Moncton, downtown group reach arena deal, but councillors warn it could be costly

Downtown Moncton Centre-ville Inc. has agreed to pay the city $3.75 million as a contribution to the Avenir Centre cost. The deal could allow the group to pay the amount over 30 years, which councillors warn could cost taxpayers up to $700,000.

Downtown Moncton to provide $3.75 million over up to 30 years after it couldn't meet previous commitment

Shane Magee · CBC News · Posted: Jan 22, 2019 3:55 PM EST | Last Updated: January 22, 2019

The $113-million Avenir Centre, which can seat 8,800, opened in September last year. (Shane Magee/CBC)

A downtown Moncton business group will pay the city $3.75 million to help cover the cost of the new Avenir Centre, though the payments could be spread over 30 years, twice as long as previously promised.

The funding agreement approved in a split vote by council on Monday will see Downtown Moncton Centre-ville Inc.'s annual payments start this year at $250,000, then falling to about $75,000 in future years depending on the pace of new development in the downtown.

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The amount is below the $250,000 the group previously committed to pay annually that the city used for its Avenir Centre budget in 2015.

Coun. Paul Pellerin suggested it could cost the city $400,000 to $700,000 if payments are made over three decades because the city will have to cover a greater share of the centre's yearly costs than anticipated.

Jim Dixon, president of Downtown Moncton, said the group representing downtown businesses and property owners hopes to make its payments within 20 years.

"I'm proud to be here saying we're going to get it done," Dixon said.

Jim Dixon, president of Downtown Moncton Centre-ville Inc., and Anne Poirier Basque, the executive director, say the business group is committed to making its payment to the city — $3.75 million over up to 30 years — to support the Avenir Centre. (Shane Magee/CBC)

Jacques Doucet, the city's chief financial officer, said the city could face additional costs because of the slower payment schedule. But he added the city has a lower interest rate on its $39-million Avenir Centre debt than budgeted, which he said helps offset the funding shortfall.

Funding pledge goes back years

Downtown Moncton pledged money for the 8,800-seat arena as early as 2010.

The group planned to use funds it raises through a levy on non-residential properties downtown of 16 cents per $100 of assessed value.

A 2011 letter from the group to city hall states it originally promised $2 million over 10 years. That was upped in August 2015 at the city's request, to $250,000 annually for 15 years, according to documents obtained by CBC last year.

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But Downtown Moncton assumed the Avenir Centre would be subject to property taxes.

In fact, as an arena, the centre is exempt under provincial law.

"If it was assessed — $100 million at 16 cents, there's $160,000 out of $250,000," Dixon said. "So that's what got us back to the drawing board and gave us a lot of soul-searching and expanding how we were going to try to fund it."

Multiple councillors expressed frustration that more due diligence wasn't done years ago.

"Were there things that went wrong?" Coun. Charles Leger said ahead of the council vote Monday. "Sure. Were there things that could've been done better? Absolutely."

Construction crews work on FiveFive Queen, a major residential and commercial development in downtown Moncton. (Shane Magee/CBC)

Coun. Blair Lawrence said he was upset when the discrepancy was revealed.

"I recognize that this is going to cost us" depending on the payment schedule, Lawrence said.

Funds from new developments

Dixon said the money for the payments will be raised from new development in the downtown, which will include FiveFive Queen, a hotel, condos and retail building behind City Hall.

One new development that is guaranteed is a new Codiac RCMP station on Albert Street, a project expected to cost taxpayers between $40 million and $50 million.

A copy of the 10-page funding agreement sent to the news media on Tuesday includes three projections of annual payments based on proposed developments in the city. Under the "safe" projection, $50,000 would be paid in 2020, $66,000 in 2021 and the $3.75 million would be fully paid by 2038.

The "extremely conservative" projection shows Downtown Moncton providing $34,000 next year and only paying a total of $3.67 million by 2048.

Members of Moncton council, including Couns. Greg Turner, Bryan Butler, Brian Hicks, Susan Edgett and Paul Pellerin. (Shane Magee/CBC)

Couns. Bryan Butler, Brian Hicks and Paul Pellerin voted against the deal, voicing concerns about its terms.

At several points during the meeting, councillors expressed hope the details of the deal and various documents councillors were provided in advance of the vote would also be given to reporters and made public.

Hicks, who returned to council in a byelection last month, expressed surprise the funding he previously considered settled had resurfaced.

Coun. Brian Hicks says it is difficult to understand how something as simple as providing annual funding became so complicated. (Shane Magee/CBC)

Hicks said since the city approves Downtown Moncton's annual budget and levy each year by passing a bylaw, the city could have exerted more control to collect on the group's original commitment.

Dixon told council that if the city demanded the $250,000 yearly, it wouldn't be able to pay the amount.

Downtown Moncton said it wouldn't cut services to meet its pledge. Those services include summer sidewalk cleaning, Christmas light displays and promotions to lure people to businesses in the core.