Some history first:
Back in early November a report came to the council about the velodrome. PanAm Games needed an indoor track cycling arena and Milton could be a possible location. My first reaction was “no freaking way”. However, I, along with most of my colleagues in the council, asked staff to see if they could come up with private sector money for the project. We made it clear that we did not want to use any property tax money for a cycling arena people in Milton cared little about.
Then we received a report towards the end of November outlining some potential funding options. On December 5th we received more details on funding and asked for a business plan that outlines all risks, operating costs and potential benefits.
So contrary to the belief, we have not agreed to move forward on the velodrome nor have we approved any such project. We’ve basically asked for more information so we can understand all costs and risks better before making an informed decision. That’s it, nothing more. Voting “no” was a much easier political decision. However, just rejecting a potential opportunity without understanding it better is not in the best interest of taxpayers.
Here’s how the funding is broken down :-
| Project Cost | $40 Million |
| PanAm Games chips in | $22.4M |
| What we have to fund | $17.6M |
| Plus a parking facility | $2.2M |
| Total cost to Milton | $19.8M |
Naturally that’s a no-go because the council made it perfectly clear that it does not want to use any tax money for the project. This is how the $19.8M will be funded :-
| Development Charges | $3.8M | This is money we are collecting from developers anyway for an indoor gymnasium that would be built anyway. If we did not build one then legally we’re obligated to return that money back to developers. Velodrome has an empty area in the middle that can house a gymnasium. Overall, it’d cost less since we get efficiencies of scale. There is room for three full-size gymnasiums within the interior of the track! |
| Pledged donations | $7.0M | We have a commitment from Mattamy |
| Naming Rights | $2.0M | We have a commitment |
| Wilfred Laurier | $2.5M | |
| Fundraising | $3.0M | TD Canada Trust’s CEO and President Tim Hockey is personally supporting the fundraising campaign and is confident that the goal is very achievable. For comparison, we raised over $2.2 million for the Milton Arts Centre that only people in Milton were interested in. This fundraising will primarily be done outside of Milton |
| In-Kind Capital | $1.5M | Companies like Milton Hydro, Crozier Engineering, Green Life Energy, Milton Energy and Generation Solutions, TSAM Investments, and other local firms and local suppliers are donating their services |
| Total | $19.8M |
We still have not agreed to anything, but at least on the capital front we can build this $40 million facility without using any property tax money (development charges are not paid by taxpayers, they are money developers put towards specific projects and we are legally obligated to return that money if it’s not used for the specific purpose it was collected for. This is actually a cheaper way of doing the indoor gym facility that we took money from developers for).
We are at the stage where we are waiting to see the business plan to understand operating costs and risks better. None of us in the council want to proceed if we are not convinced that there is sufficient margin of safety. We know that if things go wrong, not only would we be stuck as taxpayers (we pay taxes too), but we’ll likely lose our jobs over it. We are proceeding with caution right now only to understand benefits and risks better.
Now in terms of benefits, such a facility gives us enormous marketing and economic development potential. For starters, there are almost two dozen national and international competitions that will be held here every year, bringing tourists and businesses to Milton. There is also a possibility of a hotel or two popping up in the immediate area. As the Co-Chair of Milton Economic Development Advisory Committee, I can tell you that lack of hotel space in Milton is actually a serious concern for good employers who otherwise might consider locating to Milton. Finally, it gives us massive marketing benefits.
I don’t know yet if I’ll vote ‘yes’ to approve the project or not. But I do see value in studying it further. That’s all we are doing right now. It is because of that investigation that we were able to come up with private money to fund the project. On the capital front, we know that we can get this $40M one-of-a-kind-in-Canada facility for free as far as property taxpayers are concerned. Now the issue is cost overruns and operating cost. That’s what we are trying to better understand.
Whether we proceed or not all depends on balancing risks with benefits. I’ll keep you posted. I hope it clarifies my reasoning for why I voted (three times) to continue studying this issue further.
This is an excellent explanation
Zeeshan, thanks for putting this into perspective. Keep going.
Interesting post! Why do we only have to come up with $19M of the $40M project? Although I am always skeptical of projected donations, considering we are in recession and the art centre fundraising was done in boom times, my real concern is the ongoing operating costs. Even if the building is free how much will this cost to operate and repair on an annual basis?
I am a fan of cycling, but really question of we need an indoor cycling facility when I cant even ride down tremaine road without almost being killed by dump trucks. An OPP officer was killed biking on those roads a few years back I think we need to make Miltons existing roads bike friendly first before we look at indoor arenas.
Thanks for the breakdown, I would say that my opinion matches yours. I do not think that my taxes should go up to support a velodrome in Milton as the halo-effect benefits are unknown and in general these type of halo-effect benefits have been over-stated in other projects. HOWEVER, if we are going to build a recreation center anyways then I am fine if other people want to throw in extra funding to expand that from the current planned gymnasium to gymnasium plus velodrome.
Prior to reading about the mixed-use in the Champion this week, I was totally against it. Council (and the velodrome supporters) need to make sure that message gets out, I’m sure it will help with job security. ;-)
Colm Lynn – We’re already making all roads bike friendly. Check out the newly finished Lower Baseline, you’ll see properly marked bike lanes. Tremaine has a dedicated seperate bike path.
With this $21 million’s coming from PanAm games.
We’re all concerned about the operating cost, that’s why we have a consultant working on the business plan.
Excellent explanation Zeeshan!
Thanks for the very informative blog. I for one was dead against this project before reading your blog. I’m not saying like yourself that I am now for it, but at least I will be able to make an intelligent choice when the time comes. Thanks for taking the time. Ries
Tremaine does NOT have a dedicated separate bike path at the proposed location of the facility. I would estimate less that 10% of Tremaine road contains bike lanes and is safe for riding. In addition, there is supposed to be a weight restriction on large trucks using that road but it is not enforced, making it unsafe to cycle.
I actually support the Velodrome because the new focus on cycling lead to the political will to implement the much needed improvements to make our roads safe for cyclists, but we need to be aware of how much this is actually going to cost the tax base on an annual basis. Assuming a 40 year useful life, just the capital depreciation alone is $1M per year. Then there are the utility, maintenance, staffing, repairs etc that all have to be considered. It can be a shock when a “free” building end up costing the taxpayers millions of dollars.
I have to correct my above statement “the capital depreciation alone is $1M per year”. The capital costs here are assumed to be paid up front, so there would not need to be the amortization of costs over the 40 years and wouldn’t impact the decision. I also agree with a blog poster that the mixed use really needs to be emphasized, although I have no idea how you fit 3 gyms or a soccer field in the middle of a cycle track…
Thanks for the information, your perspectives and the discussion forum.
I haven’t checked out Tony Lambert’s web presence yet but can report that most of the other ToM pols have a non-existent or pitiful web presence. You are the only one having a dialogue on this subject; Mike Cluett at least has some info on his web site and I saw one tweet from Rick DiLorenzo.
The first time I heard about this idea I had the same reaction. Having read your stuff, can’t say I’m feeling too different. This just seems like a “shiny object” that’s caught people’s attention/imagination. The ToM has much bigger fish to fry … maybe we could use a proper hospital. (I drove by MH recently and said to myself “I’ve had pimples on my butt bigger than that”.)
I see the potential ToM negatives as follows:
1. risk re: $ 2.5 M MEV partner amount not materializing
2. risk re: $ 3.5 M fundraising amount not materializing; it’s not like the TD dude is guaranteeing the amount will be raised
3. on-going operating and maintenance cost for a 113,000 ft2 facility, versus what it would cost for just the infield area
4. “displaced fundraising cost” (can’t think of a better term at this point) for #2 above as well as $ 7 M Mattamy donation and $ 2 Mattamy sponsorship; my thinking is that this or part of this money might be otherwise obtainable for a much more worthy initiative … maybe a hospital ?
I’m late to this game and formulating other general points but these are my main ToM issues for now.
At this point I say “Hospitals … NOT Circuses”.
Thanks for the feedback Bruce. You raised some valid points (and yes, ‘shiny object’ is perhaps not a wrong euphamism to use).
Just wanted to clarify two points :-
- Milton hospital expansion is underway. It’s in the planning phase right now.
- If we move forward with the velodrome, the development charges money we would use for the velodrome cannot legally go towards the hospital. That money *must* go to pay for an indoor recreational facilty.
I’ll raise other questions you raised at the Council. We dont have the operating cost estimates yet and I too would like to know who foots the bill if fundraising goal or MEV partner amount doesn’t materialize.
Zeeshan Hamid
Hello again. Thanks for the reply. I understand the $ 3.8 million development charge portion must be spent on indoor recreation, so at this point I wasn’t taking issue with that.
On that point though:
1. It makes sense that there are potential efficiencies/synergies between the velodrome and the indoor recreation facilities.
2. Somewhat alarmingly, the recent ToM report CMS-050-011 is unclear just what is part of the overall $ 40 million capped cost and what part, if any of the recreation costs would be incremental to that. So if the town spends some incremental amount on making the space more flexible than what is covered under the current overall cost, etc. then that’s more money to be paid out on that portion than the notional $ 3.8 million.
The more I think of it, the more I suspect that ToM councillors as a whole have not given this a lot of thought.
Hospitals … NOT Circuses.