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Referendum wouldn't stop New Westminster office tower from being built
Even if a campaign to force a referendum on New Westminster's $59 million borrowing bylaw is successful, and even if the bylaw is defeated in the referendum it wouldn't stop construction of the office tower connected to the city's new civic centre according to city officials.
It would mean, however, the city would have to look at other ways to pay for the infrastructure projects for which the bylaw authorizes borrowing for, said Coun. Jonathan Coté.
"The project itself will still go ahead," said Coté.
That's because construction on the civic centre and the office complex is already underway, said Coté. He pointed out most of the construction will be paid for through casino money and city reserves.
If the city proceeds with its plan to borrow up to $59 million, it will be from the Municipal Finance Authority (MFA). The money will be for roads, parks and other infrastructure capital projects that would previously be paid for through city reserves.
"Basically the city is committed to building the office tower," said city finance manager Gary Holowatiuk.
Former mayoral candidate James Crosty has launched a campaign calling for a referendum on whether the city should take the $59-million loan. At least 4,528 signatures, which represents 10 per cent of eligible voters in the 2011 civic election, must be collected by Aug. 7 to force a referendum on the loan bylaw.
"The city would have a couple of options, it could go to referendum, or we would have to find an alternative way for the financing to work," said Coté of the consequences should enough signatures be submitted. "If there's a problem with the bylaw we would definitely have to find alternate plans for some of those projects. A number of those are a number of years down the road."
Coté said council is holding steadfast in backing the building of the office complex—budgeted to cost $33 million—and then selling it. Originally Uptown Property Group was to be a partner with the city on the complex but the company pulled out in March and the city decided to go it alone.
"Certainly the city believes it's the right project to be moving ahead with. It has tremendous benefits to the city. It's our objective to move through the process going ahead with selling the tower which might make the debt with the tower redundant," said Coté. "It's going to come down to a question of timing, whether it's a couple of years from now or later. Maximizing the revenue for the city is its objective.
"Certainly this is a very large project for the city, so it doesn't surprise me that it's generating a lot of discussion in the community."
Crosty said for Coté and Holowatiuk to say the office tower will be built anyway is an attempt to take away the focus from the fact the city is looking to borrow $59 million, which he said is the largest borrowing bylaw in the city's history.
"That's a ruse, you have to know that," said Crosty. "This is typical, classic deflection tactics from this council … This is what they hope to do by making headlines with this. They're trying to undermine the confidence of the people. This is not about whether we're building the tower or not, it's about borrowing $59 million, and taking that to a referendum for the people."
Crosty pointed to the case of Stockton, Calif., which has filed for bankruptcy after building an arena and a hotel. New Westminster has borrowed to build a new Moody Park Pool and now for the office tower. "The parallels are uncanny, except they're a city of 300,000 people and we're 60,000," said Crosty. "They need to go to the public to borrow this kind of money."
Crosty said his office has received about 500 signed forms of residents calling for a referendum on the bylaw. He criticized the city for not telling him how many of the forms it has received.
"I can't believe the simmering anger out there [over the bylaw], and the audacity coming down [from city hall]," said Crosty. "We're not undaunted, it's a big task, but we have to continue staying focused. They're going to throw tons of stuff at us."
Crosty said the city spending money to build an office tower will make it difficult to find the dollars for much-needed public projects such as a new Massey Theatre, a major Canada Games Pool renovation, the 12th Street Gas Works site and Muni Evers Park in Downtown New Westminster.
"[Holowatiuk] has not presented a business plan for [the office tower]. Where's the model for how this will work?" said Crosty. "I'm not an alarmist, I'm a realist."
Holowatiuk said just because the bylaw authorizes the city to borrow up to $59 million doesn't mean it will. "All that does is allow us to borrow up to $59 million. We could borrow zip," he said.
Casino revenue, called Development Assistance Compensation (DAC), will be coming in until 2019. The city is anticipating getting $60 million in DAC money, with $43 million going toward the civic centre.
"But that won't be all available to us by the time the project is finished. I'm anticipating interim financing of 1.7 per cent for short-term borrowing which is pretty good, and pay it off as the DAC comes in," said Holowatiuk.
He also pointed out, once the city sells the office tower it can take the proceeds to pay off the debt caused by borrowing for the infrastructure projects.
Holowatiuk said when the issue of how to cover the cost of building the office tower was discussed, the provincial government and MFA suggested the city request borrowing for the traditional infrastructure projects, which is what MFA is set up to finance, not the office tower—what is essentially a private venture. Holawatiuk doesn't see it as a risky venture for the city to use its reserve funds to build the tower.
"The city is getting value for the money. We are getting an asset, which is a Class A LEED gold (environmental standard) office tower. It's in a prime piece of real estate," said Holowatiuk.