Recanting

I have submitted the following to the Penticton Herald as a letter or op-ed piece:

Judging from the opinion pages of the Herald, the referendum for the SOEC might be closer than expected. One factor working against a resounding “yes” is voter apathy on the part of the “non-no” side (Pentictonites who are not against the SOEC but do not feel strongly enough about it either way to bother voting). A second factor is general wariness due in part to the city’s frustrating secrecy about the true costs and benefits of the project. I had to resort to a request under the Freedom of Information Act to pry a copy of the SOEC business plan away from the city. After reviewing the numbers, it became apparent to me that the only way the SOEC would make any financial sense is if $20 million fell from the sky.

As it turns out, the DAC funding is closer to $40 million. And saying that it fell from the sky does not give credit where credit is due. According to the small amount of information about the program available from the BC Lotteries Corporation website, DAC is an investment in casinos, not communities. The city already gets one-sixth of the revenue from the casino to spend on community programs. The purpose of DAC funding, in contrast, is to increase gaming revenue by making destination casinos around the province more attractive to gamblers. By bringing the SOEC and the Penticton Trade and Convention Centre (PTCC) under one management umbrella, the city can claim that the SOEC is part of a large, proven convention facility. And, as Las Vegas illustrates, conventions and gambling are a potent combination.

Regardless of whether any SOEC-casino synergies materialize in practice, the city’s decision to promote the events centre as a complement, rather than a competitor, to the casino was brilliant. Thanks to their success, the only remaining barrier to the project is the referendum on Saturday. The first question is pretty straightforward. It mentions borrowing but it is really asking Pentictonites whether we should accept a pile of free money or instead watch as $40 million is spent to upgrade casinos elsewhere in the province. The second question is more controversial because it asks about Global Spectrum’s role in managing the SOEC and PTCC. Blanket generalizations about public-private partnerships (PPPs) are not particularly helpful in this debate because there are many variations on the theme and the evidence is mixed: some PPPs work very well and some municipally-managed facilities are poorly run. Much depends on the city’s ability to write and enforce a good contract with its partner. As I see it, the risk of voting against combined private sector management is that separate management of the two facilities undermines the argument used to obtain the DAC support in the first place. Given that the funding is spread over many years, the last thing we want to do is give a future government a pretext for seeing the SOEC as anything other than an integral part of a thriving, well-run convention machine.

I still believe the project has its problems, most notably the city’s exposure to high operational costs and over-optimistic revenue projections. But let’s face it: $50 million in outside funding buys the SOEC team a lot of wiggle room. DAC funding has transformed the project from an iffy luxury into a complete no-brainer. My hope is that those who are eligible to vote in Saturday’s referendum will take the time to do so and will recognize the SOEC team’s accomplishment with an overwhelming vote of confidence.