Excerpt from the Official Report of


April 1, 2014

Questions during Estimates: Ministry of Transportation and Infrastructure

S. Simpson: I'll tell the minister that we're going to go to some questions around the Pavilion Corporation. I'm sure he may have some other officials that he'd like to bring up. We'll wait for them until we start.

I have just a series of questions. We don't have a ton of time, but we'll see how we do in getting through them.

I'd like to start by going to page 21 of the service plan. On page 21 it's the PavCo strategic goals. This particular section is "Optimize corporate profit and create economic benefits." The first area says: "Economic impact at B.C. Place from spending by visitors from outside of British Columbia."

What we see here is there's a forecast of some $38 million for the 2013-14 year, but this drops to $20 million by 2016-2017. Could the minister explain how this is almost cut in half over the period of four years?


S. Simpson: Should I assume that the significant event for '13-14 is the Grey Cup?


S. Simpson: I wonder if the minister can explain. As I go back down to the third line here, it talks about delegate-days to the Vancouver Convention Centre by visitors from outside of British Columbia. We see the forecast for '13-14 is 313,000 visitors from outside. That number goes to 450,000 in the next year and then is projected to be consistently at 450,000.

Then if I go over to the next page, to page 22, delegate-days for all visitors outside of greater Vancouver regional district to the Vancouver Convention Centre, the number then goes up even more. I'm assuming that's another 110,000 or 113,000 people that are projected there who will come from, presumably, not outside of British Columbia but outside of the area.

Could the minister tell me what the basis is for what is almost a 50 percent increase in projected delegateships, what events are happening, or why the minister and PavCo have confidence that the numbers will increase that dramatically when they don't seem to have done that in the past?


S. Simpson: And moving on to the subsequent years.


S. Simpson: I'm bouncing a little bit here, but the minister, hopefully, will forgive that.

If I look at page 22 again, I look at total attendance at B.C. Place events. It showed me that just over 1.23 million people attended those events in 2012-2013. The number
dropped by about 50,000 — 45,000 or 50,000 — for the forecast for '13-14. Then when I go back to page 21, the economic impact, it tells me that in 2012-13 the economic impact was $26 million. That jumps to $38 million projected for this year.

Can the minister explain what the expectations are about that are going to take 50,000 less people and create $12 million more of economic impact?

I know that the minister mentioned some very significant concert events of international stars, and they will draw, but I'm assuming that the majority of the people who come to those are going to be people who are resident and going to enjoy that. There may be some people who come from out of town and stay in hotels and things, but I would think the majority of those tickets would be bought by people in the Lower Mainland who are looking to enjoy those events.

Could the minister tell me how it is we have this dramatic jump in economic impact from 2012-13 to 2013-14, and yet 45,000 less people participated in B.C. Place events?


S. Simpson: Yes, I appreciate the minister's offer, and I'd be happy to get more detail on how those costs and benefits get projected out.

Again, on page 22, I go to the last…. In the grid here, the corporate operating deficit before government contributions, what we see for 2013-14 is projected at $26.3 million. It then drops to $22 million and a bit for '14-15 and '15-16 targets and then drops dramatically to $7.2 million, $7.3 million in 2016-17.

Can the minister explain what happens between 2013-14, when it's at $26 million, and a little bit lower but not dramatically lower for the next two years, and then it falls right off to about $7 million?


S. Simpson: Just to follow on that, would the minister then speculate that in the following year, when there isn't the $15 million to be recouped from a land sale, the deficit goes back up into the $20 million–$22 million range or something like that?


S. Simpson: We'll talk a little bit about the Paragon deal in a minute. I want to go to page 28 of the service plan, under "Capital plan." We noticed there under the "B.C. Place" heading a fairly modest capital expenditure. It's $2.7 million in '12-13, $1½ million '13-14, and then it spikes to almost $16 million in '14-15. The note to that says: "Capital projects for fiscal 2014-15 include $12 million for the construction of infrastructure on B.C. Place lands."

Could the minister tell us what that is, and is that related at all to the Paragon deal?


S. Simpson: A quick follow-up on that. Is this parkade a requirement of the municipality to meet parking needs, or is this a PavCo decision — that improving or putting in a parkade would create another revenue stream, presumably for PavCo, through the parkade? Is that the thinking — that it creates another revenue stream by putting in parking adjacent to B.C. Place?


S. Simpson: With this parkade and in those discussions, I would expect that the new Paragon development, should it go forward — the hotel-resort-casino development — would have parking requirements and obligations to meet its development obligations.

Will this parkade be part of the commitment that Paragon needs to make? Is this parkade going to help them to fulfil their obligation to the city for parking spots?


S. Simpson: Just so that I'm clear. This parking installation, should PavCo determine to build it in the next year or two, has no connection at all to Paragon in terms of meeting any of their obligations or generating any potential revenue for Paragon. All of this revenue will come directly to PavCo as an entity.


S. Simpson: I'm just going to go, since we've kind of got close…. There are a couple of questions related to the relationship with the Paragon application.

A couple of things. First of all, we know that back when the discussions were first going on, the first time that the application was made by Paragon for a significantly expanded casino, the minister of the day — it was not the current minister — talked about how the hope — and the expectation, I believe, more than hope — was that this opportunity would, in fact, end up in many ways paying for a significant portion of the roof, the $560 million or whatever it was that it cost for the new roof and other improvements inside the stadium.

We know that that initially was projected as a lease payment of roughly $6 million a month. That was going to be the lease payment. We now know that the new proposal cuts that in half, and the projected lease payment is $3 million.

I'm kind of combining a few questions here because of time. It's my understanding that the carrying costs on the roof are in the $7 million range. I'd appreciate to know if that's generally accurate.

My question to the minister is: why did we accept, essentially, a cut to half for the lease payment if it's based on the value of the property? As part of that, was due diligence and was that property…? Did the real estate folks and that go out and look for other opportunities, other potential lessors of that property, who might have given us a better deal than it appears we're going to get from Paragon if this goes forward?

I'll leave that, and the minister can try to make sense of that question.


S. Simpson: I would hope…. Now that the deal is done with Paragon, and that has been settled — the agreement is in place — I guess the only matter now is Paragon being successful with the city of Vancouver in order to allow them to proceed with their development.

Now that that deal is done, I'd ask the minister whether the information about the review that was done by the ministry and by PavCo as to what was fair market value for the property could be made available.


S. Simpson: I say to the Chair that I have two more questions and we could just about be done. The PavCo people won't have to come back tomorrow.

The first question is…. The current subsidy from government, I believe, is $9 million a year to PavCo. I believe the service plan projects that out for the next couple of years. Could the minister tell us: what's the longer-term projection for subsidy for PavCo from the provincial government? And is that $9 million anticipated to be a subsidy going forward for a number of years?


S. Simpson: I'm going to assume by the minister's answer that, obviously, they'd like the subsidy to be reduced, but the benefit is significant and so the subsidy can continue.

I have one more question I'm going to ask now, but I'm going to just preamble it a little bit by saying there are a number of other questions that are around specific information. We don't have a lot of time here, but if the minister is agreeable, I'd like to provide a letter to the minister's office laying out some of those questions. Any of them that answers could be provided for would be appreciated. Or maybe we can do some kind of briefing or something, a technical briefing on that, at some time in the future.

I'll be happy to provide…. There are three or four other items that we're just not going to have time to get to today. I'll put them in the form of a letter to the minister on that.

With that I'll ask the final question. The final question is around the past CEO, Dana Hayden. Could the minister tell us if there was severance there, a severance package, and provide some information about the scope of that severance package?




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