Michael Brydon: Deliberately creating a facilities deficit

A slightly edited version of the following letter appeared in the July 12th, 2007, edition of The Herald:

Some leaders in our community, including Mayor Kimberley and Councilor McIvor subscribe to a theory. The theory is that Penticton has a better chance of raising the $30M or so that is required for a new 700-seat performing arts facility if our existing 700-seat auditorium is demolished. By deliberately creating a facilities deficit for the performing arts in Penticton (the theory goes) we can somehow compel senior levels of government to step in with most of the money for a new venue.

This is clearly a controversial gamble so its adherents seem reluctant to acknowledge their theory in public. Instead, they rely on a collection of surrogate arguments in an attempt to cast demolition of the two Pen-Hi buildings as the only fiscally responsible course of action. The problem is that these surrogate arguments are so clearly bogus. Take for example Mayor Kimberley’s recent assertion that it would be financially irresponsible for the city to spend up to $230,000 per year to operate the Pen-Hi auditorium (and gym) given that the auditorium averages only 37 events per year. This argument has at least two flaws. The first—which must have proponents a new $30M facility squirming—is that a new performing arts facility will also incur operating costs but will require an additional $8.5M of local taxpayers’ money to build. To state the obvious, this is a lot of money for 37 performances per year. How can the mayor describe himself as the champion of hard-nosed fiscal responsibility (in the face of irrational sentimentality) when the total cost of saving the two Pen-Hi buildings does not even amount to a year’s interest on the total cost of his preferred alternative? A more troubling problem is that the operating cost estimate used by the mayor includes the salary of a full-time coordinator for the performing arts. It is clear, however, that the city intends to staff this coordinator position regardless of what happens to the Pen-Hi buildings. In other words, the cost of the coordinator is irrelevant to the decision at hand and only serves to artificially inflate the operating cost estimate of the Pen-Hi gym and the auditorium. This is not kosher.

If you take a look at the SONG website (http://saveournorthgym.blogspot.com), you will see that some members of the community (myself among them) have spent time collecting information, looking at the numbers, and attempting to refute the steady stream misinformation, red herrings, and inconsistent logic from local leaders on this issue. We continue in our efforts because we believe the Pen-Hi gym and auditorium represent an unprecedented opportunity for the city to acquire valuable assets at a bargain price. Moreover, we are confident that we represent the majority view. The city’s own survey showed that most respondents (60%) were in favor of the city acquiring the buildings for community use.

Unfortunately, SONG has made little headway with local decision makers because the ruling clique never really cared much about the facts and details. Instead, they seem to be fully committed to their beguiling but seldom-articulated theory. This creates problems for SONG, which is, and always has been, firmly in favor of a new performing arts facility. We recognize that senior levels of government—who are essential sources of funding for the new facility—might tell Penticton to make do with what we have if the Pen-Hi auditorium remains standing. On the other hand, we point to the risk of being too clever by half—of destroying two valuable community resources in the name of an unproven theory. Many of us believe that the risk of being left empty handed outweighs the speculative benefits of gambling. After all, we would have been crazy to knock down Memorial Arena in 2003 when we still had no funding in place for a new (at that time) $30M events centre. More tellingly, we would be crazy to knock Memorial Arena down now, even though funding for the events centre is in place and the old building is architecturally unappealing. But perhaps as mere spectators on the outside of the political machine, we are in no position to question our elected leaders on such matters of fine strategic judgment.

The recent statement by all living ex-mayors of Penticton (save the sitting mayor, of course) changes all this. A formidable group of political veterans has delivered an unambiguous and unanimous verdict on our current leadership’s pet theory. They recommend that funding be secured for the new performing arts facility before any consideration be given to flattening our only large auditorium (and, as collateral damage, a much-needed gymnasium) to make room for a school parking lot. This is a welcome infusion of high-octane common sense into an issue that has become needlessly murky and muddled. Recipients of the ex-mayors’ rebuke are certainly free to dig in their heels, cling to their pet theory, and dismiss the collective expertise of the group as sentimental, negative, impractical, or (most absurdly) uninformed. But an unwillingness to even consider the recommendations of such a group says much about our current leadership’s willingness to place reckless bets.

The Western: Mayors facing an uphill battle

The following editorial appeared in the Western News on July 6th, 2007:

It is hard to downplay the political optics of seeing six former mayors unite in criticizing council’s refusal to assume ownership of two school buildings scheduled for demolition.

Al Kenyon, Ivan Messmer, Dorothy Tinning, Beth Campbell, Mike Pearce and David Perry do not necessarily share similar backgrounds and views. But they have all sat in the chair now occupied by Mayor Jake Kimberley and that grants their views a certain gravity.

So people pay attention when these elder statespeople issue a joint statement opposing the destruction of the Penticton Secondary School auditorium and the north gym without replacements in place.

Whether this “desperate” appeal in the words of Campbell will save the buildings from the wrecking ball is uncertain. The odds appear to be against it.

Only two current councillors, Dan Ashton and John Vassilaki, opposed the city’s refusal to assume ownership of the two buildings and even their opposition was not unanimous. Local school board officials and the provincial government have also made it clear they are not interested in saving the facilities.

This has left the city as the only government agency capable of saving the facilities and we already know how it feels. So supporters of saving the facilities face a difficult task in translating public sentiment into political leverage.

Kimberley is certainly saying the right things in acknowledging the emotional aspect of the current debate, while trying to deflate it with a whole host of facts and figures that justify the direction of the city as it moves forward with plans for a new performing arts facility. Everybody generally agrees that the city needs such a facility.

Sorry, but I can't let this part slide: Where does this emotional/sentimental/nostalgic stuff come from? SONG's argument is at its core an economic and social argument.

But the critics say the city cannot afford do without the auditorium until it has built that new facility. And if recreational groups are clamouring for more space after the loss of Nanaimo Hall, why tear down a functional gym?

But these arguments are still looking for new converts. The city has so far dominated the commanding heights of this issue. But Thursday’s political rally has left us with the distinct and teasing impression that some among this Group of Six still carry dry powder.

Jake Kimberley: Price too steep to save school buildings

The following appeared in the June 29th editions of both The Herald and the Western News:

Having to put sentiment aside when dealing with the responsibility of spending tax dollars, my decision regarding the Pen High Auditorium and Gymnasium was based on that responsibility alone, not the sentimental value of these two buildings.

I am not sure why the Destroy Our Gym but Mainly the Auditorium (D.O.G.M.A.) group keeps calling proponents of saving the gym and auditorium “sentimental” (recall Ben Amos’ first letter as well). I don’t think SONG has ever offered a sentimental reason for saving the buildings. This is merely a form of name calling, of dismissing dissent.

Plus the issue of safety re: the increased traffic around the property now and into the future.

Costs associated with the renovation and upgrade of these two buildings was provided by an independent consultant hired by the city and a local well-known construction company. The estimates were $1.7 million and $1.5 million respectively.

Okay, this is just plain sloppy. Look at the memo from the city’s Director of Special Projects, Barry Reid: On page 2, it clearly states that the city’s estimate (reviewed by an independent quantity surveyor) is $1.5M. Greyback’s quote was $1.2M.

These cost estimates did not take into consideration the unknown costs that are often found when renovating older buildings, if you were to investigate similar projects you would find this to be the case.

Take, for example, the risk of asbestos (which the mayor spent some time discussing during the June 4th, 2007, city council meeting as a possible unknown cost). As the mayor certainly knows, asbestos is safe when inert. Things become costly when asbestos insulation is disturbed, say, during a renovation or demolition. Bottom line: it costs $X to deal with asbestos during a renovation and at least $X to deal with asbestos during a demolition. Either way, the taxpayer picks up the tab.

Any renovation work to these buildings would require them to be brought up to the latest building code requirements, such as a sprinkler system, plus additional washrooms. Washrooms and change rooms would also have to be constructed behind the stage area plus a larger lobby for the entranceway would also have to meet the building code. As stand-alone buildings they would require an additional electrical room, a new source of heating, and air conditioning units would have to be installed. The school board staff were also concerned about the exterior of these buildings and how they would appear against the new school. This exterior upgrade was not considered in the cost estimates quoted above.

Look at Greyback's estimate. Most of these items are already accounted for (except for air conditioning). As for the exterior, we can always hide the building behind wood slats (Trade and Convention Centre) or paint grapes on it (Visitors’ Information Centre).

Industry costs have escalated between 1.5 per cent and 2.0 per cent per month, case in point, the new Pen High construction costs almost doubled from the estimated costs to the final accepted bid price. This is a matter of record.

This is an important point because it involves placing a bet on long-term real (i.e., inflation-adjusted) interest rates.

We all know from our mortgages that a dollar today is worth more than a dollar in the future. That is, if we borrow $1000 today we have to pay the bank back more than this (say $1060) in a year. However, what if, because of inflation, $1000 today buys us more than $1060 in a year? Then it would make sense for us to borrow like crazy and buy everything we want now because the increase in price over time is much larger than our borrowing costs during the same period.

The real interest rate is the nominal interest rate (the rate charged by the bank) less inflation. So, if my mortgage is at 6% and inflation is at 2%, then the real interest rate (the rate that matters) is 4%. However, what about the situation above? Say interest rates are at 6%, inflation in the economy as a whole is 2%, but inflation in non-residential construction is 10%. In this case, real interest rates for construction projects are actually negative (-4%). It makes sense to borrow and spend as long as the rate of inflation (in the relevant sector of the economy) outpaces interest rates.

The problem is, real interest rates in all parts of the economy are normally positive. Even if we consider only non-residential construction (which has experienced considerable inflation recently), the long-term trend is more variable (see graph below; click to enlarge). When you are financing a major project over 20 or 30 years, what is "normal" really matters. Betting that inflation is always going to be higher than interest rates is, from a historical point of view, a bit nutty.

I should add that to save just one of these two buildings as a stand-alone building, the cost would almost be the same estimated costs as saving both.

Yes, this is well established.

The estimated costs of maintaining and managing these two buildings was between $167,000 to $227,000 per year. The average bookings for the auditorium over the last few years were 37 per year. If the city were to be successful in booking the auditorium for 259 days for the next seven years (maximum estimated years before a new structure) and applying that against the estimated costs of taking over these buildings, that would mean that each booking would cost an average of $10,000. Is that a fiscally responsible cost to enter into until a new performing arts facility is built?

I have submitted a longer letter to the editor regarding this claim. As a general observation, this type of argument is very risky. The basic issue is the following: is $10,000 per event too much? What is the basis for comparison?

I took a quick look at the upcoming schedules for the “state of the art” performing arts facilities in Kelowna (326 seats) and Vernon (750 seats). I count 57 events in Kelowna and 39 in Vernon in the coming/past year.

Since our new performing arts facility will more attractive to both performers and spectators than the old Pen-Hi, we might reasonably assume that we will be able to stage more than 37 events in a year. Let’s assume we do better than both Kelowna and Vernon and stage 65 events per year in the new facility. Now let’s compare the cost per show of the new facility with that of the old Pen-Hi auditorium. In order to err on the conservative side, I have assumed a seven year life for the Pen-Hi auditorium (the mayor’s estimate) and a 50-year life/50-year bond for the new facility. For operating costs, I have assumed the lower end of the mayor’s scale ($167K) for the new facility and the upper end ($227K) for the drafty old Pen-Hi auditorium.

Oddly, I get different numbers than the mayor (see table below; click to enlarge). I used Excel and am pretty confident that I did not mess it up; perhaps he did not include the carrying cost of the debt. I calculate the cost of each performance over the seven year life of the Pen-Hi auditorium at $13,700. Interestingly, this is roughly the same as the cost per show over the 50 year life of the new facility. Both are significantly higher than the $10K that so outrages the mayor, so I am not sure what we should take away from all this. If $10K per show is too high, it is pretty clear that we should have no performing arts facility, old or new. I don’t think this was the point the mayor intended to make.

These estimated costs would mean a one per cent overall property tax increase for the renovation work and an annual one per cent tax increase for operation and maintenance costs — a total ongoing property tax increase of two per cent starting in 2008. Monies for the purchase of land for a Performing Arts Centre site would be taken out of the Capitol Reserve fund and therefore would not require a property tax increase.

So the capital reserve money is not tax money? Good to know.

Parking in and around Pen High has always been a problem for the city and property owners in that area have always put forward complaints of school vehicles blocking their driveways. Safety regarding the unloading of the students from school buses must be taken off Eckhardt Avenue where the new entrance will be, this is why the school board was insistent that the gym could not remain on the site.

Odd, the SONG plan makes use of some unused school district land on east of the gym/auditorium to provide more parking than what is in the current plan. I am assuming the mayor read this. Of course, this land could be sold and thus has an opportunity cost. But it has no immediate cash cost—it is school district land.

It was also found in the independent review that there are adequate facilities in the community to accommodate the arts and culture up until a new state of the art facility is constructed.

Obvious question: If the Pentecostal church is adequate for Community Concerts, why are we spending $10M of taxpayer’s money on a new performing arts facility? Are there no other priorities?

Plus, the construction of an indoor soccer facility funded and constructed by the soccer club will fill the void from losing the gym. This new structure will also free up space in the community centre gym.

According to information from Sandra Congram, adult recreational soccer uses the Community Centre gym once per week. I tried to confirm this, but in response to my request for gym usage information, I was told by city staff in an email: “Unfortunately, we do not publish the gym usage numbers and I am told that the use is quite variable from year to year.” In other words, Community Centre gym usage information is top secret.

The indoor soccer facility is a great idea precisely because it will be used for soccer. See the proposal.

Following this decision, city staff will be entering into discussions with the school board staff on joint use of all school gymnasiums including the new state of the art gym being built at Pen High. This maximizes the use of school board facilities, i.e. better use of school taxes and properties.

As stated elsewhere in this blog, the problem with elementary school gyms is not booking efficiency, the problem is that these little gyms are designed for llittle children. They are not great venues for adult recreational sports.

As for community use of the new Pen-Hi gym, the mayor is dreaming. See my previous posting on this topic. It even has video.

Based on the above assessment of upgrading these buildings, I believe this decision will encourage other levels of government to support the need of a new state of the art performing arts facility in Penticton equal to other communities in the valley.

Ah, the theory: destroy what we have and other levels of government will sweep in with money for a replacement. Permit me to doubt.

Michael Brydon: The Theory

In 2003, the City of Penticton was working hard to acquire funding for a new $30M events centre. Imagine if, at that time, civic leaders hatched a theory that involved knocking down Memorial Arena before any money for the new events centre had been raised. According to the theory, the federal and provincial governments would notice the resulting hole in the ground and make good on their responsibility to provide Penticton with a state-of-the-art hockey arena. People in the community might have objected that the theory was just that—a theory. They might have pointed to the risk of ending up with no facility and the on-going community benefits of keeping the old Memorial Arena, event after the events centre became a reality.

But imagine if proponents of the theory dismissed such concerns as negativity and sentimentalism for an obsolete and architecturally-unappealing structure. They could trot out a cost-benefit analysis that—if the salary costs of a planner in the city’s Parks and Recreation Department was creatively allocated—showed the operation costs of Memorial Arena to be very high. They could also argue (in clear contradiction of reports by city staff and well-known facts) that McLaren Arena was available most evenings for Penticton Vees hockey games and would be adequate until 2005 (2006 at the very latest), when the new events centre would surely be completed. They could congratulate themselves for their wisdom and financial prudence.

I am pretty sure that this theory applied to Memorial Arena in 2003 would have been laughed out of existence. But some proponents of a new performing arts facility, including Mayor Kimberley and Councilor McIvor, are true believers in a similar theory. They believe that, by knocking down our old 700-seat auditorium, they can increase the probability that the federal and provincial governments will fund two-thirds of a new 700-seat auditorium. Sounds promising, but there are some problems: First, the old auditorium does not need to be knocked down before funding is in place for a new performing arts facility. The buildings will not occupy the same piece of land and the $1.5M required to convert the old gym and auditorium is a drop in the bucket compared to the cost of a new $30M (pre-overrun estimate) facility. Second, deliberately orchestrating our own facilities deficit puts local taxpayers on the hook for at least a third of the cost of the new facility. Perhaps the referendum for borrowing at least $10M should be held before the old auditorium is paved over. Third, the theory ignores the fact that senior levels of government have many responsibilities and interest (such as health care, greenhouse gas reduction, land claims, education, Olympics, wars, and so on) and that external funding for the new performing arts facility remains speculative. Finally, the theory ignores the potential community benefits of keeping the gym and the auditorium, even if a new facility it built.

Members of SONG (http://saveournorthgym.blogspot.com/) believe—and have always believed—that a new performing arts facility would benefit the city, especially if most of the funding is external. However, we also believe that the city has an unprecedented opportunity to acquire the Pen-Hi gym and auditorium at a bargain. Unfortunately, many city leaders are willing to forego the bargain in favor of theory—a theory that might not be nearly as clever as they imagine.

Michael Brydon: Response to Ben Amos' letter

In an op-ed piece in the June 20th, 2007, edition of The Herald, Ben Amos criticized the letter in which I concluded that funding for the proposed $30M performing arts facility would be difficult to raise. Just to clarify: the point of my letter was not to disparage the folks who have invested time and effort into the proposal. On the contrary, the consensus within SONG is, and always has been, that a new performing arts facility would be beneficial to the city. What we do not understand is why local politicians and (surprisingly) the leadership of the performing arts facility society are so keen to knock down the old auditorium before raising the first dollar for its replacement. It is not like the old has to cleared to make room for the new (the Pen-Hi auditorium is on Eckhardt; the proposed facility will be downtown). Nor is it true that cost of retaining the Pen-Hi auditorium and gym somehow jeopardizes the new facility—it is a trivial amount compared to $30M. If proponents of the new facility are willing to take outrageous risks in order raise $1.2M-$1.5M, then they are in worse shape than we thought.

The point of this posting is to address some of Mr. Amos' criticisms head on. I have no intention of responding in The Herald because it is difficult to rebut sarcasm and name-calling with anything but more of the same. As my wife points out, the result would be be... unseemly. So I will respond to Mr. Amos in this less public venue....

Arts spending about more than just political expediency

It is unfortunate we have among us people who are unable to articulate any thing other than negativity.

Yes, but for the record, I was also called "negative" when I predicted that the SOEC would cost taxpayers money back when the quoted price was still just $30M (see my blog posting).

One recent letter-writer chose to advise us on all his perceived reasons why something might or might not happen and even has the audacity to forwarn us he will let us know where proponents of a new performing arts facility are both "confident and wrong".

Actually, I did not say all proponents of the new facility, I said some (by which I mostly meant Mayor Kimberley). The mayor's factual errors are a matter of public record (see the posting below). We even have video. Decide for yourself whether the evidence is audacious.

It makes one breathless with anticipation.

I can't tell if this is sarcasm. I will assume it is not.

It may be that the strategy is meant to generate and even exacerbate any potential divisions of opinion in the city.

Potential divisions of opinion? How about actual and substantive divisions of opinion? According to the western intellectual tradition, such differences should be resolved through a process of debate or, more gratuitously, the Hegelian dialectic. Certain politicians in the community have stated a thesis (funding for the new facility is just around the corner). I have countered with an antithesis (acquiring funding is going to be difficult). So far, so good. Now, we are supposed to resolve our differences through a rational consideration of the facts. Dismissing my objections as mere pessimism is not a synthesis; it is the suppression of debate.

It is my understanding, following discussions early on with a proponent of saving the the Penticton Secondary Gym gymnasium, the Save the Gym group was originally formed to do just that—lobby to save the gym.

Um, had Mr. Amos bothered to check this website, he would have known that our mandate is, and always has been to save both buildings. Saving one and not the other makes little sense, as discussed in our FAQ. Even so, I am not sure what the point is here.

Yet the school board has never considered the gym as a retention option.

We have tended to dismiss the school board's view on this matter for one simple reason: According to a survey conducted by city staff, 60% of taxpayers in the city think it makes sense for the city to save both buildings (from Barry Reid's presentation during the June 4th, 2007, morning council meeting). In a democracy, what the people think is more important than what their elected officials think.

We now know the two facilities (gym and auditorium) are virtually inseparable. The "Save the Gym" group would now have us believe it is the auditorium that is the principle driver.

Um, no. First of all, we "now know" the gym and auditorium are inseparable because Larry Kenyon (President of Greyback Construction, professional engineer, and SONG member) told us so after analyzing the salvage options. Second, Mr. Amos' chronology is wrong—a fact easily verified by the time-stamped materials on this site and in the local newspapers. SONG has always had members of the performing arts community among its ranks and has always recognized the importance to the community of the Pen-Hi auditorium.

The group finds itself in the strange position of criticizing the city over a decision not to expend funds on what would have been open-ended expenditures for costly renovations on an obsolete structure that the school board does not want...

Many adjectives here: open-ended, costly, obsolete. First, Mr. Amos' financial assertions are not supported with any data. In contrast, the $1.2M-$1.5M estimate for saving the gym and auditorium has been reviewed by city staff and verified by a professional third-party quantity surveyor hired by the city. Second, it seems a bit rich for a proponent of a $30M (unverified) project to call a $1.5M project costly. Obsolete is, of course, a more subjective measure. All we can do is weight Mr. Amos' conclusions against those of the many performers and audience members who have spoke out in favor of the Pen-Hi auditorium.

...—in fact, wants it out of the way of its new development.

To be more precise, the school board wants the two buildings out of the way of its new parking lot (and bus loop, though why the buses do not unload on Jermyn—where the new school will be—is unknown to me).

The other cynical thesis put forward was that funding from senior levels of government is purely a matter of political expediency.

Mr. Amos is right about this—it is cynical. But that does not mean it is wrong. The reader will have to draw on his/her own experience with the political process to come to a conclusion.

All levels of government have a responsibility and interest in re-investing our tax dollars in the arts for the benefit of all.

Nicely put, and true. But this strikes me as hopelessly naive. Governments also have a responsibility to provide health care, fight wars, host Olympics, reduce greenhouse gases, fund education, resolve land claims, and on and on. Since the costs of these responsibilities far exceed the money available, Mr. Amos' argument does not really say anything; it is an empty platitude with no predictive ability whatsoever. Indeed, I am more than a little worried that this is the extent of their reasoning on the issue. Put it this way: they better have something better—a secret deal or backroom assurance of funding—or they are going to have some explaining to do to my kids.

The Penticton and District Performing Arts Facilities Society has always been positive in addressing Penticton's need for the state-of-the-art facility.

Good, but the problem is not PDPAFS's lack of positive energy; it is their lack of $30M.

They have consciously stayed away from the nostalgia-driven efforts to maintain and outdated structure.

They have done more than stay away. In the June 4, 2007, city council meeting, PDPAFS chair Don Grant recommend that the Pen-Hi auditorium be demolished. This recommendation which, as noted above, has no impact on PDPAFS's plans, adversely impacts the gym. Mr. Grant launched an unnecessary attack on SONG's interests in order to further (however marginally) the interests of PDPAFS. Hardly heroic.

As for "nostalgia-driven", Mr. Amos is guilty of putting his words into SONG's mouth. Had he taken the time to read the material on our site, he would have found exactly zero instances of "a wistful or excessively sentimental yearning for return to or of some past period or irrecoverable condition" (Webster). It is true that many SONG members have a sentimental attachment to their tax dollars, but this is a different matter.

Our city has a population of approximately 34,000 and the region it serves is close to 100,000. In addition, tourism adds to its population base in the summer months.

Sure.

The population is growing, with most new residents in the 45-65 group of above-average income, coming from other major centres of Canada,...

In fact, Penticton's population growth is below the provincial average (see the latest census data). But this slow growth is probably due to substitution (young and poor for older and richer), so Mr. Amos' observation is likely correct in spirit.

...often with high expectations for access to the performing arts.

And they are going to be some choked when they discover that we knocked over our best auditorium without bothering to get a firm commitment to fund a new one.

Cities across Canada and around the world are realizing the arts in general, performing arts in particular, are one of the keys to the new urban economy...

I must have missed the memo on this. Plus, I don't believe there are many who retire to Penticton in order to partake in the urban economy. Mr. Amos, for example, owns a vineyard—what could be less urban?

They fuel creativity which is key to economic growth.

This is a pretty broad assertion. When I look around Vancouver, I see plenty of cranes working on public infrastructure. But they are not building facilities for the the performing arts; they are building university facilities (UBC and SFU) and research hospitals (Abbotsford). I teach in a business school and I have to acknowledge my failure to see dance and theatre as the key to our future economic development. Indeed, I would argue that the whole point of economic development is to create wealth and leisure so that we, as a society, have opportunities to participate in the arts. That is, the arts should exist for their own sake, not as a means to material accumulation.

A new performing arts facility in our downtown core would be the centre-point for an emergent downtown cultural district and a great asset for our businesses.

Hmm, a theatre and a Starbucks does not a cultural district make. Wait, don't tell me: Theatre-goers are going to grab dinner first and drinks after and the benefits for the local economy are going to be huge! The problem is that this reasoning is known to be flawed. We are talking here about discretionary spending. The money could have just as easily been spent on dinner, drinks, and a substitute (e.g., hockey game) if the theatre was unavailable. There is no growth in this type of spending, just an alternative allocation of money to competing uses. Again, it is a bad sign when efforts are made to justify the arts in terms of return on investment.

There are those who would espouse a moratorium on all things, no matter how beneficial, because of the construction of the South Okanagan Events Centre.

Yes, these people are known as "accountants".

This is unreasonable and unnecessarily-angst ridden. A manageable city debt is a fact of life.

To have any meaning at all, Mr. Amos would have to define what he means by "manageable". In addition, he has no idea what the SOEC is going to costs—no one does. But a few paragraphs back, he was deploring "open-ended expenditures for costly renovations". Now, money is no object, as long as we get to see "The Producers".

It will take some time to raise funds and to construct an arts facility we will all be proud of.

Mr. Amos needs to talk to Messers McIvor and Grant. They estimated 24-36 months to completion during the June 4, 2007, city council meeting. If it does take longer, as Mr. Amos seems to be implying, perhaps we can gather around a scaled down production of "The Producers" in Pen-Hi's ample parking lot.

We should move ahead now. Rather than criticize those with passion and foresight and the persistence to to keep on with the task, we should positively applaud their efforts...

And gentlemen in England now abed
Shall think themselves accursed they were not here,
And hold their manhoods cheap whiles any speaks
That fought with us upon Saint Crispin's day. (HenryV, IV, iii)

In keeping with an apparent need for cliches—don't throw good money after bad.

Hmm, I think this makes more sense when a bad investment has been made and more money is required to prop it up, resulting in further losses. But both the Pen-Hi gym and auditorium have proved themselves to be workhorses. Everyone—with the exception of a few who seem maniacally obsessed with razing them from the earth in the belief that doing so will somehow help them raise $30M—says nice things about these buildings.

So what do I conclude from Mr. Amos' letter? Despite Mr. Amos' name-calling, sarcasm, and platitudes, he has failed to address the big question that I hear both inside and outside of SONG meetings: Why are we knocking down the Pen-Hi auditorium before we know whether we can build a new facility? And if we do knock it down, what happens if PDPAFS comes up short? Blame is like a plane: it has to land somewhere.

Michael Brydon: Why Mayor Kimberley is wrong

I stated in recent letter that the City of Penticton's decision to decline the opportunity to acquire the Pen-Hi gym and auditorium is incoherent. I understand that the decision has already been made and I should get on with my life. But it is important to recognize that the mayor did not permit public response to council's arguments during the debate on the issue. As a result, a lot of nonsense went unchallenged and some of us now feel compelled to conduct a kind of postmortem debate in the opinion pages of the local paper.

If you watch the archived recording of the gym/auditorium deliberations, you will see that there is much that begs for rebuttal. However, given space constraints, I will concentrate on the three key elements of Mayor Kimberley's argument for demolishing the buildings: A lack of parking for auditorium events, the availability of a newer, state-of-the art high school gym for community use, and uncertainty regarding the cost of converting the buildings for community use. As a general observation, the mayor's arguments suffer from two shortcomings. First, in each case, his facts are exactly wrong. Second, he fails to apply the same critical logic to his preferred alternative (immediate construction of a new $30M performing arts centre). Let's review the details:

Parking: Following a presentation by Dr. Sandra Congram, a spokesperson for Save Our North Gym (SONG), Mayor Kimberley asked if SONG's proposal addressed the parking issues that would arise when events held in the gym/auditorium coincided with regular school activities. This question is so comprehensively clueless that, when I heard it, I had a moment of self-doubt and actually checked the Internet for theatre schedules. Of course, I discovered what I already knew—what everyone knows—that theatre events are rarely (if ever?) scheduled during school hours. For example, the Sunshine Theatre series in Kelowna starts at 8:00 PM on evenings and matinees run only on Saturdays. Thus, rather than posing a parking problem, the Pen-Hi auditorium exists in almost perfect parking symbiosis with the school: when school is out, its hundreds of parking spaces can be used by theatre patrons. A downtown performing arts facility, in contrast, does pose major parking challenges, especially if, as the mayor suggests, dozens of condominiums are stacked on top of the facility to help defray its costs. Surprisingly the mayor's parking concerns were not challenged by anyone, including other members of council or even a local press outlet, which dutifuly opined that the Pen-Hi auditorium poses intractable parking problems. As for gym activities during the school day, these are equally unlikely. The whole point of saving the gym as a community resource is so that it may be used after school and after work.

Community use of the new Pen-Hi gym: In dismissing the need to save the Pen-Hi gym, Mayor Kimberley asserted that the new gym currently under construction for Pen-Hi will be available for community use (thereby negating the need for the older structure). In reality, high school gyms in Penticton are rarely available for community use because high school teams monopolize their gyms for most of the year. Dr. Congram explained this to the mayor and the city's Director of Special Projects, Barry Reid had, in his presentation just moments before, said the following: "The high school gyms are normally fully used; it is tough to get into them." (A video summary of this exchange can be found on YouTube) The mayor's certainty caused in me another moment of self-doubt, so I checked with both Maggie and Pen-Hi and discovered what I already knew: the high school gyms are booked solid during much of the year. Moreover, both high schools also make liberal use of the adjacent middle school gyms (copies of the gym schedules for both high schools have been posted on the SONG website). Although Mr. Reid acknowledged that the city faces a shortage of prime-time gym space for community groups, the city's position is that we can make do with our many empty elementary school gyms. Again, there is a logical inconsistency: the mayor advocates demolition of the Pen-Hi auditorium because it lacks a pleasing spot in which to have a glass of wine during intermission. However, citizens of less refined tastes—such as members of the 25 or so teams in this city who play adult recreational volleyball four nights a week for most of the year—are asked to make do with tiny elementary school gyms with dusty floors, low ceilings, and no space for warming up or spectators.

Cost uncertainty: The cost projections presented by SONG were developed by Greyback Construction at no cost to the city. The projections were then reviewed by city staff and verified by an independent quantity surveyor. Despite the time, effort, and cost expended on developing and verifying these estimates, Mayor Kimberley decided that the $1.2M-$1.5M estimate was too low. Councilor Litke concurred, based on his experience with used cars. Even if Messers Kimberley and Litke know something that construction professionals do not, which is unlikely, the same logic must then be applied to the new performing arts facility. If the city cannot afford cost inflation on a project with a base price of $1.5M, how can it then recommend an alternative with a base price of $30M?

The net result of the mayor's factual contortions and inconsistent logic is that people actually believe him when he says that it makes more sense to chase a $30M facility than make do with what we have until we resolve some of the uncertainty regarding funding (and demand) for the new performing arts facility. At the very least, the city should mothball the gym and auditorium until they have the $30M in hand. Alas, a clique of local politicians has apparently hatched a clever plan that requires expeditious demolition of the Pen-Hi auditorium (the Pen-Hi gym being mere collateral damage in all this). But that is a topic for a future letter...

Michael Brydon: "Get on with it" or "look before you leap"

A slightly edited version of the following letter appeared in the June 14, 2007 edition of the Herald:

I have advocated converting the Pen-Hi gym and auditorium into community use facilities so I was disappointed when I heard of city council’s decision not pursue the opportunity. I could not attend the council meeting at which the decision was made due to travel, but I assumed that the outcome was the result of sound judgment and careful consideration of the facts. I was ready to admit that we had lost the battle and relieved to be done with the whole matter. But then I watched the archived video of council’s June 4th deliberations. The question I am now asking is whether a decision based on transparently shaky logic and a sometimes comical misapprehension of the facts actually resolves anything? The more I review the arguments used to justify the demolition of the gym and auditorium, the more I am convinced that council’s decision is not merely bad, it is incoherent. My objective in writing this letter (and any sequels) is to convince anyone who will listen that something is broken.

The gym/auditorium issue has many facets, but the most important justification for demolishing the buildings is that the city will soon have a new performing arts facility. Little information about the proposed facility has been made public (despite the fact that will be paid for with taxpayers’ money) but the basic idea is that it will cost roughly $30M and require funding from federal, provincial, municipal, and perhaps even private sources. Proponents of the facility and several members of council, including the mayor, are confident that the funding will be in place and the curtain will rise in the new facility within 24-36 months. But, given that some of these folks have already demonstrated the ability to be both confident and wrong at the same time (more about this in a future letter), it is worth drawing our own conclusions about the inevitability of funding. Let’s consider the potential sources:

• Federal: Conservatives have a doctrinal aversion to spending taxpayers' money on the arts. However, given their minority status, the Conservatives might be willing to fund some projects in an attempt to secure a majority. The problem is that Stockwell Day received more votes than the other three candidates combined in the 2006 election and has since been promoted to cabinet. His seat is one of the safest in Canada. Why then would scarce federal funding come here when it can be used in Ontario or Quebec to make a difference?
• Provincial: Messers Barisoff and Thorpe can join Mr. Day in the Safe Seat Club, having already delivered a whopping $50M contribution to the SOEC. So why would the provincial Liberals, who are facing increasing financial pressure from Olympic overruns, set an unsustainable precedent by giving a small city in a safe riding even more money?
• Municipal: Proponents of a new performing arts facility like to point to a series of studies and plans commissioned over the last couple of decades. Unfortunately, those documents became ancient history the moment the city agreed to underwrite the $17M cost overrun of the SOEC. In addition, new surprises might be in store once the SOEC is complete. Although a real business plan for the SOEC was never made public, it is clear the city expects the facility to turn a profit. But as communities such as Cranbrook and Youngstown, OH, have discovered, the revenue projections used to justify the construction of such facilities may bear little relation to actual revenues. Under the terms of its contract with its private sector partner, the City of Penticton bears almost all of the risk of operating losses, which may be significant. Making commitments to other major capital projects before the city’s true liabilities can be estimated with any precision strikes me as reckless.
• Private investors: Both Mayor Kimberley and Larry Little, the chair of School District 67, have argued in favor of the destruction of Pen-Hi’s auditorium by pointing out that building is seldom used. Others have responded that the district’s restrictive booking policies (e.g., no setup until the end of the school day) are the culprit and that events would be easier to book if the auditorium were under community control. Either way, an unused auditorium is hardly a ringing endorsement of the financial viability of an expensive replacement. More recently, the mayor has floated the possibility of using condominium development to cross-subsidize the provision of a new performing arts facility. No information on this idea has been forthcoming so it is hard to comment on its merits. However, given the city’s lack of success in getting developers to do simple things, like build on the vacant Three Gables site or invest in a supermarket in the downtown core, it is not clear how the city is going to convince a developer to underwrite an expensive money-losing auditorium.

Given this political and financial calculus, I would put the probability of raising $30M in the next 36 months somewhere between bleak and dismal. At the very least, we should acknowledge that the city is making important irreversible decisions in the face of massive uncertainty. Fortunately, much of this uncertainty can be reduced at low cost. Since the performing arts facility society insists that it cannot raise money until it owns land, the city’s first priority should be to acquire this land. This way, we can see whether all the happy talk about funding has any basis in fact. Naturally, the land could revert to the city if the fundraising fell short, making the transaction essentially risk-free for the city.

Unfortunately, the city has confused knocking over its backup facility (“Getting on with it”, seems to be the dominant slogan) and rational first steps. The prevailing theory seems to be that the $1.5M required to save the gym and auditorium should be spent to buy the land for the new performing arts facility. But $1.5M (which also buys us a large, much needed gymnasium) is a mere 5% of the cost of a new facility. It is like council saying it cannot afford travel insurance because it needs the money for airfare. My response is that, if it cannot afford insurance, it should not be traveling at all. Unfortunately, most councilors are unmoved by risk mitigation strategies or conventional logic. Instead, they seem to be most interested in facile slogans. As a conclusion then, let me offer some proven winners: Don’t count your chickens before they hatch. A bird in the hand is worth two in the bush. Look before you leap.