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Weekly UpdatesLOCATING PROJECTS ON GOVERNMENT-OWNED PROPERTY
Depending on the structure of the agreement, it is often preferable to have developments built on government-owned property That way, if the project fails, the assets can revert to government ownership. This is particularly useful when part of the financing package comes by way of a government loan guarantee. Both the Toronto hockey and soccer facilities were located on city-owned property, which helped reduce the risks to the city
CONCLUSIONS
Toronto's sports and recreation projects have presented considerable challenges. On balance, however, they have resulted in significant benefits for the city. For instance, the Coliseum renovation created a new, improved home for the Royal Winter Fair and preserved a building with an important role in Toronto history. The terms of the new agreement with the Marlies team owners will likely result in the project's initial construction costs being repaid to the city together with a modest return on its investment.
The investment in the soccer stadium gave Toronto the opportunity to host the 2007 FIFA Under-20 Championship. As a result, Toronto received considerable worldwide media exposure with a relatively small capital investment. If the current attendance rates are maintained, the project will also generate significant operating surpluses that can be used to fund other activities on the Exhibition Place campus. In addition, the city has been able to secure the use of the stadium by community groups at modest and in some cases no cost.
This article originally ran in the Winter 2008 issue of the Canadian Finance Matters newsletter.
JOE FARAG is director, special projects, for the City of Toronto, He can be contacted at jfarag@oronto.ca. LEN BRITTAIN is director, corporate finance, for Toronto and can be contacted at lbrittai@toronto.ca. He is also co-chairman of the GFOA's Committee on Canadian Issues.
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