City hands over operation of 3 key downtown entertainment facilities for up to 49 years

For the next few decades the City of Hamilton has handed over running the FirstOntario Centre, FirstOntario Concert Hall, and the Hamilton Convention Centre — all of which will undergo multi-million dollar renovations. 

Hamilton Urban Precinct Entertainment Group (HUPEG) is behind the $500-million winning proposal, announced in 2020, to renovate downtown entertainment facilities. The details of the master agreement were revealed Wednesday.

Thirty years are guaranteed, said Ray Kessler, city manager of real estate but the contract could run for up to 49 years.

The group —  which includes Carmen's Group, LiUNA, dpai architects, Meridian Credit Union, Paletta International — takes over operations and maintenance of all three venues on April 1, 2022. 

There is no monetary contribution from the city, which also retains ownership of the lands and facilities. 

Kessler said "confidential" commercial agreements have been negotiated. He said "high-level numbers" and a "framework" have been provided. 

Mayor Fred Eisenberger said it was a "momentous day, indeed."

"Once we're past the predominance of this pandemic, people will be yearning for entertainment, people will be yearning for new housing opportunities," he said, calling it a "great opportunity" to bridge economic recovery. 

City staff started looking into having the private-sector redevelop the three venues on a motion from council in 2017. 

"The signing of this master agreement is the 'end of the beginning', so now the real work begins as we embark on our ambitious and visionary plans," said PJ Mercanti, precinct group president and CEO of Carmen's Group. 

City councillors ratified the agreement on Wednesday. Ward 4 (east Hamilton) councillor Sam Merulla said that it would save the city millions. A city media release estimates that amount as $155 million over 30 years.

"A lot of people didn't believe in it. A lot of people thought it was a headline-grabbing scenario," he said. 

Arena renovations will take 2 years

FirstOntario Centre construction is expected to start in the fall of 2022. The city said it will take two years and be completed in two phases. 

Proposed renovations — costing at least $50 million — include a new exterior façade and video board, a "transformation" of the lower bowl, an expanded concourse level, and a new curtaining system for the upper bowl balcony.

The group also proposed year-round access to street-level features on York Boulevard, like a Sports Lounge, e-Gaming zone, a food and drink options. 

The long-term plan, the release says, envisions transforming into a "Distillery District-inspired area, with enhanced pedestrian capabilities and a complete live-work-play experience." 

Should city council move forward with a $3.4-billion offer for light-rail transit (LRT) system in Hamilton, running alternately down King and Main streets, the construction may overlap.

Ryan McHugh, city manager of tourism and events, said he believes HUPEG is supportive of that deal and "would welcome the short-term pain" for "long-term benefits" of LRT.

He did not comment if simultaneous construction would compound traffic or obstacles for surrounding businesses, but said HUPEG is working with existing tenants on phasing construction. 

Construction at the Hamilton Convention Centre and the FirstOntario Concert Hall will start after the arena renovations are done. 

The latest city release says that plan includes $12.5 million in capital upgrades, expansion and aesthetic enhancements to the existing Hamilton Convention Centre and Concert Hall, plus a one-time $2 million contribution to the Art Gallery of Hamilton.

The group previously said more than $16 million in upgrades were planned for those venues. Kessler said "adjustments" had been made.

"They certainly identified issues with each of the properties as they had undertaken their review and due diligence, and we negotiated what the outcome of those considerations would be," he said.

The amount of "auxiliary mixed-use development" is now cited at over $500 million. HUPEG says that will include five per cent affordable housing in one residential development. 

McHugh said HUPEG will have to meet the city definition of "what is representative of affordable housing," but did not expand on exactly how many units the percentage could reflect. 

Other changes

The city will also "transact" the following properties to HUPEG for redevelopment: 

• York Boulevard Parkade. 
• Surface parking lot located at 14 Vine Street. 
• 191 York Boulevard. 

Design will be approved through the city's planning committee. The city says staff will work with the group to replace a portion of the public parking capacity at the first two lots.

"Parking is not a massive revenue-picture on a per site basis, and these will become development sites that will generate additional tax dollars down the road," Eisenberger said. "I think it's a net gain for the City of Hamilton overall," 

McHugh said the sites pulls even on an operating basis, but there are additional costs for ongoing repairs. 

The third address includes Community Living Hamilton, which supports people with developmental disabilities. The city says the organization's "ongoing operational requirements" will be addressed at any new development to the site. 

Vrancor in support, mayor says

The city will also have a downtown entertainment precinct advancement program — a tax increment-based program where grants may be provided to offset increases in municipal property taxes. More details, the city said, will come in July. 

Vrancor Group —  the development company owned by Darko Vranich —  also pitched a $200-million plan, but wasn't selected. It proposed limiting the arena's capacity to around 15,400 seats, with the possibility to expand to 17,000 if needed. 

Eisenberger said the group is "very supportive" of HUPEG's proposal and agreement.