Toronto 2015 CEO Ian Troop spoke to RTH today on the phone to discuss the Pan Am velodrome, the stadium, and the decision facing Hamilton City Council.
By Ryan McGreal
Published August 30, 2011
Ian Troop, CEO of Toronto 2015, was in Hamilton to talk to Councillors about the Pan Am Velodrome proposal at yesterday's General Issues Committee (GIC) meeting.
Mr. Troop spoke to RTH today on the phone to discuss the velodrome, the stadium, and the decision facing Hamilton City Council.
City staff and TO2015 staff have been in ongoing discussions over the proposed velodrome. "It's important to realize about this project that from its conception, we've been working on whether we can reach something more significant than what went into the bid book."
He added that the original bid "put money aside for a structure with a flexible roof that was driven by our work with a supplier" who went bankrupt in 2009. Since then, no alternative business has been able to match the price for that material.
Working together, city and TO2015 staff considered a number of potential velodrome locations before deciding Mohawk had promise. "The appeal of a partner is sharing capital costs and having a partner with a need to program on the infield", or the space inside the cycling track. "You can put three basketball courts in the infield, making it an important part of robust planning" for its legacy use.
"Mohawk stepped up, saying they believe their infrastructure needs to be updated for students. They have a mutual interest in the velodrome."
According to Troop, Mohawk came up as a serious site consideration in late spring, during the April-May-June period.
Troop said the September 15 deadline for Hamilton to present a Velodrome proposal is "the first moment where we've established a date we need to hit," as TO015 manages the "bundle" of capital projects that includes the athletic stadium at York University.
Until now, there has been no firm deadline, and the prior deadlines "were trying to manage our workflow with regards to other projects and making sure the details and functional programming work was being done and making progress on the Velodrome."
TO2015's top priority is to ensure that the capital projects are completed and "delivered on time and on budget".
Troop has long been a big proponent of the Velodrome as a great opportunity for Hamilton to achieve an important legacy facility for high performance amateur sport. "We see the legacy benefit of a velodrome to serve the needs of athletes for years to come and a shot in the arm for sport in Hamilton." He pointed to the "impact of the velodrome in England" as an indicator of how it could benefit Hamilton.
He argued, "You need the facilities if you want to develop kids into athletes. It's hard to think your kid will grow up to be a piano player if you don't have a piano."
Asked whether the Province and TO2015 can do more financially to support a higher-cost permanent velodrome, he noted that TO2015 has "prioritized and looked at our capital projects to generate $25 million toward a permanent velodrome. We've stepped up with our 56% of the capital cost."
However, given the budget and the current economic climate, he does "not see any extra money coming. We need to look for self-sufficient solutions to make this a reality."
As for Hamilton's 44% contribution, "Now we're at the point where we understand what the velodrome should be, does our partner have the 44% or not? I understand it's not an easy discussion."
On the operating side, the City report to councillors on the velodrome states that a capital commitment from the City would be conditional on an annual $500,000 operating fund from the Pan Am Legacy Fund.
Asked about this, Troop said, "I understand the motivation from staff, but that's not practical." As one of the Pan Am legacy facilities, the velodrome would receive its "fair share" of annual interest on the $70 million Pan Am Legacy Fund, but there is no way to guarantee how much that would be.
The Fund will be managed by an independent board of trustees who will allocate the interest on the $70 million fund to the Pan Am legacy facilities, including the velodrome, the York University stadium and Ivor Wynne stadium.
Troop added, "Interest rates change from year to year. There's a big difference between 2% of $70 million and 3% of $70 million. None of us can make a guaranteed statement around a number."
The velodrome proposal has tangible synergies for Mohawk College next to their sports facility. However, they're only contributing $2 million toward the total capital cost, of which some will go to a shared parking facility.
Asked what benefits the partnership has for Hamilton, Troop responded, "It's important to remember they're providing the property as well" as some funding. While staff are "not clear yet on the parking need and what the right solution will be, we've said there's a lease opportunity to require parking without capital expenditure."
He added, "Capital is one side, land is another, and the ability to collaborate on a business plan is another." A good partner is "a partner who will use that facility." Troop proposes that we have a good chance of achieving "a facility where the track and the infield are being used and our problem is how to schedule all the demand. That's a wonderful place to be, and Mohawk is a great partner to help us see that future."
On the capital side, the planners have already worked hard on the "mechanics of affordability: you make sure you build a building that is cost effective. We have come up with a high-utility, utilitarian velodrome and driven cost on capital as low as possible."
On the operating side, "you've got to have users prepared to use the facility," Troop added. "The National Cycling Association is prepared to move their training centre from Carson to Hamilton. Mohawk will use the infield to host basketball courts and other multi-purpose intramural sports facilities."
Using the velodromes at Carson, California and Glasgow, Scotland as models, there are strong opportunities "to think about users and revenue streams. It gets about as positive as it can be in terms of an affordable cost platform with facilities that are used in a way with people willing to pay for it to get revenue streams."
With the addition of "international events and things over and above daily operation - and we need to do more homework to understand what that means - we could also be looking at three or four regional, national, international cycling events a year." That provides benefits from "sports tourism and other local business impacts, though again we need to define that better."
He acknowledged that Hamilton Councillors "challenged us to provide better perspective on what that means."
Between now and the next GIC meeting, scheduled for September 13 at 9:30 AM to continue the discussion over the Velodrome proposal, city and TO2015 staff will have to provide some more details on how to close the funding gap for the capital cost and what we can expect in terms of operating costs and revenues.
Ultimately, however, the decision will have "a certain element of a leap of faith. [Mohawk President Rob] MacIsaac said, 'we will embark on a philanthropy plan' to generate more capital, but there won't be any checks ready by the end of the month."
The question for council is: "given everything we're trying to manage, will this fit? Do we want to support it? Are we willing to bet on this? How big of a risk are we willing to take?"
TO2015 can provide more information and perspective about long term benefits to the community, to business, to the image of Hamilton, but "at the end of the day, Council has to decide: what does this look like and are we prepared to support it?"
Under the current velodrome proposal, the City is responsible to cover 44% of the total cost. That City contribution includes $5 million from the Future Fund, an additional $5 million from some other source (the staff proposal suggests debenture financing), $2 million from Mohawk, and a balance of between $8 million and $12.5 million that will have to be funded from other sources, including fundraising and sale of naming rights.
The city would be responsible to cover any shortfall in funding to meet 44% of the total cost.
Asked if TO2015 has a Plan B in case the City takes a pass, Troop replied, "I don't want to open that up and consider it at this point. We have had a great partnership with the city, and our priority is to get council to get a full set of facts and make a decision. We'll cross that bridge if we have to, but this is a positive thing, an opportunity. Let's embrace the opportunity and make a quality decision."
The velodrome "will drive events internationally, will help the city's image, helps the college, a major institution, and will help both high performance athletes and the general community as well. We see this as a positive thing and are hopeful that as we sort through all the issues, that a positive decision for Hamilton is made.
Troop noted that the current capital cost estimate for the velodrome is an "upset number" - a high-end, worst-case estimate - and that "the current climate for bids is very good" because there is not a lot of international demand for capital sports facilities. "We're getting lots of interest from builders internationally."
The $45 million velodrome price may end up being high. "There's a chance that the costs could come in lower at the market" through a competitive bidding process.
Troop believes the final velodrome cost will be lower than the upset number because the cost to rebuild Ivor Wynne Stadium is also coming down. It came to light in an update from City Manager Chris Murray posted on Friday to the city website that the current plan is to completely rebuild IWS, instead of rebuilding the South Stands and refurbishing the North Stands.
By to the current cost estimate, the entire stadium can be rebuilt for the same capital funding that was confirmed at the end of January.
The update from Murray notes, "In the Spring of 2011 staff learned that the grade on the upper tier of the North Stands is such that it cannot accommodate seats with backs."
According to Troop, "The City came to us with a proposal in May-June saying we need to look beyond refurbishment of the North Stands. We took that away and looked at the cost: can we afford it within the funding envelope? We looked at net effect - is it cheaper to take down and build back up or to refurbish? We came back and said we think we we can fit this within the initial funding envelope. It seems like it's a better solution for the same money."
He added, "This is a positive story for Hamilton. You would hope that we, the city, IO [Infrastructure Ontario, which is managing the capital projects for the Pan Am Games], get the best possible value for money."
For some councillors, the higher cost to build new was a deciding factor in choosing a partial rebuild at Ivor Wynne rather than a full build at the West Harbour.
Asked why the earlier estimate was so far off the latest estimate, Troop replied, "I don't think it's so far off. The estimate was based on the knowledge we had at the time. You try to set up estimates where you won't have to go back and ask for more money. The estimate has got some contingencies, and as we move forward, we hope we can tighten it up."
He added that the plan can change as it comes into focus. "It's part of the process of getting a better definition of the true cost of what you're doing and being flexible enough to say, can we do this, and being open to that dialogue."
He noted, "There was lots of discussion in January about the number being way off, too high, comments to that effect. But as we get in, we can tighten up the number decide that we have enough to take down the north stands."
Another factor in making IWS more affordable is that it entails "building on a known quantity. With fewer complications, it's easier to fit the project into the budget. It also helps to have a tenant who is happy" with the location.
Asked whether he knew how much it will cost to relocate the Hamilton Tiger-Cats during the stadium construction or who will cover that cost, Troop replied, "No I don't. That typically is not something that is our responsibility. I don't know what they're going to do, but one of the things we're looking at is the amount of time they have to play at another location."
Troop said it would be a nonstarter to reconsider the location of the stadium given that it will be a full rebuild. "There's no possible way that you could look at that, and I don't want to be within ten feet of opening that discussion."
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