Analysis

Winnipeg Free Press - PRINT EDITION

Time P3 arena carried its own weight

By: Deveryn Ross

Posted: 06/1/2012 1:00 AM | Comments: 0

BRANDON -- Would Brandon's Keystone Centre exist if the province's new private-public infrastructure partnership rules had been in place when Ed Schreyer was Manitoba's premier? What would a risk and value-for-money analysis conclude if that project were being considered today?

Those are questions Manitobans should be asking now that the Keystone is seeking a fresh infusion of tax dollars, and now that the Selinger government has introduced legislation that prohibits the province and municipalities from entering into P3s without first satisfying a number of requirements. One of those conditions is a detailed risk and value-for-money analysis to determine if a P3 arrangement provides the best value for the investment of public dollars.

The Keystone was established in 1971 through an agreement among the City of Brandon, the Province of Manitoba and the Provincial Exhibition of Manitoba, a private agricultural society. Under that agreement -- one of Manitoba's first P3 arrangements -- the provincial exhibition contributed 90 acres of land located in Brandon's south end in exchange for the province and City of Brandon agreeing to share equally in any future deficit incurred by the Keystone.

Since opening its doors in 1972, the facility has incurred four decades of deficits, burning through millions of public dollars to cover operating losses, repairs and upgrades. The pace and size of the payments has grown over the past few years.

In 2005, the Keystone received $15 million from the three levels of government to fund the construction of a large expansion that the Keystone's management group (which includes representatives appointed by the provincial government) repeatedly guaranteed would make the Keystone profitable. It hasn't stopped the flow of red ink.

Though millions more were spent on upgrades for the 2010 Memorial Cup, the Keystone is now demanding another $10 million from taxpayers for urgent repairs to the roof, air conditioning, pipes, pumps and other facility infrastructure.

It is becoming more difficult -- and more expensive -- to keep up with the repairs and upgrades the aging complex requires. There is a strong likelihood that increasingly larger cash injections will be required over the coming years, with increasing regularity.

Though the Keystone delivers significant economic benefits to western Manitoba, does it make sense for taxpayers to be continually shovelling millions of dollars into a facility that is capable of solving its own financial woes?

The sprawling complex is surrounded by more than 80 acres of Brandon's most valuable commercial real estate. If developed properly, that vacant land could yield an income stream that would potentially eliminate the annual operating deficits and finance ongoing capital expenses.

Keystone management stubbornly refuses to develop that land, however, preferring instead to continue to loudly bang its tin cup for more public money. After all, it's a strategy that's worked for four decades.

If a strategy to wean the Keystone from public subsidies through commercial development sounds familiar, it should.

Several weeks ago, the Red River Exhibition unveiled a plan to partner with a local developer to construct a retail and hotel complex, a 5,000-seat arena/event centre, a 300,000-square-foot "Expo Centre" and a light-industrial park on its undeveloped land west of the Perimeter Highway.

The arena centre will be capable of hosting agricultural exhibitions, concerts and sporting events, while the Expo Centre will be large enough to host major agricultural trade shows, conventions and exhibitions for which significant space is needed.

Though the development would resemble the Keystone Centre in size, mission and capabilities, there is one critical difference -- while the Keystone is funded by taxpayers, no public money will be required for the Red River Ex project. It will be entirely financed by borrowing secured by the Red River Ex land, which is some of the most valuable real estate in Winnipeg.

If the Red River Ex can make its project work by leveraging the value of its property, why can't the Keystone Centre? Why should taxpayers continue to underwrite the Keystone's losses and capital expenses, when it refuses to mitigate those losses by following the example set by the Red River Ex?

More important, if the new legislation applies to new P3 arrangements, shouldn't the new rules also apply to existing P3s wanting new public money?

Those are questions the cash-strapped Selinger government should consider before pouring millions of additional tax dollars into the Keystone.

Deveryn Ross is a political

commentator living in Brandon.

deverynrossletters@gmail.com

Republished from the Winnipeg Free Press print edition June 1, 2012 A12

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