Thursday, July 26, 2007

Jake Kimberley: Mayor clarifies city’s position on major projects

The following letter appeared in both The Herald and the Western News:

Once again I feel compelled to write a letter to clarify the process of the three major projects the city has had to deal with since I took office.

Transparency is good.
[... stuff about the South Okanagan Events Centre]

I was informed when I took office that the city was made aware in 2004 by the school district that the auditorium and gymnasium were not included in the overall site plan for the new high school and would be torn down. After I took office I was contacted by the chairperson of the school board and told the board needed a firm answer from the city on what their interest would be with the auditorium. This led to a meeting between the board, their staff, Barry Reid and myself in December 2006. We were reminded that the gymnasium was not part of the discussion and that the board needed an answer on the auditorium by June 1.

We understand that saving the buildings was not in the school board's original plan. But so what? We think the old plan is a bad one and are asking for a new plan—that is the whole point. The school board's primary mandate is to do what is best for the school (which apparently means routing school buses through a busy parking lot). However, school board members serve at the pleasure of taxpayers, and taxpayers take a broader view of their interests. Unfortunately, we have two elected bodies in deadlock—each pointing to the other as if the other were some type of omnipotent authority. School board members are not elected to make their own decisions; instead, they are there to represent the interests of local taxpayers. According to the city's own survey, 60% of Penticton residents think saving the two buildings is a good idea. You would think that democratically-elected officials would see survey result as relevant.
From there a complete review was undertaken by city staff and an outside consultant to determine the actual costs to bring both structures up to code and the cost of managing them and maintaining them until a new performing arts facility would be constructed. The cost estimates were $1.7 million for renovations plus $200,000 per year for management and maintenance.

As noted previously, according to the memo from Barry Reid, the estimates were $1.2M and $1.5M. I am not sure where $1.7M came from. Also, the $167K - $227K operating cost estimate includes (as Mr. Reid's memo makes clear) the salary for a full-time arts coordinator for the city (a position that the city will fill either way) and does not include any rental revenue the facilities might generate. On the other hand, the operating cost estimate does not include any fees payable to the school district for the use of the land occupied by the two buildings. I am not sure this is an issue. The school board seems to be insisting on "fair market value" for the land, but it is taxpayers' money either way. Any payment between the city and the school district would be interesting from a bookkeeping point of view, but have no impact on the taxpayers' net assets. Indeed, according to local folklore, it was not that long ago that the city simply gave the land on which Pen-Hi sits to the school district. It seems a bit rich for the school board to come back now and demand fair market value.
These costs were, in my opinion, too high for the short-term life span that these buildings would have, estimated to be five years.
In his June 29 letter, the mayor put the expected life of the Pen-Hi buildings at seven years. Now it is five? Several members of SONG with construction and building maintenance experience scoff at the seven year estimate (way too low).
I am sure the school board would not accept the necessary increase to the footprint of these buildings that would be needed to accommodate new washrooms and change rooms to meet building code requirements.
  1. As noted above, the school board does not have a veto over city plans.
  2. How big are these washrooms going to be?
  3. Both the city and the school board are showing an appalling lack of creativity in addressing these problems. What happened to can-do spirit?
Also not included into the overall cost is what the school district would have to charge for the lease of these two buildings and for how long they would provide the lease for.
Again, this lease/fair market value issue is a red herring. Imagine the logical outcome:
  1. City taxes go up to pay for the transfer of money to the school district.
  2. The school district now has new funds with which to meet its operating budget.
  3. School taxes go down to reflect the new revenue.
Residents of the city should see the decrease in school taxes exactly offset their increase in property taxes. People like me outside city limits would do slightly better, since we pay our property taxes to the RDOS, not the city and would receive an un-earned break on our school taxes. The logical solution is for the school to retain ownership of the land, charge a nominal lease (e.g., $1/year) and leave taxes where they are.
The additional cost of 200,000 tax dollars into operating these buildings would also conflict with the already subsidized operation of the Cleland Theatre, which is still not totally utilized. Does it make fiscal sense to have two city-owned theatres competing for the same market dollar?
Careful here. If it does not make sense to have two theatres, why are we investing significant city resources ($2.5M so far—see below) into a new performing arts facility. Either utilization is an issue, or it is not.
The solution to this issue is to have the school board to continue to operate these buildings.
Huh? I am not sure this follows. SD67 is getting a new gym for school use. They do not have any budget to operate the old buildings. Moreover, they have no mandate to operate them as community facilities—it is the city's responsibility to manage community facilities.
The interest in a building a brand new performing arts facility was initiated prior to December 2005 at which time the previous council committed $20,000 towards a study on whether such a facility was needed. This project was spearheaded by individuals who had a keen interest on developing more cultural activity in the city and bringing the city up to what both Vernon and Kelowna already have.
Which brings up a good point: Where is this feasibility analysis. Given that it was paid for with city money and donations (some large-ish donations actually came from SONG members), the feasibility analysis should be publicly available. I can't find it on the Internet.

According to Statscan, the Penticton area is home to roughly 43K people. Vernon has 55K and Kelowna has 162K. Maybe Vernon is still a good reference point, but comparing to Penticton to Kelowna is inappropriate—they are nearly four times our size.
The report confirmed that a new performing arts centre would be a benefit to the city and be well supported.
Confirmed? Really? Let's see the report.
In 2006 I first met with Don Grant, who had initiated the appeal to the previous council for funding of the study. He submitted three locations that his board felt would be appropriate for the building. Staff was then directed to work with the group and find a suitable location. One being the site of the existing auditorium and gymnasium — this site was unacceptable to the school board because it would restrict any future development plans they may have for that site.
Again, look at the census data. We already have more high school space than we are going to need in the coming 20-30 years. What expansion does the school board have in mind?
It is the interest of this group who is spearheading this project to have it jointly funded by the province, the federal government and through private donations. It is also the intent of this group to have their own management staff run and promote the new facility. Their objective, which they feel they can achieve, is to be totally independent of the city.
Good, but this is still a risk, is it not?
Last week an agreement was reached between the city and the owner of the property north of Nanaimo Hall to purchase the property at a cost of $1.25 million. This will be paid out of the city’s capital reserve fund. All these resulting decisions are, in my opinion, positive news for the city and its future.
Let's be clear about these numbers: $1.25 of new land plus a comparable parcel of city-owned land (Nanaimo Hall) means a grant to the Penticton and District Performing Arts Facility Society (PDPAFS) of $2.5M of taxpayers' money. Whether this money came from reserve funds is irrelevant: it is all public money. Given this sizable investment of taxpayers' money in this initiative, it is odd that no documentation on the project is available on the web. Why is this? How are local taxpayers supposed to understand their investment?
Hopefully this explanation with these three projects will clarify my involvement with them and set the record straight.

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