Downtown Moncton Will Take Longer To Make $3.75-Million Contribution To Avenir Centre
MONCTON – City Council approved Monday night an agreement with Downtown Moncton Centre-ville Inc. (DMCI) that would see the organization contribute $3.75 million to the operating costs of the Avenir Centre over 30 years, though the board president says it will likely take less time to pay that amount.
“The timeline is 15 to 20 years,” said Jim Dixon. “It terminates after 30 years, but the optics that it’s going to take 30 years to do it are not correct.”
The 10 additional years serves as a buffer if the non-profit organization cannot complete the payments in 20 years, Dixon said. For this year, the DMCI will hand over $250,000 to the city. In the next few years, the amount will be around $75,000 annually, depending on how many new developments take place downtown, he said.
The DMCI, which represents property owners and businesses in the downtown core, had said since 2010 that it would contribute to funding the Avenir Centre, which ended up costing close to $113 million. The city is paying a little over $50 million for it.
But prior to the vote in 2015 that allowed the facility to be built, the city went ahead on the DMCI’s word that it would contribute $250,000 a year for 15 years, amounting to a total of $3.75 million. No agreement was officially signed until today.
In December, DMCI Executive Director Anne Poirier-Basque said despite previous reports stating DMCI has committed $250,000 annually over 15 years, the amount could be higher or lower, depending on the time frame. The commitment, she said, was $3.75 million over 15 years, but no details of the payouts had been sorted out.
On Monday night, Dixon confirmed that the speed of the payment will depend on the pace of new developments and their tax assessments. The DMCI won’t touch the $0.16 levy on existing properties. Instead, the money for Avenir Centre will come from levies of $0.16 per $100 of tax assessment on new developments like FiveFive Queen, the Hyatt Hotel and the new RCMP building announced on Monday to be built on Albert street.
The group is also working to expand the Business Improvement Area, within which non-residential properties pay the DMCI a levy. Once that’s done, which likely won’t be for another two years, new developments within that area would contribute to the Avenir Centre funding, too.
The change in plans from originally committing $250,000 a year for 15 years was due to the fact that the Avenir Centre, which is a multi-functional entertainment centre that also houses a professional hockey rink, isn’t taxable per provincial law. The DMCI lobbied the provincial government to change the law, arguing that the facility isn’t a community rink and that it would generate business within it, but the province didn’t budge.
“If it was assessed – $100 million at 16 cents, there’s $160,000 out of $250,000. So that’s what got us back to the drawing board and gave us a lot of soul-searching and expanding how we were gonna try to fund it,” said Dixon, who is also the principal for Ashford Investments.
Without the memorandum of understanding as it is today, the DMCI wouldn’t have been able to contribute beyond this year, Dixon said to the council. The MOU wasn’t made public Monday night.
Councillor Brian Hicks, who opposed the deal along with Councillors Paul Pellerin and Bryan Butler, said DMCI knew the centre wasn’t subject to the tax in April 2015 and that shortly before the final vote for the centre, they had agreed to commit $250,000 annually for 15 years.
Hicks, who voted in 2015 and returned to council after two and a half years, said at the time, he relied on an e-mail from DMCI stating the commitment and that he wasn’t aware of any terms and conditions.
“So for me, when I voted on the downtown centre, I just thought that was a contract. There were no terms and conditions. The terms and conditions came up three years later,” he said.
He said the deal means the city “doesn’t really know from year to year, how much money they’re going to get from Downtown Moncton.”
Now the DMCI is relying on its confidence in upcoming downtown development. In December, Poirier-Basque said in a presentation to the council that tax assessment has increased 4.97 per cent in 2018 due to new development downtown. Dixon said Monday this is unlikely to all come from new development. Based on this, he’s expecting more organic growth to support DMCI’s activities even as it pays off its commitment to the Avenir Centre.
It will take a few years before the full impact of assessments from new developments is known, he said. But if the city’s plan for the downtown core continues as planned, there will be many new developments in the next two decades.
Impact On Taxpayers
Because the payment timeline is prolonged, the city would incur between $385,000 and $700,000 of what CFO Jacque Doucet calls an “opportunity cost” over 30 years. This was a point of concern for Councillor Paul Pellerin, who opposed the deal.
Taxpayers will be covered because of better bond rates on the centre, says Doucet. The city had assumed bond payments at 5 per cent interest rate in its budget, but the reality is it’s lower – at 3.528 per cent. This means the city can save $385,000 per year compared to what it had projected.
“So just that, it covers way more than even that $250,000 per year payment.”
Doucet said this means the deal with the DMCI wouldn’t affect taxpayers any more than what the city originally proposed for the centre’s funding. Although citizens won’t be gaining the amount of that “opportunity cost” either.
“Based on the information we have today, yes we’re going to get less of a quick return on the DMCI contribution, but we were able to get a better bond rate than we had initially anticipated. So in the end, for this project as a whole, the taxpayer is protected.”
“We strongly believe we’re still going to get the full $3.75 million, just instead of in 15 years, it will be in, we’re projecting between 20 and 26 years,” he said. “The more new development there is downtown in the DMCI boundaries, the faster we will get paid.”