A good government always knows its limitations, to paraphrase policy analyst Clint Eastwood.
The City of Whitehorse and the Yukon government now face the Eastwood test with the proposed $75-million convention centre on the Whitehorse waterfront.
Should the City of Whitehorse stretch its resources to include a convention centre and not just landslide-proofing the South Access Road, building a new curbside recycling collection system, implementing the new pro-housing bylaw reforms and addressing the climate change emergency they declared?
Should the Yukon government say that healthcare, social housing and green energy have enough money and that now is the time to roll the dice on entering the national convention market?
The proponents from Chu Níikwän, the Kwanlin Dün First Nation’s development corporation, recently presented their plan for the 1000-person event facility to Whitehorse City Council. Per usual with such proposals, the show included visionary architect diagrams and eye-popping economic spinoff numbers. The project will, they say, have a community economic impact of $20 million per year.
I asked the Yukon Convention Bureau for a copy of economic study, but they said it was confidential. Which leaves us with no way to know how credible that $20 million figure is or what the assumptions are behind it.
Generally, such presentations leave unsaid exactly who will pay, and who will get the $20 million per year. As I discussed in my column “If we need a new convention centre, the private sector should pay for it” last fall, the answer is usually that taxpayers pay for it and small numbers of contractors and hotel owners capture most of the benefit.
There is also the risk problem. If you get the construction contract for this project, it doesn’t matter if the national convention market turns out to be so competitive — and Whitehorse expensive to fly to — that the convention centre loses money every year. Ditto if you own a hotel. If the convention centre attracts even a handful of events per year, you get extra convention guests and can raise prices for all guests that week since hotel rooms will be scarce.
However, what if the project runs into the well-known phenomenon where costs end up higher and revenue numbers lower? Who has to pay for heat and security on a rarely used convention centre for the next thirty years? Once the proponents talk us into paying to build it, there is no way a future government can just abandon the building.
You’re locked in for decades. And we should remember that we may not always be as flush with transfer payment money as we are now. The Victoria Gold disaster raises questions about the long-term future of the mining industry here. I doubt future cabinets will thank this one for leaving them an expensive white elephant to maintain.
“No” is an under-used word in Yukon politics. I suggest it be used right now on Yukon and city funding for this project.
The minister responsible, John Streicker, told the legislature in the spring that the feds have provided planning funding to Chu Níikwän.
The next step in a project like this is to ask Ottawa for cash, and for Ottawa to insist that the Yukon and City governments contribute as well. As for Chu Níikwän, it is critical for them to structure the deal so they get an ongoing stream of rental and management fee income from the project but do not take on the white-elephant risk if the convention business hits tough sledding in the future.
One problem about this approach for the 44,000 Yukoners who are not contractors or hotel owners is that it involves the Yukon using its scarce political capital in Ottawa to ask for a convention centre. From a lobbying strategy point of view, you can only be asking Ottawa for so many projects at one time. Which other projects will get deprioritized when the premier has just 15 minutes with the prime minister?
If I were a senior Finance official in Ottawa and I heard the Yukon was asking for a convention centre, my first thought would be “That’s what they need? We must be giving them too much money.”
But the main problem with the approach is that it requires the Yukon and city governments to join the feds in paying for the convention centre, both upfront and over the coming decades. And also sharing in the risk that the revenue projections don’t pan out.
This is a serious risk, given that practically every other scenic community in Western Canada is also trying to get a piece of the convention business.
The architect images presented at city council are impressive. If someone else paid for it, it would be wonderful to have such a facility in our capital city. Even more so if they put 200 units of affordable housing on top of it.
So what are the options, assuming a firm “no” to cash handouts?
One is an Alaska-style approach where Chu Níikwän borrows the money to build it, guaranteed by the taxpayer after citizens okay the bond issue in a referendum. However, I think the chances of Yukoners voting in favour of a project like this are vanishingly thin.
A second option is to try some Jedi mind tricks on the feds, and tell them this project is so important to Canada that they should pay for the whole thing and also guarantee all future operating losses. Also improbable in the extreme.
Option three is to “support” the project by offering to set up a system like in other cities where hotel rooms are taxed year-round and the money flows into a fund for the convention centre. This would better align the cost of the project with the main beneficiaries.
The final option is to say you might financially support the convention centre project, but only if the “convention centre” part was replaced by “health centre with affordable housing on top.”
Keith Halliday is a Yukon economist and the winner of the 2022 Canadian Community Newspaper Award for Outstanding Columnist. His most recent book Moonshadows, a Yukon-noir thriller, is available in Yukon bookstores.
