ST. JOHN'S, N.L. — The city calls it being thorough, but Dean MacDonald considers it laughable — either way, the decision on whether or not the City of St. John’s will sell Mile One Centre to a private owner is being delayed.
In its weekly meeting Monday, city council agreed to follow the recommendation of the commissioned consultants, and have the 20-year-old building’s condition assessed before taking any further steps.
“I kind of chuckled, to be honest with you, and you can quote me on that. I was, like, ‘Come on!’” MacDonald, owner of Deacon Investments Ltd. and the ECHL’s Newfoundland Growlers, said not long after the meeting.
“The city would do themselves such a good service if they just said at the outset as a matter of public policy, they just don’t want to do it.”
MacDonald wants to purchase Mile One Centre and give it a $25-million overhaul, including a new full-service restaurant, sports bar, theatre, recording studio, e-sports arena and 9,000-square-foot food court on the main concourse.
Many residents and businesses have expressed excitement over the proposal. However, MacDonald says he’s not feeling the same warm, fuzzy feeling from the city.
“This has to be the only place in the world that isn’t interested in seeing a $25-million investment to the elimination of a subsidy,” MacDonald said.
The city reported its subsidy to Mile One Centre increased this year by $1.77-million — to $5.7-million — due to the pandemic, to cover costs at the underutilized Mile One Centre and the St. John’s Convention Centre.
On Oct. 15, 2020, the city and St. John’s Sports and Entertainment (SJSE) hired KPMG to provide the city with advice on the sale/privatization model.
“This has to be the only place in the world that isn’t interested in seeing a $25-million investment to the elimination of a subsidy."
— Dean MacDonald
The report was finalized Jan. 14. It was reviewed by an independent sub-committee of the SJSE board before finally coming to council Monday.
MacDonald said he read the report and felt it was “pretty balanced,” with it pointing to many advantages to selling the facility.
The report said a private owner would be able to take more financial risk to attract large-scale provincially and nationally significant sporting events and concerts, while private owners “are typically able to negotiate a lower capital construction cost for asset renovation,” which could potentially speed up renovations to make it a more popular destination for entertainment promoters.
MacDonald said Coun. Jamie Korab, chair of SJSE, in his presentation to council Monday and in a news release, presented negative points.
Korab said that of the 58 comparable arenas in Canada surveyed by KPMG, there is only one example of a privately owned and operated arena — Manitoba’s Bell MTS Iceplex, home of the American Hockey League’s Manitoba Moose and the NHL’s Winnipeg Jets.
When it comes to operations, he said, Mile One Centre and the St. John's Convention Centre are connected, both in terms infrastructure and operational staff.
“This fact reflects the many financial challenges of owning a regional facility such as Mile One and the difficulty in making these types of facilities profitable,” Korab said.
He said in terms of building systems, the boilers at Mile One Centre provide hot water to the St. John's Convention Centre, and the electrical for Mile One is located at a switching station that’s in the convention centre. For operations and ownership of Mile One Centre to be severed from the St. John's Convention Centre, various building systems contingencies will have to be considered, Korab said.
He said there would also be labour implications, as the two facilities share staff.
As for financial and economic implications, the consultants outlined three potential models for determining the value of Mile One Centre, ultimately recommending that an evaluation be obtained from a third, independent party.
The total cost of construction of Mile One Centre and the original convention centre was $48,878,312. The final debenture to finance the construction is scheduled to be repaid in 2022, so any sale of Mile One Centre would need to consider how to treat the outstanding debt of $2.3 million.
But whether or not the city sells Mile One Centre, the information from a building condition assessment on the aging facility would be valuable, as it would identify life-cycle issues and major required maintenance, Korab said.
He said he isn’t sure how long this process will take. He said the building condition assessment would first go to tender, which will take a few weeks. Once it’s awarded, the city will have a better sense how long it will take, he said.
'We're not selling a used car on Kijiji'
Korab dismissed any suggestion the delays were intentional.
“We’re not selling a used car on Kijiji here. This is a major piece of city infrastructure. We want to go through the process and we want to do this right. It’s a city asset and built with taxpayers’ money,” he said.
“It’s not a stalling tactic whatsoever. My question is, what does the city have to gain by stalling?”
MacDonald said he wonders if it’s a political tactic to delay it until after the provincial election.
“I’ve heard the name of the game is kick this can down the road past the election,” he said.
“But they’re going to have to do something. … The puck is in their court.”
With files from Juanita Mercer and Robin Short
