The real cost of the convention centre

by Brian DuBreuil Posted: Jul 10, 2012 4:39 PM ET Last Updated: Jul 10, 2012 4:39 PM ET

Now that we've had a chance to look at the fine print of the new trade and convention centre agreement, we know it's going to cost taxpayers a lot more than the $164.2 million in initial construction costs.

In fact, the true cost will be more than double that amount.

That's because Ottawa is the only level of government putting its money ($51.4 million) up front. The province and HRM will pay their share ($56.4 million each) over time through a lease agreement with the developer, Rank Inc..

It's similar to buying a house and financing it with a long-term mortgage. If you took out a $100,000 mortgage at 3% interest, and paid it off over 25 years, your real costs would be about $142,000. Add the cost of heating your house and maintaining it through those 25 years, and your costs really add up.

In this case, Halifax and the province have each agreed to pay $6 million dollars a year over 25 years to lease, maintain and operate the new convention centre. So when you do the math ($12 million X 25 years) the real cost to provincial and municipal taxpayers is $300 million. Add the $51.4 the feds are contributing up front and the true cost to all taxpayers is more than $350 million.

The province hasn't said yet how it will pay its annual share of the costs, but the city expects taxes on the rest of the project (the hotel, office space, garage) will pay for most of its share. It's even negotiated an option to defer some of its payments if the project doesn't generate enough tax revenue in its infancy. But while that may ease some of the burden up front, taxpayers will eventually still have to make the payments.

For that money Halifax gets a new convention centre with the option to buy it at the end of the lease for one dollar.

So, is it a good deal?

The NDP government obviously thinks so, and so do the majority of city councillors (council voted 19-5 to approve the memorandum of agreement with the province).

By now we've heard all the arguments for both sides.

Opponents say with a struggling economy, and technology that gives people other options to meet, the convention business is dying. They say the convention centre will turn into a white elephant, and when it sits partially empty, taxpayers will be stuck with skyrocketing deficits.

The glass-half-full crowd argues the only way to stay competitive in the convention centre market is to build a new one. They talk about the money conventioneers spend on hotels, restaurants, cabs and tours, and the economic spin-offs for the dozens of other companies that supply those businesses.

With Tuesday's council vote, Nova Centre is now all but a done deal. In the end, it was a leap of faith; a "build it and they will come" decision.

At least now, we have a much better idea what it's going to cost us.

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