By Steve Kidd - Penticton Western News Published: September 11, 2008
Michael Brydon points to one of the many charts he used in his press conference to illustrate his take on the deals made by the city over their share of casino revenues. Questions raised earlier this week about how the South Okanagan Events Centre is being funded are groundless, according to city officials. On Wednesday, Michael Brydon, a member of the Okanagan-Skaha Residents Association, brought forward his allegations that the City of Penticton has entered into a deal to pay back a large portion of the $40 million the city had received from the B.C. Lottery Corporation for the SOEC. Brydon felt the deals were so outrageous that he demanded not only an in-depth audit, but that the city suspend all decision making. According to Brydon, the city signed a deal with the B.C. Lottery Corporation, the province and Lake City Casinos in March 2007. This deal increased the percentage of net casino income Lake City Casinos receives in Development Assistance Compensation from 16.67 per cent to 23.34 per cent, while the city accepted a corresponding decrease 6.67 decrease in the Host Financing Assistance it receives.
“The city is giving the illusion there was more new money coming in,” said Brydon, who claims that the HFA money represented general revenue that might have supported other city functions, like policing. Under the DAC agreement, that money can now only be used to fund the SOEC and so, he said, represents a loss for the city. “This is an undisclosed loan that allows the city to misrepresent its financial position,” Brydon said. Jack Kler, Penticton’s director of corporate services, said that Brydon is mistaken not only about the nature of DAC and HFA funding, but also the how the city was using it’s HFA income. Contrary to Brydon’s allegation that the HFA income was general revenue, Kler pointed out that a city council decision made in 2001 directed the majority of those funds to a capital project reserve fund, a decision that continues, with minor alterations, under the current council. So, far from being a loss for the community, Kler said the money is still being used for the purpose council defined seven years ago, to fund capital projects. And by making this deal, he added, Penticton was able to ensure that a full third of the net casino revenues would be dedicated to the convention centre until 2020, when the deal expires, a situation that would not have happened otherwise.
Unlike HFA monies, which are paid to the community, DAC is given to the casino to further improve their premises or to build additional facilities, like the Hooded Merganser restaurant or the newly opened poker room. However, the DAC funding is only available as long as the casino is able to use it, and as Kler pointed out, the Lake City Casino in Penticton is nearing the limit of what it can build. “Their ability to use DAC is diminishing,” he said, adding that unlike the city, the casino also has to invest its own funds before it can draw on DAC funding. The net result of the deal is that by giving up part of its HFA funding, Penticton was able to convince the province and the BCLC that dedicating the DAC money to the SOEC would be the best use of the money. “We would not get that money for anything else,” said Mayor Jake Kimberley. He likens the HFA to DAC transfer to a person moving money from their chequing account to savings; in other words, putting it where it does the most good.
Agreeing to direct the DAC money to the SOEC has direct benefits for Lake City Casinos as well according to Kimberley. “This is a huge facility that will draw people in,” he said. Those people will no doubt be looking for other entertainment while they are in town, he continued. Brydon also alleged the city was misrepresenting or “hiding” the deal behind the SOEC funds. “The city is welcome to go out and make any deal they want, but you’ve got to tell the taxpayer,” Brydon said, calling it a secret deal, which he defined as any deal that the taxpayer doesn’t know about. However, as Mayor Jake Kimberley points out, the documents that Brydon received through his Freedom of Information Act request were approved in open council in February 2007 and form part of the public record. Further, Kler points to the city’s 2006 annual report, where, under the treasury department achievements it lists both the negotiations for the DAC funding and the agreement to lower the HFA funding. “This agreement guarantees the City’s share to be at least $10 million for the remaining 13 years of the contract,” the report states.
Without the agreement, Kler clarified, it was by no means certain that Penticton would continue to receive the 16.67 per cent. As a destination resort Penticton receives special consideration from the BCLC — most cities with casinos, like Kelowna, only receive 10 per cent. However, Penticton was only guaranteed the extra money for another three years, at which time the deal would be reviewed with a 10-year extension possible. Kimberley also commends Kler and other city staff for being able to work out these deals, reducing the amount of money the city had to borrow to a level that, despite Brydon’s claims of hidden costs, is only resulting in a scheduled two per cent tax increase for the city. “The crux of this whole argument is that the monies have been allocated legally, publicly and any other accusation to say otherwise is, in my opinion, from people who have not observed what has happened in the past two years,” said Kimberley.
---------------------
Don Quixote Note: If you go to the ActLocalNow.ca website you will see the aknowledment that:
It looks like our press conference was all for nothing. An editorial entitled "Funding not what it seems" in the September 7, 2006 edition of the Vernon Courier already came to exactly the same conclusions—this was MORE THAN TWO YEARS AGO! A copy is posted at vernonblog.blogspot.com
The editorial was based on the sleuthing of a Vernon blogger writing under the name Pancho Sanchez. The whole story was made public (at least in Vernon) within days of the initial DAC announcement (see the posting).
-----------------
A full copy of the relevant documents excluding the final side agreement between the City of Penticton and Lake City Casino is posted on this site also: Among the background documents are:
- An agreement dated 27 March, 2007, between the City, the Province of BC, Lake City Casinos, and the BC Lottery Corporation: http://www.actlocalnow.ca/docs/DAC.pdf
- An agreement dated 27 March, 2007, between the City and the Province of BC: http://www.actlocalnow.ca/docs/HFAA.pdf
This is simply another example of a City not stating openly,clearly and transparency to the electorate at the referendum that the "Taxpayers will be forgoing future revenue of $x dollars in total projected at the rate of $x per year from our Casino Host City normal revenue for a period of 13 years."
Instead they fudged the message or placed it in council documents and minutes and annual reports that very few people ever read or have the inclination to read. The last part of my final FOI message to the City of Penticton was "It was a hell of a deal for the City of Penticton and my compliments to the architects of the deal from the City.".
It was a great achievement to get the $30 million+ from the DAC money and they only had to be clear that the cost to the taxpayer was a diversion of $12 million+. This upfront clarification would have been sellable.
No comments:
Post a Comment