Friday, March 14, 2008

Michael Brydon: A message to Mayor Kimberley

The following message was sent to Mayor Kimberley, members of Penticton city council, members of the board of SD67, and the secretary of the Penticton and District Performing Arts Facility Society on 13 March 08. So far, I have received no substantive responses. We will have to wait and see.

Dear Mayor Kimberley:

Thank you for taking the time to respond and for including the larger group in this discussion. Information on this issue seems not to be flowing very well so I think this was a good decision.

Although I do not pay property taxes in the City of Penticton (and, like Mr. Siddon et al., have nothing to lose if your administration commits tax dollars to the SOPAC), many of us in this community are troubled by an arrangement in which the City of Penticton has abdicated all responsibility for planning and analysis for the SOPAC to Mr. Amos’ group and (according to Dr. Karr’s letter in this morning’s Herald and Western) Mr. Amos’ group has abdicated all responsibility for planning and analysis to Proscenium Architects and Interiors—a firm with no local knowledge and a clear conflict of interest in that it is in the business of selling performing arts facilities. This sequence of abdications has created a situation in which the city is backing a plan about which it knows very little. To cite just one example, you appeared surprised in Tuesday’s meeting to learn that the Proscenium plan (the plan on which Mr. Amos’ group is drawing so heavily) includes a downtown parkade (please see page 16 of the 20 Feb 08 SOPAC presentation).

As a professional researcher with some experience with complex, uncertain decision problems, I have decided to do some of my own due diligence. It is clear to me from even a cursory analysis that the SOPAC has no possibility of going forward without significant investment by the City of Penticton or a regional government. Please allow me to share what I have discovered and perhaps you will understand the source of my skepticism.

I have attached five documents:

  1. A copy of a recent income statement from the North Okanagan Regional District that clearly shows payments made by the NORD on behalf of the Vernon and District Performing Arts Centre. This information has already been widely circulated within the community and the press. I include it only for completeness. The significance of the Vernon case, even though costs have escalated dramatically since its construction, is that Vernon received no federal or provincial funding and raised only $30K within the community. Given the similarities between Penticton and Vernon, I think it would be unwise to discount the Vernon precedent.
  2. A preliminary sample of recent news stories and press releases from the Lexis/Nexis database. I searched on the terms “performing arts”, “facility”, and “funding” in Canadian news sources and included any story that seemed relevant. It is clear from the experiences of other communities across Canada who have built or are building performing arts facilities that significant municipal/regional investment is the norm. It is also clear that funding from senior levels of government (provincial and federal), when it does materialize, is relatively modest.
  3. A copy of the Framework Agreement between the federal Building Canada program and the Government of BC. The relevant passage states “For projects involving a local or regional government, the Parties expect that level of government to provide funding for a minimum of one-third (1/3) of the Eligible Costs of an Approved Project.”
  4. My slides from our recent press conference. I include these so you know what has been said to the press recently.
  5. A formal decision analysis of the Pen-Hi, SOPAC, and referendum problem. I hope to recoup my investment in time in this project by publishing a paper (the coin of the realm in academia) on the structure of this decision problem. This analysis is missing some of the most recent evidence. Even so, it will be blindingly obvious to any decision theorist that the rational course of action in this case is to sequence a borrowing referendum ($30K or no $30K) prior to making irreversible decisions worth tens of millions of dollars.
So with regards to the referendum question, here is a less-formal chain of reasoning. Please tell me if and where you disagree:
  1. It is a matter of public policy (at least under the federal program used in other communities to fund performing arts facilities) that municipal/regional governments must commit to 1/3 of the total cost of the facility. As Mr. Siddon and other experienced politicians have already pointed out, there is no free lunch.
  2. It is an empirically verifiable fact that actual municipal/regional commitments have been significantly higher than one-third. Local governments are picking up between 57%-100% of the total cost of these facilities. Moreover it appears that the municipalities/regions are responsible for all cost overruns.
  3. Although the SOPAC committee has so far declined to provide the public with the estimated cost of the SOPAC, the cost of a slightly smaller facility in Burlington, ON, is currently estimated at $33M-$36M (no parkade). Thus, in the most optimistic scenario, the City of Penticton is obliged to fund $11M of the cost of the SOPAC if the facility hopes to qualify for federal funding.
  4. The borrowing costs alone for an $11M investment over 20 years are just over $1M annually. I am guessing that this corresponds to a tax increase of roughly 5% (please correct this if it is wrong—I do not have access to the information required to calculate this).
  5. Bottom line: If the SOPAC goes forward at any point, the City of Penticton will have to get voter assent for at least $11M of borrowing and a dramatic tax increase. There is no question of if a referendum is required (at whatever cost); there is only a question of when.
To reiterate a point made by Mr. Siddon on Tuesday, it is very important at this point that you either acknowledge the inevitability of the city’s participation in the SOPAC or publically refuse any further involvement. Either the city is “in” (in which case it might want to conduct some of its own due diligence) or it is “out” (in which case the SOPAC is clearly dead). This is something we will be focusing on leading up to the referendum so you may wish to prepare a clear answer.

Of course, you are free to use the arguments below to justify your unwillingness to get voter assent before you make decisions [Mayor Kimberley claimed a referendum would be too expensive in the 2008 budget year in previous correspondence]. You are free to put all your faith in a “feasibility analysis” produced by salesmen. But it seems a bit inconsistent to commit the City of Penticton to 20 years of million-dollar debt payments without first paying $30K to ask voters if this is something they want. Moreover, it would be politically reckless to willfully destroy an affordable and viable alternative to a $33M-$36M luxury (which, let’s face it, will only benefit a well-connected cultural elite) before giving voters any say in the matter. Based on what we are hearing at our table in Cherry Lane mall, Penticton voters are smart enough to see where this is going.

You have made the case in the past that council and the school board has had to choose between an old, inadequate building and a new state of the art facility. However, let’s not ignore the evidence. The real choice for a cash-strapped little town that has already had a tremendous feast at the public trough is between the Pen-Hi buildings (even if it costs $6M to upgrade them) and nothing. On this point, Dr. Karr is correct—we are a special interest group: Our special interest is to keep the current leadership of Penticton from blindly running our little town into the ground.