Debate over Halifax Convention Centre reignited as city hall faces $18M problem
Most office space vacant at Nova Centre complex, dragging down property tax revenues
As Halifax city officials face finding a projected $18 million over the next decade to pay for its just-opened downtown convention centre, the newly disclosed financial headache is renewing debate about the gleaming space.
The municipality had banked on using property tax revenues from the Nova Centre to cover its share of costs related to the Halifax Convention Centre, which is the cornerstone of the one-block complex. The city splits the costs 50/50 with the province.
However, only 30 per cent of the Nova Centre's office space has been rented, and city officials warned this week it would likely generate lower-than-anticipated property tax revenues.
It means a reserve funded through the property tax revenue and established to pay for the city's portion of the convention centre's operation costs likely will not be anywhere near enough.
"The lack of space being filled at this point is part of that problem because they were counting on the tax that they would receive from the new businesses that would go into the Nova Centre, non-convention centre space," Fred MacGillivray, retired CEO of Trade Centre Ltd., told CBC's Information Morning.
The opening of the new convention centre, two years behind schedule, comes at a particularly bad time. With so many new office buildings going up, there's now nearly a 17 per cent vacancy rate in the central Halifax business district, according to a market survey by Turner Drake.
Figures 'pulled out of thin air'
Chris Majka, a research associate with Canadian Centre for Policy Alternatives, which describes itself as a progressive research institute, looked at the feasibility of the new convention centre back in 2010.
He said while convention centres very rarely make money, they should break even by attracting more visitors who spend money.
Those numbers, I have to say, were just pulled out of thin air.- Chris Majka , Canadian Centre for Policy Alternatives
"The problem then and now is that the number of those national and international delegates was projected to triple once the new convention centre was open, and those numbers, I have to say, were just pulled out of thin air," he told CBC's Information Morning. "There was really no basis at all for them."
On Tuesday, Halifax regional council agreed to pony up $301,000 for cost overruns related to the convention centre for the last fiscal year.
In the long term, council expected to have a $5.8-million balance in reserves by Year 10 of the project. But new projections show that could be closer to an $18-million deficit.
MacGillivray insists the centre just needs more time.
"People will now start booking Year 2, Year 3, Year 4, Year 5, etc.," he said. "So the first year would be a very difficult year because people in many cases wouldn't book until the actual building was finished."
An oversupply problem
But not everyone is convinced the shiny new convention centre is worth it.
Heywood Sanders, author of Convention Center Follies, called the idea that the Halifax Convention Centre could generate funds a "fantasy of provincial bureaucrats."
He told CBC's Mainstreet that all across Canada and the U.S., convention centres are causing headaches and hefty bills. He said in major cities such as Ottawa, Calgary and Vancouver, new centres continue to go up even though bookings for major events are going down.
"In that context, major centres are giving away their space rent-free in a rather desperate effort to lure events and attendees," Sanders said.
Bookings 'exceeding expectations'
He said it's too soon to say how Halifax's convention centre's will do, but he pointed to Toronto's convention centre, which had 70 conventions and trade shows in 1998 and just booked 51 last year.
"Those are to me rather telling figures," he said. "Now, you know, we'll have to see how the new centre in Halifax does but all of the indications are that it too is caught up in this oversupply situation."
Still, Halifax municipal staff noted in their recent report that bookings for the centre are "currently exceeding expectations."
"The facility shows every sign of being extremely successful and contributing to the economic and cultural life of the province," the report said.
With files from CBC's Information Morning and Mainstreet