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KINGSWAYENTERTAINMENTDISTRICTANDARENAEconomicandFinancialAnalysisSudbury,Ontario
PreparedforMunicipalLawChambers
March12,2018
www.urbanMetrics.ca|67YongeStreet,Suite804,Toronto,ON,M5E1J8|416-351-8585(1-800-505-8755)|info@urbanMetrics.ca
March12,2018
Mr.GordPetchMunicipalLawChambersRoyalBuilding277LakeshoreRoadEastOakville,OntarioL6J6J3DearMr.Petch:
KingswayEntertainmentDistrictandArenaEconomicandFinancialAnalysis
Asperourdiscussions,youhaveaskedurbanMetricstoprepareapreliminaryreportsummarizingourinitialanalysisandconclusionswithregardstotheproposedKingswayEntertainmentDistrictinSudburyandtheproposedrelocationoftheSudburyCommunityArena,aspartofthisproposedarena/casino/entertainment/retailcentreonthenorthsideofTheKingswayinthevicinityofLevesqueStreet.
Asyouareaware,ourfirm,andourlegacyorganizations:theCoopers&LybrandRealEstateConsultingGroupandthePricewaterhouseCoopers(PwC)RealEstateAdvisoryServicesPractice,haveextensiveexperienceintermsofanalyzingtheneedforsportsandentertainmentcomplexesaswellascasinogaming.Inaddition,wehaveundertakennumerousstudiesonbehalfofmunicipalitiestoassisttheminplanningtheircommercialstructuresanddowntowncores.WewereinvolvedintheanalysisthatledtotheinitialintroductionofcasinogaminginOntario,andhavecontinuedtoanalyzecasinoandgamingprojectsonbehalfofbothprivateandpublic-sectorclients.Wehavealsoundertakennumerousdowntownstudiesonbehalfofmunicipalities,andrecently,onbehalfoftheDowntownPeterboroughBIAundertookananalysisofasimilartypeofcasinoproposal.Moreover,wearealsoabletoprovideconsiderableinsightsintotheSudburymarketandtouristdraw,havingbeentheeconomicconsultantstoScienceNorthonanumberofoccasionsandassistedinthecreationoftheDynamicEarthattraction.
Aspartofouranalysis,wehaveundertakenareviewofthebackgrounddocumentation,includingtwoPwCreports,whichreviewedvariousoptionsforthearena/entertainmentcomplex,developedlocationalcriteriaandappliedthosecriteriatoprovideCouncilwith
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directionastoanappropriatesiteforanewarena.Wehavealsoreviewedvariousplanningpolicydocuments,althoughwewouldnotethatthefocusofouranalysisrelateslargelytothemarketandeconomicimpactsrelatedtothearenaandtheimpactsthatmightoccurwiththerelocationofthearenaandthecasinototheproposedKingswayEntertainmentDistrict.
ThefollowingreportsummarizesourprincipalconclusionsandsupportinganalysisrelatedtotheproposedEntertainmentcomplex.
Ifyouhaveanyquestionswithregardstoanyaspectofourreport,pleasedonothesitatetocontactus.
Yourstruly,
urbanMetrics inc.
RowanFaludi,MCIP,RPP,CMC,PLE Partnerrfaludi@urbanMetrics.ca
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SummaryofFindingsWehaveundertakenapreliminaryassessmentoftheprincipalcomponentsoftheproposedKingswayEntertainmentDistrict,andparticularly,theproposedrelocationofSudburyCommunityArenaandtheproposedrelocationofGatewayCasinosSudbury.
Inouropinion,theproposedKingswayEntertainmentDistrictwouldbecontrarytoanumberofkeymunicipalandProvincialpolicies,includingtheOfficialPlan,theDowntownMasterPlan,theEconomicDevelopmentStrategyandtheGrowthPlanforNorthernOntario.
OuranalysisalsoconcludesthattheKingswayEntertainmentDistrictisnotaprojectthatwouldmakeeconomicsensefortheCityofGreaterSudburyinthatthebenefitsitwouldproducewouldbeovershadowedbyitseconomicandfinancialcosts.Beforeinvestingfurtherstaffandfinancialresourcesinthisproject,westronglyrecommendthattheCityproceedwiththeconductofanindependenteconomicandfinancialanalysisofthisproject.
• DowntownSudburyistheCity’sandRegion’sCommercialEngine.ThisisreflectedinalloftheCity’skeyPlanningandEconomicDevelopmentpolicies.ThesepoliciesprotectDowntownSudburyandactivelypromotecontinuedinvestmentinthecore.TheSudburyCommunityArenaisthelargestvisitorattractiontoDowntownSudburyandsupportsmanydowntownbusinesses.TherelocationoftheSudburyCommunityArenawouldbealastingeconomicdrainonDowntownSudbury.ItwouldlikelycausethedirectlossofbusinessesthatrelyonthearenaandwouldsignificantlyhampertheattractionofnewinvestmenttodowntownSudbury
• Downtown’sarethePreferredLocationforMajorArena/EntertainmentComplexes.MajorsportsleaguesincludingtheNHLandCHLhaverecognizedthattheirmostsuccessfulfranchisesareindowntownlocations,whiletheleastsuccessfulfranchisesareonsuburbansites.Municipalities,suchasLondon,Kingston,Guelph,St.Catherines,Oshawa,andothers,withdowntownCHLarenasareseeingasurgeincommercialandresidentialinvestment.ThedevelopmentofanewarenainDowntownSudbury,wouldhelptostimulateprivateinvestmentinthisstrategicarea.
• ThePwCReportConfirmedDowntownasthePreferredSitefortheNewArena.PwCwasengagedbytheCityofGreaterSudburytoundertaketworeportsexaminingtheneedforandthelocationforanewArena/Entertainmentcomplex.Afterexaminingeightkeyfactors,PwCconcludedthattheDowntownwasthepreferredsitefortheArena.
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• MakingaDecisionBasedonaSub-setofthePwCFactorsisaFlawedApproach.CouncildirectedPwCtomakeanassessmentbasedononlythreeofthefactors–EconomicImpact,Cost,andParking.WhiletheDowntownsitewasratedhighestfromaneconomicimpactperspective,itwasratedbehindtheKingswaysiteintermsofCostandParking.PwCusedverygeneralizedandpreliminarycostinformationand,inouropinion,didnothavesufficientinformationtoranktheoptionsbasedoncostinasupportablemanner.Theparkinganalysisleftoutanumberofkeyfactorsthatcouldhavereturnedanalternativeresultifconsidered.Furthermore,itwasbasedonapre-existingbiasthatanexpansivesuburbanparkingareawasinsomewaysuperiortodowntownparkingoptions,withouttakingintoconsiderationtheamountofparkingactuallyrequiredtosupportanewarena.Theanalysisusingonlythreeoftheeightfactorsisaflawedapproachandshouldnottakeprecedenceovertheanalysisofthefullrangeoffactors,whichresultedintheDowntownbeingthepreferredlocationforthearena/entertainmentcomplex.
• TheKingswayEntertainmentDistrictWouldRedirectBusinessandInvestmentAwayfromOtherPartsofSudbury.ThecurrentKingswayproposalwouldincludetherelocatedcasino,therelocatedarena,aswellas,restaurants,andotherrecreation/entertainmentusesandisalsobeingpromotedtoincludeshopsandaconventioncentre.Sudburyisnotalargemarketandisprojectedtogrowatonlymodestlevels.Intheabsenceofamajordrawinthedowntowntoreplacethearena,itislikelythattheKingswayEntertainmentdistrictcouldexistonlybycannibalizingbusinessfromthedowntownandotherpartsoftheCity,whicharealreadyidentifiedintheOfficialPlanasbeingimportantcommercialnodestheentireCityandbeyond.
• TheKingswayProposalWouldJeopardizetheCity’sPlannedTransformationalLargeProjects.Followingapublicconsultationprocess,CityCouncilgavedirectiontoproceedwithtwomajorprojects–TheGreaterSudburyConventionandPerformanceCentreandtheLibrary/ArtGallery.There-useoftheexistingarenawasdeemedthepreferablelocation.Inouropinion,itislikelythattheproposedKingswayEntertainmentCentrecouldduplicatethefunctionoftheconventioncentreandeventscentre–byofferingalternativeperformancevenues,meetingspacesandconventionfacilities.Inaddition,byrelocatingthearenatotheKingswaysite,theCitywouldbelosingallofthesynergiesthatwouldexistbetweentheconventioncentreandthearena,suchas,attractinglargescaleeventsthatwouldusebothfacilities,orbyattractingalargeconventionhotelthatcouldservebotharenaandconventioncentre.Inouropinion,theKingswaydevelopmentwouldseriouslyimpacttheviabilityoftheseimportantprojectsinthedowntowncore.Andinfact,the
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Kingswaydevelopmentisalreadybeingpromotedforaconventioncentretotieintotheopportunitiescreatedbytherelocatedarena1.
• ACasinoWouldNotSignificantlyAffectTourismtoSudburyandWouldDrawtheVastMajorityofItsSupportfromwithintheCity.TheexistingSudburytourismmarketisnotlargeandnotwellorientedtowardscasinogaming,withabout70%ofvisitorscomingtovisitfriendsandrelativesorforshoppingandpersonalappointments.About60%ofvisitorsarrivefromotherpartsofNorthernOntario.Thecurrentpleasuremarketcomprisesonlyabout21%ofvisits.TheexistingcasinosinNorthernOntario–inThunderBayandSaultSte.Mariedrawbetween85%to95%oftheirvisitorsfromwithinthelocalmunicipality.LicenceplatesurveysconductedattheGatewayCasinoSudbury(FormerOLGSlots),confirmthatthevastmajorityofcustomersarefromSudbury.AttractingtouriststoacasinoinSudburywouldrequiretappingintonewmarketsnotcurrentlyvisitingSudbury.ThiswouldbedifficulttodobecausetheProvincialandInternationalgamingmarketsarealreadyseverelyconstrainedbyexistingcasinos,whiletheOLGmodernizationprogramwillbebolsteringthiscompetition.Inouropinion,additionalgamingrevenuesthatwouldbeachievedbyanewcasinoinSudburywouldbederivedmostlyfromSudburyresidents,whowouldhavetransferredtheirspendingfromothercommercialsectorselsewhereintheCity.
• CasinoGamingExtractsMoneyfromtheLocalEconomy.Casinosandslotsfacilitiestypicallygenerateveryhighprofits.InthecaseoftheOLGSlots,thisfacilitygeneratedapproximately$42millioninnetgamingrevenuesin2016/17,plusasmallamountinfoodservices.Localcosts(wagesandsalaries,municipalrevenueshare,sponsorships,localpurchases,etc.)comprisedonlyabout$12million.TheOLGSlotsSudburyfaciltiycontributedapproximately$30milliontotheProvince.WiththevastmajorityoftheserevenuesbeingderivedfromSudburyresidents,anestimated$20to$24millionwaseffectivelytransferredfromtheCity’seconomytotheProvince.WhiletheProvinceinvestedmoneybackintotheCityaspartofitsongoingspendingonhealthcare,transportation,infrastructure,etc.,thereisnowayofknowingwhetherthisrepresentsagainoralossfortheCity,orwhethertheProvincewouldinvestanydifferentlyiftherewerenotcasinoinSudbury.EffectivelythismoneywasbeingtransferredfromtheCityfordiscretionaryspendingbytheProvince.ThissituationwillbelessfavourableforSudburygoingforward,inthatfuturecasinorevenueswillbeshared
1PromotionalvideopreparedbyTrueNorthStrongCentre.2ScienceNorthismadeupofmultipleseparateattractionsincludingtheScienceCentre,DynamicEarth,the
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betweentheProvinceandGatewayCasinos–aprivateBCcompanyownedbyaTorontoInvestmentfirm,whichwouldhavenoobligationtoinvestrevenuesbackintothelocaleconomy.
• TheProposedKingswayEntertainmentDistrictMayNotResultinaSignificantNumberofNewJobsfortheCity.Whiletheproposedentertainmentdistrictwillbearelativelylargeemployer,mostofthejobswilloccurfromtransferringexistingjobsfromthearenaandtheslotsfacility.Theemploymentgainfromthenewarenawouldbenegligibleandwouldlikelybethesameifthearenawereconstructeddowntown.GatewayCasinoshasannouncedthatitwillemploysome400persons.Thesewouldreplaceapproximately190jobsattheslotssite.BasedonourunderstandingoftheGatewayconcept,abouttwo-thirdsoftheseemployeeswouldberequiredforworkinfoodservicesandretailoutletsatthecasino.Itislikely,thatatleastsomeofthesejobswillbetransferredfromexistingbarsandrestaurantsinthedowntownandelsewhereinSudbury,sothatthenetgaincouldberelativelysmall.Equallyasimportant,isthatduetotheirhighprofits,casinosdonotgeneratealotofemploymentperdollarearned.Sothattransferringrevenuesfromestablishmentssuchasrestaurantsthatrequiremorestaffperrevenueearned,couldactuallyresultinemploymentlossesfortheCityasawhole.
• AdditionalRevenuestotheCityfromtheProposedKingswayEntertainmentProjectMayNotBeSignificant.TheCitycurrentlyreceivesabout$2.2millionfromthecurrentslotsfacilitythroughtheMunicipalContributionAgreementwithOLG.Basedonaprojectedcasinowinfromacurrentlevelof$42millionfromtheslotstobetween$75and$80millionfrombothtablesandslots,thiswouldincreasethemunicipalsharebybetween$1.45to$1.7million.Additionalrevenueswouldalsobeavailablefrompropertytaxes,however,thesewillbehighlydependentonassessmentchangesthatarebeingreviewedbytheMunicipalPropertyAssessmentCorporationinresponsetotheOLGmodernizationprogram.Thesewouldresultmorefromchangestohowcasinosareassessedthantowheretheyarelocated.Inotherwords,theassessedvalueofthefacilitywilllikelychangeregardlessofwhetherGatewayCasinosmovestoanewlocation.Asamunicipalfacility,theCommunityArena,isexemptfromtaxes.ThisisnotexpectedtochangewiththeproposedrelocationtotheKingswaysite.ThesenetrevenuegainswillalsobetemperedbytaxlossesfromtheclosureordownsizingofdowntownbusinessesduetotherelocationofthearenaandcompetitionfromtheproposedKingswaydevelopment.Furthermore,taxesreceivedfromnewdevelopmentalsocomewitharequirementforamunicipalitytoprovidepublicservices,suchasroadmaintenance,emergencyservices,administrative
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services,etc.Sothatmuchofthetaxincreasefromthedevelopmentofanewcasinomayberequiredtoprovidethenecessaryservicestosupportit.
• Inconclusion,theProposedKingswayEntertainmentDistricthasmanyEconomicDrawbacksfortheCityanditislikelythatitsEconomicandFinancialCostswouldOutweighitsBenefits.Asaresult,wewouldstronglyrecommendthatamoredetailedeconomicanalysisbeundertaken,beforeadditionalstaffandfinancialresourcesareinvestedbytheCitytowardsthisproposal.
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SudburyCommunityArenaisanImportantEconomic1.0DriverandCommunityResource
SudburyCommunityArenaiscurrentlyoneofthelargestvisitorattractionswithintheCityandanimportanteconomicdriverforthedowntowncore.
BasedontheFebruary21,2017PwCReport,whichwascommissionedbytheCitytoassesstheviabilityofconstructingalargerandmodernizedfacility,between2013and2015,thecurrentarenahasdrawnbetween156,000and213,000visitorsannually.Toputthisinperspective,thisismorethantheattendanceattractedtotheScienceNorthScienceCentreoverthisperiod,whichdrewbetween142,000to149,000visitors2.Whilethesourceofvisitationtothesetwoimportantattractionsisverydifferent,nonetheless,SudburyCommunityArenadrawsaverysignificantvolume.
TheCityofGreaterSudbury’swebsitedescribestheSudburyCommunityArena:
TheSudburyCommunityArenaiswheresportsandentertainmentcomealiveinthenorth!Ahubofcommunityactivitysince1951,theSudburyCommunityArenahashostedcountlessconcerts,tradeshowsandsporting,entertainmentandculturalevents.ItisalsoproudhometotheOntarioHockeyLeague’sSudburyWolves.CentrallylocatedindowntownSudbury,theSudburyCommunityArenaissituatednearavarietyofuniqueshopping,entertaininganddininglocations3.
AsoneofthemostvisitedattractionsintheCity,SudburyCommunityArenaattractsmanyvisitorstothesite,butalsosupportsawiderangeofbusinessesinitsvicinity,includingrestaurants,retailshops,accommodations,andothers.
Inourexperience,thelocationofthearenawillplayaverysignificantroleintermsofitsabilitytosupportlocalbusinessesandattractvisitorstoitsownevents.
2ScienceNorthismadeupofmultipleseparateattractionsincludingtheScienceCentre,DynamicEarth,theExhibitHall,theIMAXTheatre,thePlanetariumandthenewEscapeRoom.Alloftheseattractionscombineddrewbetween343,000and381,000personsbetween2013and2015.TheScienceCentreisthemostpopularoftheseattractions,drawingbetween142,000and149,000visitors.3https://www.greatersudbury.ca/play/recreational-facilities/arenas/sudbury-community-arena/
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DowntownshaveBecomethePreferredLocationfor2.0MajorArena/EntertainmentComplexes
BothmunicipalitiesandsportsorganizationsacrossNorthAmericahaverealizedthatsuburban-basedarenasconsistentlyunderperformthoseindowntownlocations,bothintermsofeconomicimpactsandattendance.
TheNationalHockeyLeaguehasacknowledgedthetrendtowardssuccessfuldowntownarenas,citingyoungpeople’spreferencetolivingdowntownandforgoingcarownershipandthatfromanurbanplanningperspectivethetrendismovingawayfromsuburbanentertainmentdistrictstowardsamoredynamicmixed-useapproach,includingresidentialdevelopmentandretailing.Theweakestfranchisesintermsofattendance-Florida,NewJersey,Arizona,CarolinaandOttawaarethosewithNHLarenasinsuburbanlocations4.
TheEdmontonOilersrecentlyrelocatedfromtheformerNorthlandsColiseum(RexallPlace)besidetheNorthlandsexhibitiongrounds(i.e.anentertainmentdistrict),toRogersPlaceintheheartofthedowntowncore.Theconstructionofthenewarenahasattractedadowntownbuildingboomcharacterisedbyanumberofnewcondominiumandofficeprojects.TheCityofOttawaisalsoconsideringarelocationofitsNHLarenafromsuburbanKanatatoLeBretonFlatsadjacenttothedowntowncore.NHLCommissionerGaryBettmanhasstatedthat“Anewdowntownarenaisvitallyimportanttothelong-termfuture,stabilityandcompetitivenessoftheSenators”5.
SmallercommunitieswithCanadianHockeyLeague(CHL)teamsarealsomovingtowardsdowntownarenas.TheLondonKnights,whichhasthehighestaverageattendanceintheOntarioHockeyLeague(OHL)andthesecondhighestintheCHLhastheirhomeinBudweiserGardens–animportantdowntownattraction,whichlikeEdmontonhasalsoattractedconsiderabledowntowninvestmentsinceitsopeningin2002.TheCitywiththehighestaverageattendanceintheCHLisQuebecCity,whichhasanarenaonthefringeofitsdowntown.
Similarly,theK-RockCentreindowntownKingstonhasbecomeakeyeconomicdriverforthecorearea,hostingtheKingstonFrontenacsOHLteamandamyriadofmajorconcertsandevents.Toenhancetheeconomicimpactsofthearena,itwasdesignedso
4“SuburbanarenasaproblemfortheNHL”,TorontoStar,November23,2107.https://www.thestar.com/sports/breakaway_blog/2017/11/23/suburban-arenas-a-problem-for-nhl.html5“NHLcommissionerGaryBettmansaysOttawaSenatorsneedanewhome”,OttawaSun,November10,2017.http://ottawasun.com/sports/hockey/nhl/ottawa-senators/bettman-says-the-senators-need-a-new-home
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asnottoofferon-sitedestinationparkingtoensurethatpatronswouldpassbyshopsandrestaurantsthroughoutthedowntowncoreontheirwaytothevenue.
OtherOntariocitiesthathavedevelopedsuccessfularenasintheirdowntowncoresinclude:Guelph(SleemanCentre),St.Catherines(MeridianCentre),andOshawa(TributeCommunitiesCentre).WhiletherecentlyrenovatedTDPlacearena–hometotheOttawa67s–isnotinthedowntowncore,itissituatedwithinthehistoricGlebeneighbourhoodandBankStreetcommercialavenue.TogetherwiththedevelopmentoftheTDPlacestadium,thismajorredevelopmentprojecthashelpedtoattractextensivecommercialandresidentialdevelopmenttothishistoricareaofOttawa.
TheexistingSudburyArenaattractsover150,000to200,000personstothedowntowneachyearandhostseventsthatcouldnotbeaccommodatedelsewhereintheCity.TheCityofGreaterSudburyOfficialPlanrecognizesthatamenitiessuchas…SudburyArena…contributetotheappealofdowntown”andasastatedprogramindicatesthat“Inordertomakeitmoreattractiveasaplaceofresidence,additionalamenitiesnecessarytoenhancetheliveabilityoftheDowntownwillbeidentified”6.Inotherwords,theOfficialPlanisseekingtoincreasethenumberofamenitiesliketheArenatolocateinthedowntowncore.
Insummary,thetrendinboththeNHLandtheCHListowardsdowntownarenasforseveralreasons:
• Theytendtodrawhigherattendancethansuburbanarenas;• Thereisanemergingmarketwithlowerratesofcarownershipandapropensity
tolivedowntown;• Fromaneconomicdevelopmentperspective,downtownarenasaremore
successfulatattractingnewresidential,office,entertainment,andcommercialdevelopmentthantheirsuburbancounterparts;and,
• Fromaplanningpolicyperspective,downtownarenasitessupportamoreefficient,transitandpedestrianurbanstructurethansuburbanarenas.
TheproposedentertainmentcomplexontheKingswaywouldbecountertothesetrendsandappearstoignorethepositiveeconomicimpactsofdowntownarenasthatarebeingexperiencedbycitiesbothlargeandsmall.
6CityofGreaterSudburyOfficialPlanSection4.2.1.1Program1.
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TheKingswayProposalisInconsistentwiththeCity’s3.0PoliciesProtectingandEnhancingtheDowntownastheEngineoftheRegion’sCommercialEconomy
DowntownSudburyisthecentreofretail,artsandculture,governmentandbusinessservicesfornotonlytheCity,butalsoSudbury’sextensiveservicearea.BasedondatacompiledbytheCanadianUrbanInstitute7,DowntownSudburyaccommodatessome400businessesand6,000employees.DowntownSudburyishometosomeoftheCity’sleadinginstitutions,including:theLaurentianSchoolofArchitecture,CityHall,MemorialPark,theYMCAandOlderAdultCentre,theSudburyTheatreCentre,andSudburyArena,amongmanyothers.
SudburyOfficialPlanTheOfficialPlancontainsnumerousreferencestotheimportanceofthedowntowntotheCityanditsservicearea,andcontainspoliciestosustainandattractnewinvestmenttothisvitalpartofSudbury’surbanstructure.
Forexample,Section1.4citestheimportanceofthedowntowntothecommunity;theneedtoenhanceitsrole;andtheneedtoattractnewresidentialdevelopmenttothecore:
TheheartofGreaterSudbury,itsmosturbanplace,isandwillbetheDowntown.Withthechangingroleofdowntowns,thereisacontinuingneedforappropriatepoliciesandprogramstoenhancetheDowntownasalocationofgovernment,commerce,culturalandentertainmentfacilities.ResidentialdevelopmentinandaroundtheDowntownisneededtosupportnewandexpandedfacilitiesandamenities.
Section1.2directstheCitytosustainthedowntownasavibranthub:
GreaterSudbury’sDowntownwillbedevelopedandsustainedasthevibranthubofadynamiccitybypreservingitshistoricalbuiltform,promotingartsandculture,improvinglinkagestoneighbourhoodsandamenities,integratingnaturalfeatures,developingresidentialuses,andcreatinguniqueurbanspacesthroughinnovativedesign.
7TheValueofInvestinginNorthernOntarioDowntowns:TheCityofGreaterSudburyCaseStudy,August19,2014.
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Tothisend,Policy1inSection4.2.1.2requirestheCitytopreservethoseaspectsofthedowntownthatcontributetotheimage,characterandqualityoflifeoftheCity.
ItispolicyofthisPlantopreservethoseaspectsoftheDowntownthatcontributetotheimage,characterandqualityoflifeintheCity,includingnaturalfeatures,landmarks,designattributes,heritageresources,linkagestoexistingtrails,pedestrianwalkwaysandotherdesirableelementsofthebuiltenvironment.
Insummary,thedowntownisakeypartoftheSudburyeconomy.Althoughtheminingandsmeltingindustryhas,inthepast,beentheeconomicdriveroftheCity,Sudburyisdiversifyingitseconomicbase,whichhasbeencharacterisedbygrowthinbankingandfinancialservices,businessservices,government,tourism,healthcareandretailing.ThePwCreportsconfirmtherecentemergenceandrecognitionofGreaterSudburyasacentreforresearchandinnovationwithgrowthinvariousinformationtechnologysectors(e.g.,scienceandtechnologyresearch)8.Thisrecentgrowthalsoincludesdirectpartnershipswithlocalpost-secondaryinstitutions.TheadditionoftheLaurentianSchoolofArchitectureisaprimeexampleofthisdiversificationandtheattractivenessofadowntownenvironmentforthesecreativeandtechnologyintensivesectors.
ThesetypesofactivitiesaremuchmoreurbanincharacterthanSudbury’straditionalindustries.Avibrantdowntownwithamixofentertainment,shopping,residentialandbusinessopportunitieswillbeimportantintermsofattractingbusinessesandemployeesfromthesesectors.
AcrossNorthAmerica,downtowncoresareplayingakeyroleintermsofestablishingcitiesasqualityplacesthatcanattracttheemergingworkforcerequiredforthecreativeeconomy.
FromtheGroundUp2015–2025Sudbury’sEconomicDevelopmentStrategypreparedbytheCityofGreaterSudburyCommunityDevelopmentCorporationentitledFromtheGroundUp2015-2025,makesextensivereferencetothedowntownasakeydriverofSudbury’seconomicfuture.
GreaterSudburyrecognizesthatdowntownsareimportantandthattheyrepresentthehistoricandsymbolicheartofthecommunity.Ahealthy,active,successful
8PricewaterhouseCoopers,ProposedSportsandEntertainmentCentreFeasibilityandBusinessCaseAssessment,February21,2017.p.6.
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downtownmakesapositivestatementabouttheprosperityofthecityandsendsapositivemessagetofutureresidents,businessesandinvestors.9
TherevitalizationanddevelopmentofDowntownSudburyisakeyobjectiveoftheCity’sEconomicDevelopmentStrategy.Objective4.1oftheStrategyisto“RevitalizeandRedevelopDowntownSudburyasakeyindicatoroftheCommunity’sQualityofPlace”.The“RequiredActions”toachievethisobjectiveinclude:attractinginvestmentinretail,arts,food,andhospitality;implementingabusinessretentionandexpansionprogramtargetingthebusinessesinthedowntown;anddevelopingpublicspaces,buildings,andinfrastructureasacatalystforrevitalizationandpublic-sectorinvestmentintheDowntown.
TheEconomicDevelopmentStrategyindicatesthatrepresentativesfromtheCity’sTourismSectoridentifiedtheArenaandConventionfacilityas“thejewelinthecrown”,that“itunlocksthepotentialforourcommunity”10.
Therelocationofthe“jewel”andthelargestvisitordrawtothedowntowntoasuburbanlocationwouldbeindirectcontrasttotheobjectivesandrecommendedactionsoftheCity’sEconomicDevelopmentStrategy.Infact,Objective7.1oftheStrategy–“InvestinFacilities,SpacesandInitiativesNeededtoSupporttheGrowthofTourism”specificallyrecommendsthedevelopmentofamulti-purposefacilityorfacilitiesinthedowntowncore,includingtheconsiderationofanarena/sportscomplex.
ItisalsoworthwhiletonotethatwithintheEconomicDevelopmentStrategythereisnotasinglereferencetocasinos,gamingorslotsascontributingtotheeconomicdevelopmentoftheCityorsomethingtheCityshouldpursuetoenhanceeconomicgrowth.
SudburyDowntownMasterPlanTheSudburyDowntownMasterPlanwascommissionedandapprovedbytheCityofGreaterSudburyin2012andfunctionsastheblueprinttoguidetherevitalizationofDowntownSudburyoverthenexttenyears(i.e.to2022)andbeyond,detailingaseriesofactionsandinitiativesnecessaryforthistransformationandspecifyingtheirtimingandallocatingresponsibilities.
TheDowntownMasterPlanhasbeencarefullypreparedtoenabletheCitytomeetitsownpolicyobjectives,aswellasthoserequiredbytheProvince:
9FromtheGroundUp2015-2025p.31.10FromtheGroundUp2015-2025,AppendixA:ConsultationSummaryp.63.
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TheOfficialPlanrecognizestheimportantroleofDowntownasanemploymentcentrewithintheCity.ThenewNorthernGrowthProvincialPlanrequiresthatmunicipalitiesdevelopstrategiestoencourageasignificantportionoffutureresidentialandemploymentdevelopmentlocateinstrategiccoreareasandotheropportunityareas,suchasbrownfields.Buildingonthesepolicydirections,theMasterPlanproposesaprogramofpublicandprivateinvestmentinthedowntownnecessaryforittoachievetheself-sustainingcriticalmassandplayitsoptimalrole11.
Thestudyemphasiseswhyitisimportantformunicipalitiestoprotectandpromoteeconomicgrowthintheirdowntowns:
Thestudynotesthat:astrugglingdowntownsendsanegativemessagetofutureresidents,businessesandinvestors.
Conversely,asuccessfuldowntown:
…createsapositiveimagefortheRegion....supportsastrongtaxbaseforthecity.…actsasanincubatorfornewbusinessgrowth.…retainsandcreatesnewanddifferentjobs.…protectspropertyvaluesinsurroundingneighbourhoods.…isasignificanttourismdestination.…allowsgrowthtooccurinanefficientandsustainableway.…isthemeetingplaceforthecity12.
TheDowntownMasterPlancallsonDowntownSudburytobea“Destination”:
TheVisionforDowntownSudburyisforittobetheurbanplaygroundforNorthernOntario.Sudburyshouldbetheleadingdestinationforbusinessmeetings,sportseventsandculturalandcommunityfestivalsintheNorth.However,atpresentthecitylacksmanyofthefacilitiesnecessarytoassertthisleadershiproleandmanyothercitiesareeagerforthisbusiness.IfGreaterSudburyistoremaincompetitiveandfirmlyestablishitselfastheCentreoftheNorth,itcannotremainstatic.TheCitymustcontinuetoinvest
11DowntownSudburyaplanforthefuturegoingdowntowngrowingdowntown,March2012.p.40.12Ibid.p.3.
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strategicallyinitsdowntownandfostergrowththatwilldeliverwiderbenefittothecityasawhole13.
TheDowntownMasterPlanadvisesthatanumberoflarge-scaleinitiativesarerequired,whichinturncreatethemarketforretail,restaurant,recreationandotherrelatedactivities.Importantly,theywillsettherequiredenvironmentforresidentialinvestment,acriticalstrategyfordowntownsuccess.OneoftheseprojectscallsforupgradingtheArenaincombinationwiththeconstructionofanewmulti-usefacilitysouthofBradyStreetwithafour-starhoteloverlookingMemorialPark.TheMasterPlanprovidesitsvisionofthisinitiative:
TheShaughnessyDistricthasbroughtnewenergytothesouthernportionofDowntownwiththerejuvenatedarenacomplex,four-starhotelandnewmulti-usecommunityandconferencespace.Witheventsheldweekly,thecentreisbookedsolidbyamixofbusinessgroups,not-for-profitsandcommunitygroups.Festivals,food,music,filmandtheartskeepdowntownbuzzing14.
TheDowntownMasterPlanisthepolicydocumentwhichlaysouttheCity’sinvestmentsinthedowntownoverthenext10years.ItisalsoadocumentthatSudburyresidentsandbusinessesrelyontomaketheirowninvestments.TheDowntownMasterPlan,aftercarefulstudyandlong-termconsiderationhasidentifiedtheneedtoundertakesignificantinvestmentinitsDowntown.TheSudburyCommunityArena,includinganewhotelisanimportantpartoftheCity’sinvestmentstrategy.
TheproposedKingswayEntertainmentCentrewouldbediametricallyopposedtothisstrategy.Ratherthanencouraginginvestmentinthedowntown,itwouldinvolvetheremovalofexistinginfrastructureoutofthecoreandwould,ineffect,activelyencouragebusinessestorelocatefromthecoretoasuburbanlocation.ThevisionpromotedfortheKingswayEntertainmentDistrictincludesawiderangeofcommercialandentertainmentbusinesses,includingretailshops,restaurantsandaconventioncentrewhichwouldservetodrainbusinessfromthecore,aswellas,otherpartsoftheCity.Inouropinion,thiswouldnotonlybeeconomicallyharmfultothecore,itwouldbecontrarytotheCity’sownpoliciesandthepoliciesoftheNorthernOntarioGrowthPlan.
13Ibid.p.40.14Ibid.p.29.
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ThePwCReportsConfirmedDowntownasthePreferred4.0SiteforaNewArena
PwCpreparedtworeportsaddressingpotentialoptionsfortheredevelopment/relocationoftheSudburyCommunityArena.ThefirstreportdatedFebruary21,2017,providedanoverviewofarenaoperationselsewhereinCanadianHockeyLeague(CHL)citiesandmaderecommendationswithregardstoasupportablesizeandthevariousdesigncomponentsforanewarenainSudbury.Itprovidedpreliminarycostestimatesandfinancialprojectionsbasedonassumptionssurroundingfacilityutilizationandprogramming.Itpreparedahigh-levelnon-locationspecificeconomicbenefitsanalysisofanewarenaandfinally,providedasetofcriteriatoguideananalysisofapreferredlocation.
Inourview,oneofthemostimportantdiscussionsrelatingtolocationisfoundonpages73and74ofthisreport,wheretheauthorsdiscusstheimportanceoflocationintermsofgeneratingeconomicimpactsforacommunity.Theyrefertoanumberofdowntownarenaprojects,includingLondon,Kingston,Oshawa,GuelphandMoncton,thathavehadsubstantialpositiveimpactsintermsofattractingnewinvestmentintoacommunity.
Theyalsocitesomenon-downtownarenaprojects,suchasBarrie,thoughinthiscase,theysuggestedthatthesurroundingdevelopmentactivitywaslikelyduetotraditionalmarketforcesattractedaroundHighway400ratherthantothearena.BasedonoursignificantexperienceintheBarriemarket,wewouldagreethatthisisthecase.TheyalsorefertoMedicineHat,Alberta,wheretheCanaltaCentrewasconstructedonlanddonatedbyadeveloper.Theynotethatthisareawasalreadydevelopingasaretailnode,butthattheCanaltaCentrehelpedtospurandadvancedevelopmentofthearea.Finally,theynotetheMoheganSunArenainWilkes-BarrePennsylvaniawheretheareaaroundthearenahadbeentransformedfrom“worthlessproperty”intooneofthebusiestretaildistrictsintheregion.Again,theynotethatthesuccesswiththefacilitywasdue,inpart,toitslocationinarapidlygrowingregionaleconomy,withapopulationof14millionpeoplewithina100-mileradius.Inallcases,wheretheyrefertosuburban-basedarenas,theareasaroundthearenasiteshadalreadybeensubjecttostrongmarketgrowthregardlessofthepresenceofanarena.
Theyconcludethattomaximisespin-offdevelopmentaroundarenas,stronglocaleconomicconditionsandsupportiveplanningwillberequired.
Thefinalsentence,whichconcludesthereport,providesinsightintoapreferredlocationstrategy:
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Ingreenfieldsites,thisamountofcriticalmasswillsometimesneedtobe“created”andcouldtakeyearstofullyevolve,whereasinmoreurbanlocations,acriticalmassofspaceislikelyalreadypresentandcitycoresareabletorealizepositivespin-offbenefitsmorequickly15.
ThesecondPwCreportdatedJune2017appliesasetofcriteriadevelopedinthefirstreporttoevaluatethepotentialof23sitestoaccommodatethenewarena.Basedonphysicalconstraints,suchassitesizeanddimensions,proximitytoparking,proximitytoarterialroads,proximitytomunicipalservices,andsuitablesoils/geology,the23siteswerereducedtofourshortlistedsites,whichwereevaluatedusingeightcriteriadevelopedinthefirstreport.Theseinclude:
• Vision–WhethertheEventsCentreconceptonthesiteisconsistentwiththeoveralllong-termstrategicvisionoftheCity.
• ComplimentaryBenefits–TheabilityoftheEventsCentretoenhancethesurroundingarea.
• EaseofDevelopment–Costandtimingonaparticularsite.• Access–Whetherthesiteisorcanbeeasilyaccessedbyvehicle,pedestriansor
transit.• Parking–WhethersufficientparkingwouldbeavailabletosupporttheEventsCentre.• Cost–Totalcostofdevelopment,includinglandacquisition,sitepreparation.• EconomicImpact–Whetheraparticularsitehasanenhancedeconomicimpactfor
thesurroundingneighbourhood,theCityortheRegion.• CityBuilding–Whetherthedevelopmentofasitewouldenhanceeconomicgrowth,
qualityoflife,citizensatisfactionandcommunitypride.
15ProposedSportsandEntertainmentCentreFeasibilityandBusinessCaseAssessment,CityofGreaterSudbury,PwC,February21,2017.p.75.
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PwCappliedthesecriteriatofourdistinctsites:
• A19.2-acrepropertyonMacIsaacDrive,neartheintersectionofRegentStreetandLongLakeRoad
• A22-acresiteonthesouthsideofRegentStreetatAlgonquinRoad• A23.1-acresiteonTheKingswayintheJackNicholasBusinessandInnovationPark,
whichwouldbedevelopedaspartofabroaderentertainmentdistrictwithacasinoandothercomplementaryuses.
• A3.0-acresiteinDowntownSudburyadjacenttotheexistingarena.
Afterapplyingallofthecriteria,PwCrankedtheDowntownsiteasthemostdesirable,followedbytheKingswaySite,theMacIsaacsiteandtheAlgonquinsite.TheDowntownsitehadthehighestrankinginallcategoriesexceptcostimpactwhereitfinishedsecondtotheKingswaysiteandparkingwhereitfinishedfourth.
AnalyzingOnlytheCouncil-Deemed“Highest5.0Importance”CriteriaisaFlawedApproach
Whileusingallofthecriteria,thePwCReportsdeemedthedowntownasthepreferablesiteforanewarena.However,CouncildirectedPwCtoseparatethecriteriaintothreegroups:
OfHighestImportance
• Cost• EconomicImpact• Parking
ExtremelyImportant
• ComplementaryBenefits• Access• EaseofDevelopment
Important
• Vision• CityBuilding
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UsingonlythosecriteriawhichCouncildeemedofHighestImportance(Parking,Cost,EconomicImpact),theDowntownsitefinishedsecondbehindtheKingswaysite.TheMacIsaacandAlgonquinrankingsremainedunchangedat3rdand4threspectively.Inouropinion,thisisnotavalidapproachtoanalyzingthemeritsofalocation,becauseitignoresfactorsthatshouldbeconsidered.Infact,initsanalysis,PwChadalreadydevisedaweightingsystemforeachcriterion,sothatsomefactorsweregivenhigherweightingsthanothers,butallfactorswereconsidered.OnlyconsideringthefactorsdeemedofHighestImportancetoCouncilignoresotherimportantfactorswhichshouldbeconsideredintermsofanydecision–suchasvision,citybuilding,complementarybenefitstothecommunity,accessibility,andeaseofdevelopment.Withoutconsideringthesefactors,adecisioncannotbemadebasedonafullunderstandingoftheimplicationsoftheproject.
Equallyimportant,however,isthatthereareanumberofsignificantissueswiththePwCrankingsystemthatlikelyunfairlyandincorrectlyskewedtwoofthecriteriadeemedofHighestImportancetoCouncilagainstthedowntownsite–CostandParking.
CostCriteria
Firstly,thecostinformationavailabletotheconsultantswasonlyataveryhighlevel,particularlycostsrelatedtoinfrastructureandsitepreparation.Astherehasbeennodetailedcostanalysisofthesites,PwCcouldonlyuseveryroughestimates.Forexample,withregardstotheKingswaysite,sitepreparationwasestimatedatbetween$10and$15million,whileservicingwasestimatedatbetween$5and$10million.Includingthe$80millionconstructioncostforthearena/eventscentre,thetotalcostattheKingswaysitewasassignedavalueof$98million.
FortheDowntownsite,sitepreparationcostswereestimatedatbetween$5and$10million,whilethecostforadditionalworksandservicinghasbeenestimatedatlessthan$5million.TherewerealsounspecifiedcostsrelatedtoacquiringportionsofthesitenotownedbytheCity.Inaddition,theBIAagreedtocommitsome$2.2millionifthearenawaslocateddowntown.Includingthe$80milliontophysicallyconstructthebuilding,theDowntownsitewasassignedatotalcostof$99million.
Inouropinion,giventhebreadthofthecostrangeforservicingandsitepreparation,thereisnotsufficientprecisiontorankthetwositesdifferently,particularlywhenthetotalcostdifferenceassignedwasonlyabout1%ofthetotalprojectedcosts.Secondly,PwChassuggestedthatduetothenatureofconstructioncosts,thattheseestimatesmaybepronetosomedoublecounting16,whichfurthererodesconfidenceintheprecisenessoftheestimates.
16GreaterSudburyEventCentreSiteEvaluation,PwC,June2017.pp.15,18,21and27.
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Finally,theservicingcostsandsitepreparationcostsattheKingswaysitearefarlesscertainthanthoseoftheDowntownsite,whichalreadyhasaccesstomunicipalservicesandhasinfrastructureinplacetosupporttheexistingarena.Furthermore,thegeotechnicaldetailsoftheDowntownsitearealsolikelysimilartothoseofsiteselsewhereinthedowntown,includingtherecentlyconstructedSchoolofArchitecturebuilding.ThesamecannotbesaidfortheKingswaysite,whichwouldrequirewaterandsewerconstructionandtheprovisionofhydroandasstatedinthePwCreport:“isvacantandunimprovedandcontainsundulatingbedrockwithdipsandvalleys”andwouldrequire“asignificantamountofblastingandsitegrading”.Inotherwords,thereisconsiderablymoreriskwithregardstothepreliminarycostestimatesassociatedwiththeKingswaysite.
Inouropinion,thereisnotsufficientinformationtoranktheKingswaysiteaheadoftheDowntownsite(orpotentiallytheothersites)onthebasisofcost.AmorereasonableapproachwouldhavebeentoranktheDowntownsiteequaltotheKingswaysiteinthiscategory,althoughitisconceivablethattheKingswaysitecouldbemoreexpensivetodevelopthananyoftheotherthreesites,oncedetailedengineeringandgeotechnicalanalysishasbeencompleted.
ParkingCriteria
SeveralissuesalsoexistwithrespecttotheapplicationoftheparkingcriteriaappliedinthePwCreport.
First,whilethereportranksthesitesontheiravailabilityofparking,nowhereisthereananalysisofhowmuchparkingwouldactuallybeneededandwhetherthedowntownsiteduetoitsaccesstotransitwouldrequirelessparkingthantheothersites.Thefactthatonesitehasmoreparkingthananothermaynotberelevantiftheexcessparkingisnotneeded.
Secondly,theFebruaryPwCreportnotesthat:
Oneofthekeyelementsthatmustbeincludedinanylocationdecisionisaccesstoparking.Remoteorsuburbanlocationstendtohaveadequatelandforparkingbutalsotendtohaveonlyonemajorroadleadingtothesite.Asaresult,whileparkingmaybeeasilyaccommodated,therecanbesignificantissuesintermsofloadingandespeciallyexitingtheparkingareaafteranevent(acommonissueraisedinregardtotheWFCUCentreinWindsor)17.
ThisisexactlythesituationinwhichtheKingswaysitefindsitself.Inotherwords,allofthetrafficleavingthesitewouldbechannelledontotheKingsway.Giventhatthesiteisinthe17ProposedSportsandEntertainmentCentreFeasibilityandBusinessCaseAssessment,CityofGreaterSudbury,PwC,February21,2017.p.46.
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eastendofthebuilt-uparea,thevastmajorityoftrafficwouldbefunnelledintothewestboundlaneswhenleavingthesite.ThiswasnotaddressedintheparkinganalysiscontainedintheJunePwCreport,whichonlycommentsthattheKingswaysitecouldaccommodateover2,000parkingspaces.
Thirdly,thediscussionwithregardstotheparkingassessmentintheJunePwCreportissomewhatcontradictory.PwCnotesthattherearemorethan3,500parkingspaceswithina10-minutewalkoftheDowntownArenasite,whichinaggregateismorethanisavailableatthethreeothersites.Thestudyalsonotesthata“sufficientnumberofspacesmaybeavailablewithin600metresofthesite”,whichtheynoteisaseven-and-a-half-minutewalk.However,thisseemstobediscounteddueto“publicperception”thatmanyofthesespacesarelocatedtoofarfromtheeventcentre.AsimilaranalysiswasnotconductedwithregardstotheKingswaysite–i.e.howfarawalkwouldittaketoaccommodateasufficientnumberofspacesandwouldthismakeamaterialdifferenceintermsofthefunctionalityandmarketattractivenessofthefacility,asopposedtoapurely“perceptual”difference.
Fourthly,inthePwCFebruaryreport,thediscussionoftheParkingcriterionincludesthequestions:“Ifadditionalparkingisrequired,woulditbewell-usedonadailybasisforotherpurposes?”;and“Wouldthecreationofadditionalparkingbeaprudentinvestment?”18ThesequestionswerenotaddressedintheanalysisofthefoursitesconductedintheJunereport.Inthisregard,thedowntownsitewouldbesuperiortotheKingswaysiteinthatitwouldmakeuseofexistingparkingspacesthatareunderutilizedintheeveningsandweekendsandwouldnotrequiretheconstructionofadditionalspacesthatwouldlargelybevacantduringnon-eventtimes.Thisspeakstonotonlyfinancialsustainabilitybutalsolong-termeconomicsustainabilityasrequiredbytheProvince’sNorthernOntarioGrowthPlan,aswellastheCityofGreaterSudbury’sowngoalofbecomingasustainablecommunityasdocumentedintheCity’sOfficialPlan.
Furthermore,thePwCJunereportalsoindicatedthatitdidnotconsideraproposedparkingfacilitythatcouldbedevelopedifdemandforaDowntownarenaandeventscentrewarrantedit.WhilethispotentialdowntownparkingstructurewasnotconsideredbyPwC,itsfirstplacerankingoftheKingswaysitewaspredicatedentirelyontheconstructionofnewparkingaroundthatfacility.
Finally,PwCdidnotconsidertheroleofparkingintermsofenhancingeconomicdevelopment.Asnotedpreviously,theCityofKingston,whenitdevelopedtheK-RockCentreinitsdowntown,madethestrategicdecisiontominimizeon-siteparkingsoastopromotepedestriantrafficflowthroughthedowntown,therebyencouragingcustomerstofrequent
18Ibid.p.48.
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localshopsandrestaurants.Thisisastrategythathasbeensuccessfulinthatcommunity.Comparinganexpansiveacreageofparkingonagreenfieldsitetoaparkingsolutionthatmightbeemployedinthedowntowncoretoenhancelocalbusinessdevelopment,isnotafairorreasonableapproach.
Inouropinion,PwCdidnothavesufficientinformationavailabletotheminordertoprepareareasonablerankingbasedonitsparkingcriterion.InitsFebruarystudy,PwCspecificallynotedthat“adetailedandprofessionallypreparedtrafficandparkingstudyforeachproposedsiteincludinganestimationofparkingrequirementswillbeneeded(doessufficientparkingexistintheareasurroundingthesiteandwhat,ifany,streetandvehicularaccessimprovementsarerequired)”19ThereisnoreferencesintheJunereporttothesestudieshavingbeenconducted.PwCappearstohavereacheditsconclusionsbasedondeveloperplans,parkingspacecounts,and“publicperception”.Itsanalysiscontainsnoreferencetoactualparkingrequirements,parkingutilisation,accessibility,trafficingress/egresstoeachsite,orotherinformationthatwouldbederivedfroma“detailedandprofessionallypreparedtrafficandparkingstudy”.
Inouropinion,thelackofinformationavailabletoPwCandtheassumptionstheyusedtoevaluatetheparkingandcostcriteria,unfairlybiasedtheirrankingagainsttheDowntownsite.ThecostanalysisundertakenbyPwCwasconductedatfartoohighalevelandundertakenwithoutsupportinginfrastructureorgeotechnicalstudies.Itcouldnotreasonablyhavebeensopreciseastoallowforarankingofonesiteaheadofanotheronthebasisofa1%verygeneralizedcostdifferential.Similarly,theparkinganalysisappearstohavebeenundertakenwithoutreferencetoinformationinstudiesthatevenPwChadearlierindicatedshouldbeconducted.Itexcludednumerousdatathatcouldhaveeasilyyieldedalternativeresults.
HadthePwCanalysisappropriatelyrankedthedowntownsiteequaltotheKingswaysiteintermsofcostandhadtakenalloftheabovenotedfactorsintoaccountfortheparkinganalysis,thedowntownsitewouldhavebeenrankedhighestnotonlyoverall,butalsointermsofthosecriteriaidentifiedasofhighestimportancetoCouncil.
TheRelocationoftheArenaWouldHarmBusinessesWithinthe6.0DowntownCore
AkeypieceofinformationthathasbeenlackingfromthearenalocationanalysisistheimpactontheDowntownshouldthearenabemovedoutsideofthecore.Thearenaisthelargestvisitordrawtothedowntownandsupportsnumerousbusinessesinthedowntowncore
19PwCJuneReportp.47.
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notablyrestaurantsandpubs,aswellasotherretailandcommercialestablishments.Inaddition,asaprominentattraction,itprovidesadditionalexposuretothedowntowncorethroughmarketingandadvertisingandaddsprestigetothecore.
Thelossofthismajorfacilitywillaffectbothspecificbusinesseswhichrelyoncustomerstothearena,aswellas,thedowntowncoreingeneral.Furthermore,wenotethattheconstructionofanewarenaisalsoexpectedtoinvolvetheexpansionofarangeofmajorentertainmentfacilities.ThisincludespotentialnewentertainmentusesthatarenotcurrentlylocatedinSudburyand—ifrelocatedto,orexpandedontheKingswaysite—couldadverselyaffecttheremainingfoodandentertainmentuseslocatedinthedowntown.IfthesetypesofusesareultimatelyconcentratedattheKingswaysite,itwouldalsobedifficultforexistingbusinessesinthedowntowntoeverrecapturethislevelofattractionordraw.
InthecaseofWindsor,in2008theformerdowntownarenathatwashometotheWindsorSpitfirewasclosedandanewarena(WFCUCentre)wasopenedinasuburbanlocationabout12kilometresoutsideofthecore.Whiletherearemanyfactorsatplay,DowntownWindsorhasbeeninsteadydeclinesince2000andthelossofthetraffictothearenahelpedtohastentheissuesfacingthecore.Sinceitsclosure,theformerarenahasbeenusedforminorleagueanduniversityhockeygames,satvacantandbeenusedforsaltstorageforthemunicipalworksdepartment.ThereiscurrentlyaproposaltodevelopaschoolonthesitefortheCatholicSchoolBoard.UnlikedowntownSudbury,downtownWindsorhasarelativelylargeresidentpopulationtosupporttheeventuallyreuseofthesite.Ifthisredevelopmentoccurs,itwouldrepresenta10-yearspansincethearenawasvacatedbyitsmajortenant.
Inouropinion,anydecisiontorelocatethearenatoasuburbanlocationshouldnotbemadewithoutexaminingtheimpactofthisrelocationonthedowntown.
AnEntertainmentDistrictincludingaNewCasinoWillRedirect7.0BusinessAwayfromOtherPartsoftheCommunity
Asnotedabove,thelossofamajorattraction,suchasthearena,willundoubtedlynegativelyimpactDowntownSudbury.Alarge-scaleentertainmentdistrictwithacasinowillalsodrawcommercialtrafficawayfromotherpartsoftheCity.Forexample,asistypicallythecaseinothercommunities,restaurantsandotherfoodservicesthatarelocatedinthecasinooftenareabletooutcompetesimilarbusinessesinotherpartsoftheCityonpriceandspecialofferings.Thevisionbeingpromotedfortheentertainmentdistrictalsocallsforshopsandboutiquestobeintegratedintheconcept.ThiscouldpotentiallyimpactestablishedretailnodesthathavealreadybeendesignatedintheOfficialPlanasimportanttoservingtheentire
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cityandbeyond20.Aquestionthatneedstobeaddressedaspartofanyexaminationofthearenarelocationandestablishmentofanewentertainmentdistrict,iswhetherbusinesslossesinthedowntownandotherpartsoftheCitywillbeoffsetbybroaderpositivecommunitybenefits.ThishasnotbeenaddressedinthePwCanalysis.
Asperthecurrentproposal,thearenawouldberelocatedandsituatedontheKingswaysiteaspartofaconceptfora“KingswayEntertainmentDistrict”whichisalsoplannedtoincludeanewcasino(whichwouldberelocatedfromSudburyDowns),ahotel,restaurants,retailoutlets,andotherpossibleentertainment/recreation/conventionuses.
Anotherkeyquestionthatneedstobeaddressed,iswhethertherewouldbesufficientmarketgrowthorrecapturetosupportanentertainmentdistrict.Inouropinion,itismorelikelythatintheabsenceofanothermajordrawinthedowntowntoreplacethesefoodandentertainmentandretailfunctions,sucharelocationwouldsimplycannibalizeexpendituresthatarealreadybeingmadeelsewhereintheCity.TheretailimpactoftheproposedKingswaydevelopmentontheexistingcommercialnodesshouldalsobestudied.Finally,withlimitedoptionsavailable,itisunlikelythatanewordifferentmajordrawcouldbeintroducedtothedowntowninthecomingyears.
TheKingswayProposalWouldJeopardizetheCity’sPlanned8.0TransformationalLargeProjects
InNovember2012,theCityinviteditscitizenstoproposelargescaleprojectsthatwouldbetransformationaltotheCity.Atitsmeeting,onSeptember12,2017,theCitygavedirectiontostafftoimplementtwooftheseprojects–theGreaterSudburyConventionandPerformanceCentreandtheLibrary/ArtGallery.
Inevaluatingthelocationfortheseimportantprojects,theCitydeterminedthatthere-useoftheexistingArenawasthemostappropriatewaytoaccommodatebothprojects.ACitystaffreportdatedNovember15,2017analyzedanumberofsitesandrankedtheexistingArenasiteasthebestoption.21
ItisalsoimportanttorecognizethatthisreportwascompletedwiththeassumptionthattheKingswayEntertainmentDistrictwouldbeapprovedandconstructed,asoneofthereasons
20InadditiontotheDowntown,theOfficialPlandesignatesthreeRegionalCentres,whicharecommercialcentresservingacatchmentareaextendingbeyondtheCity.Thesecommercialcentresarepermittedtoexpandtoincludeotheruses,asameansofutilizingexistinginfrastructureandachievingincreasedurbanintensification.21CityCouncilReport–GreaterSudburyConventionandPerformanceCentre/LibraryArtGalleryUpdate.
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givenforselectingthearenasitewas“ItaddressescommunityconcernsaboutthefutureofthissiteaftertheKingswayEventCentreopens”22.
Inouropinion,theproposedKingswayEntertainmentDistrictwould,tonosmallextent,duplicatethefunctionofaconventioncentreandaperformancecentre.Atbest,theproposedKingswayEntertainmentDistrictwouldimpedethemarketfortheseusesdowntown,byofferingdiscountedcompetitivefacilitiesasanattractortopotentialgamingpatrons.Similarly,thetransferofhospitalityinfrastructurefromthedowntowntotheKingswaysitewouldfurtherreducetheviabilityoftheperformingartscentreandconventioncentreinthedowntown.
Atworst,theKingswayEntertainmentDistrictwouldmakeaperformingartsvenueandconventioncentreindowntownredundant–therebyofferingnocomparablereplacementfortheArenaandsubstantiallyincreasingthetouristandentertainmentdrawawayfromthecore.
TheCity’sreportdiscussesthevisionforahotelassociatedwiththeconventioncentre,butprovidesnoanalysisastowhetherthereissufficientmarketforanewhotel,inadditiontothehotelfacilitiesbeingplannedaspartoftheentertainmentdistrict,nordoesitprovideanyanalysisofhowtheconventioncentrewouldeffectivelycompetewiththeKingswaycasino/arena/hoteldevelopmentthatwouldlikelycontainconferenceandmeetingfacilitiesinadditiontohavingdirectaccesstothearenaspace.PotentialimpactsontheexistinghotelsintheDowntownshouldalsobestudied,astheycouldbesignificant.
Ontheotherhand,aconventioncentreandarenadevelopedtogetherinthedowntowncoreinconjunctionwithaperformingartscentretogetherwiththelibrary/artgallery,wouldtransformthedowntownintoavibrantentertainment/tourismhubthatwouldsupportrestaurants,hotels,andotherlocalbusinesses.Inparticular,adowntownconventioncentreadjacenttothenewarenawouldenabletheCitytocompeteforawiderangeofconventions,consumershows,businessmeetings,specialeventsandotheractivitiesthatwoulddrawvisitorsandtheirexpendituresintoSudburyandsupportavibrantdowntowncore.
WewouldalsonotethattheKingswaydevelopmenthasalreadyrecognizedtheconnectionbetweenthearenaandconventioncentreandhasproducedapromotionalvideoshowingaconventioncentreaspartoftheKingswayEntertainmentCentrecomplex.
Todate,noeconomicanalysishasbeenundertakentodetermineeithertheimpactondowntownofrelocatingthearenatotheproposedKingswayentertainmentdistrictorthe
22GreaterSudburyConventionandPerformanceCentre/LibraryArtGalleryUpdate,November15,2017.5thunnumberedpageunder“Analysis”section.
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economicbenefitsthatwouldbederivedfromthecreationofadowntownhubincludingtheArena,aconventioncentre,aperformingartsvenue,alibraryandartgallery.
ACasinoWouldNotHaveaSignificantImpactonTourismand9.0WouldDrawHeavilyfromwithintheCityofGreaterSudbury
Overtime,asgaminghasbecomemoreubiquitousacrossNorthAmerica,itsuniquenessasatourismdrawhaswaned.Theintroductionofonlinegamblingbynumerousoperators,includingtheOntarioLotteryandGamingCorporationhasfurthererodedthedrawofphysicalcasinos.Inaddition,casinosarenotpartoftheentertainmentregimenforthesmart-phonesavvycomputer-gamingyoungerdemographic23.
AlthoughwedonothavedirectdatawithregardstothegeographicdistributionofvisitorstotheOLGSlotsinSudbury,wehavebeenabletoobtainareasonableapproximationthroughanalysinglicenceplatesatthefacilityanddatafromcellphoneusage.InFebruary2018,alicenceplatesurveyofvehiclesvisitingthecurrentSudburyDownscasinositewasundertakenunderthedirectionofurbanMetrics.AdescriptionofthemethodologyandsummaryoftheresultshasbeenprovidedinAppendixB.Wewouldnotethatinourexperience,licenceplatesurveystendtooverestimatepersonstravellingtoasitefromfurtheraway24.Regardless,74%ofallvehicleplatesrecordedwerefromtheCityofSudburyand88%werefromwithinadistanceof120kilometresfromthesite(includingNorthBay).Basedonthetypicalovercountofnon-localcustomers,wewouldestimatethatbetween80%and85%ofvisitorsoriginatedfromtheCityandsome90%to95%originatedfromwithin120kilometres.
ThisestimatewascorroboratedthroughtheanalysisofcellphoneusagedataatOLGSlotsinJuly,AugustandSeptember2017andinFebruary2018.(SeeAppendixC)Thesedateswerechosentomimicthehighsummertourismseasonandthesameperiodcoveredbythelicenceplatesurvey.Visitationpatternsbymonthwereverysimilar,andonaveragesome90%ofvisitorsarrivedfromwithin120kilometresofthesiteplusNorthBayand84%originatedfromwithintheCityofGreaterSudbury.Only9%originatedfromoutsideofNorthernOntario.
23CanadianGamingBusiness.“DemographicDilemma–TheChallengeofConnectingwithToday’sPlayer”,Spring2017.24Forexample,licenceplatesurveyswouldnotcapturepersonsarrivingbymeansotherthantheirprivatevehicle(e.g.taxisorpersonsbeingdroppedoff),theywouldnotbecapableofdistinguishingapersonwhohadmovedtothelocalarea,buthadnotchangedtheiraddressontheirdriverslicence,theycannotdistinguishtheownershipofleasedvehicles(i.e.someonedrivingavehicleleasedbytheircompany)etc.Thesefactorstendtoinflatenon-localvisitationbetween5%and15%.
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ThisisconsistentwithotherevidencewhichindicatesthatNorthernOntariocasinosdonotdrawheavilyoutsideoftheirowncommunities.A2006surveybytheOntarioProblemGamblingResearchCentredeterminedthatthetwoNorthernOntarioCasinosinThunderBayandSaultSte.Marieattractedsome90%and86.5%ofvisitorsfromwithintheirowncommunities.Onlyabout5%ofvisitorstotheSaultSte.MariecasinowerefromoutsideofOntarioandonly2%ofThunderBaycasinopatronswerefromoutsideoftheProvince.Asasmallerslots-onlyfacilitynotclosetoaninternationalborderandwithextensiveandgrowinggamingcompetitionservingtheGTA,wewouldnotexpectSudburytodifferfromtheexperienceoftheseotherNortherngamingfacilities.
Basedon2014StatisticsCanadaTourismdatacommissionedbytheCityofGreaterSudbury25,theSudburyTourismmarketisorientedtowardspersonsvisitingfromNorthEasternOntario,andpersonstravellingtoSudburytovisitfriendsandrelativesandforpersonalappointments.Thepleasuremarketrepresentsonlyabout21%oftripstoSudbury.Personsengagingincasinogaming(i.e.OLGSlots)representaminisculeproportionofthemarket.ThefollowingsummarizesthecurrentSudburytourismmarket:
• 60%ofcurrenttouristsarefromNorthernOntarioand93%arefromwithintheProvince.
• 70%ofvisitorstoSudburycomeeithertovisitfriendsandrelativesorarevisitingforaspecificpersonalreason(e.g.toshop,doctors/dentistappointment,etc.).
• Thepleasuretravelmarketrepresentsonly23%ofvisitorstoSudbury.• Only1%ofvisitorsreportedvisitingacasinoaspartoftheirtrip.Themostcommon
activitiesbySudburyVisitorswerevisitingfriendsandrelatives;outdoorsportingactivities;shoppingandmedical/dentalappointments.
• 54%ofvisitorsdidnotstayovernight.• 52%ofnightsstayedwereataprivatehome.Onlyabout25%wereatahotel,motel,
commercialcabin,orothercommercialproperty.
Inouropinion,thecurrenttourismmarketisnotwellpredisposedtogamingactivities.Thereisnotalargepleasuremarketseekingalternativeentertainmentoptions.Thepleasuremarketcurrentlymakesuplessthanaboutone-quarterofarelativelysmalltourismbasewithastrongorientationtowardsoutdooractivitiesvs.nightlife/dining/urbanentertainment.Theremaybepotentialtoattractpersonsvisitingfriendsandrelatives,however,atleastpartofthiswouldcomprisetransfersofexpendituresfromotherpartsoftheCity,anditlikely
252014SudburyTourismProfilebasedonStatisticsCanadamicrodatawhichcontainanonymiseddatacollectedintheTravelSurveyofResidentsofCanadaandtheInternationalTravelSurvey.
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wouldnotresultinincreasedlengthsofstayoradditionalnightsincommercialaccommodations.
AttractingtouriststoacasinoinSudburywouldlikelyrequiretappingintonewmarketsnotcurrentlyvisitingSudbury.ThedifficultywiththisisthatOntarioissignificantlyincreasingitsgaminginfrastructureacrosstheProvince,andparticularlyintheGTA,whichrepresentstheforemosttouristmarketforOntarioattractions.Inotherwords,acasinoinaneventcentreinSudburywouldhavetocompetewithexpandingcasinosthataremuchlargerandmuchclosertotheaudienceitistryingtoattract.TheUSmarketinSudburyisverysmallandisalreadyservedbylargercasinosatthemajorbordercrossings.
Inouropinion,whiletheproposedentertainmentcentrewouldbeabletoexpandthevisitorsandrevenuesgeneratedbyacasino,thevastmajorityofgrowthwillbederivedfromSudburyresidents.
GrowthinGamingRevenuesfromanExpandedCasinoWillBe10.0DerivedMainlyfromSudburyResidents.
GaminginSudburyuntilrecentlyoperatedasOLGSlotsSudbury26,andwasaslots-onlyfacility.TheOntarioLotteryandGamingModernizationprogram,however,haschangedthegaminglandscapeacrosstheProvince.Followingacompetitivebiddingprocess,OLGhasenteredintoagreementswithprivategamingcompaniestooperategeographicallydefinedgamingbundles,whichinvolveamongotheraspectsthecreationofnewgamingsites,theexpansionofexistingsites,andtheestablishmentoftablegamesatlocationsthathadpreviouslyoperatedasslots-onlyfacilities.AspartofitsModernizationplan,OLGenteredinto20-yearagreementswithGatewayCasinosandEntertainment–aBritishColumbia-basedgamingcompanyownedbyaTorontoprivateequityinvestmentfirm27tooperatetheNorthernandSouthwestOntarioGamingBundles.
TheNorthernOntarioBundleincludestheexistingcasinosinSaultSte.MarieandThunderBay,OLGSlotsSudburycurrentlyoperatingatSudburyDowns,andanewcasinolocationinNorthBay.FollowingtheacquisitionoftheNorthernBundle,OLGSlotsSudburyhasbeenrebrandedasGatewayCasinosSudburyandcannowincludetablegames.AsOLGSlotsSudbury,thefacilityoffered407slotmachinesandwasstaffedby141fullandpart-timeemployees.
26PriortothatitwasknownasTheSlotsatSudburyDowns,whenitco-existedwiththehorseracetrack.27TheCatalystCapitalGroup
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ThecurrentproposalbyGatewaywouldbetorelocatethecasinofromtheSudburyDownssitetotheGatewaysiteaspartoftheirconceptforanentertainmentdistrictthatwouldalsoincludetherelocatedarenaandotherhospitalityandentertainmentfacilities,includingrestaurantsandlikelyretailoutlets.Gatewayhasannouncedthatitwouldinvest$60millioninthenewcasinoproperty.Thecompanyhasnotspecified,theextenttowhichitwouldexpanditsgamingoffering,however,itsagreementwithOLGallowsfortheoperationofupto600slotmachinesand180tablepositions(theequivalentof30tablegames).
TherelocationtotheGatewaysitewouldrequireapprovalofbothOLGandtheCity.TheOntarioLotteryandGamingCorporationActregulationsrequirethatpublicinputisrequiredbeforethemunicipalitycanapproveanewgamingsite.ItisourunderstandingthattherequiredpublicinputintotheGatewaysitehasnotyetbeenprovidedandOLGhasnotyetapprovedtheKingswaysiteforacasino.Furthermore,theproposedKingswayEntertainmentDistrictwouldbecontrarytothepoliciesoftheCity’sOfficialPlan,theNorthernOntarioGrowthPlan,aswellas,thepolicydirectionandactionsprescribedtotheCitybytheDowntownMasterPlananditsFromtheGroundUpEconomicDevelopmentStrategy.
Inordertoproperlyinformthepublicaboutthemeritsofanexpandedandrelocatedcasino,aneconomicimpactstudyshouldbeconductedtomorefullyunderstandtheeconomicandfinancialimplicationstotheCity.Toourknowledge,thishasnotyetbeenundertakenbytheCity.Tobetterunderstandtheimplicationsofanexpandedcasino,wehavebeenabletoanalyzesomeoperationaldataavailablefromOLG.
Duringthefiscal2016-17yeartheSlotsatSudburyDownsattracted400,000visits28.
BasedontheCity’s5.25%shareofSlotsrevenuereportedas$2.2millionin2016/17,thetotalfacility“win”wouldbeapproximately$42million.WehaveundertakenadetailedanalysisoftheperformanceoftheSudburyslotsfacilityandcomparedittootherOLGSlotsandCasinosacrosstheProvinceinordertoestimatethecasinowinifthegamingfacilityweretoberelocatedtotheKingswaysite.ThedetaileddatasupportingourconclusionsarefoundinAppendixA.Inouropinion,acasinoontheKingswaysitewouldgenerateapproximately$75to$80millioninslotsandtablewin.Thefollowingsummarizesthelogicbehindthisestimate.
• TheKingswaysiteisbetterpositionedwithrespecttothegeneralSudburypopulationthanthecurrentSudburyDownssiteandcouldexpecttohaveagreaterdrawfromwithintheCity.
• Similarly,thecasinowouldhavetheabilitytodrawontheadditionalcrowdattractedtothesiteongameandeventdays.
282016-17OLGCommunityBenefitSummary.
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• ThefourOLGoperated(non-resortcasinos)drawmorerelativetothesizeoftheirPrimarymarketpopulationthantheSlotsonlyfacilities.In2016-17,theyattracted2.07visitsperresidentwithin40kmcomparedtoonly0.8visitsforslots-onlyfacilities.This,however,ispartlyduetothefactthatthecasinosaresituatedwithinurbanizedareas,whereastheslotsfacilitiestendtobesituatedonracetracksitesinruralsettings.Furthermore,averagecasinoperformanceisskewedbytheThunderBaycasino,whichisoneofonlytwogamingsitesthatcurrentlyhavenoothergamingcompetitionwithina40-kilometreradius(TheotherbeingtheOLGSlotsSudbury)29.
• Thewinperresidentwithin40kmisalsosignificantlyhigherforcasinosthanforslots-onlyfacilities.Onaveragecasinosattractabout74%moreslotwinpercapitathanslots-onlyfacilities.
• Thereisapositivecorrelationbetweenthenumberofslotmachinesandtheslotwinperslotfacilityvisit.Thefiveslots-onlyfacilitieswith252orfewerslotsmachinesaveraged$75inwinpervisit,whereasthesevenfacilitieswith738ormoreslotsmachinesgeneratedanaverageof$111pervisit.Sudbury,however,isananomaly,inthatitscurrent407,andpotentialfor600,machinesfallwithinasizablegaprelativetotheotherslots-onlyfacilities(thenextlargestisLondonwith738slotsandthenextsmallestisCentreWellingtonwith252slots).Whileitisnotpossibletodefinitivelyconcludethatanincreaseofabout200slotmachinesinSudburywouldgeneratehigherrevenuespervisitor,itislikelygiventhedatafromslotsfacilitiesacrosstheprovince.
Thesefactorswouldsuggestthattherelocationofthefacilityanditsconversiontoacasinowithupto600slotswouldresultinanincreasedwinforthenewfacility.However,therearesomeotherfactorsthatwillservetodampenthepotentialincreaseinwin.
• ThecurrentPrimarymarketpopulationfortheOLGSlotsSudbury(i.e.thepopulationwithin40kilometres)is162,000,whiletheSecondarymarketpopulation(i.e.thepopulationbetween40kmand120kmplusNorthBay)amountsto108,000,asper2016Censusdata.ThePrimarymarketpopulationwillnotchangewiththerelocationtotheKingswaysite.TheSecondarymarketpopulationhoweverwillbesubstantiallyreducedaftertheopeningofacasinoinNorthBay–decliningfrom108,000tojust29,000.
29TheSaultSte.MarieCasinohasnoCanadiancompetitionwithin40kilometres,butthemuchlargerKewadinCasinoissituatedwithina10-kilometredrivefromtheOLGcasinoinSaultSte.Marie,MichiganandtheBayMillsCasinoandResortalsoinMichiganisabout40kilometresfromtheOLGcasino.Similarly,theOLGSlotsatRideauRacewayinOttawahasnoOntariocompetitionwithin40kilometres,butiswithin25kilometresoftheCasinoduLac-LeamyinGatineau,Quebec.
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• TourismtoSudburyisdiscussedfurtherbelow.Inouropinion,gamingbytouristsoutsideofthe120-kilometreradiusfromtheKingswaysiteisnotexpectedtobeasignificantfactoraffectingthewin.TheGTAmarketisalreadywellservedbymajorgamingvenues,includingWoodbine,Innisfil(GeorgianDowns),CasinoRamaResortCasinoandtoalesserextentAjaxandGreatBlueHeron,aswellas,Milton,HamiltonandthetwoNiagaraResortCasinos.Theconversionofthecurrentslots-onlyfacilities(Woodbine,Innisfil,Ajax,MiltonandHamilton)tocasinoswithtablegames,andtheplannedexpansionsofWoodbineandGreatBlueHeron,aspartofOLG’smodernizationprogrammewillfurtherstrengthentheGTAgaminginfrastructure.Inaddition,majorUSbordercrossingsarealreadyservedbycasinogamingsites,bothontheCanadianandtheUSside.ItisunlikelythatthesmallerscaleofthecasinoinSudburywouldbeabletoattractasignificantnumberofnewtouriststothecommunityandwouldmostlikelysimplydrawonexistingresidentsandtouristsalreadyattractedtotheCityforreasonsotherthangaming.
• Revenuepervisitandslotrevenuepermachine/dayareloweratcasinosthanslots-onlyfacilities.Thisislikelybecausetablegamescompetewithslotsforplayerrevenueandbecauseaportionofcasinovisitorsareattractedpredominantlytotablegames.Inaddition,asthecasinostendtobeinurbanlocations,unliketheslots-onlyfacilities,itisexpectedthatthecasinosgeneratemorefrequentvisitationwithlowerspendingpervisit.Theaverageslotwinpermachineperdaywasestimatedat$201atcasinosand$416atslots-onlyfacilities.Thewinpervisitwas$70atcasinosand$103atslots-onlyfacilities.
• TheOLGSlotsSudburyalreadygenerateveryhighrevenuesandvisitationbasedonitspopulationwithin40km.The2.46visitorsperpopulationwithin40kilometersiswellabovetheaverageof0.8forslotsfacilitiesand2.07forcasinos.Itswinpercapitaof$258issecondhighestofallslots-onlyfacilitiesandonlylowerthanThunderBayandSaultSte.Marieamongthefourcasinos.ThisisduetothefactthattheOLGSlotsSudburycurrentlyhasnocompetitionwithinabout250kilometresandservestheNorthBaymarketwhichdoesnotyethaveagamingfacility30.However,withtheopeningofacasinoinNorthBay,itsmarketsharefromeastoftheCitywillbereducedsignificantly.
• Ourrevenueestimatesarebasedonthefollowingassumptions:
30ThenearestgamingfacilitiestoSudburyareCasinoRamatothesouthandtheSaultSte.Mariecasinotothewestbothapproximately250kilometresfromtheCity.
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o ThenumberofvisitstotheSudburyfacilityontheKingswaysitewilldoublefrom400,000to800,000duetoalargerfacility,crossvisitationonhockeygameandeventnights,andcloseraccessformanySudburyresidents.Thisrepresentsapproximately5visitsperpopulationwithin40kilometres–anincreaseoverthecurrentlevelof2.46.ThiswouldbecomparabletothedrawoftheSaultSte.MarieCasinoandwellaboveanycurrentslots-onlyfacilities.
o Theslotwinpervisitwillbereducedfromacurrentlevelof$110tobetween$65and$70.Thisrecognizesthatreducedslotrevenuepervisitwillresultfromtheintroductionoftablegamesandincreasedfrequencyofvisitationbythelocalpopulation(i.e.patronswillvisitmoreoften,butspendlesspervisit).
o Wehaveestimatedthatcasinotablewinwillrepresentapproximately30%ofoverallcasinowinwhichisconsistentwithexistingresortsandothercasinosinOntario31.
Theseassumptionswouldresultinanincreaseincasinowinfromacurrentlevelof$42milliontobetween$75and$80million.Thisrepresentsanincreaseofbetween$31and$36million.Basedonouranalysis,thevastmajorityofwhichwillbetheresultofincreasedspendingbySudburyresidents.
TheMajorityofMoneySpentattheCasinoWillLeaveSudbury?11.0Oneofthemostimportantconsiderationsindeterminingtheeconomicimpactofaninvestmentisunderstandingwhereexpendituresaremadeandhowrevenuesareultimatelydistributed.Alabour-intensivetouristattractionnearaninternationalborderwilltypicallydrawmorerevenuesfromoutsideofthecommunitythanmoniesflowingoutsideofthecommunityintermsofcorporateprofits,specializedlabourandequipment,administrativecosts,etc.
Thisisnotnecessarilytrueofacasinoinaninternalsitethatgeneratesfarmoreinrevenuesthanitpaysinannualwagesandmaynothaveaccesstoalargetourismmarket.InthecaseoftheOLGSlotsSudbury,duringthe2016/17corporateyearthefacilitygeneratedrevenuesof$42million.AssumingthatSudburywassimilartoSaultSte.Marieintermsofvisitationfromoutsideofthecommunity,then85%oftheserevenuesor$35.7millionwouldbe
31Ernst&YoungreportedthatonaverageOntarioresortcasinosgeneratebetween$1.0and$1.1millionpertableand$100,000perslot,whichtheyindicateisconsistentwithLasVegascasinos.(E&YCommercialCasinoinToronto,October2012.p.36).BasedontheselevelsurbanMetricshascalculatedthatthefourresortcasinosinOntariowouldgeneratebetween29%and30%oftheirrevenuesfromtablegames.Thisisconsistentwithourexperience.
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derivedfromSudburyresidentsandjust$6.3millionwouldbederivedfrompersonslivingoutsideSudbury.Basedontheunadjustedlicenceplatesurveyresults,whichlikelyoverstatethevolumefromoutsideoftheCity,75%oftheserevenuesor$31.5millionwouldbederivedfromwithintheCitywithabout$10millionbeingderivedfromoutside.
AsreportedbyOLG,themoniesspecificallyspentinSudbury(andsurroundingregion)include:
• $8.0millioninwagesandbenefitsforgamingemployees;• $1.4millioninpurchasesfromlocalandregionalvendors;• $2.2millionastheCityofSudbury’sshareofslotsrevenue;and,• Justunder$50,000insponsorshipoflocalfestivalsandevents32.
Thistotalsjustover$11.6million.Inadditiontothis,therewouldbeasmallamountpaidforrenttotheownerofSudburyDownsthatcouldbedeemedtostaywithinthecommunity.Inotherwords,OLGSlotswoulddrawinonly$6to$10millionfromoutsideofSudburyanddistribute$30millionoutsideofthecommunity.Effectively,$20to24millionisdrawnoutoftheCity’seconomyeachyearbythecurrentslotsfacility.
Whatthismeansisthatmoneysthatcouldotherwisehavebeenspentinotherentertainment,retail,restaurantandhospitalityvenuesintheCitywouldhavebeendrawntotheslots,wheretheywouldflowoutsideoftheCitytotheProvincialgovernment.
However,itisimportanttonotethatrevenuesfromcasinosandslotsgointotheProvince’sConsolidatedRevenueFund,whichisthegeneralfundthroughwhichmostofthegovernment’srevenuesflow.Fromtheserevenues,theProvincepaysformanycommunitybenefits,suchashospitals,amateursports,communityservices,etc.TheProvincealsosupportstheOntarioTrilliumFund,whichprovidesfundingforcharitableandnot-for-profitorganizations.So,someofthesefundsmayandlikelydoflowbackintotheCity.However,thereisnowayofknowing(a)whethermoregamingfundsarechannelledbacktotheCitythanaretakenfromit;(b)whethertheProvincewouldspendanylessinSudburyifitdidn’thavetheslotsfacility;and(c)howmuchmoneygeneratedbyacasinoinSudburyisbeingusedtofundprojectsincommunitieswithoutgamingfacilities.
Thereislittledoubtthatthecurrentslotsfacilityisdrawingmoremoneyoutofthecommunitythanisdirectlyspentinthecommunitythroughwages,theCity’sshare,etc.Howmuch,ifany,oftheserevenuesthatarereinvestedinSudburyisnowcontrolledbytheProvince.
32OLGCommunityBenefitsSummaries2016/17.
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Goingforward,thesituationislikelytobelessfavourabletotheCity,assignificantlymoregamingexpenditureswillbedrawnfromSudburyresidentsandfutureprofitswillnowbesharedbetweentheProvinceandtheprivateoperator–whichisaBCCompanywhoseprincipalshareholderisaTorontoinvestmentfirm.UnliketheProvincewhohasadutytothepeopleofOntario,GatewayCasinosisaprivatecompanyobligatedtoitsshareholdersandisundernoobligationtoinvestitsprofitsinthelocalcommunity.
WhileGatewayCasinoshasindicatedthatitplanstoinvest$60millionintoanewcasinoontheGatewaysite,thisislessthanthenetcasinorevenuesthatareprojectedtobegeneratedinthefirstfullyearofoperation.Thecompanyhasindicatedthatthisconstructionprojectwouldgenerate700yearsofconstructionemployment.Thiswouldbetheequivalentofabout16fulltimepermanentjobs33.WhilemostofthisemploymentwillbederivedfromwithintheCity,somemayneedtobesourcedfromoutsidedependingonthelocalavailabilityoflabourandthespecializationofconstructionskillsrequired.
Whilea$60millioninvestmentwouldbeimportanttoSudbury,itisrelativelysmallincomparisontothenetrevenuesthatwillbeflowingtotheProvinceandthenewoperatoronanannualbasis.
Inouropinion,aneconomicimpactanalysisthatfullyexamineswhethertheCitywillbenefitfromtheproposedcasinohasnotbeenundertaken.Thisstudywouldbekeytothecommunity’sunderstandingoftheimplicationsofacasinopriortoprovidingpublicinputintotheproposedGatewaysite.
TheKingswayEntertainmentDistrictMayNotResultina12.0SignificantNetEmploymentGainfortheCity
WhiletheproposedKingswayEntertainmentDistrictwillbearelativelylargeemployerwithinSudbury,itwillnotlikelygeneratemanyactualnewjobswithinthecommunity.Thisistrueforseveralreasons:
• ThelargestproportionofjobswillsimplybetransferredfromtheOLGSlotsatSudburyDownsandtheSudburyCommunityArenatothenewsiteandwillnotrepresentnewjobs;
• Thegrowthincasinowin,forthemostpart,willbederivedfromSudburyresidents,whowouldotherwisehavespenttheirmoneyelsewhereinthelocaleconomyandwouldotherwisebesupportingjobselsewhereinthecommunity.
33Basedona45yearaverageworkingcareer.
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• Casinosandslotfacilitiesarenotefficientgeneratorsoflocalemploymentrelativetotheirrevenues,andrelativetootherhospitalityandentertainmentbusinesses,suchashotelsandrestaurants.Forexample,$1,000,000spentinarestaurantwillgeneratesignificantlymorejobsthan$1,000,000spentinacasino.EverydollartransferredfromrestaurantsandotherhospitalityvenuesinSudburytotheCasino,representsanetlossinemployment.Thisislargelyrelatedtothelargeprofitstakenbycasinosandtheirlowerstaffingcosttorevenueratio.
TransferofJobsfromExistingFacilities
TheproposedEntertainmentDistrictwouldencompasstheSudburyCommunityArena,acasino,ahotel,restaurants,andpotentiallyotherunspecifiedretail,hospitalityandentertainmentuses.Thearenawouldhaveaslightlylargercapacitythantheexistingdowntownarena,soitmayemployasmallnumberofadditionalemployees.However,thebulkofemployeeswouldsimplybetransferredfromtheexistingarena.Mostimportantly,anarenaontheKingswaysitewouldlikelynotemployanyadditionalemployeesthanifitwereredevelopedinthedowntowncore.So,withrespecttothearena,theKingswaysitewouldnotresultinanyadditionaljobstothecommunity.
GatewayCasinoshasannouncedthatitwouldemployupto400employees34.However,therearecurrentlysome141formerlyOLGemployeesattheSudburyDownssiteandanother50workersemployedbytheracetrackownerinmaintenance,janitorial,securityandotherpositions.Sothatthenetadditionalemploymentwouldbeapproximately210persons.Asthecasinowouldincludeasignificantincreaseinbarandrestaurantfacilitiesovertheformerslotsfacility,weestimatethatabouttwo-thirdsofthesenewjobswouldberelatedtothefoodserviceandgiftshopfacilities35.
Ahotelcouldalsobeincludedaspartoftheconcept.Wewouldnote,however,thattheconceptforthedowntownentertainmentcentre/arenaalsoincludedahotel,sothatifthelocalmarketdemandwasavailabletosupportanewhotel,theKingswayEntertainmentDistrictwouldsimplybetransferringthisemploymentopportunityfromthedowntown.
TransferofEmploymentfromOtherLocalSectors
Asthebulkofnewcasinoexpenditures(gamingandnon-gaming)willbederivedfromSudburyresidents,thevastmajorityofemploymentatthecasinowouldbecreatedfrom34NewsreleasebyGatewayCasinosJune13,2017andStatementbyGatewayCasinosJanuary3,2018.35OLGNon-resortcasinoscurrentlygenerateapproximately15%oftheirincomefromnon-gaming.Assumingthatthecasinogenerates$80millioninrevenuesthiswouldresultinapproximately$14millioninnon-gamingrevenues.Infull-servicerestaurants,salariescomprise30%to35%ofsales.At30%,thiswouldamountto$4.2millioninwagesandsalaries.Atanaverage(fullandpart-time)salaryof$25,000thiswouldresultin168employees.At$30,000averagesalarythiswouldresultin140employees.
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revenuesthatwouldhaveotherwisehavebeenspendelsewhereinSudbury.Forexample,ifacoupledecidedtogotohavedinnerandgambleatthecasino,whereaspriortothecasino’sopening,theywouldhavegonetoalocalrestaurantandamovie,theirexpenditureswouldsimplybelosttothelocalrestaurantandmovietheatre.Asthisoccursonabroaderscale,otherlocalcommercialoperationswillreducetheiremployment,dampeningoreliminatingtheemploymentbenefitsofthecasino.
CasinosareNotEfficientLocalEmploymentGenerators
Basedontherevenuestheytakein,casinosarenotefficientemploymentgeneratorscomparedtootherhospitalityandentertainmentbusinesses.Thisisbecauseaverylargeshareofrevenuesarepaidoutinprofitstotheoperatorsandnotpaidtoemployeesinwages.Forexample,in2017theformerOLGslotsSudburyemployedsome141OLGemployees,withsome50otheremployeesandgeneratedgamingrevenueof$42millionandamarginalamountofnon-gamingrevenue.Thisamountstoonlysome4.5employeesper$1,000,000inrevenues.BasedontheGatewayCasinoestimateof400employeesandassuming$80millioningamingrevenuesand15%non-gamingrevenues,theproposednewcasinowouldgenerateonly4.2jobspermilliondollarsrevenue.Incomparison,byindustrystandardsrestaurantandfastfoodfacilitieswouldemploysome10to12employeespermillioninrevenues.
So,anysalestransfersfromotherpartsofSudburyfrommoreefficientemploymentgenerators,suchasrestaurants,tothecasinocomplex,wouldrepresentanetlossinemployeesforthecommunity.
TheAdditionalRevenuestoSudburyfromTheKingsway13.0EntertainmentDistrictWillNotBeSignificant
ThetwoprincipalsourcesofongoingrevenuetheCitywouldreceivefromthedevelopmentoftheKingswayEntertainmentDistrictwouldbetheshareofgamingrevenuesSudburywouldreceivefromthecasinoandpropertytaxes.
ShareofCasinoRevenuestotheMunicipality
UndertheMunicipalContributionAgreementthatOLGsignswithhostmunicipalities,Sudburyreceives5.25%oftotalslotwinuptothefirst$65million,3%onthenext$135millionandlowerpercentagesthereafter.Inaddition,theCitywouldreceive4%ofthetablewin.Asof2016/17,theCityreceived$2.2millioninrevenuesfromtheOLGSlotsfacility.Withafull-scalecasinoandexpandedslotsfacilitiesproposedontheKingswaysite,therevenuesavailabletotheCitywouldincrease.
AsindicatedonFigure1,anewcasinogeneratingawinofbetween$75and$80millionwouldincreasemunicipalrevenuesbybetweenabout$1.5and$1.7millionannually.
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Figure1:AdditionalShareofGamingRevenuesfromKingswaySiteCasino
PropertyTaxRevenues
Propertytaxeswouldbeavailablefromthecasino,thehotelandotherhospitalityfacilitiesthatwouldbedevelopedonthesite.SudburyCommunityArenaiscurrentlyclassifiedforPropertyTaxpurposesasCode721–Non-CommercialSportsComplex.Assuchitisalmostentirelytaxexemptwiththeexceptionofasmallamountclassifiedascommercialandpaymentinlieu.Themunicipalshareofpropertytaxes(excludingtheEducationshare)isapproximately$8,000.Ifthearenaremainsatitscurrentstatusforpropertytaxpurposes,theannualtaxrevenueswouldnotchangesignificantlyifitweretorelocatetotheKingswaysite.Theprincipalsourceofpropertytaxrevenuewouldcomefromthecasinoandancillaryhospitalityfacilities(i.e.hotelandrestaurants).
Inordertoappreciatetheimpactofanewfacility,suchastheproposedentertainmentcomplex,ontaxrevenuestotheCity,itisnecessarytounderstandhowthepropertytaxsysteminOntarioworks.AnewdevelopmentprojectdoesnotsimplyaddnewtaxestotheCity,butrathercausesaredistributionoffundstheCitydeemsitmustcollectfromtaxes.Ultimately,thetaxratesareseteachyearbasedonthetotalassessmentbaseintheCityandtheamountofmoneyitdetermines,throughitsbudgetprocess,mustbecollectedintaxes.AnewdevelopmentprojectdoesnotprovidetheCitywithnewmoney,butrathercanreducethetaxburdenontherestofthecommunity.
InthecaseoftheproposedKingswayEntertainmentDistrict,theassessmentofthetaxbenefitstotheCitymustalsotakeintoconsiderationthetaxlossesfromotherpartsoftheCity,aswellas,thecoststhattheCitywillhavetobearasaresultofanynewdevelopment.
Revenue Revenue% $ % $
Slots 52,000,000$ 5.25% 2,730,000$ 56,000,000$ 5.25% 2,940,000$Tables 23,000,000$ 4.00% 920,000$ 24,000,000$ 4.00% 960,000$TOTAL 75,000,000$ 3,650,000$ 80,000,000$ 3,900,000$
Less:ExistingRevenues 2,200,000$ 2,200,000$
NetAdditionalRevenues 1,450,000$ 1,700,000$
MunicipalShare$75Million $80Million
MunicipalShare
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Forexample,theCitywilllosethetaxrevenueorpaymentinlieucurrentlygeneratedbythecasinoatSudburyDowns.AsanOLGSlotsfacilityatSudburyDowns,thefacilitywasassesseddifferentlythanitwouldasafull-scalecasino,whichcouldbedevelopedontheexistingsite.TheassessedvalueoftheOLGSlotsfacilityasofthe2018assessmentyear36was$2,309,000.BasedonthecommercialtaxrateinSudbury,thiswouldgeneratejustunder$80,000inpropertytaxes,ofwhichtwo-thirdswouldbeavailabletotheCityandtheremainderwouldbeforeducation.WewouldnotethatthecurrentassessedvalueisextremelylowincomparisontoothergamingfacilitiesintheProvince.Forexample,theCasinoinSaultSte.Marie,whichgeneratesalowerwinthantheOLGSlotsSudbury,isassessedatover$12,000,000.Similarly,thecasinoinThunderBay,whichgeneratesnetrevenuesabout60%morethanthoseoftheSudburycasinoslotsfacilityisassessedat$47million–over23timesthevalueoftheSudburyfacility.TheconversionoftheOLGSlotsfacilitytoaprivatelyoperatedfullcasinowilllikelyresultinachangeinassessmentmethodologyandultimatelyassessedvalue;regardlessofwhetherthecasinoremainsontheSudburyDownssite,isrelocatedtotheGatewaysiteorelsewhere.AnassessmentofpropertytaxrevenuestoSudburymusttakethisintoaccount.
Inaddition,inouropinion,therelocationofthearenawillcausesomeclosureordisplacementofbusinessesfromthedowntown,particularlyrestaurants,barsandeatingestablishmentsthataresupportedbyattendeesofhockeygames.ThecasinoandassociatedhospitalitycomponentswillalsodrawbusinessawayfromotherpartsoftheCity.Totheextentthatthiscausesbusinesslossesand/orvacanciesinothercommercialbusinessesandhotels,thiswillalsoresultinreducedpropertyassessmentsandtaxes.Again,thesemustbedeductedfrompotentialEntertainmentDistricttaxestofullyunderstandthetruetaximpact.
Finally,propertytaxesarenot“freemoney”toamunicipalitybutcomewiththeobligationofprovidingmunicipalservicestothebuildingowners,tenants,andemployees.AdevelopmentsuchastheKingswayEntertainmentCentrewillrequireongoingmunicipalservicesthatwillconsumetaxes,suchasroadmaintenance,police,fireandparamedicsservices,socialservices,wastedisposalservices,planningservices,generaladministrativeservicesandotherservices.AdetailedfiscalimpactanalysiswouldberequiredtodeterminewhetherthepropertytaxesgeneratedbytheKingswaysitewouldbesufficienttooffsetthemunicipalcostsrequiredtosupportthefacility.
Insummary,whiletheproposedKingswaydevelopmentmaygenerateadditionalpropertytaxesandgamingrevenuetotheCity,withoutadetailedfiscalanalysis,itisnotpossibletodeterminewhetherthesewouldactuallyprovideanetsurplustotheCityorrepresentaloss.36EventhoughthefacilityhadbeentransferredovertoGatewayCasinosinMay,2017,itwasstillbeingassessedasaracetrackwithslotfacilitybasedonMPACPropertyLinereports.
KingswayEntertainmentDistrictandArenaEconomicImpact
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Clearly,simplyexaminingthegrosstaxesandotherrevenuesavailabletotheCityfromtheKingswayprojectwouldsignificantlyoverstatethenetfiscalimpact.
SocialandPublicHealthImpactsMustAlsoBeRecognized14.0Inadditiontoeconomicimpacts,therearearangeofpotentialsocialandpublichealthissuesassociatedwithcasinogamingthatremaintobeaddressedwithrespecttotheestablishmentofanewcasinoinSudbury.ArecentreportfromtheSudburyHealthUnit,aswellasothersimilarandsupportingresearchundertakenbyTorontoPublicHealth,identifyanumberofspecificconcernsrelatingtoapossibleincreaseintheprevalenceof“problemgambling”.Thisresearchfurtheridentifiesanumberofmitigationstrategiestobeconsideredastothelocationandrequiredoperatingconditionsofanewcasino.37
ThesearequestionsthathavenotyetbeenansweredineitherthePwCreportsorelsewhereandshouldbeaddressedpriortomakingadecisiononthisproject.
EconomicAnalysisRequiredPriortoApprovingtheRelocation15.0oftheArena
Inouropinion,amoredetailedeconomicanalysisisrequiredtobetterunderstandthetrueimpactsofrelocatingthearenaoutsideofDowntownSudburytoaproposedentertainmentdistrict,besideacasino,ontheKingsway.Somekeyquestionsthatshouldbeaddressedinclude:
• WhatwillbethelossofbusinessandjobsinthedowntownifthearenaweretoberelocatedtotheKingsway?
• WhatwouldbethelossinattractivenessofthedowntownasabusinessandresidentiallocationifthearenaweretoberelocatedtotheKingsway?
• Whatnewdevelopment(residential,office,retail,other“employment”typeuses,etc.)couldbeattractedtothedowntownwiththedevelopmentofanewarena?
• WillanentertainmentdistrictontheKingswaysite,includinganarena,casino,hotel,restaurantsandretail,etc.increaseSudbury’sdrawfromoutsideoftheregion?
• IstheresufficientmarkettosupporttheproposedentertainmentdistrictontheKingswaysite?
• TowhatextentwilltheproposedentertainmentdistrictontheKingswaysitecannibalizeexistingbusinessesinSudbury?
37Sudbury&DistrictHealthUnitBriefingNote,Re:TheHealthImpactofGamblingExpansioninGreaterSudbury(February14,2013)
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• TowhatextentwilltheproposedentertainmentdistrictdrawrevenuesawayfromcommercialareasdesignatedintheSudburyOfficialPlan?
• WilltherebesufficienteconomicbenefitsfromrelocatingthearenatotheKingswaysitetooffsetthelossofbusinessestoandattractivenessofdowntownSudbury?
• WhatisactuallyrequiredintermsofsitepreparationandservicingwithregardstotheKingswaysite?
• WhatistheprecisecostdifferentialbetweendevelopingtheKingswaysiteandthedowntownsitetakingintoconsiderationactualsitepreparation,servicingandsiteacquisitioncosts?
• HowmuchparkingwouldberequiredtosupportarenasinthedowntownandtheKingswaysite?Similarly,arethereanyotherlong-termmunicipalinfrastructurecostsrelatedtotheKingswaysitethathavenotyetbeenidentified(e.g.,streetmaintenance,publictransit,etc.)?
• Issufficientexistingparkingalreadyavailabledowntowntosupporttheproposedarenaandhowfarawalkwoulditbetoreachtherequiredparkingamount?WhatwouldthedifferenceinwalkingdistancetoparkingbeattheKingswaysite?
• Wouldtheconstructionofadditionalparkinginthedowntown,asproposed,enhancetheattractivenessofthedowntownsite?
• WouldtherebedifferencesintrafficdelaysleavinganeventbetweenthedowntownandKingswaysites?
• Towhatextentwouldthecasino,aspartofanentertainmentdistrict,relyonlocalexpendituresandtowhatextentwoulditenhanceexpendituresfromoutsideofthecommunity?
• WhatisthemarketforahotelontheKingswaysite?WouldahotelontheKingswaysitecausetheclosureofotherhotelsintheCity?WouldahotelontheKingswaysiteimpedethemarketforanewdowntownhotel?
• HowwilltherelocationoftheCommunityArenatotheKingswaysiteimpactthemarketforaconventioncentredowntown?
• HowwilltheKingswayEntertainmentDistrictimpactthemarketforaperformingartscentreinDowntownSudbury?
• Wouldacasino,aspartofanentertainmentdistrict,detractfromtheCity’sabilitytodrawknowledgeandcreativeworkersandinvestmenttothecommunity?
• Wouldincreasedinvestmentinthedowntown,includinganarena/eventscentrebebetterabletoattractknowledgeandcreativeworkersandbusinessestothecommunity?
Inadditiontothevariousunansweredquestionsabove,theproductionofmoredetailedfinancialdataandotherinformationisneededtoprepareapropereconomicimpactstudythatconsidersallofthefactorsidentified.
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Inouropinion,theredevelopmentoftheSudburyArenawillhaveprofoundimpactsonthecommunityandthelocationdecisionwillhaveanimmediateandlastingimpactonthelocaleconomy.Ifthearenaismovedoutsideofthecore,itwillalsoshifteconomicprosperityoutsideofthedowntowntoanotherpartoftheCity.IftheKingswayentertainmentsiteisultimatelyselected,theimpactwillbetotransferwealthfromthedowntowncore,whereitisenjoyedbyamyriadofdowntownbusinessestoasinglelandowner.Similarly,recognizingtheremotelocationofSudburyandtheproximitytootherexisting/proposedcasinosthroughoutNorthernOntario,anewandexpandedcasinocomplexattheKingswaysiteisexpectedtoderivethemajorityofitsspendingfromlocalresidents.ThissuggeststhatmostrevenuesatthecomplexwouldsimplybedivertedfromotherpartsoftheCityintermsoffood,retail,accomodationandentertainmenttypeexpenditures,ratherthanrelyingonadditional,or“netnew”growthinrevenuesfromvisitorstothecommunityfrombeyondtheRegion,asisthecasewithothermajorbordercasinos(e.g.,NiagaraFalls,Windsor,etc.).
Whiletheeconomicandfinancialworkthathasbeenconductedtodateprovidesaverygeneraloverviewoftherequirementsofanewarena,questionsremainastotheaccuracyofsomeoftheassumptionsanddataconsideredaspartoftheanalysespreparedtodate.Consequently,thereisinsufficientinformationtoenableandsupportCityCouncilinmakinganinformeddecisiononthemostappropriatelocationforthisveryimportantcommunityresource.
TheabovequestionsneedtobemorefullyansweredaspartofaneconomicandfeasibilitystudyrelatedtotheredevelopmentandrelocationoftheSudburyArena,therelocationoftheGatewayCasinoandtheproposalfortheKingswayEntertainmentDistrict.
Inconclusion,theProposedKingswayEntertainmentDistricthasmanyeconomicdrawbacksfortheCityanditislikelythatitseconomicandfinancialcostswouldoutweighitsbenefits.Asaresult,wewouldstronglyrecommendthatamoredetailedeconomicanalysisbeundertaken,beforeadditionalstaffandfinancialresourcesareinvestedbytheCitytowardsthisproposal.
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AppendixA:BackgroundGamingData
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AppendixA:BackgroundGam
ingData
Gam
ingType
SlotsTables
Estimated
CasinoorSlotsWin
Visits
CanadianPopulationwithin40
kmRadius
US
Populationwithin40
KmRadius
TotalPopulationwithin40
KmRadius
VisitsPerPopulationwithin40km
TotalWin
PerVisit
SlotWinPer
DayPerMachine
TotalWinPer
PopulationBrantford
Casino861
58101,000,000
$1,300,000
1,070,322
1,070,322
1.21
78$
225$
94$
PointEdward
Casino450
2149,000,000
$600,000
110,207
178,894
289,101
2.08
82
$209
$169
$SaultSt.M
arieCasino
43411
29,000,000$
600,000
84,626
26,276
110,902
5.41
48$
128$
261$
ThunderBayCasino
45011
51,000,000$
800,000
123,999
123,999
6.45
64$
217$
411$
Average549
2557,500,000
$825,000
347,289
2.07
70
$201
$144
$
AjaxSlots
880
0209,500,000
$1,800,000
3,118,074
3,118,074
0.58
116$
652$
67$
CentralHuronSlots
123
011,000,000
$200,000
66,846
66,846
2.99
55
$245
$165
$CentreW
ellingtonSlots
252
042,000,000
$500,000
806,408
806,408
0.62
84
$457
$52
$Chatham
-KentSlots
148
013,000,000
$200,000
121,133
51,169
172,302
1.16
65
$241
$75
$Ham
iltonSlots
804
0121,000,000
$1,000,000
1,832,722
1,832,722
0.55
121$
412$
66$
HanoverSlots
196
023,000,000
$300,000
82,222
82,222
3.65
77
$321
$280
$Innisfil
Slots996
0
125,000,000$
1,100,000
586,212
586,212
1.88
114$
344$
213$
LondonSlots
738
0105,000,000
$1,100,000
565,269
565,269
1.95
95
$390
$186
$Milton
Slots925
0
151,000,000$
1,100,000
2,896,686
2,896,686
0.38
137$
447$
52$
Ottaw
aSlots
1,236
0118,000,000
$1,200,000
1,808,326
1,808,326
0.66
98$
262$
65$
SudburySlots
407
042,000,000
$400,000
162,490
162,490
2.46
105
$283
$258
$Toronto(W
oodbine)Slots
2,995
0521,000,000
$5,400,000
5,543,677
5,543,677
0.97
96$
477$
94$
Woodstock
Slots236
0
27,000,000$
300,000
552,213
552,213
0.54
90$
313$
49$
Average764
116,038,462$
1,123,077
1,395,560
1,399,496
0.80
103$
416$
83$
Source:BasedonDatafromOLG2016/17Com
munityBenefitSum
maries.W
incalculatedbyurbanMetricsbasedonthem
unicipalshareasreportedintheOLGCom
munityBenefits
Summariesandtheshareform
ula.
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40KMRadiifrom
OLG
CasinosandSlotsFacilities
KingswayEntertainmentDistrictandArenaEconomicImpact
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40and120KmRadiifrom
SudburyDow
nsGatew
aySiteandtheProposedKingswayand
NorthBaySites
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AppendixB:LicencePlateSurvey
urbanMetricsinc.wasprovidedwithlicenseplatedatafromSudburyDowns,thesiteofGatewayCasinoSudbury(formerlyOLGSlotsSudbury)forfourdaysinFebruaryof2018–ThursdayFebruary8th,FridayFebruary9th,SaturdayFebruary10thandSundayFebruary11th.Thesewerecollectedatduringvarioustimeintervalsthroughouteachday,from6amto12am.Atotalof600licenseplateswerecollected,allocatedasfollows:
• Thursday–100plates• Friday–150plates• Saturday–200plates• Sunday–150plates
TheoutputwasthensenttotheMinistryofTransportation(MTO),tosortbasedonDisseminationArea.Afterprocessing,MTOreturnedatotalof574entriestourbanMetricsforanalysis.ThesefindingswereplottedbothbygeographyanddistancefromGatewayCasinoSudbury.Thefindingsproducedareshowninthetablebelow:
Asshown,theoverwhelmingmajorityofvisitorstothecasinoarrivefromSudbury,some74.2%.
Municipality NumberofRecords %BreakdownSudburyCensusSubdivision(includesChelmsford) 426 74.2%WestofSudburytoSaultSte.Marie(includesElliotLakeandManitoulinIslands) 54 9.4%EastofSudburytoNorthBay 32 5.6%GreaterOttawa 8 1.4%GTA 16 2.8%AllOther 38 6.6%TotalPlotted 574 100.0%
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ThetablebelowshowstheresultspresentedasafunctionofdistancefromGatewayCasino:
Asshown,74.2%ofvisitorscomefromwithin40kmofGatewayCasino.Atotalof88.0%ofvisitorscomefromwithina120kmradius,orfromtheCityofNorthBay.
Additionally,asshown,thebreakdownofvisitorsacrossthevariousdatessurveyedwasrelativelyconsistent.
Boundary NumberofRecords %ofTotalWithin40km 426 74.2%Within120kmandNorthBay 505 88.0%Beyond120km 69 12.0%
NumberofRecords
%ofTotal
NumberofRecords
%ofTotal
NumberofRecords
%ofTotal
NumberofRecords
%ofTotal
Within40km 70 74.5% 97 70.3% 142 72.8% 117 79.6%Within120kmandmunicipalboundaryofNorthBay 79 84.0% 120 87.0% 170 87.2% 136 92.5%Beyond120km 15 16.0% 18 13.0% 25 12.8% 11 7.5%
Thursday Friday Saturday Sunday
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AppendixC:CellPhoneData
Geofencingisanewtechnologythatisbeingusedbymarketresearchersasanalternativetolicenceplatesurveysandon-sitesurveys.Itmakesuseofcellphoneusagewithinageographicarea.Typicallythisinvolvesidentifyingasmallgeographicareaandtrackingcellphoneactivitywithinthearea.Differenttypesofinformationcanbeobtainedthroughthistechnology,includingvisitationpatterns,placeoforiginanddemographicdata.
ThroughdataavailablefromtheBellcellularnetwork,urbanMetricswasabletoobtaindatarelatedtothehomemunicipalityofpatronsvisitingOLGSlotsSudbury(NowGatewayCasinosSudbury).Thedataexcludedemployeesatthesite.
Thedataincludedpersonsvisitingthesiteduringthesummerof2017(July,August,andSeptember)andinFebruary2018.ThesummerdatawasusedtomimicaperiodwithhighvolumesoftouriststotheSudburyarea,whiletheFebruarydatawasusedasacomparisonwiththelicenceplatesurveyresults.
Thedataismorecomprehensivethanthelicenceplatesurveydata,inthatitincludesallpatronsonthesamecellularnetwork,regardlessofhowtheyarrivedatthefacilityandavoidsmanyofthebiasesofthelicenceplatesurveysthattendtooverestimatenon-localvisitation.
Overthestudyperiod,thesampleincludedsome2,637patrons,ofwhich84%livewithintheCityofGreaterSudburyand90%livewithin120kilometresofthesite.