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.

Bombers continue to buy lottery tickets. Kind of a no-surprise article.

Canada's economy is struggling at the moment, but it does not have the structural weaknesses that the US dollar does, so a 70 cent Canuck buck is not likely. The US economy has deteriorated to the point where almost 50 cents of each dollar spent is borrowed. That, plus military spending and dramatic deterioration of much infrastructure means very bad news for the US dollar.