wyliepoon
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National Post
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City approves $160m office tower project
Corus Entertainment; Use of taxpayer money criticized as poor precedent
Kelly Patrick
National Post
Friday, May 25, 2007
Despite warnings the arrangement is risky, city council yesterday easily approved a deal to finance a $159.5-million waterfront office tower for Corus Entertainment, Inc.
The project won the support of 34 councillors. Only four voted against it.
Proponents of the First Waterfront Place development praise it as a key step in reviving the lake's edge east of the former Redpath sugar refinery, but critics say the benefits do not outweigh the financial gamble.
"We're spending at least $160-million of taxpayers' money to locate [Corus] here in rents that I question whether they're high enough," said Michael Walker, a councillor who opposed the deal.
Mayor David Miller, an enthusiastic backer of the development, said the eight-storey building with its 1,300 media workers would set the tone for a swath of waterfront that mixes places to work, live and play.
"It's already creating opportunities," Mr. Miller said of the Corus deal. "Universities and colleges are knocking on the TWRC's [the former Toronto Waterfront Revitalization Corporation, now Waterfront Toronto] door to talk about possibilities of coming to the waterfront because we've got a major employer."
Under the deal approved yesterday, the city will lend its arms-length Toronto Economic Development Corporation (TEDCO) $132-million to construct the office tower.
The balance of the money will come from TEDCO ($10- million), Waterfront Toronto ($12.5-million) and the value of the TEDCO-owned land where the building is to be located ($5-million.)
First Waterfront Place will be the largest capital project TEDCO has ever undertaken.
Corus is a media company that owns radio stations across the country, as well as children's networks YTV, Treehouse and Discovery Kids and the animation company Nelvana.
The company is slated to move into the building in the fall of 2009. The deal gives the company $18-million in tax abatements over 20 years.
That means Corus will pay $24-million in taxes over two decades instead of $42-million.
Before voting on the deal, the city hired Sanneck Associates to examine it. Sanneck concluded "the project is likely to yield a financial return that is lower than would be acceptable for a private investor given the project's risk profile."
It also cautioned that if Corus cannot pay the rent down the road, "there could be a negative impact on the city's operating budget and its credit rating unless the situation is rectified."
TEDCO is prohibited from tapping any lenders other than the city.
"It's true, TEDCO has to borrow the money from us. That's the law," Mr. Miller said.
"But the opportunity to have the head office of this major media corporation on the waterfront, to catalyze the rest of the development, is one that would be foolhardy to turn down."
Still, Mr. Walker warned the project sets a poor precedent.
"What happens when the next private sector corporation comes along and says, 'Well if you don't help us locate in a new building at your expense on your property and give us a lease similar to Corus, we're going to Brampton?' We don't have the money to do that every time."
Link to article
City approves $160m office tower project
Corus Entertainment; Use of taxpayer money criticized as poor precedent
Kelly Patrick
National Post
Friday, May 25, 2007
Despite warnings the arrangement is risky, city council yesterday easily approved a deal to finance a $159.5-million waterfront office tower for Corus Entertainment, Inc.
The project won the support of 34 councillors. Only four voted against it.
Proponents of the First Waterfront Place development praise it as a key step in reviving the lake's edge east of the former Redpath sugar refinery, but critics say the benefits do not outweigh the financial gamble.
"We're spending at least $160-million of taxpayers' money to locate [Corus] here in rents that I question whether they're high enough," said Michael Walker, a councillor who opposed the deal.
Mayor David Miller, an enthusiastic backer of the development, said the eight-storey building with its 1,300 media workers would set the tone for a swath of waterfront that mixes places to work, live and play.
"It's already creating opportunities," Mr. Miller said of the Corus deal. "Universities and colleges are knocking on the TWRC's [the former Toronto Waterfront Revitalization Corporation, now Waterfront Toronto] door to talk about possibilities of coming to the waterfront because we've got a major employer."
Under the deal approved yesterday, the city will lend its arms-length Toronto Economic Development Corporation (TEDCO) $132-million to construct the office tower.
The balance of the money will come from TEDCO ($10- million), Waterfront Toronto ($12.5-million) and the value of the TEDCO-owned land where the building is to be located ($5-million.)
First Waterfront Place will be the largest capital project TEDCO has ever undertaken.
Corus is a media company that owns radio stations across the country, as well as children's networks YTV, Treehouse and Discovery Kids and the animation company Nelvana.
The company is slated to move into the building in the fall of 2009. The deal gives the company $18-million in tax abatements over 20 years.
That means Corus will pay $24-million in taxes over two decades instead of $42-million.
Before voting on the deal, the city hired Sanneck Associates to examine it. Sanneck concluded "the project is likely to yield a financial return that is lower than would be acceptable for a private investor given the project's risk profile."
It also cautioned that if Corus cannot pay the rent down the road, "there could be a negative impact on the city's operating budget and its credit rating unless the situation is rectified."
TEDCO is prohibited from tapping any lenders other than the city.
"It's true, TEDCO has to borrow the money from us. That's the law," Mr. Miller said.
"But the opportunity to have the head office of this major media corporation on the waterfront, to catalyze the rest of the development, is one that would be foolhardy to turn down."
Still, Mr. Walker warned the project sets a poor precedent.
"What happens when the next private sector corporation comes along and says, 'Well if you don't help us locate in a new building at your expense on your property and give us a lease similar to Corus, we're going to Brampton?' We don't have the money to do that every time."
