men (Jim Jones & Joe Li) on a council of 11-voting members wisely dissented suggesting other options are more attractive for the taxpayers of the wealthy Toronto suburb:
“I don’t really like this financial option,” Mr. Jones said. “I don’t think the town should be in the professional arena business… I want to seriously assess it and don’t put a gun to my head… To rush this is not acceptable.” Mr. Jones also said Mr. Roustan made statements about his “unsolicited bid” at last Friday’s meeting. “We should check them out,” he said. “I always thought it was going to be funded by the private sector.”
Riding against a tsunami of ignorant sentiment and nefarious intentions Mr. Li reveals a staggering choice for any public official tasked with stewarding municipal capital:
Since last Friday, at least two interested parties have approached the town to cover its portion of $162.5 million to make it a completely private facility.
One of them is a Canadian equity company headquartered in Ontario, Regional Councillor Joe Li said. Mr. Li said representatives of this company, which he declined to name, were in attendance at Friday’s meeting.
“They have made contact to meet with the mayor and councillors,” Mr. Li said. However, he said Mayor Scarpitti wouldn’t entertain the meet-up.
“And we are asking why,” Mr. Li said
Why indeed? Shouldn’t for-profit sports and entertainment complexes be owned and operated by private enterprises? The Mayor of Markham would rather remain intimately involved, surely so he can ride the ill-gotten notoriety obtained by looting the public purse.
Mr. Jones said he has calculated the town would be on the hook for $248 million — principle and interest combined.
The York Region reports that more than 1/2 of the subsidy Markham has tentatively promised is to be covered by “voluntary contributions” from other developers! Predictably these voluntary contributions are a euphemistically-named tax which a Toronto-area development community organization [Building Industry and Land Development Association (BILD)] has deemed without precedent and of “great concern”.
Mr. Li points out the “voluntary contribution” may be illegal, and mandatory, which was reiterated in a Letter sent from BILD, who closed that document with:
…we “cannot and will not support any sort of contribution” outside of previously established business practices.
Looking at the myriad unintended consequences Toronto Star exposes more brow-raising subtleties in the Markham Live Arena plan:
• Graeme Roustan and GTA Sports and Entertainment will design, build, operate and lease out the arena for concerts, sports and other events. But the city is to own it — freeing the arena of paying property taxes.
• Almost half of Section 37 money — funds all developers donate to the city in exchange for increased height and density — is diverted to the arena and will not be available for other city projects.
• Development fees will double on new homes — adding $2,000 to $6,500 to the price. Worse, adding these development fees limits the town’s ability to add future fees for city-run projects.
• The deal demands paid parking for arena events so Markham can get a share of the revenues to service the debt. Ditto for a surcharge on each ticket to the event.
Remarkably there is no assurance that an NHL will ever come to Markham. The Toronto Sun notes jokingly that
…along the way [Markham must] convince the NHL to send one of those struggling southern U.S. teams up here to Hockeyville. So, it’s sort of a “build it and they will come” on skates.”
Making light of this abuse of taxpayer money is something only a non-resident would do at this point. Attempts by the Roustan/Bratty cohort to expedite the decision-making process in Markham city council reeks of corruption and shortsightedness.
This analysis leads one to question the role of government in building sports stadia by exposing the motives and machinations of commercial real estate development and municipal politics. Lofty promises on fabricated economics ensures public money in Sports Stadium projects is a money-losing endeavour. This Arena project places another well-dried log onto the fire of readily stoked, freshly-minted Canadian $20 bills harvested from 250000 unsuspecting residents of Markham. Like many horror stories, this one is gonna get worse before it gets better.