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London Free Press Business Section:


Cost of JLC to drive up city's taxes

The debt load could contribute to a hike of up to 12 per cent, says the budget chief.
JOE BELANGER, Free Press City Hall Reporter   2004-01-15 03:31:26  

Londoners could face a property tax hike of 10 to 12 per cent this year, including up to $4.5 million on debt payments to earn the city's $75,000 profit from the John Labatt Centre, predicts budget chief Tom Gosnell. As council's board of control sang city praises yesterday for turning the JLC profit, Gosnell poured a bucket of cold water on his colleagues and a healthy dose of reality.

"We will spend $4.5 million (estimated) to earn $75,000 profit," said the deputy mayor. "Taxes are going to go up 10 to 12 per cent this year because the debt load has gone up without corresponding new growth and revenues.

"I'm not saying the JLC isn't a good thing, but taxpayers have to know that . . . debt on projects like this . . . is why (taxes) are going up so high."

City council is about to embark on its 2004 budget talks, hoping to pare back spending to avoid a hefty tax increase.

In a report to the board, Vic Cote, general manager of finance and corporate services, said the JLC ended its first fiscal year with higher-than-expected attendance and a tidy profit for the city in its first nine months ending June 30.

The number of people who paid for tickets to the downtown arena, 458,860, exceeded original estimates by 63,341, despite only 85 events, five fewer than expected.

The $42-million JLC opened in late 2002, one of a series of mega-projects financed by city hall as it made downtown renewal a top priority.

Brian Ohl, general manager for the centre operated by Global Spectrum, told the board profits weren't as high because of one-time start up costs of $600,000 for things such as staff training, stationery, envelopes and more.

Cote said in the report he's optimistic the JLC will produce greater profits for the city in future, including $100,000 to $125,000 in the fiscal year ending June 30.

But those profit levels actually fall short of previous estimates by Cote, who once estimated profits in the first year at $138,000 and later doubled those to about $300,000.

Cote said yesterday his previous estimates were incorrect because he didn't expect the higher operating expenses.

The city's share of profits in the first five years is 20 per cent. The share climbs to 40 per cent after five years and 70 per cent in the 11th year.

While Gosnell sounded the alarm, Mayor Anne Marie DeCicco offered no apologies. She defended the city's capital spending for the JLC, Covent Garden Market and the Central Library.

"In the past . . . this community didn't invest in things that are important to residents, their families and the quality of life," she said. "These kinds of investments show London is a good place to live and now people are enjoying going downtown and going to the JLC.

"Yes, there is a cost, but there is also a cost for not doing these things. It was a decision city council made with its eyes wide open."

DeCicco said there are other measures to consider, such as spinoffs in downtown business and residential growth.

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