keoadmin
01-20-2004, 02:37 PM
Terence Corcoran is Editor of the Financial Post, the business section of the National Post. Mr. Corcoran's editorial on mega project ARENAS, PERFORMING ARTS & CONVENTION CENTRES appeared in the Financial Post the day after Kingston 2000 was first introduced to Kingston.
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From SkyDebts to SinkHoles
EDITORIAL by Terence Corcoran
Financial Post November 26, 1998
The financial collapse of theatre promoter Livent and the imminent bankruptcy of Toronto's SkyDome have much in common. Above all, they reveal one of the great economic deceptions of our age.
In the name of art and sports and conventions, North American cities have littered their landscapes with colossal monuments to waste and financial ruin. With a few exceptions, these megastructures-arenas, stadiums, performing arts centres and convention centres-are essentially bankrupt. They cannot and will never pay their way. If their true financial conditions were known, if all their hidden debts, tax deals, subsidies and bailouts had to be accounted for, they would - like Toronto's Livent and SkyDome - dissolve into financial chaos.
For all its show-biz claims to theatrical daring and entrepreneurial flair, Livent was essentially a real estate speculation built with taxpayer support. Behind the glitz, in every major city it operated in, Livent worked the local political angles, fixed tax deals and collected favours. Chicago, New York, Vancouver and Toronto all have Ford Theatres for the Performing Arts, and each is a triumph of political dealmaking.
In Chicago, the Oriental Theatre was refurbished with $ 13.5 million in city funds and expanded on land expropriated by the city in an area - State Street - that received millions more in up- grades and preferential treatment at taxpayer expense. Li vent's New York theatre is based on a long-term lease that allows Livent to escape realty taxes for up to 75 years, also in an area of Manhattan thick with government deal-making. Vancouver's Ford Centre received a $5.2 million "commercial loan" from the province. Toronto's Ford Centre was built by the city of North York in a deal with Livent whose sweetheart details have never been revealed by the city, then run by current Toronto Mayor Mel Lastman.
Without that Toronto deal, Livent's major productions could never have gotten off the ground. Toronto taxpayers subsidized the launch of Show Boat and Ragtime. With the collapse of Livent and its elaborate system of cross-subsidies, the Toronto version of the Ford Centre - located in a suburb far from downtown - is likely to become another financial drain on a city that has more than its share of sinkhole monuments.
Toronto's SkyDebt was built on $650 million in loans guaranteed by the former Liberal government of David Peterson and his treasurer, Bob Nixon. Mr. Nixon, a Chretien loyalist, eventually moved on to a federal sink hole called Atomic Energy of Canada Ltd. The outstanding debt on the province's books, with interest, is probably now approaching $1-billion, but who's counting? The latest round of renegotiations are likely to leave another trail of unpaid bills, either debt or taxes or both. The SkyDebt is now in private hands, but a new generation of favour seekers - tax relief, maybe, or debt postponement - is on the make. Other Toronto money pits include the downtown Metro Convention Centre and the Ottawa-funded National TradeCentre. Built at a cost of $ 180-million, one third of its money from the "infrastructure" program, the trade centre barely meets its operating expenses, which do not include paying down debt or covering interest costs on the original $180-million. That cost is buried behind three levels of government borrowing.
The deception is this: Each of these projects, in city after city, is sold to a gullible population on the basis of economic snake oiL The claim is that if a city builds a trade centre or a theatre complex, or spends half a billion on a sport stadium, the economic spin-offs will double the city's investment. For the price of a Mercedes, you can hire a Big Name economic consulting firm to produce a computer print out and an audio-visual show that will demonstrate how a new stadium will generate quanta of jobs, spending, revenue, tax gains and rail cars filled with positive externalities. It is all a scam, and the consultants who peddle this junk economics should be stripped of their credentials.
Everybody in the country is familiar with these productions. The economists help politicians whip up support by creating large numbers of beneficiaries - restaurant operators, hotels, club owners. When the city of Chicago was negotiating with Garth Drabinsky's Livent, its real estate consulting firm claimed that reopening of the Oriental Theatre alone could bring in $ 1.2-billion in total spending by theatre goers over the following 12 years.
In Toronto yesterday, the current owners of the SkyDome repeated the claims that have been made by every SkyDome promoter since the project was first mooted 10 years ago. The Dome creates jobs, generates profits for local small businesses, and gives Toronto a world-class sports franchise.
The truth is that these projects, of which there are hundreds across North America, are economic drains. The benefits accrue to some, but the costs in higher taxes are greater to others.
____________________________________
From SkyDebts to SinkHoles
EDITORIAL by Terence Corcoran
Financial Post November 26, 1998
The financial collapse of theatre promoter Livent and the imminent bankruptcy of Toronto's SkyDome have much in common. Above all, they reveal one of the great economic deceptions of our age.
In the name of art and sports and conventions, North American cities have littered their landscapes with colossal monuments to waste and financial ruin. With a few exceptions, these megastructures-arenas, stadiums, performing arts centres and convention centres-are essentially bankrupt. They cannot and will never pay their way. If their true financial conditions were known, if all their hidden debts, tax deals, subsidies and bailouts had to be accounted for, they would - like Toronto's Livent and SkyDome - dissolve into financial chaos.
For all its show-biz claims to theatrical daring and entrepreneurial flair, Livent was essentially a real estate speculation built with taxpayer support. Behind the glitz, in every major city it operated in, Livent worked the local political angles, fixed tax deals and collected favours. Chicago, New York, Vancouver and Toronto all have Ford Theatres for the Performing Arts, and each is a triumph of political dealmaking.
In Chicago, the Oriental Theatre was refurbished with $ 13.5 million in city funds and expanded on land expropriated by the city in an area - State Street - that received millions more in up- grades and preferential treatment at taxpayer expense. Li vent's New York theatre is based on a long-term lease that allows Livent to escape realty taxes for up to 75 years, also in an area of Manhattan thick with government deal-making. Vancouver's Ford Centre received a $5.2 million "commercial loan" from the province. Toronto's Ford Centre was built by the city of North York in a deal with Livent whose sweetheart details have never been revealed by the city, then run by current Toronto Mayor Mel Lastman.
Without that Toronto deal, Livent's major productions could never have gotten off the ground. Toronto taxpayers subsidized the launch of Show Boat and Ragtime. With the collapse of Livent and its elaborate system of cross-subsidies, the Toronto version of the Ford Centre - located in a suburb far from downtown - is likely to become another financial drain on a city that has more than its share of sinkhole monuments.
Toronto's SkyDebt was built on $650 million in loans guaranteed by the former Liberal government of David Peterson and his treasurer, Bob Nixon. Mr. Nixon, a Chretien loyalist, eventually moved on to a federal sink hole called Atomic Energy of Canada Ltd. The outstanding debt on the province's books, with interest, is probably now approaching $1-billion, but who's counting? The latest round of renegotiations are likely to leave another trail of unpaid bills, either debt or taxes or both. The SkyDebt is now in private hands, but a new generation of favour seekers - tax relief, maybe, or debt postponement - is on the make. Other Toronto money pits include the downtown Metro Convention Centre and the Ottawa-funded National TradeCentre. Built at a cost of $ 180-million, one third of its money from the "infrastructure" program, the trade centre barely meets its operating expenses, which do not include paying down debt or covering interest costs on the original $180-million. That cost is buried behind three levels of government borrowing.
The deception is this: Each of these projects, in city after city, is sold to a gullible population on the basis of economic snake oiL The claim is that if a city builds a trade centre or a theatre complex, or spends half a billion on a sport stadium, the economic spin-offs will double the city's investment. For the price of a Mercedes, you can hire a Big Name economic consulting firm to produce a computer print out and an audio-visual show that will demonstrate how a new stadium will generate quanta of jobs, spending, revenue, tax gains and rail cars filled with positive externalities. It is all a scam, and the consultants who peddle this junk economics should be stripped of their credentials.
Everybody in the country is familiar with these productions. The economists help politicians whip up support by creating large numbers of beneficiaries - restaurant operators, hotels, club owners. When the city of Chicago was negotiating with Garth Drabinsky's Livent, its real estate consulting firm claimed that reopening of the Oriental Theatre alone could bring in $ 1.2-billion in total spending by theatre goers over the following 12 years.
In Toronto yesterday, the current owners of the SkyDome repeated the claims that have been made by every SkyDome promoter since the project was first mooted 10 years ago. The Dome creates jobs, generates profits for local small businesses, and gives Toronto a world-class sports franchise.
The truth is that these projects, of which there are hundreds across North America, are economic drains. The benefits accrue to some, but the costs in higher taxes are greater to others.