The importance of good trade-offs

(submitted to the Penticton Herald as a letter to the editor)

If one takes letters to the editor in the local paper as a barometer of public opinion, then we can conclude that Pentictonites are strongly in favor of three things: low-density, controlled development; protection of agricultural land against urban sprawl; and affordable housing. The problem is that we cannot have all three, especially given that people outside of our community want to live here. Constrained supply and strong demand for housing inevitably leads to increasing prices. If we really want affordable housing, we will have to accept either higher density or increased sprawl. The only way to sidestep this economic reality is to impose a non-market solution like, for example, Banff, which has capped its population at 10,000 and requires residents to apply to live there. The downside, of course, is that by outlawing growth, Banff has become the town that time forgot.

This pattern of tradeoffs, in which only two-of-three desirable objectives are achievable, seems common in city politics. Consider the South Okanagan Events Centre. The rule of thumb in project management is that a project can be on time, on budget, or be fully functional, but it cannot be all three. This implies that project managers must pick two of these objectives and accept slippages on the third. Apparently, we have decided to let the budget for the events centre slip. I have always believed that the events centre would become a white elephant; however, like many others, I was under the impression that it would be free white elephant (at least as far as capital costs are concerned). Recent revelations about mixups and misunderstandings—I have to be careful here, because I do not want to say anything actionable—mean that the event centre is actually going to cost Penticton taxpayers (er, I mean water and electricity users) a fair chunk of money.

It may be the case, as both Giffels and City Hall contend, that costs have increased dramatically since the referendum. But if this is so, why are we so willing to let the budget slip instead of making other tradeoffs? A smaller, cheaper facility is one possibility. However, many long-time residents warn against scaling back the functionality of the project (as we apparently did, but should not have done, with the Community Centre in the 1980s). What about letting the schedule slip instead? Do we really need to undertake a major project during a period of unprecedented inflation in construction costs? If, as Giffels claims, costs are spiraling upwards due to an Olympic building boom, why not wait out the boom? We know when it will end. And Giffels might be happy to have some post-boom projects on the books.

Delaying the project would certainly involve costs and unpleasantries. We would not, for example, have the centre completed in time for our centennial year. Imagine the civic shame. And delay would mean missing the Olympic-related spillovers that we have heard so much about, such as having (say) the Belarusian hockey team train for a couple of weeks on our ice. Yet, we are talking about a lot of money: for $17M, we could fly all of Penticton to the Olympics for the real thing. To frame the tradeoff differently, consider the following question: Would you, as a resident of Penticton, prefer Package A or Package B given that both packages cost the same? Package A consists of an event centre delivered in our centennial year and a couple of weeks of pre-Olympic activity. Package B consists of the same event centre delivered in 2011, no Belarusians, and a new wave pool (or a new community arts centre, or some other major project built with the money saved by timing the events centre better). If the Olympic boom is the true cause of the event centre’s cost overruns, then Package B is a real alternative.

The problem, as a recent editorial pointed out, is that we seem to be guilty of escalating commitment to the event centre. But this does not mean that we are powerless to make changes. In the same way that George W. might want to fully reconsider his options in Iraq, the City of Penticton might want to fully reconsider its options in our own little quagmire.