Selling city assets isn’t necessarily a solution (column)
London Community News
City council’s investment and economic prosperity committee continues with two days of public hearings next week as it continues to examine the 50-plus ideas from citizens and organizations to get London moving.
The total unfunded cost for proposals so far — which include Western’s education complex centred around the existing city hall, St. Joe’s micro-biology research centre, a history-arts-children’s museum, a performing arts centre and several different kinds of incubators for entrepreneurial ideas — is in excess of $250 million.
Where do we get the money?
The committee will turn its attention to that question once the public hearings are finished, says chairperson Ward 3 Councillor Joe Swan. It has already commissioned a report from city staff, due within the next few months, on the potential sale of city assets to raise seed money for new investment projects.
And that’s a report sure to generate controversy, both within council and the community.
As a corporate entity, the City of London owns billions of dollars worth of material things — more than $2 billion alone just in water and sewer pipes and equipment. But what’s it worth on the open market and who would want to buy?
You might be surprised at the answers, says Martin Hayward, the city treasurer and chief financial officer. One dollar worth of construction costs doesn’t necessarily mean a dollar’s worth of real estate on the open market, he suggested to a recent council meeting.
For example, Ward 4 Councillor Stephen Orser, an investment committee member, is forever arguing the city should sell the downtown London Convention Centre and use the $40 million to help fund some new projects. But could you actually sell the convention centre for the $40 million it cost to build in the early 1990s?
Almost certainly not. As a building the convention centre has not much use for anything other than what it is. So if you were going to buy it, you’d most likely be buying the business. And as a business, the convention centre is not much better than break even, even with city taxpayers picking up the long-term cost of building upkeep.
How much would you pay for a business that turns no profit, currently pays no property taxes, and has only limited prospects of ever doing better? Not $40 million; maybe not even a quarter of that.
While city taxpayers see no direct revenue from the convention centre — in fact, it costs us a little each year — it makes sense as a city asset because in the bigger picture it generates revenue for scores of local businesses such as hotels, restaurants and retail shops which in turn pay taxes and create jobs.
How about the John Labatt Centre, er Budweiser Gardens? There’s a business that makes money, although not enough to cover repayment of the $40 million borrowed to build it 10 years ago.
Few sports and recreation complexes in Canada are owned by private enterprise; the exceptions are pretty much limited to the Air Canada Centre in Toronto and the Bell Centre in Montreal, both of which depend on highly successful National Hockey League franchises.
The baseball stadium once known as SkyDome, built by the province at a cost of well over $500 million, was ultimately sold to Rogers for a small fraction of its construction value.
Philip McLeod is a longtime London journalist who writes a regular blog on civic affairs. Email firstname.lastname@example.org.