Markham arena would’ve brought ‘no new tangible economic benefits’: reports

Reports finally released, years after $325-million proposal failed, paint grim picture of idea touted by Mayor Frank Scarpitti and others.

Yorkregion.com
Feb. 4, 2016
By Noor Javed

Markham’s NHL arena would likely have brought “no new tangible economic benefits” to the city and the economic projections it was using to support the $325-million dream were “overstated,” according to two documents that were ordered released this week - more than two years after the project was cancelled.

The reports, recently ordered to be made public due to an appeal to the Information and Privacy Commissioner of Ontario, will likely be the last two released by the city on the arena project. The city was allowed to keep parts of some documents that fell under solicitor-client privilege out of the public domain, said Councillor Karen Rea, who filed the appeal before she took office in 2014.

Markham’s arena plan - promoted by Mayor Frank Scarpitti and others - fell through in 2013, but the city had kept the 13 documents related to the project, which cost upward of $700,000, secret.

Some of the disclosed reports, show that the experts hired to back up the project expressed caution about its financial framework from the start.

“It reconfirms everything that we already knew ... that this arena was not viable,” said Rea, who filed her appeal as a private citizen in 2012.

Scarpitti, who was on a trade mission to India, was not reachable for comment on Thursday. He has long maintained that the project would have been a boon for the city.

In the latest documents, sports economists Brad Humphreys and Daniel Mason looked at sports complexes across North America to see what kind of economic boost the city of Markham could expect.

“There was remarkable agreement (among economists) that professional sports facilities do not produce any tangible economic benefits in cities that build new facilities and attract new teams to these facilities,” they wrote in the report in 2012, after looking at 30 or so examples across the continent.

The professors concluded there could be some “intangible benefits” in the range of $28 million to $56 million - that could further increase with the presence of an anchor tenant, such as an NHL team. The city could also see an increase in real estate values, if such a team was to move in.

But the report criticizes other consultant reports the city was relying on to bolster the case for an arena as “somewhat ambitious” in their economic projections.

“The academic literature has pointed out that economic activity associated with the construction of a new sports facility should be classified as a cost, and not a benefit,” the report states.

The original funding framework for the arena had a private investor and the city each paying half the share of the construction costs, with the city’s share paid primarily through development fees and voluntary contributions from the development industry. The city was to upfront the entire cost, with the investor paying it back over time.

In the final version of the plan, the city’s share of the cost was going to be paid primarily by the development industry.

Marilyn Ginsburg, director of the Markham Citizens Coalition for Responsive Government, said residents were never told about the risks of the arena plan.

“We never remember the Mayor and his supporters talking about the financial risks to the taxpayers or that we could be stuck with a very expensive white elephant,” she said. “We wonder how any individual, then sitting on Markham Council, could have read these reports and continued to support the proposal for as long as they did.”