Debate over Halifax Convention Centre reignited as city hall faces $18M problem

As Halifax city officials face finding a projected $18 million over the next decade to pay for its just-opened downtown convention centre, the newly disclosed financial headache is renewing debate about the gleaming space.

The municipalityhad banked on using property tax revenues from the Nova Centre to cover its share of costs related to the Halifax Convention Centre, which is the cornerstone of the one-block complex. The city splits the costs 50/50 with the province.

However, only 30 per cent of the Nova Centre's office space has been rented, and city officials warned this week it would likely generate lower-than-anticipated property tax revenues.

It means a reserve funded through the property tax revenue and established to pay for the city's portion of the convention centre's operation costs likely will not beanywhere near enough.

"The lack of space being filled at this point is part of that problem because they were counting on the tax that they would receive from the new businesses that would go into the Nova Centre, non-convention centre space," Fred MacGillivray, retired CEO of Trade Centre Ltd., told CBC's Information Morning.

Theopening of the new convention centre, two years behind schedule, comes at a particularly bad time. With so many new office buildings going up, there's now nearly a17 per cent vacancy rate in the central Halifax business district, according to a market survey byTurner Drake.

Figures 'pulled out of thin air'

ChrisMajka,a research associate with Canadian Centre for Policy Alternatives, which describes itself as a progressive research institute,looked at the feasibility of the new convention centre back in 2010.

He said while convention centres very rarely make money, they should break even by attracting more visitors who spend money.

Those numbers, I have to say, were just pulled out of thin air.- Chris Majka,Canadian Centre for Policy Alternatives

"The problem then and now is that the number of those national and international delegates was projected to triple once the new convention centre was open, and those numbers, I have to say, were just pulled out of thin air," he toldCBC'sInformation Morning. "There was really no basis at all for them."

On Tuesday, Halifax regional councilagreed to pony up$301,000 for cost overruns related to the convention centrefor thelast fiscal year.

In the long term, council expected to have a $5.8-million balance in reserves by Year 10 of the project. But newprojections show that couldbecloser to an $18-million deficit.

MacGillivrayinsists the centrejust needs more time.

"People will now start booking Year 2, Year 3, Year 4, Year 5, etc.," he said. "So the first year would be a very difficult year because people in many cases wouldn't book until the actual building was finished."

An oversupply problem

But not everyone is convinced the shiny new convention centre is worth it.

Heywood Sanders, author ofConvention Center Follies, called the idea that the Halifax Convention Centre could generate fundsa "fantasy of provincial bureaucrats."

He told CBC's Mainstreetthat all across Canada and the U.S., convention centres are causing headaches and hefty bills.He said in major citiessuch asOttawa, Calgary andVancouver, new centres continue to go up even though bookings for major events are going down.

"In that context, major centres are giving away their space rent-free in a rather desperate effort to lure events and attendees," Sanders said.

Bookings 'exceeding expectations'

He said it's too soon to say how Halifax's conventioncentre's will do, but he pointed to Toronto's convention centre, which had 70 conventions and trade shows in 1998 and just booked 51 last year.

"Those are to me rather telling figures," he said. "Now, you know, we'll have to see how the new centre in Halifax does but all of the indications are that it too is caught up in this oversupply situation."

Still, Halifax municipalstaff noted in theirrecent report that bookings for thecentre are"currently exceeding expectations."

"The facility shows every sign of being extremely successful and contributing to the economic and cultural life of the province," the report said.