An $88,000 annual payment by Moncton taxpayers to the Wildcats hockey team is actually a grant that led to an unnamed Irving company setting up in the city, according to a City Hall document obtained by CBC News.
The payment is included in the lease contract between the city and the Irving-owned team for the use of the Moncton Coliseum.
It’s ostensibly to compensate the team for the lack of revenue-generating corporate boxes at the Coliseum.
But minutes of a June 2010 private council meeting indicate it helped lure an Irving business to the city.
Mayor George LeBlanc told councillors that “Council of the day agreed to provide the $88,000 on the condition of an Irving business locating in the Moncton Industrial Park versus other communities,” the minutes say.
'Council of the day agreed to provide the $88,000 on the condition of an Irving business locating in the Moncton Industrial Park versus other communities.' - Moncton City Council minutes from private meeting in June 2010
The minutes continue: “The City also agreed to pay the funding until such time they installed the suites, which did not materialize, and, therefore, is obligated to meet that commitment.”
The $88,000 payment was part of the original contract signed in the 1990s, according to city spokesperson Isabelle LeBlanc.
“It was based on what net revenue corporate boxes provided for similar hockey operations at that time,” she said in an e-mailed statement. “It has been in the renewed contracts ever since at the same amount.”
LeBlanc did not respond to a follow-up question about the money being a location grant.
CBC News has confirmed the Irving business in question is a $60-million Irving Personal Care Ltd. diaper manufacturing plant located in the Caledonia Industrial Park, only a short drive across the municipal boundary from Robert Irving’s other operations in Dieppe.
The plant was announced in 2003 and opened in 2004. At the time of the announcement, it was expected to have 105 employees and an annual payroll of $9 million.
During the 2003 announcement, Robert Irving praised Moncton’s “excellent workforce that allows us to provide superior service to our customers.”
The PC government of Bernard Lord gave the company $35 million in loan guarantees to help build the plant.
Last year, the assessed value of the property was $13,197,000. It paid $604,673.35 in property taxes.
The Wildcats are one of the Irving group of companies based in the Moncton area and run by Robert Irving, a grandson of K.C. Irving.
Kevin Lacey, the Atlantic director of the Canadian Taxpayers Federation, condemned the subsidy and the secrecy around it.
"The city should be upfront about what this money is for, who it's going to, and what taxpayers got for putting this money out,” he said.
“If taxpayers' money is going to go to fund a business, the city owes it to those taxpayers to be accountable for what that money is being used for and where it's going, and not to hide it behind some other contract for some other item that is not related to anything that the money is actually being used for.”
Last week, Wildcats general manager Jeff Rose refused to comment on the $88,000 payment.
Earlier this year, Moncton refused a CBC News request under the Right to Information Act to release its contract with the Wildcats.
Both the City of Bathurst and the Harbour Station Commission in Saint John released their contracts with their Quebec Major Junior Hockey League teams.
The $88,000 payment was revealed publicly during contract negotiations between Moncton and the Wildcats in 2010. It was described at the time as compensation for the lack of corporate suites. There was no mention of it being a subsidy.
A history of controversy
Municipal subsidies to corporations have a long and controversial history in New Brunswick.
Until Premier Louis Robichaud’s Equal Opportunity reforms of the 1960s, municipalities were free to offer property tax breaks and other concessions to private companies.
The reforms were designed to stop bidding wars between municipalities by centralizing property tax assessments and collection in the provincial government.
At the time, K.C. Irving lobbied against the tax reforms, arguing they would threaten existing concessions his plants had received in Saint John.
In 2005, critics argued that the spirit of Robichaud’s reforms were violated when the City of Saint John capped the property tax bill for Irving Oil’s Canaport LNG at $500,000 for 25 years. That sparked outrage and protests in the city.
It took a special amendment by the New Brunswick Legislature to provincial laws governing the calculation of property tax assessments to make the LNG deal legal.
But a straight grant appears to be less of a problem. Section 90.01 of the provincial Municipalities Act says a municipal council can give a grant to any “organization or corporation” if it believes “the grant will assist in the development of the municipality.”
On Friday, a spokesperson for the Department of Local Government, Lisa Harrity, said it’s up to the municipality, not the province, to decide whether its actions fall within the scope of that section of the Act.
In 2003, a judge blocked the City of Miramichi from borrowing money from the province so it could buy land and lease it to the Atcon Group to help it build a veneer lumber mill.
A competing forest company went to court to challenge the city’s move, which relied on a different section of the Municipalities Act.
Justice George Rideout blocked the land deal, saying the arrangement had “no specific public purpose service” and fell outside the city’s powers.
But Rideout wrote at the time that the city could have used Section 90.01, which, he wrote, “would appear” to allow grants.
When Mayor George LeBlanc told councillors in 2010 about the location grant, City Council was debating a new three-year contract with the team. There had been complaints that because of generous concessions to the team, it was costing the city $175,000 per year.
The contract that the team and the city eventually signed was supposed to let the city break even by 2013. The city now refuses to say whether that happened.
Council is again negotiating a new contract with the team. City Hall’s Isabelle LeBlanc said on Oct. 11 the agreement was “close to being finalized” and “should be completed shortly."
There are signs, however, that the negotiations have not gone smoothly.
In an e-mail to councillors Sept. 27, also obtained by CBC News, city manager Jacques Dube appears to be lobbying them to be more supportive of the team by pointing to Robert Irving’s “major philanthropic impact” on the Greater Moncton area.
“We understand that some of you may not feel this information is relevant to the debate surrounding the proposed Wildcats contract with the City, but in the spirit of full disclosure of information, we felt it best to share this with you,” Dube said.
He said Irving has given “millions of dollars” to the Magnetic Hill Zoo, the Santa Claus parade, the Friends of the Moncton Hospital, and several other non-profit organizations. He also mentioned about $400,000 in donations by the Wildcats organization to youth hockey, cancer research, and literacy programs.
Another sign that this year’s negotiations haven’t been easy is Robert Irving’s recent complaints about the Coliseum itself.
Last week he said the Wildcats organization was withdrawing its bid for the 2015 Memorial Cup because the city had not kept a promise to install new air conditioning in the aging arena.
The negotiation of a new contract comes as Moncton is trying to secure funding for a new entertainment centre in the city, which would have the Wildcats as the anchor tenant.
The projected cost of the centre was recently raised to $112 million, from $75 million three years ago.