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Wednesday, November 2, 2011

Fair game

The Western Fair Association  was invited to the Community and Neighbourhood Committee meeting to outline its big plans. But the presentation may have raised more questions than it bargained for.

Perhaps anticipating a light agenda for Tuesday’s Community and Neighbourhoods Committee meeting, committee chair Harold Usher invited Hugh Mitchell, CEO of the London Western Fair Association (WFA), to bring forward its strategic plan. Since this is a big plan, Usher, himself a member of the Western Fair Association Board of Governors, allotted him 15 minutes rather than the usual 5 to make his pitch.

Although this was the first presentation at city hall, the plans should not come as any surprise to Londoners. It was detailed at some length by the London Free Press this past spring. The background that I provided at that time can be found in a blog entitled No fair taxation.

The Western Fair is one of two businesses owned by the city of London. Unlike London Hydro, our other business, which injects nearly $7M into city coffers while providing a needed and reliable product and service, the Western Fair Association has never been profitable for the city. In fact, as an agricultural society it is able to avoid paying taxes and its rent of city-owned lands continues to be subsidized by London’s taxpayers. Although it is a not-for-profit organization, surpluses are put back into upgrading the facilities and there is never enough money to pay the market rent.

According to Mitchell, the strategic plan for the WFA is visionary. Over the next 5 to 7 years, $30M will be invested to make this area the destination choice for shopping, entertainment and dining. It is not asking the city for any money; it will pay the whole freight. Facilities will be enlarged, there will be landscaping, the agricultural building will get a new floor, a few houses that currently pay taxes will be torn down to make room for more parking, everything will be nicely paved. And maybe a fountain or a sculpture.  Some buildings will be demolished; they want to be able to respond quickly to business opportunities.

What this has to do with agriculture, no one on the committee asked. The WFA enjoys its tax free status at the pleasure of the Ontario Agricultural and Horticultural Organizations Act which recognizes it as an agricultural society whose objectives are “to encourage an awareness of agriculture and to promote improvements in the quality of life of persons living in an agricultural community by,

(a) researching the needs of the agricultural community and developing programs to meet those needs;
(b) holding agricultural exhibitions featuring competitions for which prizes may be awarded;
(c) promoting the conservation of natural resources;
(d) encouraging the beautification of the agricultural community;
(e) supporting and providing facilities to encourage activities intended to enrich rural life; and
(f) conducting or promoting horse races when authorized to do so by a by-law of the society.”

To ensure that everyone appreciates the changes forthcoming will, of course, require a rebranding exercise including a video extolling the virtues of the new brand. Unfortunately, the visuals were somewhat less than compelling as they did not transmit well to the overhead screens. But the major change in the brand is that it is no longer to be known as the Western Fair, but the Western Fair District, retaining its history but modernized. And the tagline says it all: “Be entertained.”

In fairness to the WFA, it’s hard to stick true to the original mandate when our prime agricultural land is disappearing at an alarming rate, when farming has become “agribusiness”, and when two-thirds of our food is imported from other countries.

Not all on the committee were enchanted with the presentation. Interestingly, it was Councillor Bill Armstrong, himself a Western Fair Director, not to be confused with the  Western Fair Association Board of Governors, who asked the tough questions.

Armstrong wanted to know if the former IMAX would be demolished and when.

For council, this would be of some interest. Only a couple of months earlier, Ward 9 Councillor Dale Henderson had sent them a curious email. Henderson had invested a cool million or so in turning the old IMAX into a ”performing arts centre” which never really caught on. Despite its tax-free status, it was hard to turn a profit with opera videos from Covent Gardens or imitators of long dead rock 'n roll or country and western stars.

Although he was prepared to bow out when his lease expired in October, Henderson was hoping to be able to sell some of his equipment to a new lease holder. On August 25 he wrote “The Western Fair advised me the 30 million dollar City asset (London City Music Theatre IMAX building renovated to 600 seat performing arts Theatre) will have to be demolished before December!  The Western Fair makes no money on my 60,000 dollar per year rent (all expenses including maintenance) and have no plan to include this building in their 'Be Entertained' business plan.”

He went on to say that Fanshawe College was not interested as it wanted to be downtown but suggested that “It would be perfect for Orchestra London.” He concluded with a note of urgency: “If the City is interested in retaining this City Jewel we will have to move quickly.” When asked about this by the London Free Press, Henderson denied any conflict of interest. After all, he was not voting on a motion.

Mitchell didn’t have an answer for Armstrong. There were no specific plans to demolish the building, he replied. A suitable tenant was being sought.

In response to Armstrong’s query about whether or not the IMAX had been a bad investment, Mitchell was evasive. He provided a bit of background. The IMAX had been built for about $3M in 1996 and had been in business for 9 years. He couldn’t say whether the Western Fairgrounds had been a bad location, but he indicated that he was not aware of any stand-alone theatres of this type that had survived.

Armstrong pointed out that the IMAX had lost money every one of those nine years. “The business model was flawed,” he charged, and suggested that the taxpayers were out a lot of money. Whether the city had invested directly in the theatre was not clarified.

But Armstrong had other concerns as well. He alleged that the Western Fair businesses were competing with other businesses in the city. He didn’t mention their tax advantage.

Steve Orser was shocked. He loves the Western Fair which has doled out money to various community groups. “Did you really say that?” he asked.

“Yes, I did, “Armstrong replied.

Usher, too, was not happy. He had brought The WFA in as a good news story, not for critical questions. “You’re done, Bill,” he warned. "We didn't bring the Western Fair here for that."

Mayor Fontana had a few observations as well. He noted that the report had been well received when it was unveiled, and he was excited about the prospects. He agreed that there was a need for more trade show space. He wished to encourage cooperation with the convention centre.

But his greater interest was in the slots. He pointed out that the Western Fair is one of OLG’s best houses and brings in about $5M for the city. “How we can expand the entertainment part of OLG?” he wanted to know.

According to Mitchell, the agreement with OLG, which brings in $100M to the province each year, runs out in 2016; perhaps in a new agreement there might be products in addition to slots.

The mayor indicated that he had already been talking to the OLG but didn’t elaborate on the content of those talks. He did, however, have another question. Referring to the current 85 acres on which the WFA resides, Fontana wanted to know “Can we operate in other parts of city?”

Mitchell responded that the WFA is not restricted on its footprint but all surpluses must go back into its site.

It’s an interesting question. Four years ago, when the lease agreement with WFA was renewed at less than market rates, the WFA agreed to consult with the city before acquiring more land. That was at the request of the city.

Surely the mayor would not be interested in an expansion that takes more properties out of the assessment base.

Curiouser and curiouser.


Over55Carol said...

Gremlins tell me that businesses and quasi-businesses should not be the recipients of favourable taxation policy. Perhaps Western Fair qualifies as a quasi-business.

Protestant said...

About the only thing the Western Fair has accomplished in London in regard to agriculture is to provide the surrounding farm community with a place to gamble.
I don't have the evidence but I'm positive the city of London has benefitted far more greatly from proceeds of our agricultural committees losses then we ever would by collecting property tax. The whole darn historical drama is just so sad it's enough to make a body wring their hands in despair and throw in the towel...and what's this about not-for-profit...THE WESTERN FAIR ASSCOCIATION is supposed to be a charity. There's a big difference.

Raymond Day said...

In regards to the Western Fair Distict IMax Centre.We have a young, stately building ,which is eye appealing from Rectory St. What a shame the idea of demolition of this site , which has so much potential . Lets think outside the box. i/e Calgary has a building much similar, called the the Planaterium . Laser light shows are put on, along with visual trips to the stars . This place is packed ,whatever night you decide to go . Great tourist attraction.Perhaps keeping in line with the slots ,what about Las Veges style shows . Even a science centre . This building has so much potential . Come on London , lets go tourist hunting .

Anonymous said...

The mayor is most interested in any opportunities for a photo op.

Why council lets this business model continue is beyond me. Doesn't Orser know that one reason they dole out cash is so they don't have to pay the city any?

Anonymous said...

Congratulations to Councillor Armstrong in his lonely quest to get some accountability.

Just the other night I saw the Mayor on TV stressing how we have to expand London's tax base. But at this committee he's in favour of steps that would reduce it.

Maybe it's time for Joe to stop talking for a while and try to think out his plan.

anon one