Excerpt from the Official Report of


July 18, 2013

Questions regarding BC PAVCO during Minsitry of Transportation and Infrastructure

S. Simpson: I'll tell the minister we're going to talk about the Pavilion Corporation for a little bit now. I know the minister maybe has some staff coming from the corporation.

We only have a short period of time, so I'm going to focus these questions into some specific areas. The first area relates to the financial situation of the Pavilion Corporation. I'm looking at page 29 of the revised service plan at this point.

When I look at the service plan, at page 29, which is the summary financial outlook for the Pavilion Corporation, under "Revenues," I see "Sales" and "Other revenues" roughly running from about $54.6 million or $54.7 million in fiscal 2012-2013 up to about $59½ million, maybe $60 million, in fiscal 2015-2016. I see over those same years total expenses of about $116½ million in 2012-13 and then a little more than $125 million annually for the next three years.

What this shows me is that we're seeing a deficit here, an annual deficit of somewhere between $60 million to $70 million in actual revenues coming in. Those are offset here by amortization contributions, which are identified at about $51 million per year, that are added to revenues. Those are identified in the notes to the financial outlook as contributions provided by the Ministry of Energy, Mines and Natural Gas, including amounts to cover the costs of operations and the renewal of capital assets.

My question to the minister is: could he tell us what the nature of those contributions is, and how do they differ from, essentially, a government subsidy delivered through that ministry to offset the losses of the Pavilion Corporation?


S. Simpson: When I look at this and the way this is designed, I see the amortization piece here. Could the minister then tell us…? When I look further, I see significant losses for B.C. Place on an annual basis, with or without the contributions. Losses are projected out, before government contributions, of $13 million of loss in 2012-13, over $24 million in '13-14, $9 million plus in '14-15 and over $22 million in 2015-2016.

It appears from the numbers here — this is page 32 of the revised service plan — that we're looking at losses here of what may be $59 million for B.C. Place over the next four years, from 2012-13 heading on.

Clearly, there are some challenges around those costs, and it says that it's before government contributions. Should I expect from this that the government then provides the subsidy to make up the difference to cover the 60-odd-million dollars of losses that B.C. Place will realize over the next four years?


S. Simpson: The minister might know that economic benefit is a bit of a mug's game. It can be played a number of ways. I'd like to get into that conversation about what is and isn't, but we don't have time to do that right now.

I'm going to ask another question here, but just as an add-on to that, we're going to have very limited time for this conversation. I know the minister is new in the file and taking some time to make sure he gets his answers correct, in consultation with his staff.

I hope the minister will agree. I'm going to submit a letter to the minister post these estimates with some of the questions that we'll not get a chance to entertain here today. Maybe the minister could agree to respond in writing to some of those questions so that we can get this information fully on the record — appreciating we're all in a bit of a time bind and that the minister is being conscientious, I'm sure, to be accurate about the information he's providing.

The minister talked, though, about revenue. A question I have…. The two primary tenants of B.C. Place are the Whitecaps and Lions. It is my understanding that the lease arrangements with them are based on royalty payments on ticket sales. It's the formula for the lease arrangement. If that's not correct, I'd be happy to be corrected by the minister. If that is the case, could the minister tell us: what was the total payment from the B.C. Lions and the total payment from the Vancouver Whitecaps for their last seasons?


S. Simpson: Thanks to the minister for agreeing to respond to some written questions following today. I appreciate that.

One more question that relates to this. When I look at the revenue streams from sales — the $13-odd million, almost $14 million, in 2012-13; and then about $12½ million for the next couple of years; and then about $13½ million projected out in 2015-2016 — they're not large numbers, not relative to the big picture here. They're about a little more than half the amount of the contributions that are made from, presumably, government sources.

Could the minister provide a little bit more detail on the question…? I'm going to ask two questions that relate to this. It's about revenue streams as well.

First of all, could the minister provide some detail about why it's not possible to release the numbers on these two teams? There are no other teams playing in this province. They're not competing with anybody. They are what they are. There's no competition for the Whitecaps or the Lions, so it's not a competitive question for them. I'd like a little more explanation about why it's a problem to release that information for PavCo.

Quite frankly, nobody is competing with PavCo on the questions of a stadium either. There are no other stadiums to compete with B.C. Place, so it's not like it's a competitive issue. So I'd like an explanation as to why that information can't be released.

The second is related to this. We know the situation that occurred around the issue of the renaming of B.C. Place Stadium — I believe it was Telus — and the naming of that. Could the minister tell us whether there are any discussions going on now with Telus about naming rights, or is the expectation that the name will continue to be B.C. Place, as it is?


S. Simpson: I appreciate the minister's answer. I would note, though, that PavCo and B.C. Place are not any private company. They are publicly owned. They are essentially a monopoly for what they provide in Vancouver and in British Columbia. And they're a monopoly that the government, the taxpayers, are contributing $13 million a year to, and $24 million, $9 million, $22 million, over the next four years.

That's a taxpayer subsidy to B.C. Place Stadium being paid for by taxpayers. Taxpayers might want to know whether, in fact, the business practice is a good business practice and what kind of revenue we're getting out of the long-term tenants who are there. So my view would be that the taxpayer has some right to know as well.

I'm going to move on from that, because we have limited time. I want to ask a question that relates to the media-reported agreement between B.C. Place, PavCo and Paragon. It's my understanding from news reports that an agreement was signed in March. I have read reports that suggest it's a 70-year agreement at a value of about a $3 million lease payment annually over a 70-year period.

I'm wondering if the minister could tell us whether, in fact, that agreement has been signed and whether those are accurate numbers or whether there maybe are different numbers that could be provided.

Related to that question: was this agreement with Paragon a sole agreement? Why was it not, since it's essentially….? The moving of the Edgewater Casino is largely what we're talking about. Why wasn't it put out to tender to see whether one of the other participants — Gateway, Great Canadian, somebody else — might have wanted to bid and maybe put a better offer on the table at this? Was it put to tender, and if not, why not?


S. Simpson: Thanks for that. The problem, of course, was that in 2009, when this was first done, the annual lease value of this was double that. About $6 million a year was the lease value at that time.

So somewhere between shortly after the worst economic crisis in North America, if not the world, since the Great Depression, when we were going to get $6 million in lease payments, we have now agreed, after we're into a recovery, that $3 million is okay and that that's a good deal.

From what the minister says, that's based on an assessment of that site that made that agreement okay. Will the minister make that assessment available so we can all see for ourselves that, in fact, $3 million was good value?


S. Simpson: I've just got a couple of questions left around this. The next one relates a little bit to the issue of the roof. We've had this issue around the roof of B.C. Place and concerns that were raised about stains caused by cables. I know there's been a court case around this. I believe that lawyers for Canam told the B.C. Supreme Court that damage that needed to be repaired could be as high as $20 million.

My question to the minister is: who, essentially, is on the hook for this $20 million? If the insured don't pay or if there's resistance there, where's the $20 million coming from to do the repairs that are the fallout from this court case?


S. Simpson: One last topic here, and then I'll turn the floor back over to my colleagues.

This relates to a question about the floatplane terminal in Coal Harbour. I have had concerns raised to me by folks about the degree or the scope of environmental assessment that's been done on that terminal in the development of the terminal and any subsequent environmental assessments that have been done that have looked at potential health effects and other factors there.

Could the minister tell us: have there been any environmental assessments done of that terminal and its operations? What is the ongoing environmental oversight of the terminal to make sure that it's not having negative impacts on health and habitat and such? Any assessments or studies that have been done — would the minister make those available?


S. Simpson: I'm glad to hear that, and I would encourage PavCo to continue to have active oversight on those questions. We all know — we've all ridden those floatplanes enough times to know — that there probably is more focus and attention on environmental questions today than there ever was at the time when those planes first started operating.

That's the nature of the society we're in today. Environmental questions are much more in the forefront of people around habitat and health and those issues. So I'm glad to hear the minister's answer, and I am hopeful that PavCo will continue to see its role as ensuring that proper oversight moves forward. [ Page 660 ]

With that, I want to thank the minister. We're running out of time here, and I'm having to move on. I do want to just confirm that I will be sending a letter to the minister — probably it's best through the minister's office to PavCo — with some specific questions that we weren't able to canvass today.

I very much appreciate the offer of the assessment or the valuation that helped to determine that the $3 million annual payment was an appropriate payment based on market. I appreciate the offer of that, and I look forward to receiving a copy of that as soon as it can be made available by his officials.

With that, I'll thank the minister and his officials for their time.



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