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Winnipeg Free Press - PRINT EDITION
Overruns already?
THE first shovel hasn't broken ground, but already there are concerns that the Canadian Museum for Human Rights is over budget or in financial peril. The concern is somewhat exaggerated, but that doesn't mean the museum does not need to be vigilant during the difficult and uncertain time leading to opening day in three years.
In a report submitted to Parliament recently, the museum's board of trustees stated it would be required to pay more than $5 million in property taxes, an expense that had not been anticipated in earlier estimates of operating costs, which could be over $27 million a year. The discovery of a major new expense seemed incredible at this late date, but the property tax bill is not as unexpected as it sounds.
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When the museum idea was first proposed, it was to be a privately run facility, which would have exempted it from property taxes. When the Conservative government decided two years ago, however, to make the museum a Crown corporation and to fully fund its operating costs, it became liable to property taxes, or payments in lieu of taxes.
Such payments can be equal to the property taxes, but not in the case of a museum, which is a special building because its use is somewhat limited, unlike an office structure. At this point, the city has no idea what its taxable value might be because the question simply hasn't been studied yet. The figure of $5 million was a ballpark estimate. The precise amount will be negotiated between the city and the federal Department of Public Works.
The explanation for why the museum will now have to pay property taxes, however, does not mitigate the concern that it could go wildly out of control. The 12-storey facility going up at The Forks is expected to cost $265 million, but officials have said it could be higher in this uncertain economic climate. The sooner the tenders are issued, therefore, the sooner the price can be nailed down and the easier it will be to prepare an operating budget and hire staff.
The private sector is contributing $105 million toward the cost of building the museum, or less than one-third of the capital costs. The three levels of government are picking up the rest of the tab, while Ottawa will be paying the operating costs. The board of trustees, led by Winnipeg businessman Arni Thorsteinson, should exercise its authority to ensure that the museum is efficient and cost-effective. The museum is owned and operated by the government, but that doesn't mean it shouldn't strive to meet some of the entrepreneurial principles of the private sector.
Republished from the Winnipeg Free Press print edition February 28, 2009 A16
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