http://www.winnipegsun.com/2015/01/05/stadium-money-pit-grows?utm_source=dlvr.it&utm_medium=twitter

 

by Tom Broadbeck

Winnipeg Sun

Jan 5, 2015

 

 

While the Winnipeg Blue Bombers made good last week on its $4.5-million loan payment to help repay the costs of Investors Group Field, the total amount owed to taxpayers to build the stadium is expected to jump to a staggering $185 million this year, up from the original loan of $160 million. That’s because the miniscule loan payments made to date have fallen well short of covering the soaring interest charges on the loan, which totalled $17 million as of March 31, 2014, and are expected to top $25 million this year.

 

Two years from now, the total amount owing could be close to $200 million, an amount that may never be repaid in full. As my Winnipeg Sun colleague Kirk Penton reported last week, of the $4.5 million paid by the Bombers, only $1 million of that goes towards the taxpayer loan. The rest is applied to a $10-million CIBC bank loan the Bombers took out on top of the taxpayer loan for last-minute enhancements to the facility.

 

Also, the city of Winnipeg has still not made a payment on its IGF loan obligation from taxes generated at the former stadium site at Polo Park. All new city taxes from the site, including the new Target retail outlet, are earmarked to help pay off the new stadium under the city’s Tax Increment Financing Zone agreement. The Winnipeg Sun has learned the city will make a small loan payment of $222,779 this month under the TIF agreement. Annual payments, the amount of which remains unknown, will begin about a year from now, the city says.

In the meantime, only $1.2 million has been repaid to taxpayers so far. And with interest charges, calculated at 4.65% annually, now hovering at about $8 million a year, the total amount owing — principal and interest — is expected to be about $185 million by March 31, 2015.

No one appears to know when the Bombers and the Polo Park development together will be able to cover even the interest charges on the loan, much less pay down the principal. Until then, the total amount owing to taxpayers will continue to grow.

Of course, once the Bombers pay off the $10-million bank loan — expected in 2017 — the club should be able to make good on its full annual payments of about $4 million a year to taxpayers, largely from facility fees and amusement taxes charged on event tickets.

And once the Polo Park site is fully developed, there will be additional tax dollars from the TIF agreement, although that amount is still unknown. It will depend on the assessed value of the properties and businesses that are developed there.

In the meantime, every year that goes by where substantial payments on the taxpayer loan are not made and significant interest charges accrue, the balance owing will continue to grow.

 

The taxpayer loan — which began to flow in the 2011-12 fiscal year — is actually broken down into two loans. Phase 1 of the loan is the city’s $75-million Polo Park TIF loan, which is due in 2038. Phase 2 of the loan is the Bombers’ $85-million loan, due in 2058.

The Bombers don’t have to pay interest on their portion of the loan until 2017, which is another hidden taxpayer subsidy. Instead, the interest accruing on their loan is tacked on to the Polo Park TIF loan. So city property taxpayers will be repaying provincial taxpayers.

 

Nice shell game.

 

It has been argued new tax revenue from the Polo Park site is essentially “free” money because the old stadium generated no tax revenue at all. Actually, most of it is not net, new tax dollars. New commercial developments create costs for the city, including public works, police, fire/paramedic, administrative, etc. That’s why commercial and residential properties pay taxes — to cover their share of city expenses. So while “new” tax dollars from Polo Park go towards paying the stadium loan, taxpayers are left paying for the new ongoing costs associated with the Polo Park development.

 

It’s one more reason why our property taxes will go up again this year.

 

Interest is a taxpayer cost.  The Bombers aren't paying any to the Govt. until the $10 Mil CIBC loan is paid.  The $1.2 Mil the Bombers have paid goes directly to the principle, if I read things right.  Interest is charged on the entire loan, not just the Bombers part of it.  

 

4.65% on a mortgage loan is too high.  4% is more likely.

 

With $4.5 Mil yearly payments, the interest on the total loan won't be covered, let alone paying down any principle.

 

The Bombers aren't paying down the full loan, they're just paying down the $85 million. The $10M loan from CIBC has nothing to do with the taxpayers (other than potential impact on the Bombers ability to repay the $85M), and any interest paid on the $85M isn't a taxpayer cost - the Province lent $85M to the Bombers, not $85 + interest.

 

No one said the Bombers are paying down the full loan.  The $10 mil CIBC loan means the $85 Mil repayment gets pushed back which means accruing extra interest.  $85 million over 45 years at 4% compounded semi-annually, one payment per year is about 4.9 Mil per year.  If the Bombers weren't paying interest, then the payment would be less than $2 Mil (1.889 * 45 = 85) per year, so no they didn't get an interest free loan.

 

It doesn't matter which level of government is paying the interest on the rest of the money, it's still a taxpayer cost.

 

 

Interest is a taxpayer cost.  The Bombers aren't paying any to the Govt. until the $10 Mil CIBC loan is paid.  The $1.2 Mil the Bombers have paid goes directly to the principle, if I read things right.  Interest is charged on the entire loan, not just the Bombers part of it.  

 

4.65% on a mortgage loan is too high.  4% is more likely.

 

With $4.5 Mil yearly payments, the interest on the total loan won't be covered, let alone paying down any principle.

 

The Bombers aren't paying down the full loan, they're just paying down the $85 million. The $10M loan from CIBC has nothing to do with the taxpayers (other than potential impact on the Bombers ability to repay the $85M), and any interest paid on the $85M isn't a taxpayer cost - the Province lent $85M to the Bombers, not $85 + interest.

 

No one said the Bombers are paying down the full loan.  The $10 mil CIBC loan means the $85 Mil repayment gets pushed back which means accruing extra interest.  $85 million over 45 years at 4% compounded semi-annually, one payment per year is about 4.9 Mil per year.  If the Bombers weren't paying interest, then the payment would be less than $2 Mil (1.889 * 45 = 85) per year, so no they didn't get an interest free loan.

 

It doesn't matter which level of government is paying the interest on the rest of the money, it's still a taxpayer cost.

 

I didn't say they got an interest free loan, I just said that interest isn't a taxpayer cost. The government didn't take out a loan, they loaned the money to the Bombers.

Our provincial government is running a deficit of about $500M right now I believe.  So it could be argued the provincial government, who fronted the money for the stadium, took out a loan to pay for it.

Our provincial government is running a deficit of about $500M right now I believe.  So it could be argued the provincial government, who fronted the money for the stadium, took out a loan to pay for it.

 

I suppose you could argue that, but you could argue the same with any other money the government has spent. No one's paying interest on any other infrastructure costs and we certainly don't count interest in the cost of projects when the government is in deficit.

It is still a cost to future government budgets when they need to pay the interest. So yes, the taxpayer is paying interest on infrastructure costs.

It isn't money that is magically invented because it is government.

In fact the Manitoba Governments credit rating has recently been down graded because of their debt and the deficits they run. So the cost of borrowing that money is going up.

Just because it isn't talked about in infrastructure projects doesn't mean it isn't there. People just don't like to talk or think about government debt. Ask Detroit how that goes.

The government spent an extra 200 million in debt to pay for the stadium (less when you factor in recovered money from the sale of the old stadium property) and since we are in a deficit, we will have less money available in future budgets as it will go to pay down that interest and debt had the stadium not been built.

I'm not arguing that it shouldn't have been done or paid but to think there is no cost is naive.

It is still a cost to future government budgets when they need to pay the interest. So yes, the taxpayer is paying interest on infrastructure costs.

It isn't money that is magically invented because it is government.

In fact the Manitoba Governments credit rating has recently been down graded because of their debt and the deficits they run. So the cost of borrowing that money is going up.

Just because it isn't talked about in infrastructure projects doesn't mean it isn't there. People just don't like to talk or think about government debt. Ask Detroit how that goes.

The government spent an extra 200 million in debt to pay for the stadium (less when you factor in recovered money from the sale of the old stadium property) and since we are in a deficit, we will have less money available in future budgets as it will go to pay down that interest and debt had the stadium not been built.

I'm not arguing that it shouldn't have been done or paid but to think there is no cost is naive.

That is a cost.

Is there any proof that the Government took out a loan specifically for the stadium? If not, then they would've spent the money anyway, and no extra cost was incurred and no interest would have been recouped.

Go ahead and think that if you want. But the stadium is a one time cost which the government didn't have the money to pay for.

Even if the stadium money would have been used somewhere else, then there is additional costs in deferred infrastructure costs that couldn't be completed because it went to the stadium instead.

Maybe now they have to rip up a road and rebuild it bottom up rather then pay for maintenance on it to fix it which would have been cheaper in the long run.

You can't just say the money would have been spent somewhere else so it doesn't matter. The somewhere else still need to be spent at some point.

Our provincial government is running a deficit of about $500M right now I believe.  So it could be argued the provincial government, who fronted the money for the stadium, took out a loan to pay for it.

In Alberta we have a deficit of $6-7 BILLION dollars.... Just this year. You guys have it good. And the Flames want a new arena? Good luck with that.

 

Our provincial government is running a deficit of about $500M right now I believe.  So it could be argued the provincial government, who fronted the money for the stadium, took out a loan to pay for it.

In Alberta we have a deficit of $6-7 BILLION dollars.... Just this year. You guys have it good. And the Flames want a new arena? Good luck with that.

 

source?

 

 

Our provincial government is running a deficit of about $500M right now I believe.  So it could be argued the provincial government, who fronted the money for the stadium, took out a loan to pay for it.

In Alberta we have a deficit of $6-7 BILLION dollars.... Just this year. You guys have it good. And the Flames want a new arena? Good luck with that.

 

source?

 

Well nothing concrete but with the price of oil dropping like it has that seriously impacts the governments revenues. Here's the thing about Alberta, there has been a massive population boom in the last 10-15 years and the Ralph Klein governments deferred a lot of spending in order to get out of debt. The result is that now there is a big need for infrastructure to replace old stuff and to accomodate all the new people so a lot of government spending is required. Couple that with the fact that Alberta has low taxes and no PST their revenue is really tied to the stuff that comes out of the ground. It's a boom or bust cycle that no one seems to care about trying to end. 

The excessive tax cuts we've seen across the country in the past decade = good politics but bad policy

 

 

- Brian Mulroney

Im curious about reports of egress issues.  Anytime I've been to the Stadium, I saw no issue with entering or exiting.  As it relates to temporary seating, you can bet the NHL and True North will be all over the Bombers to make sure that temporary seating is in place.  Recall, when IGF opened and had traffic issues, The Bombers turned to True North for advice and things quickly improved.

 

Implying the Government took out a loan for the Bombers is pretty weak.  Ofcourse it's taxpayers money but the bottom line is, the facility was money well spent and years from now no one will care or they will look back and laugh at the chicken littles like Broadbeck making a big deal out of it.  Id like to know what Broadbeck proposes as an alternative.  Because if the team folded and CIS scuttled, all his articles would be about how the government dropped the ball and what a small drop in the bucket it would have been to invest in the team and community and what a fiscal waste to let the team and CIS fold.

The excessive tax cuts we've seen across the country in the past decade = good politics but bad policy

 

 

- Brian Mulroney

I agree to a degree.  But governments cant keep going with taxes as the catchall to save the day.  Fiscal responsibility and spending cuts matter.  Im a huge Harper fan but I'm "meh" at best on the GST reduction because I think it hurts more then it helps but it sounds great to most taxpayers.  I'd rather have an income tax cut that makes a significant difference and keep sales taxes up.

The GST cut was a direct "**** you" to the Liberals who promised to abolish the GST when they were elected but then never did. It was the Conservatives way of saying to the country "See we actually keep the promises we make" 

 

Just ignore the times they didn't, that's a big visible one that people notice. 

Interest is a taxpayer cost.  The Bombers aren't paying any to the Govt. until the $10 Mil CIBC loan is paid.  The $1.2 Mil the Bombers have paid goes directly to the principle, if I read things right.  Interest is charged on the entire loan, not just the Bombers part of it.  

 

4.65% on a mortgage loan is too high.  4% is more likely.

 

With $4.5 Mil yearly payments, the interest on the total loan won't be covered, let alone paying down any principle.

 

4.65% Is not too high.  This is a commercial loan TB, not a mortgage on a residential house.  Commercial loans & mortgages are always higher rates than residential mortgages

 

Our provincial government is running a deficit of about $500M right now I believe.  So it could be argued the provincial government, who fronted the money for the stadium, took out a loan to pay for it.

In Alberta we have a deficit of $6-7 BILLION dollars.... Just this year. You guys have it good. And the Flames want a new arena? Good luck with that.

 

This has been brewing for the past two years and its gonna get worse in Alberta. There are problems with a one-source economy, and the forecasts are for at least two more years of low oil and gas problems. Just wait until the tar sands start shutting down- they take years to get back up to full production.

 

 

Our provincial government is running a deficit of about $500M right now I believe.  So it could be argued the provincial government, who fronted the money for the stadium, took out a loan to pay for it.

In Alberta we have a deficit of $6-7 BILLION dollars.... Just this year. You guys have it good. And the Flames want a new arena? Good luck with that.

 

This has been brewing for the past two years and its gonna get worse in Alberta. There are problems with a one-source economy, and the forecasts are for at least two more years of low oil and gas problems. Just wait until the tar sands start shutting down- they take years to get back up to full production.

 

The fact that they take years to get going is a reason why they won't just shut down. Too much investment in them already to just drop it. What you'll see is less new investment but that might not be a bad thing over all. Things were getting overheated in the economy. 

 

No it's not oil that gives Alberta it's problems, it's the unwillingness to adopt a progressive taxation system. Could generate a lot of revenue by altering the way the province taxes everything but the ideology won't allow it. 

 

 

Our provincial government is running a deficit of about $500M right now I believe.  So it could be argued the provincial government, who fronted the money for the stadium, took out a loan to pay for it.

In Alberta we have a deficit of $6-7 BILLION dollars.... Just this year. You guys have it good. And the Flames want a new arena? Good luck with that.

 

This has been brewing for the past two years and its gonna get worse in Alberta. There are problems with a one-source economy, and the forecasts are for at least two more years of low oil and gas problems. Just wait until the tar sands start shutting down- they take years to get back up to full production.

 

 

It's going to affect the whole country - Alberta is a huge source of transfer payments.  However, one bright spot nation-wide is a fairly robust agricultural sector, due to higher commodity prices.

Its a bad news/good news scenario. Lower energy prices mean household budgets are not as stressed and the Canadian dollar will find a resting spot around 0.90 USD, which will make exports more competitive.

Bad News:The tar sands are largely owned by Chinese and they have no problem shuttering a bad investment until things improve. There are major black clouds on the horizon- the European enconomies actually shrank last quarter, Canadian real estate is about 30% overvalued ond overdue for a "correction", and the American Economy is teetering, due in no small part to the antagonistic political climate there and military adventures which have bled some 1.5 TRILLION dollars out of the economy. The biggest,most successful US investor, Warren Buffet (no relation to Jimmy) has pulled about 34 billion dollars out of the stock market in expectation of a crash.

Im curious about reports of egress issues.  Anytime I've been to the Stadium, I saw no issue with entering or exiting.  As it relates to temporary seating, you can bet the NHL and True North will be all over the Bombers to make sure that temporary seating is in place.  Recall, when IGF opened and had traffic issues, The Bombers turned to True North for advice and things quickly improved.

 

It's less of a practical day-to-day issue and more of an issue of satisfying the building code, which obviously forces structures to have more egress than would seem necessary for safety.

Its a bad news/good news scenario. Lower energy prices mean household budgets are not as stressed and the Canadian dollar will find a resting spot around 0.90 USD, which will make exports more competitive.

Bad News:The tar sands are largely owned by Chinese and they have no problem shuttering a bad investment until things improve. There are major black clouds on the horizon- the European enconomies actually shrank last quarter, Canadian real estate is about 30% overvalued ond overdue for a "correction", and the American Economy is teetering, due in no small part to the antagonistic political climate there and military adventures which have bled some 1.5 TRILLION dollars out of the economy. The biggest,most successful US investor, Warren Buffet (no relation to Jimmy) has pulled about 34 billion dollars out of the stock market in expectation of a crash.

 

I'd be shocked if the dollar stays that high without oil coming back up towards $100 a barrel.  I think we'll be looking a dollar in the 70s sooner than later.

 

It'll be bad for Alberta, Newfoundland and Saskatchewan, but overall the money saved on energy by everyone, including business and government should flow back into the economy and lessen the blow on the whole for Canada.  But certain businesses have a bad habit of hoarding capital in this country, namely the banks.

A seventy cent dollar is not good for anyone except the manufacturing sector in Ontario & Quebec. The politicians from Upper & Lower Canada want a cheaper dollar so the flow of wealth can start going back east. Away from we upstarts out west. 

A seventy cent dollar is not good for anyone except the manufacturing sector in Ontario & Quebec. The politicians from Upper & Lower Canada want a cheaper dollar so the flow of wealth can start going back east. Away from we upstarts out west.

It's good for livestock exports, which are common in the hog and beef industries

I'm no economist but to me, the Canadian way of always wanting a weak dollar to help with exports... Why can't we become competitive with the US & quit leaning on subsidies & monetary policies from the feds to be competitive in the export markets? Needing a cheaper dollar to compete tells me we're not competitive & need to become so in the 21st century. we were promised that free trade would make Canadians more wealthy & make our country an even bigger player on the economic world stage back in the late 80's when Mulroney was doing his NAFTA selling bit to the Canadian people. Didn't turn out that way.