Zip line park, winter light show cost Ontario taxpayers more than $900K

Audit report obtained by CBC slams St. Lawrence Parks Commission for 'significant financial losses'

Cbc.ca
Sept. 5, 2019
Mike Crawley

An Ontario government agency running a winter-themed light show and a treetop adventure park with zip lines lost more than $970,000 on the projects in just three years, CBC News has learned.

The province's St. Lawrence Parks Commission incurred "significant and long-term financial losses" on two projects it launched in 2016, reveals an internal audit report obtained through a freedom of information request.

The losses include:

• $287,000 lost on the zip-line park, which is still operating.
• $685,000 lost on the light show, which has now been cancelled.
• $9,000 spent on hospitality, including drinks, at the light show's grand opening.

The parks commission predicted at the time that the tourist attractions -- Lumina Borealis and Skywood Eco Adventure --​​​​ would be money-makers. But in reality, they have been a drain on Ontario taxpayers.

The attractions "did not meet financial expectations and will likely continue to incur losses well into the future,"  say the auditors. They blame staff of the commission for failing to prepare a proper business case for the projects.

The auditors submitted their report to the Ministry of Tourism, Culture and Sport in June 2018, just as Kathleen Wynne's governing Liberals lost the election to Doug Ford's Progressive Conservatives, but their findings have not been revealed until now.

The St. Lawrence Parks Commission (SLPC) is a provincial agency that manages parks and tourist attractions in eastern Ontario, between Kingston, Ont., and the Quebec border, including Upper Canada Village. Its board is appointed by the provincial government.

The audit report obtained by CBC News raises concerns that the commission awarded contracts in ways that "violated the principles" of value for money, transparency and fairness.

"The number and nature of procurement irregularities ... had a significant impact on SLPC's finances and operations," says the audit.

Lumina Borealis was a multimedia production of images, light and sound that was shown inside Fort Henry, a commission-run site in Kingston, for about six weeks in each of the past three winters. "Find your path through an enchanted land, across a frozen landscape, to reignite your winter spirit," says the attraction's website.

The parks commission forecast Lumina Borealis would bring in an average annual profit of $600,000.

The audit shows Lumina Borealis was instead $279,000 in the red in the winter of 2016-17, and lost $308,000 in 2017-18. "The ability to reach a break-even point in future is doubtful," say the auditors. Commission staff say the production had a shortfall of almost $99,000 in 2018-19 and will not be revived this coming winter.

"Lumina was an outstanding event," said the commission's new CEO and general manager Hollee Kew, in an interview with CBC News.

"Unfortunately, the costs to actually run the event on an annual basis were high," said Kew, who took over the job last September, three months after the audit was published. "The board has made a decision to refresh that event, to look for another profitable event that we could actually run in its place." 

The commission's predictions for attendance at Lumina Borealis were "overly optimistic," say the auditors. The agency forecast 70,000 visitors in the first year, but instead got 57,000. The forecast for 2017-18 was 90,000, but the actual attendance was 28,000. The commission blamed the steep drop in part on extreme cold weather. 

The start-up costs for creating Lumina Borealis totalled $2.3 million, more than double the $900,000 originally budgeted, says the report. The audit also found the agency spent $9,000 on hospitality, including drinks, at the attraction's grand opening, more than four times the amount approved by the provincial ministry.

Zip line park still losing money

The commission bills Skywood Eco Adventure as "Canada's largest aerial adventure and zip line park." It's located on the 1000 Islands Parkway in Mallorytown, about 35 kilometres east of Gananoque.

The commission forecast the park would generate $150,000 in its first year, with profits then growing by two per cent annually.

Instead, the zip line lost $11,550 in 2016-17 and more than $118,000 the following year, the audit shows. Commission staff tell CBC News the Skywood facility lost more than $158,000 in the 2018-19 fiscal year. It is forecast to be in the red this year too.

"The likelihood is it's going to lose some money this summer," said Bob Runciman, the former senator and Progressive Conservative cabinet minister who the Ford government appointed in February to chair the commission's board.

The board has not made any decisions about the future of the zip line park, Runciman said, adding that he is concerned too little has been done to market it to potential visitors.

"Whether we should be in that business or not, or whether it should be leased out to a private sector operator, those are the kinds of issues we will be dealing with going forward," he said in an interview.

The loss on the zip line park is absorbed by the commission's parks and recreation division, which operates campgrounds and "is very successful and generates a positive net return," said SLPC director of marketing Susan LeClair.

Runciman said the audit "indicated a number of problems" with how the commission was being run.

"Decisions were made with perhaps not the best interest of the taxpayers of Ontario in mind," he said. "Maybe enthusiasm got ahead of logic."

The auditors also found that the awarding of a contract in 2014 to develop the parks commission's website was "improperly handled" and involved "serious non-compliance" with provincial rules on fair competition.

The agency granted the contract to a company that submitted its bid 10 days after the deadline for bids had passed. In addition, an independent evaluator warned the commission that the company did not have the "experience or the scope to handle a project of this magnitude."

The firm that designed the commission's current website says it "came to the rescue."

"The company St.Lawrence Parks Commission initially hired to create/manage their website had gone out of business," said Kingston-based web design firm 14 Theories Inc. "The website was left in an unfinished state so the biggest challenge was organizing and working through pre-existing code."

Travel and hospitality expenses by commission staff also drew attention in the audit. The auditors could not find justifications for trips that senior staff took to Alcatraz, the former prison island in San Francisco Bay, and to Williamsburg, Va., a town that attracts visitors with its colonial-era architecture.

The commission's leadership has changed since the period covered by the audit.

The general manager and CEO since 2011, Darren Dalgleish, left in 2017 and was replaced by an interim chief executive, Ronald Holgerson. The province's Sunshine List for 2017 shows the commission paid Dalgleish $179,212 that year and Holgerson $247,193.

The auditors said in their June 2018 report that Holgerson had "initiated action to address some of the issues identified." He was succeeded by Kew last September.

"All things that are identified in an audit you take very seriously," said Kew.