KINGSWAY ENTERTAINMENT DISTRICT AND ARENA KED Financial... · Kingsway Entertainment District and...

KINGSWAYENTERTAINMENTDISTRICTANDARENAEconomicandFinancialAnalysisSudbury,Ontario

PreparedforMunicipalLawChambers

March12,2018

www.urbanMetrics.ca|67YongeStreet,Suite804,Toronto,ON,M5E1J8|416-351-8585(1-800-505-8755)|[email protected]

March12,2018

Mr.GordPetchMunicipalLawChambersRoyalBuilding277LakeshoreRoadEastOakville,OntarioL6J6J3DearMr.Petch:

KingswayEntertainmentDistrictandArenaEconomicandFinancialAnalysis

Asperourdiscussions,youhaveaskedurbanMetricstoprepareapreliminaryreportsummarizingourinitialanalysisandconclusionswithregardstotheproposedKingswayEntertainmentDistrictinSudburyandtheproposedrelocationoftheSudburyCommunityArena,aspartofthisproposedarena/casino/entertainment/retailcentreonthenorthsideofTheKingswayinthevicinityofLevesqueStreet.

Asyouareaware,ourfirm,andourlegacyorganizations:theCoopers&LybrandRealEstateConsultingGroupandthePricewaterhouseCoopers(PwC)RealEstateAdvisoryServicesPractice,haveextensiveexperienceintermsofanalyzingtheneedforsportsandentertainmentcomplexesaswellascasinogaming.Inaddition,wehaveundertakennumerousstudiesonbehalfofmunicipalitiestoassisttheminplanningtheircommercialstructuresanddowntowncores.WewereinvolvedintheanalysisthatledtotheinitialintroductionofcasinogaminginOntario,andhavecontinuedtoanalyzecasinoandgamingprojectsonbehalfofbothprivateandpublic-sectorclients.Wehavealsoundertakennumerousdowntownstudiesonbehalfofmunicipalities,andrecently,onbehalfoftheDowntownPeterboroughBIAundertookananalysisofasimilartypeofcasinoproposal.Moreover,wearealsoabletoprovideconsiderableinsightsintotheSudburymarketandtouristdraw,havingbeentheeconomicconsultantstoScienceNorthonanumberofoccasionsandassistedinthecreationoftheDynamicEarthattraction.

Aspartofouranalysis,wehaveundertakenareviewofthebackgrounddocumentation,includingtwoPwCreports,whichreviewedvariousoptionsforthearena/entertainmentcomplex,developedlocationalcriteriaandappliedthosecriteriatoprovideCouncilwith

KingswayEntertainmentDistrictandArenaEconomicImpact

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directionastoanappropriatesiteforanewarena.Wehavealsoreviewedvariousplanningpolicydocuments,althoughwewouldnotethatthefocusofouranalysisrelateslargelytothemarketandeconomicimpactsrelatedtothearenaandtheimpactsthatmightoccurwiththerelocationofthearenaandthecasinototheproposedKingswayEntertainmentDistrict.

ThefollowingreportsummarizesourprincipalconclusionsandsupportinganalysisrelatedtotheproposedEntertainmentcomplex.

Ifyouhaveanyquestionswithregardstoanyaspectofourreport,pleasedonothesitatetocontactus.

Yourstruly,

urbanMetrics inc.

RowanFaludi,MCIP,RPP,CMC,PLE [email protected]


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SummaryofFindingsWehaveundertakenapreliminaryassessmentoftheprincipalcomponentsoftheproposedKingswayEntertainmentDistrict,andparticularly,theproposedrelocationofSudburyCommunityArenaandtheproposedrelocationofGatewayCasinosSudbury.

Inouropinion,theproposedKingswayEntertainmentDistrictwouldbecontrarytoanumberofkeymunicipalandProvincialpolicies,includingtheOfficialPlan,theDowntownMasterPlan,theEconomicDevelopmentStrategyandtheGrowthPlanforNorthernOntario.

OuranalysisalsoconcludesthattheKingswayEntertainmentDistrictisnotaprojectthatwouldmakeeconomicsensefortheCityofGreaterSudburyinthatthebenefitsitwouldproducewouldbeovershadowedbyitseconomicandfinancialcosts.Beforeinvestingfurtherstaffandfinancialresourcesinthisproject,westronglyrecommendthattheCityproceedwiththeconductofanindependenteconomicandfinancialanalysisofthisproject.

• DowntownSudburyistheCity’sandRegion’sCommercialEngine.ThisisreflectedinalloftheCity’skeyPlanningandEconomicDevelopmentpolicies.ThesepoliciesprotectDowntownSudburyandactivelypromotecontinuedinvestmentinthecore.TheSudburyCommunityArenaisthelargestvisitorattractiontoDowntownSudburyandsupportsmanydowntownbusinesses.TherelocationoftheSudburyCommunityArenawouldbealastingeconomicdrainonDowntownSudbury.ItwouldlikelycausethedirectlossofbusinessesthatrelyonthearenaandwouldsignificantlyhampertheattractionofnewinvestmenttodowntownSudbury

• Downtown’sarethePreferredLocationforMajorArena/EntertainmentComplexes.MajorsportsleaguesincludingtheNHLandCHLhaverecognizedthattheirmostsuccessfulfranchisesareindowntownlocations,whiletheleastsuccessfulfranchisesareonsuburbansites.Municipalities,suchasLondon,Kingston,Guelph,St.Catherines,Oshawa,andothers,withdowntownCHLarenasareseeingasurgeincommercialandresidentialinvestment.ThedevelopmentofanewarenainDowntownSudbury,wouldhelptostimulateprivateinvestmentinthisstrategicarea.

• ThePwCReportConfirmedDowntownasthePreferredSitefortheNewArena.PwCwasengagedbytheCityofGreaterSudburytoundertaketworeportsexaminingtheneedforandthelocationforanewArena/Entertainmentcomplex.Afterexaminingeightkeyfactors,PwCconcludedthattheDowntownwasthepreferredsitefortheArena.


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• MakingaDecisionBasedonaSub-setofthePwCFactorsisaFlawedApproach.CouncildirectedPwCtomakeanassessmentbasedononlythreeofthefactors–EconomicImpact,Cost,andParking.WhiletheDowntownsitewasratedhighestfromaneconomicimpactperspective,itwasratedbehindtheKingswaysiteintermsofCostandParking.PwCusedverygeneralizedandpreliminarycostinformationand,inouropinion,didnothavesufficientinformationtoranktheoptionsbasedoncostinasupportablemanner.Theparkinganalysisleftoutanumberofkeyfactorsthatcouldhavereturnedanalternativeresultifconsidered.Furthermore,itwasbasedonapre-existingbiasthatanexpansivesuburbanparkingareawasinsomewaysuperiortodowntownparkingoptions,withouttakingintoconsiderationtheamountofparkingactuallyrequiredtosupportanewarena.Theanalysisusingonlythreeoftheeightfactorsisaflawedapproachandshouldnottakeprecedenceovertheanalysisofthefullrangeoffactors,whichresultedintheDowntownbeingthepreferredlocationforthearena/entertainmentcomplex.

• TheKingswayEntertainmentDistrictWouldRedirectBusinessandInvestmentAwayfromOtherPartsofSudbury.ThecurrentKingswayproposalwouldincludetherelocatedcasino,therelocatedarena,aswellas,restaurants,andotherrecreation/entertainmentusesandisalsobeingpromotedtoincludeshopsandaconventioncentre.Sudburyisnotalargemarketandisprojectedtogrowatonlymodestlevels.Intheabsenceofamajordrawinthedowntowntoreplacethearena,itislikelythattheKingswayEntertainmentdistrictcouldexistonlybycannibalizingbusinessfromthedowntownandotherpartsoftheCity,whicharealreadyidentifiedintheOfficialPlanasbeingimportantcommercialnodestheentireCityandbeyond.

• TheKingswayProposalWouldJeopardizetheCity’sPlannedTransformationalLargeProjects.Followingapublicconsultationprocess,CityCouncilgavedirectiontoproceedwithtwomajorprojects–TheGreaterSudburyConventionandPerformanceCentreandtheLibrary/ArtGallery.There-useoftheexistingarenawasdeemedthepreferablelocation.Inouropinion,itislikelythattheproposedKingswayEntertainmentCentrecouldduplicatethefunctionoftheconventioncentreandeventscentre–byofferingalternativeperformancevenues,meetingspacesandconventionfacilities.Inaddition,byrelocatingthearenatotheKingswaysite,theCitywouldbelosingallofthesynergiesthatwouldexistbetweentheconventioncentreandthearena,suchas,attractinglargescaleeventsthatwouldusebothfacilities,orbyattractingalargeconventionhotelthatcouldservebotharenaandconventioncentre.Inouropinion,theKingswaydevelopmentwouldseriouslyimpacttheviabilityoftheseimportantprojectsinthedowntowncore.Andinfact,the


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Kingswaydevelopmentisalreadybeingpromotedforaconventioncentretotieintotheopportunitiescreatedbytherelocatedarena1.

• ACasinoWouldNotSignificantlyAffectTourismtoSudburyandWouldDrawtheVastMajorityofItsSupportfromwithintheCity.TheexistingSudburytourismmarketisnotlargeandnotwellorientedtowardscasinogaming,withabout70%ofvisitorscomingtovisitfriendsandrelativesorforshoppingandpersonalappointments.About60%ofvisitorsarrivefromotherpartsofNorthernOntario.Thecurrentpleasuremarketcomprisesonlyabout21%ofvisits.TheexistingcasinosinNorthernOntario–inThunderBayandSaultSte.Mariedrawbetween85%to95%oftheirvisitorsfromwithinthelocalmunicipality.LicenceplatesurveysconductedattheGatewayCasinoSudbury(FormerOLGSlots),confirmthatthevastmajorityofcustomersarefromSudbury.AttractingtouriststoacasinoinSudburywouldrequiretappingintonewmarketsnotcurrentlyvisitingSudbury.ThiswouldbedifficulttodobecausetheProvincialandInternationalgamingmarketsarealreadyseverelyconstrainedbyexistingcasinos,whiletheOLGmodernizationprogramwillbebolsteringthiscompetition.Inouropinion,additionalgamingrevenuesthatwouldbeachievedbyanewcasinoinSudburywouldbederivedmostlyfromSudburyresidents,whowouldhavetransferredtheirspendingfromothercommercialsectorselsewhereintheCity.

• CasinoGamingExtractsMoneyfromtheLocalEconomy.Casinosandslotsfacilitiestypicallygenerateveryhighprofits.InthecaseoftheOLGSlots,thisfacilitygeneratedapproximately$42millioninnetgamingrevenuesin2016/17,plusasmallamountinfoodservices.Localcosts(wagesandsalaries,municipalrevenueshare,sponsorships,localpurchases,etc.)comprisedonlyabout$12million.TheOLGSlotsSudburyfaciltiycontributedapproximately$30milliontotheProvince.WiththevastmajorityoftheserevenuesbeingderivedfromSudburyresidents,anestimated$20to$24millionwaseffectivelytransferredfromtheCity’seconomytotheProvince.WhiletheProvinceinvestedmoneybackintotheCityaspartofitsongoingspendingonhealthcare,transportation,infrastructure,etc.,thereisnowayofknowingwhetherthisrepresentsagainoralossfortheCity,orwhethertheProvincewouldinvestanydifferentlyiftherewerenotcasinoinSudbury.EffectivelythismoneywasbeingtransferredfromtheCityfordiscretionaryspendingbytheProvince.ThissituationwillbelessfavourableforSudburygoingforward,inthatfuturecasinorevenueswillbeshared

1PromotionalvideopreparedbyTrueNorthStrongCentre.2ScienceNorthismadeupofmultipleseparateattractionsincludingtheScienceCentre,DynamicEarth,the


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betweentheProvinceandGatewayCasinos–aprivateBCcompanyownedbyaTorontoInvestmentfirm,whichwouldhavenoobligationtoinvestrevenuesbackintothelocaleconomy.

• TheProposedKingswayEntertainmentDistrictMayNotResultinaSignificantNumberofNewJobsfortheCity.Whiletheproposedentertainmentdistrictwillbearelativelylargeemployer,mostofthejobswilloccurfromtransferringexistingjobsfromthearenaandtheslotsfacility.Theemploymentgainfromthenewarenawouldbenegligibleandwouldlikelybethesameifthearenawereconstructeddowntown.GatewayCasinoshasannouncedthatitwillemploysome400persons.Thesewouldreplaceapproximately190jobsattheslotssite.BasedonourunderstandingoftheGatewayconcept,abouttwo-thirdsoftheseemployeeswouldberequiredforworkinfoodservicesandretailoutletsatthecasino.Itislikely,thatatleastsomeofthesejobswillbetransferredfromexistingbarsandrestaurantsinthedowntownandelsewhereinSudbury,sothatthenetgaincouldberelativelysmall.Equallyasimportant,isthatduetotheirhighprofits,casinosdonotgeneratealotofemploymentperdollarearned.Sothattransferringrevenuesfromestablishmentssuchasrestaurantsthatrequiremorestaffperrevenueearned,couldactuallyresultinemploymentlossesfortheCityasawhole.

• AdditionalRevenuestotheCityfromtheProposedKingswayEntertainmentProjectMayNotBeSignificant.TheCitycurrentlyreceivesabout$2.2millionfromthecurrentslotsfacilitythroughtheMunicipalContributionAgreementwithOLG.Basedonaprojectedcasinowinfromacurrentlevelof$42millionfromtheslotstobetween$75and$80millionfrombothtablesandslots,thiswouldincreasethemunicipalsharebybetween$1.45to$1.7million.Additionalrevenueswouldalsobeavailablefrompropertytaxes,however,thesewillbehighlydependentonassessmentchangesthatarebeingreviewedbytheMunicipalPropertyAssessmentCorporationinresponsetotheOLGmodernizationprogram.Thesewouldresultmorefromchangestohowcasinosareassessedthantowheretheyarelocated.Inotherwords,theassessedvalueofthefacilitywilllikelychangeregardlessofwhetherGatewayCasinosmovestoanewlocation.Asamunicipalfacility,theCommunityArena,isexemptfromtaxes.ThisisnotexpectedtochangewiththeproposedrelocationtotheKingswaysite.ThesenetrevenuegainswillalsobetemperedbytaxlossesfromtheclosureordownsizingofdowntownbusinessesduetotherelocationofthearenaandcompetitionfromtheproposedKingswaydevelopment.Furthermore,taxesreceivedfromnewdevelopmentalsocomewitharequirementforamunicipalitytoprovidepublicservices,suchasroadmaintenance,emergencyservices,administrative


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services,etc.Sothatmuchofthetaxincreasefromthedevelopmentofanewcasinomayberequiredtoprovidethenecessaryservicestosupportit.

• Inconclusion,theProposedKingswayEntertainmentDistricthasmanyEconomicDrawbacksfortheCityanditislikelythatitsEconomicandFinancialCostswouldOutweighitsBenefits.Asaresult,wewouldstronglyrecommendthatamoredetailedeconomicanalysisbeundertaken,beforeadditionalstaffandfinancialresourcesareinvestedbytheCitytowardsthisproposal.


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SudburyCommunityArenaisanImportantEconomic1.0DriverandCommunityResource

SudburyCommunityArenaiscurrentlyoneofthelargestvisitorattractionswithintheCityandanimportanteconomicdriverforthedowntowncore.

BasedontheFebruary21,2017PwCReport,whichwascommissionedbytheCitytoassesstheviabilityofconstructingalargerandmodernizedfacility,between2013and2015,thecurrentarenahasdrawnbetween156,000and213,000visitorsannually.Toputthisinperspective,thisismorethantheattendanceattractedtotheScienceNorthScienceCentreoverthisperiod,whichdrewbetween142,000to149,000visitors2.Whilethesourceofvisitationtothesetwoimportantattractionsisverydifferent,nonetheless,SudburyCommunityArenadrawsaverysignificantvolume.

TheCityofGreaterSudbury’swebsitedescribestheSudburyCommunityArena:

TheSudburyCommunityArenaiswheresportsandentertainmentcomealiveinthenorth!Ahubofcommunityactivitysince1951,theSudburyCommunityArenahashostedcountlessconcerts,tradeshowsandsporting,entertainmentandculturalevents.ItisalsoproudhometotheOntarioHockeyLeague’sSudburyWolves.CentrallylocatedindowntownSudbury,theSudburyCommunityArenaissituatednearavarietyofuniqueshopping,entertaininganddininglocations3.

AsoneofthemostvisitedattractionsintheCity,SudburyCommunityArenaattractsmanyvisitorstothesite,butalsosupportsawiderangeofbusinessesinitsvicinity,includingrestaurants,retailshops,accommodations,andothers.

Inourexperience,thelocationofthearenawillplayaverysignificantroleintermsofitsabilitytosupportlocalbusinessesandattractvisitorstoitsownevents.

2ScienceNorthismadeupofmultipleseparateattractionsincludingtheScienceCentre,DynamicEarth,theExhibitHall,theIMAXTheatre,thePlanetariumandthenewEscapeRoom.Alloftheseattractionscombineddrewbetween343,000and381,000personsbetween2013and2015.TheScienceCentreisthemostpopularoftheseattractions,drawingbetween142,000and149,000visitors.3https://www.greatersudbury.ca/play/recreational-facilities/arenas/sudbury-community-arena/


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DowntownshaveBecomethePreferredLocationfor2.0MajorArena/EntertainmentComplexes

BothmunicipalitiesandsportsorganizationsacrossNorthAmericahaverealizedthatsuburban-basedarenasconsistentlyunderperformthoseindowntownlocations,bothintermsofeconomicimpactsandattendance.

TheNationalHockeyLeaguehasacknowledgedthetrendtowardssuccessfuldowntownarenas,citingyoungpeople’spreferencetolivingdowntownandforgoingcarownershipandthatfromanurbanplanningperspectivethetrendismovingawayfromsuburbanentertainmentdistrictstowardsamoredynamicmixed-useapproach,includingresidentialdevelopmentandretailing.Theweakestfranchisesintermsofattendance-Florida,NewJersey,Arizona,CarolinaandOttawaarethosewithNHLarenasinsuburbanlocations4.

TheEdmontonOilersrecentlyrelocatedfromtheformerNorthlandsColiseum(RexallPlace)besidetheNorthlandsexhibitiongrounds(i.e.anentertainmentdistrict),toRogersPlaceintheheartofthedowntowncore.Theconstructionofthenewarenahasattractedadowntownbuildingboomcharacterisedbyanumberofnewcondominiumandofficeprojects.TheCityofOttawaisalsoconsideringarelocationofitsNHLarenafromsuburbanKanatatoLeBretonFlatsadjacenttothedowntowncore.NHLCommissionerGaryBettmanhasstatedthat“Anewdowntownarenaisvitallyimportanttothelong-termfuture,stabilityandcompetitivenessoftheSenators”5.

SmallercommunitieswithCanadianHockeyLeague(CHL)teamsarealsomovingtowardsdowntownarenas.TheLondonKnights,whichhasthehighestaverageattendanceintheOntarioHockeyLeague(OHL)andthesecondhighestintheCHLhastheirhomeinBudweiserGardens–animportantdowntownattraction,whichlikeEdmontonhasalsoattractedconsiderabledowntowninvestmentsinceitsopeningin2002.TheCitywiththehighestaverageattendanceintheCHLisQuebecCity,whichhasanarenaonthefringeofitsdowntown.

Similarly,theK-RockCentreindowntownKingstonhasbecomeakeyeconomicdriverforthecorearea,hostingtheKingstonFrontenacsOHLteamandamyriadofmajorconcertsandevents.Toenhancetheeconomicimpactsofthearena,itwasdesignedso

4“SuburbanarenasaproblemfortheNHL”,TorontoStar,November23,2107.https://www.thestar.com/sports/breakaway_blog/2017/11/23/suburban-arenas-a-problem-for-nhl.html5“NHLcommissionerGaryBettmansaysOttawaSenatorsneedanewhome”,OttawaSun,November10,2017.http://ottawasun.com/sports/hockey/nhl/ottawa-senators/bettman-says-the-senators-need-a-new-home


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asnottoofferon-sitedestinationparkingtoensurethatpatronswouldpassbyshopsandrestaurantsthroughoutthedowntowncoreontheirwaytothevenue.

OtherOntariocitiesthathavedevelopedsuccessfularenasintheirdowntowncoresinclude:Guelph(SleemanCentre),St.Catherines(MeridianCentre),andOshawa(TributeCommunitiesCentre).WhiletherecentlyrenovatedTDPlacearena–hometotheOttawa67s–isnotinthedowntowncore,itissituatedwithinthehistoricGlebeneighbourhoodandBankStreetcommercialavenue.TogetherwiththedevelopmentoftheTDPlacestadium,thismajorredevelopmentprojecthashelpedtoattractextensivecommercialandresidentialdevelopmenttothishistoricareaofOttawa.

TheexistingSudburyArenaattractsover150,000to200,000personstothedowntowneachyearandhostseventsthatcouldnotbeaccommodatedelsewhereintheCity.TheCityofGreaterSudburyOfficialPlanrecognizesthatamenitiessuchas…SudburyArena…contributetotheappealofdowntown”andasastatedprogramindicatesthat“Inordertomakeitmoreattractiveasaplaceofresidence,additionalamenitiesnecessarytoenhancetheliveabilityoftheDowntownwillbeidentified”6.Inotherwords,theOfficialPlanisseekingtoincreasethenumberofamenitiesliketheArenatolocateinthedowntowncore.

Insummary,thetrendinboththeNHLandtheCHListowardsdowntownarenasforseveralreasons:

• Theytendtodrawhigherattendancethansuburbanarenas;• Thereisanemergingmarketwithlowerratesofcarownershipandapropensity

tolivedowntown;• Fromaneconomicdevelopmentperspective,downtownarenasaremore

successfulatattractingnewresidential,office,entertainment,andcommercialdevelopmentthantheirsuburbancounterparts;and,

• Fromaplanningpolicyperspective,downtownarenasitessupportamoreefficient,transitandpedestrianurbanstructurethansuburbanarenas.

TheproposedentertainmentcomplexontheKingswaywouldbecountertothesetrendsandappearstoignorethepositiveeconomicimpactsofdowntownarenasthatarebeingexperiencedbycitiesbothlargeandsmall.

6CityofGreaterSudburyOfficialPlanSection4.2.1.1Program1.


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TheKingswayProposalisInconsistentwiththeCity’s3.0PoliciesProtectingandEnhancingtheDowntownastheEngineoftheRegion’sCommercialEconomy

DowntownSudburyisthecentreofretail,artsandculture,governmentandbusinessservicesfornotonlytheCity,butalsoSudbury’sextensiveservicearea.BasedondatacompiledbytheCanadianUrbanInstitute7,DowntownSudburyaccommodatessome400businessesand6,000employees.DowntownSudburyishometosomeoftheCity’sleadinginstitutions,including:theLaurentianSchoolofArchitecture,CityHall,MemorialPark,theYMCAandOlderAdultCentre,theSudburyTheatreCentre,andSudburyArena,amongmanyothers.

SudburyOfficialPlanTheOfficialPlancontainsnumerousreferencestotheimportanceofthedowntowntotheCityanditsservicearea,andcontainspoliciestosustainandattractnewinvestmenttothisvitalpartofSudbury’surbanstructure.

Forexample,Section1.4citestheimportanceofthedowntowntothecommunity;theneedtoenhanceitsrole;andtheneedtoattractnewresidentialdevelopmenttothecore:

TheheartofGreaterSudbury,itsmosturbanplace,isandwillbetheDowntown.Withthechangingroleofdowntowns,thereisacontinuingneedforappropriatepoliciesandprogramstoenhancetheDowntownasalocationofgovernment,commerce,culturalandentertainmentfacilities.ResidentialdevelopmentinandaroundtheDowntownisneededtosupportnewandexpandedfacilitiesandamenities.

Section1.2directstheCitytosustainthedowntownasavibranthub:

GreaterSudbury’sDowntownwillbedevelopedandsustainedasthevibranthubofadynamiccitybypreservingitshistoricalbuiltform,promotingartsandculture,improvinglinkagestoneighbourhoodsandamenities,integratingnaturalfeatures,developingresidentialuses,andcreatinguniqueurbanspacesthroughinnovativedesign.

7TheValueofInvestinginNorthernOntarioDowntowns:TheCityofGreaterSudburyCaseStudy,August19,2014.


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Tothisend,Policy1inSection4.2.1.2requirestheCitytopreservethoseaspectsofthedowntownthatcontributetotheimage,characterandqualityoflifeoftheCity.

ItispolicyofthisPlantopreservethoseaspectsoftheDowntownthatcontributetotheimage,characterandqualityoflifeintheCity,includingnaturalfeatures,landmarks,designattributes,heritageresources,linkagestoexistingtrails,pedestrianwalkwaysandotherdesirableelementsofthebuiltenvironment.

Insummary,thedowntownisakeypartoftheSudburyeconomy.Althoughtheminingandsmeltingindustryhas,inthepast,beentheeconomicdriveroftheCity,Sudburyisdiversifyingitseconomicbase,whichhasbeencharacterisedbygrowthinbankingandfinancialservices,businessservices,government,tourism,healthcareandretailing.ThePwCreportsconfirmtherecentemergenceandrecognitionofGreaterSudburyasacentreforresearchandinnovationwithgrowthinvariousinformationtechnologysectors(e.g.,scienceandtechnologyresearch)8.Thisrecentgrowthalsoincludesdirectpartnershipswithlocalpost-secondaryinstitutions.TheadditionoftheLaurentianSchoolofArchitectureisaprimeexampleofthisdiversificationandtheattractivenessofadowntownenvironmentforthesecreativeandtechnologyintensivesectors.

ThesetypesofactivitiesaremuchmoreurbanincharacterthanSudbury’straditionalindustries.Avibrantdowntownwithamixofentertainment,shopping,residentialandbusinessopportunitieswillbeimportantintermsofattractingbusinessesandemployeesfromthesesectors.

AcrossNorthAmerica,downtowncoresareplayingakeyroleintermsofestablishingcitiesasqualityplacesthatcanattracttheemergingworkforcerequiredforthecreativeeconomy.

FromtheGroundUp2015–2025Sudbury’sEconomicDevelopmentStrategypreparedbytheCityofGreaterSudburyCommunityDevelopmentCorporationentitledFromtheGroundUp2015-2025,makesextensivereferencetothedowntownasakeydriverofSudbury’seconomicfuture.

GreaterSudburyrecognizesthatdowntownsareimportantandthattheyrepresentthehistoricandsymbolicheartofthecommunity.Ahealthy,active,successful

8PricewaterhouseCoopers,ProposedSportsandEntertainmentCentreFeasibilityandBusinessCaseAssessment,February21,2017.p.6.


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downtownmakesapositivestatementabouttheprosperityofthecityandsendsapositivemessagetofutureresidents,businessesandinvestors.9

TherevitalizationanddevelopmentofDowntownSudburyisakeyobjectiveoftheCity’sEconomicDevelopmentStrategy.Objective4.1oftheStrategyisto“RevitalizeandRedevelopDowntownSudburyasakeyindicatoroftheCommunity’sQualityofPlace”.The“RequiredActions”toachievethisobjectiveinclude:attractinginvestmentinretail,arts,food,andhospitality;implementingabusinessretentionandexpansionprogramtargetingthebusinessesinthedowntown;anddevelopingpublicspaces,buildings,andinfrastructureasacatalystforrevitalizationandpublic-sectorinvestmentintheDowntown.

TheEconomicDevelopmentStrategyindicatesthatrepresentativesfromtheCity’sTourismSectoridentifiedtheArenaandConventionfacilityas“thejewelinthecrown”,that“itunlocksthepotentialforourcommunity”10.

Therelocationofthe“jewel”andthelargestvisitordrawtothedowntowntoasuburbanlocationwouldbeindirectcontrasttotheobjectivesandrecommendedactionsoftheCity’sEconomicDevelopmentStrategy.Infact,Objective7.1oftheStrategy–“InvestinFacilities,SpacesandInitiativesNeededtoSupporttheGrowthofTourism”specificallyrecommendsthedevelopmentofamulti-purposefacilityorfacilitiesinthedowntowncore,includingtheconsiderationofanarena/sportscomplex.

ItisalsoworthwhiletonotethatwithintheEconomicDevelopmentStrategythereisnotasinglereferencetocasinos,gamingorslotsascontributingtotheeconomicdevelopmentoftheCityorsomethingtheCityshouldpursuetoenhanceeconomicgrowth.

SudburyDowntownMasterPlanTheSudburyDowntownMasterPlanwascommissionedandapprovedbytheCityofGreaterSudburyin2012andfunctionsastheblueprinttoguidetherevitalizationofDowntownSudburyoverthenexttenyears(i.e.to2022)andbeyond,detailingaseriesofactionsandinitiativesnecessaryforthistransformationandspecifyingtheirtimingandallocatingresponsibilities.

TheDowntownMasterPlanhasbeencarefullypreparedtoenabletheCitytomeetitsownpolicyobjectives,aswellasthoserequiredbytheProvince:

9FromtheGroundUp2015-2025p.31.10FromtheGroundUp2015-2025,AppendixA:ConsultationSummaryp.63.


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TheOfficialPlanrecognizestheimportantroleofDowntownasanemploymentcentrewithintheCity.ThenewNorthernGrowthProvincialPlanrequiresthatmunicipalitiesdevelopstrategiestoencourageasignificantportionoffutureresidentialandemploymentdevelopmentlocateinstrategiccoreareasandotheropportunityareas,suchasbrownfields.Buildingonthesepolicydirections,theMasterPlanproposesaprogramofpublicandprivateinvestmentinthedowntownnecessaryforittoachievetheself-sustainingcriticalmassandplayitsoptimalrole11.

Thestudyemphasiseswhyitisimportantformunicipalitiestoprotectandpromoteeconomicgrowthintheirdowntowns:

Thestudynotesthat:astrugglingdowntownsendsanegativemessagetofutureresidents,businessesandinvestors.

Conversely,asuccessfuldowntown:

…createsapositiveimagefortheRegion....supportsastrongtaxbaseforthecity.…actsasanincubatorfornewbusinessgrowth.…retainsandcreatesnewanddifferentjobs.…protectspropertyvaluesinsurroundingneighbourhoods.…isasignificanttourismdestination.…allowsgrowthtooccurinanefficientandsustainableway.…isthemeetingplaceforthecity12.

TheDowntownMasterPlancallsonDowntownSudburytobea“Destination”:

TheVisionforDowntownSudburyisforittobetheurbanplaygroundforNorthernOntario.Sudburyshouldbetheleadingdestinationforbusinessmeetings,sportseventsandculturalandcommunityfestivalsintheNorth.However,atpresentthecitylacksmanyofthefacilitiesnecessarytoassertthisleadershiproleandmanyothercitiesareeagerforthisbusiness.IfGreaterSudburyistoremaincompetitiveandfirmlyestablishitselfastheCentreoftheNorth,itcannotremainstatic.TheCitymustcontinuetoinvest

11DowntownSudburyaplanforthefuturegoingdowntowngrowingdowntown,March2012.p.40.12Ibid.p.3.


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strategicallyinitsdowntownandfostergrowththatwilldeliverwiderbenefittothecityasawhole13.

TheDowntownMasterPlanadvisesthatanumberoflarge-scaleinitiativesarerequired,whichinturncreatethemarketforretail,restaurant,recreationandotherrelatedactivities.Importantly,theywillsettherequiredenvironmentforresidentialinvestment,acriticalstrategyfordowntownsuccess.OneoftheseprojectscallsforupgradingtheArenaincombinationwiththeconstructionofanewmulti-usefacilitysouthofBradyStreetwithafour-starhoteloverlookingMemorialPark.TheMasterPlanprovidesitsvisionofthisinitiative:

TheShaughnessyDistricthasbroughtnewenergytothesouthernportionofDowntownwiththerejuvenatedarenacomplex,four-starhotelandnewmulti-usecommunityandconferencespace.Witheventsheldweekly,thecentreisbookedsolidbyamixofbusinessgroups,not-for-profitsandcommunitygroups.Festivals,food,music,filmandtheartskeepdowntownbuzzing14.

TheDowntownMasterPlanisthepolicydocumentwhichlaysouttheCity’sinvestmentsinthedowntownoverthenext10years.ItisalsoadocumentthatSudburyresidentsandbusinessesrelyontomaketheirowninvestments.TheDowntownMasterPlan,aftercarefulstudyandlong-termconsiderationhasidentifiedtheneedtoundertakesignificantinvestmentinitsDowntown.TheSudburyCommunityArena,includinganewhotelisanimportantpartoftheCity’sinvestmentstrategy.

TheproposedKingswayEntertainmentCentrewouldbediametricallyopposedtothisstrategy.Ratherthanencouraginginvestmentinthedowntown,itwouldinvolvetheremovalofexistinginfrastructureoutofthecoreandwould,ineffect,activelyencouragebusinessestorelocatefromthecoretoasuburbanlocation.ThevisionpromotedfortheKingswayEntertainmentDistrictincludesawiderangeofcommercialandentertainmentbusinesses,includingretailshops,restaurantsandaconventioncentrewhichwouldservetodrainbusinessfromthecore,aswellas,otherpartsoftheCity.Inouropinion,thiswouldnotonlybeeconomicallyharmfultothecore,itwouldbecontrarytotheCity’sownpoliciesandthepoliciesoftheNorthernOntarioGrowthPlan.

13Ibid.p.40.14Ibid.p.29.


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ThePwCReportsConfirmedDowntownasthePreferred4.0SiteforaNewArena

PwCpreparedtworeportsaddressingpotentialoptionsfortheredevelopment/relocationoftheSudburyCommunityArena.ThefirstreportdatedFebruary21,2017,providedanoverviewofarenaoperationselsewhereinCanadianHockeyLeague(CHL)citiesandmaderecommendationswithregardstoasupportablesizeandthevariousdesigncomponentsforanewarenainSudbury.Itprovidedpreliminarycostestimatesandfinancialprojectionsbasedonassumptionssurroundingfacilityutilizationandprogramming.Itpreparedahigh-levelnon-locationspecificeconomicbenefitsanalysisofanewarenaandfinally,providedasetofcriteriatoguideananalysisofapreferredlocation.

Inourview,oneofthemostimportantdiscussionsrelatingtolocationisfoundonpages73and74ofthisreport,wheretheauthorsdiscusstheimportanceoflocationintermsofgeneratingeconomicimpactsforacommunity.Theyrefertoanumberofdowntownarenaprojects,includingLondon,Kingston,Oshawa,GuelphandMoncton,thathavehadsubstantialpositiveimpactsintermsofattractingnewinvestmentintoacommunity.

Theyalsocitesomenon-downtownarenaprojects,suchasBarrie,thoughinthiscase,theysuggestedthatthesurroundingdevelopmentactivitywaslikelyduetotraditionalmarketforcesattractedaroundHighway400ratherthantothearena.BasedonoursignificantexperienceintheBarriemarket,wewouldagreethatthisisthecase.TheyalsorefertoMedicineHat,Alberta,wheretheCanaltaCentrewasconstructedonlanddonatedbyadeveloper.Theynotethatthisareawasalreadydevelopingasaretailnode,butthattheCanaltaCentrehelpedtospurandadvancedevelopmentofthearea.Finally,theynotetheMoheganSunArenainWilkes-BarrePennsylvaniawheretheareaaroundthearenahadbeentransformedfrom“worthlessproperty”intooneofthebusiestretaildistrictsintheregion.Again,theynotethatthesuccesswiththefacilitywasdue,inpart,toitslocationinarapidlygrowingregionaleconomy,withapopulationof14millionpeoplewithina100-mileradius.Inallcases,wheretheyrefertosuburban-basedarenas,theareasaroundthearenasiteshadalreadybeensubjecttostrongmarketgrowthregardlessofthepresenceofanarena.

Theyconcludethattomaximisespin-offdevelopmentaroundarenas,stronglocaleconomicconditionsandsupportiveplanningwillberequired.

Thefinalsentence,whichconcludesthereport,providesinsightintoapreferredlocationstrategy:


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Ingreenfieldsites,thisamountofcriticalmasswillsometimesneedtobe“created”andcouldtakeyearstofullyevolve,whereasinmoreurbanlocations,acriticalmassofspaceislikelyalreadypresentandcitycoresareabletorealizepositivespin-offbenefitsmorequickly15.

ThesecondPwCreportdatedJune2017appliesasetofcriteriadevelopedinthefirstreporttoevaluatethepotentialof23sitestoaccommodatethenewarena.Basedonphysicalconstraints,suchassitesizeanddimensions,proximitytoparking,proximitytoarterialroads,proximitytomunicipalservices,andsuitablesoils/geology,the23siteswerereducedtofourshortlistedsites,whichwereevaluatedusingeightcriteriadevelopedinthefirstreport.Theseinclude:

• Vision–WhethertheEventsCentreconceptonthesiteisconsistentwiththeoveralllong-termstrategicvisionoftheCity.

• ComplimentaryBenefits–TheabilityoftheEventsCentretoenhancethesurroundingarea.

• EaseofDevelopment–Costandtimingonaparticularsite.• Access–Whetherthesiteisorcanbeeasilyaccessedbyvehicle,pedestriansor

transit.• Parking–WhethersufficientparkingwouldbeavailabletosupporttheEventsCentre.• Cost–Totalcostofdevelopment,includinglandacquisition,sitepreparation.• EconomicImpact–Whetheraparticularsitehasanenhancedeconomicimpactfor

thesurroundingneighbourhood,theCityortheRegion.• CityBuilding–Whetherthedevelopmentofasitewouldenhanceeconomicgrowth,

qualityoflife,citizensatisfactionandcommunitypride.

15ProposedSportsandEntertainmentCentreFeasibilityandBusinessCaseAssessment,CityofGreaterSudbury,PwC,February21,2017.p.75.


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PwCappliedthesecriteriatofourdistinctsites:

• A19.2-acrepropertyonMacIsaacDrive,neartheintersectionofRegentStreetandLongLakeRoad

• A22-acresiteonthesouthsideofRegentStreetatAlgonquinRoad• A23.1-acresiteonTheKingswayintheJackNicholasBusinessandInnovationPark,

whichwouldbedevelopedaspartofabroaderentertainmentdistrictwithacasinoandothercomplementaryuses.

• A3.0-acresiteinDowntownSudburyadjacenttotheexistingarena.

Afterapplyingallofthecriteria,PwCrankedtheDowntownsiteasthemostdesirable,followedbytheKingswaySite,theMacIsaacsiteandtheAlgonquinsite.TheDowntownsitehadthehighestrankinginallcategoriesexceptcostimpactwhereitfinishedsecondtotheKingswaysiteandparkingwhereitfinishedfourth.

AnalyzingOnlytheCouncil-Deemed“Highest5.0Importance”CriteriaisaFlawedApproach

Whileusingallofthecriteria,thePwCReportsdeemedthedowntownasthepreferablesiteforanewarena.However,CouncildirectedPwCtoseparatethecriteriaintothreegroups:

OfHighestImportance

• Cost• EconomicImpact• Parking

ExtremelyImportant

• ComplementaryBenefits• Access• EaseofDevelopment

Important

• Vision• CityBuilding


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UsingonlythosecriteriawhichCouncildeemedofHighestImportance(Parking,Cost,EconomicImpact),theDowntownsitefinishedsecondbehindtheKingswaysite.TheMacIsaacandAlgonquinrankingsremainedunchangedat3rdand4threspectively.Inouropinion,thisisnotavalidapproachtoanalyzingthemeritsofalocation,becauseitignoresfactorsthatshouldbeconsidered.Infact,initsanalysis,PwChadalreadydevisedaweightingsystemforeachcriterion,sothatsomefactorsweregivenhigherweightingsthanothers,butallfactorswereconsidered.OnlyconsideringthefactorsdeemedofHighestImportancetoCouncilignoresotherimportantfactorswhichshouldbeconsideredintermsofanydecision–suchasvision,citybuilding,complementarybenefitstothecommunity,accessibility,andeaseofdevelopment.Withoutconsideringthesefactors,adecisioncannotbemadebasedonafullunderstandingoftheimplicationsoftheproject.

Equallyimportant,however,isthatthereareanumberofsignificantissueswiththePwCrankingsystemthatlikelyunfairlyandincorrectlyskewedtwoofthecriteriadeemedofHighestImportancetoCouncilagainstthedowntownsite–CostandParking.

CostCriteria

Firstly,thecostinformationavailabletotheconsultantswasonlyataveryhighlevel,particularlycostsrelatedtoinfrastructureandsitepreparation.Astherehasbeennodetailedcostanalysisofthesites,PwCcouldonlyuseveryroughestimates.Forexample,withregardstotheKingswaysite,sitepreparationwasestimatedatbetween$10and$15million,whileservicingwasestimatedatbetween$5and$10million.Includingthe$80millionconstructioncostforthearena/eventscentre,thetotalcostattheKingswaysitewasassignedavalueof$98million.

FortheDowntownsite,sitepreparationcostswereestimatedatbetween$5and$10million,whilethecostforadditionalworksandservicinghasbeenestimatedatlessthan$5million.TherewerealsounspecifiedcostsrelatedtoacquiringportionsofthesitenotownedbytheCity.Inaddition,theBIAagreedtocommitsome$2.2millionifthearenawaslocateddowntown.Includingthe$80milliontophysicallyconstructthebuilding,theDowntownsitewasassignedatotalcostof$99million.

Inouropinion,giventhebreadthofthecostrangeforservicingandsitepreparation,thereisnotsufficientprecisiontorankthetwositesdifferently,particularlywhenthetotalcostdifferenceassignedwasonlyabout1%ofthetotalprojectedcosts.Secondly,PwChassuggestedthatduetothenatureofconstructioncosts,thattheseestimatesmaybepronetosomedoublecounting16,whichfurthererodesconfidenceintheprecisenessoftheestimates.

16GreaterSudburyEventCentreSiteEvaluation,PwC,June2017.pp.15,18,21and27.


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Finally,theservicingcostsandsitepreparationcostsattheKingswaysitearefarlesscertainthanthoseoftheDowntownsite,whichalreadyhasaccesstomunicipalservicesandhasinfrastructureinplacetosupporttheexistingarena.Furthermore,thegeotechnicaldetailsoftheDowntownsitearealsolikelysimilartothoseofsiteselsewhereinthedowntown,includingtherecentlyconstructedSchoolofArchitecturebuilding.ThesamecannotbesaidfortheKingswaysite,whichwouldrequirewaterandsewerconstructionandtheprovisionofhydroandasstatedinthePwCreport:“isvacantandunimprovedandcontainsundulatingbedrockwithdipsandvalleys”andwouldrequire“asignificantamountofblastingandsitegrading”.Inotherwords,thereisconsiderablymoreriskwithregardstothepreliminarycostestimatesassociatedwiththeKingswaysite.

Inouropinion,thereisnotsufficientinformationtoranktheKingswaysiteaheadoftheDowntownsite(orpotentiallytheothersites)onthebasisofcost.AmorereasonableapproachwouldhavebeentoranktheDowntownsiteequaltotheKingswaysiteinthiscategory,althoughitisconceivablethattheKingswaysitecouldbemoreexpensivetodevelopthananyoftheotherthreesites,oncedetailedengineeringandgeotechnicalanalysishasbeencompleted.

ParkingCriteria

SeveralissuesalsoexistwithrespecttotheapplicationoftheparkingcriteriaappliedinthePwCreport.

First,whilethereportranksthesitesontheiravailabilityofparking,nowhereisthereananalysisofhowmuchparkingwouldactuallybeneededandwhetherthedowntownsiteduetoitsaccesstotransitwouldrequirelessparkingthantheothersites.Thefactthatonesitehasmoreparkingthananothermaynotberelevantiftheexcessparkingisnotneeded.

Secondly,theFebruaryPwCreportnotesthat:

Oneofthekeyelementsthatmustbeincludedinanylocationdecisionisaccesstoparking.Remoteorsuburbanlocationstendtohaveadequatelandforparkingbutalsotendtohaveonlyonemajorroadleadingtothesite.Asaresult,whileparkingmaybeeasilyaccommodated,therecanbesignificantissuesintermsofloadingandespeciallyexitingtheparkingareaafteranevent(acommonissueraisedinregardtotheWFCUCentreinWindsor)17.

ThisisexactlythesituationinwhichtheKingswaysitefindsitself.Inotherwords,allofthetrafficleavingthesitewouldbechannelledontotheKingsway.Giventhatthesiteisinthe17ProposedSportsandEntertainmentCentreFeasibilityandBusinessCaseAssessment,CityofGreaterSudbury,PwC,February21,2017.p.46.


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eastendofthebuilt-uparea,thevastmajorityoftrafficwouldbefunnelledintothewestboundlaneswhenleavingthesite.ThiswasnotaddressedintheparkinganalysiscontainedintheJunePwCreport,whichonlycommentsthattheKingswaysitecouldaccommodateover2,000parkingspaces.

Thirdly,thediscussionwithregardstotheparkingassessmentintheJunePwCreportissomewhatcontradictory.PwCnotesthattherearemorethan3,500parkingspaceswithina10-minutewalkoftheDowntownArenasite,whichinaggregateismorethanisavailableatthethreeothersites.Thestudyalsonotesthata“sufficientnumberofspacesmaybeavailablewithin600metresofthesite”,whichtheynoteisaseven-and-a-half-minutewalk.However,thisseemstobediscounteddueto“publicperception”thatmanyofthesespacesarelocatedtoofarfromtheeventcentre.AsimilaranalysiswasnotconductedwithregardstotheKingswaysite–i.e.howfarawalkwouldittaketoaccommodateasufficientnumberofspacesandwouldthismakeamaterialdifferenceintermsofthefunctionalityandmarketattractivenessofthefacility,asopposedtoapurely“perceptual”difference.

Fourthly,inthePwCFebruaryreport,thediscussionoftheParkingcriterionincludesthequestions:“Ifadditionalparkingisrequired,woulditbewell-usedonadailybasisforotherpurposes?”;and“Wouldthecreationofadditionalparkingbeaprudentinvestment?”18ThesequestionswerenotaddressedintheanalysisofthefoursitesconductedintheJunereport.Inthisregard,thedowntownsitewouldbesuperiortotheKingswaysiteinthatitwouldmakeuseofexistingparkingspacesthatareunderutilizedintheeveningsandweekendsandwouldnotrequiretheconstructionofadditionalspacesthatwouldlargelybevacantduringnon-eventtimes.Thisspeakstonotonlyfinancialsustainabilitybutalsolong-termeconomicsustainabilityasrequiredbytheProvince’sNorthernOntarioGrowthPlan,aswellastheCityofGreaterSudbury’sowngoalofbecomingasustainablecommunityasdocumentedintheCity’sOfficialPlan.

Furthermore,thePwCJunereportalsoindicatedthatitdidnotconsideraproposedparkingfacilitythatcouldbedevelopedifdemandforaDowntownarenaandeventscentrewarrantedit.WhilethispotentialdowntownparkingstructurewasnotconsideredbyPwC,itsfirstplacerankingoftheKingswaysitewaspredicatedentirelyontheconstructionofnewparkingaroundthatfacility.

Finally,PwCdidnotconsidertheroleofparkingintermsofenhancingeconomicdevelopment.Asnotedpreviously,theCityofKingston,whenitdevelopedtheK-RockCentreinitsdowntown,madethestrategicdecisiontominimizeon-siteparkingsoastopromotepedestriantrafficflowthroughthedowntown,therebyencouragingcustomerstofrequent

18Ibid.p.48.


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localshopsandrestaurants.Thisisastrategythathasbeensuccessfulinthatcommunity.Comparinganexpansiveacreageofparkingonagreenfieldsitetoaparkingsolutionthatmightbeemployedinthedowntowncoretoenhancelocalbusinessdevelopment,isnotafairorreasonableapproach.

Inouropinion,PwCdidnothavesufficientinformationavailabletotheminordertoprepareareasonablerankingbasedonitsparkingcriterion.InitsFebruarystudy,PwCspecificallynotedthat“adetailedandprofessionallypreparedtrafficandparkingstudyforeachproposedsiteincludinganestimationofparkingrequirementswillbeneeded(doessufficientparkingexistintheareasurroundingthesiteandwhat,ifany,streetandvehicularaccessimprovementsarerequired)”19ThereisnoreferencesintheJunereporttothesestudieshavingbeenconducted.PwCappearstohavereacheditsconclusionsbasedondeveloperplans,parkingspacecounts,and“publicperception”.Itsanalysiscontainsnoreferencetoactualparkingrequirements,parkingutilisation,accessibility,trafficingress/egresstoeachsite,orotherinformationthatwouldbederivedfroma“detailedandprofessionallypreparedtrafficandparkingstudy”.

Inouropinion,thelackofinformationavailabletoPwCandtheassumptionstheyusedtoevaluatetheparkingandcostcriteria,unfairlybiasedtheirrankingagainsttheDowntownsite.ThecostanalysisundertakenbyPwCwasconductedatfartoohighalevelandundertakenwithoutsupportinginfrastructureorgeotechnicalstudies.Itcouldnotreasonablyhavebeensopreciseastoallowforarankingofonesiteaheadofanotheronthebasisofa1%verygeneralizedcostdifferential.Similarly,theparkinganalysisappearstohavebeenundertakenwithoutreferencetoinformationinstudiesthatevenPwChadearlierindicatedshouldbeconducted.Itexcludednumerousdatathatcouldhaveeasilyyieldedalternativeresults.

HadthePwCanalysisappropriatelyrankedthedowntownsiteequaltotheKingswaysiteintermsofcostandhadtakenalloftheabovenotedfactorsintoaccountfortheparkinganalysis,thedowntownsitewouldhavebeenrankedhighestnotonlyoverall,butalsointermsofthosecriteriaidentifiedasofhighestimportancetoCouncil.

TheRelocationoftheArenaWouldHarmBusinessesWithinthe6.0DowntownCore

AkeypieceofinformationthathasbeenlackingfromthearenalocationanalysisistheimpactontheDowntownshouldthearenabemovedoutsideofthecore.Thearenaisthelargestvisitordrawtothedowntownandsupportsnumerousbusinessesinthedowntowncore

19PwCJuneReportp.47.


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notablyrestaurantsandpubs,aswellasotherretailandcommercialestablishments.Inaddition,asaprominentattraction,itprovidesadditionalexposuretothedowntowncorethroughmarketingandadvertisingandaddsprestigetothecore.

Thelossofthismajorfacilitywillaffectbothspecificbusinesseswhichrelyoncustomerstothearena,aswellas,thedowntowncoreingeneral.Furthermore,wenotethattheconstructionofanewarenaisalsoexpectedtoinvolvetheexpansionofarangeofmajorentertainmentfacilities.ThisincludespotentialnewentertainmentusesthatarenotcurrentlylocatedinSudburyand—ifrelocatedto,orexpandedontheKingswaysite—couldadverselyaffecttheremainingfoodandentertainmentuseslocatedinthedowntown.IfthesetypesofusesareultimatelyconcentratedattheKingswaysite,itwouldalsobedifficultforexistingbusinessesinthedowntowntoeverrecapturethislevelofattractionordraw.

InthecaseofWindsor,in2008theformerdowntownarenathatwashometotheWindsorSpitfirewasclosedandanewarena(WFCUCentre)wasopenedinasuburbanlocationabout12kilometresoutsideofthecore.Whiletherearemanyfactorsatplay,DowntownWindsorhasbeeninsteadydeclinesince2000andthelossofthetraffictothearenahelpedtohastentheissuesfacingthecore.Sinceitsclosure,theformerarenahasbeenusedforminorleagueanduniversityhockeygames,satvacantandbeenusedforsaltstorageforthemunicipalworksdepartment.ThereiscurrentlyaproposaltodevelopaschoolonthesitefortheCatholicSchoolBoard.UnlikedowntownSudbury,downtownWindsorhasarelativelylargeresidentpopulationtosupporttheeventuallyreuseofthesite.Ifthisredevelopmentoccurs,itwouldrepresenta10-yearspansincethearenawasvacatedbyitsmajortenant.

Inouropinion,anydecisiontorelocatethearenatoasuburbanlocationshouldnotbemadewithoutexaminingtheimpactofthisrelocationonthedowntown.

AnEntertainmentDistrictincludingaNewCasinoWillRedirect7.0BusinessAwayfromOtherPartsoftheCommunity

Asnotedabove,thelossofamajorattraction,suchasthearena,willundoubtedlynegativelyimpactDowntownSudbury.Alarge-scaleentertainmentdistrictwithacasinowillalsodrawcommercialtrafficawayfromotherpartsoftheCity.Forexample,asistypicallythecaseinothercommunities,restaurantsandotherfoodservicesthatarelocatedinthecasinooftenareabletooutcompetesimilarbusinessesinotherpartsoftheCityonpriceandspecialofferings.Thevisionbeingpromotedfortheentertainmentdistrictalsocallsforshopsandboutiquestobeintegratedintheconcept.ThiscouldpotentiallyimpactestablishedretailnodesthathavealreadybeendesignatedintheOfficialPlanasimportanttoservingtheentire


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cityandbeyond20.Aquestionthatneedstobeaddressedaspartofanyexaminationofthearenarelocationandestablishmentofanewentertainmentdistrict,iswhetherbusinesslossesinthedowntownandotherpartsoftheCitywillbeoffsetbybroaderpositivecommunitybenefits.ThishasnotbeenaddressedinthePwCanalysis.

Asperthecurrentproposal,thearenawouldberelocatedandsituatedontheKingswaysiteaspartofaconceptfora“KingswayEntertainmentDistrict”whichisalsoplannedtoincludeanewcasino(whichwouldberelocatedfromSudburyDowns),ahotel,restaurants,retailoutlets,andotherpossibleentertainment/recreation/conventionuses.

Anotherkeyquestionthatneedstobeaddressed,iswhethertherewouldbesufficientmarketgrowthorrecapturetosupportanentertainmentdistrict.Inouropinion,itismorelikelythatintheabsenceofanothermajordrawinthedowntowntoreplacethesefoodandentertainmentandretailfunctions,sucharelocationwouldsimplycannibalizeexpendituresthatarealreadybeingmadeelsewhereintheCity.TheretailimpactoftheproposedKingswaydevelopmentontheexistingcommercialnodesshouldalsobestudied.Finally,withlimitedoptionsavailable,itisunlikelythatanewordifferentmajordrawcouldbeintroducedtothedowntowninthecomingyears.

TheKingswayProposalWouldJeopardizetheCity’sPlanned8.0TransformationalLargeProjects

InNovember2012,theCityinviteditscitizenstoproposelargescaleprojectsthatwouldbetransformationaltotheCity.Atitsmeeting,onSeptember12,2017,theCitygavedirectiontostafftoimplementtwooftheseprojects–theGreaterSudburyConventionandPerformanceCentreandtheLibrary/ArtGallery.

Inevaluatingthelocationfortheseimportantprojects,theCitydeterminedthatthere-useoftheexistingArenawasthemostappropriatewaytoaccommodatebothprojects.ACitystaffreportdatedNovember15,2017analyzedanumberofsitesandrankedtheexistingArenasiteasthebestoption.21

ItisalsoimportanttorecognizethatthisreportwascompletedwiththeassumptionthattheKingswayEntertainmentDistrictwouldbeapprovedandconstructed,asoneofthereasons

20InadditiontotheDowntown,theOfficialPlandesignatesthreeRegionalCentres,whicharecommercialcentresservingacatchmentareaextendingbeyondtheCity.Thesecommercialcentresarepermittedtoexpandtoincludeotheruses,asameansofutilizingexistinginfrastructureandachievingincreasedurbanintensification.21CityCouncilReport–GreaterSudburyConventionandPerformanceCentre/LibraryArtGalleryUpdate.


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givenforselectingthearenasitewas“ItaddressescommunityconcernsaboutthefutureofthissiteaftertheKingswayEventCentreopens”22.

Inouropinion,theproposedKingswayEntertainmentDistrictwould,tonosmallextent,duplicatethefunctionofaconventioncentreandaperformancecentre.Atbest,theproposedKingswayEntertainmentDistrictwouldimpedethemarketfortheseusesdowntown,byofferingdiscountedcompetitivefacilitiesasanattractortopotentialgamingpatrons.Similarly,thetransferofhospitalityinfrastructurefromthedowntowntotheKingswaysitewouldfurtherreducetheviabilityoftheperformingartscentreandconventioncentreinthedowntown.

Atworst,theKingswayEntertainmentDistrictwouldmakeaperformingartsvenueandconventioncentreindowntownredundant–therebyofferingnocomparablereplacementfortheArenaandsubstantiallyincreasingthetouristandentertainmentdrawawayfromthecore.

TheCity’sreportdiscussesthevisionforahotelassociatedwiththeconventioncentre,butprovidesnoanalysisastowhetherthereissufficientmarketforanewhotel,inadditiontothehotelfacilitiesbeingplannedaspartoftheentertainmentdistrict,nordoesitprovideanyanalysisofhowtheconventioncentrewouldeffectivelycompetewiththeKingswaycasino/arena/hoteldevelopmentthatwouldlikelycontainconferenceandmeetingfacilitiesinadditiontohavingdirectaccesstothearenaspace.PotentialimpactsontheexistinghotelsintheDowntownshouldalsobestudied,astheycouldbesignificant.

Ontheotherhand,aconventioncentreandarenadevelopedtogetherinthedowntowncoreinconjunctionwithaperformingartscentretogetherwiththelibrary/artgallery,wouldtransformthedowntownintoavibrantentertainment/tourismhubthatwouldsupportrestaurants,hotels,andotherlocalbusinesses.Inparticular,adowntownconventioncentreadjacenttothenewarenawouldenabletheCitytocompeteforawiderangeofconventions,consumershows,businessmeetings,specialeventsandotheractivitiesthatwoulddrawvisitorsandtheirexpendituresintoSudburyandsupportavibrantdowntowncore.

WewouldalsonotethattheKingswaydevelopmenthasalreadyrecognizedtheconnectionbetweenthearenaandconventioncentreandhasproducedapromotionalvideoshowingaconventioncentreaspartoftheKingswayEntertainmentCentrecomplex.

Todate,noeconomicanalysishasbeenundertakentodetermineeithertheimpactondowntownofrelocatingthearenatotheproposedKingswayentertainmentdistrictorthe

22GreaterSudburyConventionandPerformanceCentre/LibraryArtGalleryUpdate,November15,2017.5thunnumberedpageunder“Analysis”section.


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economicbenefitsthatwouldbederivedfromthecreationofadowntownhubincludingtheArena,aconventioncentre,aperformingartsvenue,alibraryandartgallery.

ACasinoWouldNotHaveaSignificantImpactonTourismand9.0WouldDrawHeavilyfromwithintheCityofGreaterSudbury

Overtime,asgaminghasbecomemoreubiquitousacrossNorthAmerica,itsuniquenessasatourismdrawhaswaned.Theintroductionofonlinegamblingbynumerousoperators,includingtheOntarioLotteryandGamingCorporationhasfurthererodedthedrawofphysicalcasinos.Inaddition,casinosarenotpartoftheentertainmentregimenforthesmart-phonesavvycomputer-gamingyoungerdemographic23.

AlthoughwedonothavedirectdatawithregardstothegeographicdistributionofvisitorstotheOLGSlotsinSudbury,wehavebeenabletoobtainareasonableapproximationthroughanalysinglicenceplatesatthefacilityanddatafromcellphoneusage.InFebruary2018,alicenceplatesurveyofvehiclesvisitingthecurrentSudburyDownscasinositewasundertakenunderthedirectionofurbanMetrics.AdescriptionofthemethodologyandsummaryoftheresultshasbeenprovidedinAppendixB.Wewouldnotethatinourexperience,licenceplatesurveystendtooverestimatepersonstravellingtoasitefromfurtheraway24.Regardless,74%ofallvehicleplatesrecordedwerefromtheCityofSudburyand88%werefromwithinadistanceof120kilometresfromthesite(includingNorthBay).Basedonthetypicalovercountofnon-localcustomers,wewouldestimatethatbetween80%and85%ofvisitorsoriginatedfromtheCityandsome90%to95%originatedfromwithin120kilometres.

ThisestimatewascorroboratedthroughtheanalysisofcellphoneusagedataatOLGSlotsinJuly,AugustandSeptember2017andinFebruary2018.(SeeAppendixC)Thesedateswerechosentomimicthehighsummertourismseasonandthesameperiodcoveredbythelicenceplatesurvey.Visitationpatternsbymonthwereverysimilar,andonaveragesome90%ofvisitorsarrivedfromwithin120kilometresofthesiteplusNorthBayand84%originatedfromwithintheCityofGreaterSudbury.Only9%originatedfromoutsideofNorthernOntario.

23CanadianGamingBusiness.“DemographicDilemma–TheChallengeofConnectingwithToday’sPlayer”,Spring2017.24Forexample,licenceplatesurveyswouldnotcapturepersonsarrivingbymeansotherthantheirprivatevehicle(e.g.taxisorpersonsbeingdroppedoff),theywouldnotbecapableofdistinguishingapersonwhohadmovedtothelocalarea,buthadnotchangedtheiraddressontheirdriverslicence,theycannotdistinguishtheownershipofleasedvehicles(i.e.someonedrivingavehicleleasedbytheircompany)etc.Thesefactorstendtoinflatenon-localvisitationbetween5%and15%.


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ThisisconsistentwithotherevidencewhichindicatesthatNorthernOntariocasinosdonotdrawheavilyoutsideoftheirowncommunities.A2006surveybytheOntarioProblemGamblingResearchCentredeterminedthatthetwoNorthernOntarioCasinosinThunderBayandSaultSte.Marieattractedsome90%and86.5%ofvisitorsfromwithintheirowncommunities.Onlyabout5%ofvisitorstotheSaultSte.MariecasinowerefromoutsideofOntarioandonly2%ofThunderBaycasinopatronswerefromoutsideoftheProvince.Asasmallerslots-onlyfacilitynotclosetoaninternationalborderandwithextensiveandgrowinggamingcompetitionservingtheGTA,wewouldnotexpectSudburytodifferfromtheexperienceoftheseotherNortherngamingfacilities.

Basedon2014StatisticsCanadaTourismdatacommissionedbytheCityofGreaterSudbury25,theSudburyTourismmarketisorientedtowardspersonsvisitingfromNorthEasternOntario,andpersonstravellingtoSudburytovisitfriendsandrelativesandforpersonalappointments.Thepleasuremarketrepresentsonlyabout21%oftripstoSudbury.Personsengagingincasinogaming(i.e.OLGSlots)representaminisculeproportionofthemarket.ThefollowingsummarizesthecurrentSudburytourismmarket:

• 60%ofcurrenttouristsarefromNorthernOntarioand93%arefromwithintheProvince.

• 70%ofvisitorstoSudburycomeeithertovisitfriendsandrelativesorarevisitingforaspecificpersonalreason(e.g.toshop,doctors/dentistappointment,etc.).

• Thepleasuretravelmarketrepresentsonly23%ofvisitorstoSudbury.• Only1%ofvisitorsreportedvisitingacasinoaspartoftheirtrip.Themostcommon

activitiesbySudburyVisitorswerevisitingfriendsandrelatives;outdoorsportingactivities;shoppingandmedical/dentalappointments.

• 54%ofvisitorsdidnotstayovernight.• 52%ofnightsstayedwereataprivatehome.Onlyabout25%wereatahotel,motel,

commercialcabin,orothercommercialproperty.

Inouropinion,thecurrenttourismmarketisnotwellpredisposedtogamingactivities.Thereisnotalargepleasuremarketseekingalternativeentertainmentoptions.Thepleasuremarketcurrentlymakesuplessthanaboutone-quarterofarelativelysmalltourismbasewithastrongorientationtowardsoutdooractivitiesvs.nightlife/dining/urbanentertainment.Theremaybepotentialtoattractpersonsvisitingfriendsandrelatives,however,atleastpartofthiswouldcomprisetransfersofexpendituresfromotherpartsoftheCity,anditlikely

252014SudburyTourismProfilebasedonStatisticsCanadamicrodatawhichcontainanonymiseddatacollectedintheTravelSurveyofResidentsofCanadaandtheInternationalTravelSurvey.


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wouldnotresultinincreasedlengthsofstayoradditionalnightsincommercialaccommodations.

AttractingtouriststoacasinoinSudburywouldlikelyrequiretappingintonewmarketsnotcurrentlyvisitingSudbury.ThedifficultywiththisisthatOntarioissignificantlyincreasingitsgaminginfrastructureacrosstheProvince,andparticularlyintheGTA,whichrepresentstheforemosttouristmarketforOntarioattractions.Inotherwords,acasinoinaneventcentreinSudburywouldhavetocompetewithexpandingcasinosthataremuchlargerandmuchclosertotheaudienceitistryingtoattract.TheUSmarketinSudburyisverysmallandisalreadyservedbylargercasinosatthemajorbordercrossings.

Inouropinion,whiletheproposedentertainmentcentrewouldbeabletoexpandthevisitorsandrevenuesgeneratedbyacasino,thevastmajorityofgrowthwillbederivedfromSudburyresidents.

GrowthinGamingRevenuesfromanExpandedCasinoWillBe10.0DerivedMainlyfromSudburyResidents.

GaminginSudburyuntilrecentlyoperatedasOLGSlotsSudbury26,andwasaslots-onlyfacility.TheOntarioLotteryandGamingModernizationprogram,however,haschangedthegaminglandscapeacrosstheProvince.Followingacompetitivebiddingprocess,OLGhasenteredintoagreementswithprivategamingcompaniestooperategeographicallydefinedgamingbundles,whichinvolveamongotheraspectsthecreationofnewgamingsites,theexpansionofexistingsites,andtheestablishmentoftablegamesatlocationsthathadpreviouslyoperatedasslots-onlyfacilities.AspartofitsModernizationplan,OLGenteredinto20-yearagreementswithGatewayCasinosandEntertainment–aBritishColumbia-basedgamingcompanyownedbyaTorontoprivateequityinvestmentfirm27tooperatetheNorthernandSouthwestOntarioGamingBundles.

TheNorthernOntarioBundleincludestheexistingcasinosinSaultSte.MarieandThunderBay,OLGSlotsSudburycurrentlyoperatingatSudburyDowns,andanewcasinolocationinNorthBay.FollowingtheacquisitionoftheNorthernBundle,OLGSlotsSudburyhasbeenrebrandedasGatewayCasinosSudburyandcannowincludetablegames.AsOLGSlotsSudbury,thefacilityoffered407slotmachinesandwasstaffedby141fullandpart-timeemployees.

26PriortothatitwasknownasTheSlotsatSudburyDowns,whenitco-existedwiththehorseracetrack.27TheCatalystCapitalGroup


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ThecurrentproposalbyGatewaywouldbetorelocatethecasinofromtheSudburyDownssitetotheGatewaysiteaspartoftheirconceptforanentertainmentdistrictthatwouldalsoincludetherelocatedarenaandotherhospitalityandentertainmentfacilities,includingrestaurantsandlikelyretailoutlets.Gatewayhasannouncedthatitwouldinvest$60millioninthenewcasinoproperty.Thecompanyhasnotspecified,theextenttowhichitwouldexpanditsgamingoffering,however,itsagreementwithOLGallowsfortheoperationofupto600slotmachinesand180tablepositions(theequivalentof30tablegames).

TherelocationtotheGatewaysitewouldrequireapprovalofbothOLGandtheCity.TheOntarioLotteryandGamingCorporationActregulationsrequirethatpublicinputisrequiredbeforethemunicipalitycanapproveanewgamingsite.ItisourunderstandingthattherequiredpublicinputintotheGatewaysitehasnotyetbeenprovidedandOLGhasnotyetapprovedtheKingswaysiteforacasino.Furthermore,theproposedKingswayEntertainmentDistrictwouldbecontrarytothepoliciesoftheCity’sOfficialPlan,theNorthernOntarioGrowthPlan,aswellas,thepolicydirectionandactionsprescribedtotheCitybytheDowntownMasterPlananditsFromtheGroundUpEconomicDevelopmentStrategy.

Inordertoproperlyinformthepublicaboutthemeritsofanexpandedandrelocatedcasino,aneconomicimpactstudyshouldbeconductedtomorefullyunderstandtheeconomicandfinancialimplicationstotheCity.Toourknowledge,thishasnotyetbeenundertakenbytheCity.Tobetterunderstandtheimplicationsofanexpandedcasino,wehavebeenabletoanalyzesomeoperationaldataavailablefromOLG.

Duringthefiscal2016-17yeartheSlotsatSudburyDownsattracted400,000visits28.

BasedontheCity’s5.25%shareofSlotsrevenuereportedas$2.2millionin2016/17,thetotalfacility“win”wouldbeapproximately$42million.WehaveundertakenadetailedanalysisoftheperformanceoftheSudburyslotsfacilityandcomparedittootherOLGSlotsandCasinosacrosstheProvinceinordertoestimatethecasinowinifthegamingfacilityweretoberelocatedtotheKingswaysite.ThedetaileddatasupportingourconclusionsarefoundinAppendixA.Inouropinion,acasinoontheKingswaysitewouldgenerateapproximately$75to$80millioninslotsandtablewin.Thefollowingsummarizesthelogicbehindthisestimate.

• TheKingswaysiteisbetterpositionedwithrespecttothegeneralSudburypopulationthanthecurrentSudburyDownssiteandcouldexpecttohaveagreaterdrawfromwithintheCity.

• Similarly,thecasinowouldhavetheabilitytodrawontheadditionalcrowdattractedtothesiteongameandeventdays.

282016-17OLGCommunityBenefitSummary.


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• ThefourOLGoperated(non-resortcasinos)drawmorerelativetothesizeoftheirPrimarymarketpopulationthantheSlotsonlyfacilities.In2016-17,theyattracted2.07visitsperresidentwithin40kmcomparedtoonly0.8visitsforslots-onlyfacilities.This,however,ispartlyduetothefactthatthecasinosaresituatedwithinurbanizedareas,whereastheslotsfacilitiestendtobesituatedonracetracksitesinruralsettings.Furthermore,averagecasinoperformanceisskewedbytheThunderBaycasino,whichisoneofonlytwogamingsitesthatcurrentlyhavenoothergamingcompetitionwithina40-kilometreradius(TheotherbeingtheOLGSlotsSudbury)29.

• Thewinperresidentwithin40kmisalsosignificantlyhigherforcasinosthanforslots-onlyfacilities.Onaveragecasinosattractabout74%moreslotwinpercapitathanslots-onlyfacilities.

• Thereisapositivecorrelationbetweenthenumberofslotmachinesandtheslotwinperslotfacilityvisit.Thefiveslots-onlyfacilitieswith252orfewerslotsmachinesaveraged$75inwinpervisit,whereasthesevenfacilitieswith738ormoreslotsmachinesgeneratedanaverageof$111pervisit.Sudbury,however,isananomaly,inthatitscurrent407,andpotentialfor600,machinesfallwithinasizablegaprelativetotheotherslots-onlyfacilities(thenextlargestisLondonwith738slotsandthenextsmallestisCentreWellingtonwith252slots).Whileitisnotpossibletodefinitivelyconcludethatanincreaseofabout200slotmachinesinSudburywouldgeneratehigherrevenuespervisitor,itislikelygiventhedatafromslotsfacilitiesacrosstheprovince.

Thesefactorswouldsuggestthattherelocationofthefacilityanditsconversiontoacasinowithupto600slotswouldresultinanincreasedwinforthenewfacility.However,therearesomeotherfactorsthatwillservetodampenthepotentialincreaseinwin.

• ThecurrentPrimarymarketpopulationfortheOLGSlotsSudbury(i.e.thepopulationwithin40kilometres)is162,000,whiletheSecondarymarketpopulation(i.e.thepopulationbetween40kmand120kmplusNorthBay)amountsto108,000,asper2016Censusdata.ThePrimarymarketpopulationwillnotchangewiththerelocationtotheKingswaysite.TheSecondarymarketpopulationhoweverwillbesubstantiallyreducedaftertheopeningofacasinoinNorthBay–decliningfrom108,000tojust29,000.

29TheSaultSte.MarieCasinohasnoCanadiancompetitionwithin40kilometres,butthemuchlargerKewadinCasinoissituatedwithina10-kilometredrivefromtheOLGcasinoinSaultSte.Marie,MichiganandtheBayMillsCasinoandResortalsoinMichiganisabout40kilometresfromtheOLGcasino.Similarly,theOLGSlotsatRideauRacewayinOttawahasnoOntariocompetitionwithin40kilometres,butiswithin25kilometresoftheCasinoduLac-LeamyinGatineau,Quebec.


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• TourismtoSudburyisdiscussedfurtherbelow.Inouropinion,gamingbytouristsoutsideofthe120-kilometreradiusfromtheKingswaysiteisnotexpectedtobeasignificantfactoraffectingthewin.TheGTAmarketisalreadywellservedbymajorgamingvenues,includingWoodbine,Innisfil(GeorgianDowns),CasinoRamaResortCasinoandtoalesserextentAjaxandGreatBlueHeron,aswellas,Milton,HamiltonandthetwoNiagaraResortCasinos.Theconversionofthecurrentslots-onlyfacilities(Woodbine,Innisfil,Ajax,MiltonandHamilton)tocasinoswithtablegames,andtheplannedexpansionsofWoodbineandGreatBlueHeron,aspartofOLG’smodernizationprogrammewillfurtherstrengthentheGTAgaminginfrastructure.Inaddition,majorUSbordercrossingsarealreadyservedbycasinogamingsites,bothontheCanadianandtheUSside.ItisunlikelythatthesmallerscaleofthecasinoinSudburywouldbeabletoattractasignificantnumberofnewtouriststothecommunityandwouldmostlikelysimplydrawonexistingresidentsandtouristsalreadyattractedtotheCityforreasonsotherthangaming.

• Revenuepervisitandslotrevenuepermachine/dayareloweratcasinosthanslots-onlyfacilities.Thisislikelybecausetablegamescompetewithslotsforplayerrevenueandbecauseaportionofcasinovisitorsareattractedpredominantlytotablegames.Inaddition,asthecasinostendtobeinurbanlocations,unliketheslots-onlyfacilities,itisexpectedthatthecasinosgeneratemorefrequentvisitationwithlowerspendingpervisit.Theaverageslotwinpermachineperdaywasestimatedat$201atcasinosand$416atslots-onlyfacilities.Thewinpervisitwas$70atcasinosand$103atslots-onlyfacilities.

• TheOLGSlotsSudburyalreadygenerateveryhighrevenuesandvisitationbasedonitspopulationwithin40km.The2.46visitorsperpopulationwithin40kilometersiswellabovetheaverageof0.8forslotsfacilitiesand2.07forcasinos.Itswinpercapitaof$258issecondhighestofallslots-onlyfacilitiesandonlylowerthanThunderBayandSaultSte.Marieamongthefourcasinos.ThisisduetothefactthattheOLGSlotsSudburycurrentlyhasnocompetitionwithinabout250kilometresandservestheNorthBaymarketwhichdoesnotyethaveagamingfacility30.However,withtheopeningofacasinoinNorthBay,itsmarketsharefromeastoftheCitywillbereducedsignificantly.

• Ourrevenueestimatesarebasedonthefollowingassumptions:

30ThenearestgamingfacilitiestoSudburyareCasinoRamatothesouthandtheSaultSte.Mariecasinotothewestbothapproximately250kilometresfromtheCity.


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o ThenumberofvisitstotheSudburyfacilityontheKingswaysitewilldoublefrom400,000to800,000duetoalargerfacility,crossvisitationonhockeygameandeventnights,andcloseraccessformanySudburyresidents.Thisrepresentsapproximately5visitsperpopulationwithin40kilometres–anincreaseoverthecurrentlevelof2.46.ThiswouldbecomparabletothedrawoftheSaultSte.MarieCasinoandwellaboveanycurrentslots-onlyfacilities.

o Theslotwinpervisitwillbereducedfromacurrentlevelof$110tobetween$65and$70.Thisrecognizesthatreducedslotrevenuepervisitwillresultfromtheintroductionoftablegamesandincreasedfrequencyofvisitationbythelocalpopulation(i.e.patronswillvisitmoreoften,butspendlesspervisit).

o Wehaveestimatedthatcasinotablewinwillrepresentapproximately30%ofoverallcasinowinwhichisconsistentwithexistingresortsandothercasinosinOntario31.

Theseassumptionswouldresultinanincreaseincasinowinfromacurrentlevelof$42milliontobetween$75and$80million.Thisrepresentsanincreaseofbetween$31and$36million.Basedonouranalysis,thevastmajorityofwhichwillbetheresultofincreasedspendingbySudburyresidents.

TheMajorityofMoneySpentattheCasinoWillLeaveSudbury?11.0Oneofthemostimportantconsiderationsindeterminingtheeconomicimpactofaninvestmentisunderstandingwhereexpendituresaremadeandhowrevenuesareultimatelydistributed.Alabour-intensivetouristattractionnearaninternationalborderwilltypicallydrawmorerevenuesfromoutsideofthecommunitythanmoniesflowingoutsideofthecommunityintermsofcorporateprofits,specializedlabourandequipment,administrativecosts,etc.

Thisisnotnecessarilytrueofacasinoinaninternalsitethatgeneratesfarmoreinrevenuesthanitpaysinannualwagesandmaynothaveaccesstoalargetourismmarket.InthecaseoftheOLGSlotsSudbury,duringthe2016/17corporateyearthefacilitygeneratedrevenuesof$42million.AssumingthatSudburywassimilartoSaultSte.Marieintermsofvisitationfromoutsideofthecommunity,then85%oftheserevenuesor$35.7millionwouldbe

31Ernst&YoungreportedthatonaverageOntarioresortcasinosgeneratebetween$1.0and$1.1millionpertableand$100,000perslot,whichtheyindicateisconsistentwithLasVegascasinos.(E&YCommercialCasinoinToronto,October2012.p.36).BasedontheselevelsurbanMetricshascalculatedthatthefourresortcasinosinOntariowouldgeneratebetween29%and30%oftheirrevenuesfromtablegames.Thisisconsistentwithourexperience.


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derivedfromSudburyresidentsandjust$6.3millionwouldbederivedfrompersonslivingoutsideSudbury.Basedontheunadjustedlicenceplatesurveyresults,whichlikelyoverstatethevolumefromoutsideoftheCity,75%oftheserevenuesor$31.5millionwouldbederivedfromwithintheCitywithabout$10millionbeingderivedfromoutside.

AsreportedbyOLG,themoniesspecificallyspentinSudbury(andsurroundingregion)include:

• $8.0millioninwagesandbenefitsforgamingemployees;• $1.4millioninpurchasesfromlocalandregionalvendors;• $2.2millionastheCityofSudbury’sshareofslotsrevenue;and,• Justunder$50,000insponsorshipoflocalfestivalsandevents32.

Thistotalsjustover$11.6million.Inadditiontothis,therewouldbeasmallamountpaidforrenttotheownerofSudburyDownsthatcouldbedeemedtostaywithinthecommunity.Inotherwords,OLGSlotswoulddrawinonly$6to$10millionfromoutsideofSudburyanddistribute$30millionoutsideofthecommunity.Effectively,$20to24millionisdrawnoutoftheCity’seconomyeachyearbythecurrentslotsfacility.

Whatthismeansisthatmoneysthatcouldotherwisehavebeenspentinotherentertainment,retail,restaurantandhospitalityvenuesintheCitywouldhavebeendrawntotheslots,wheretheywouldflowoutsideoftheCitytotheProvincialgovernment.

However,itisimportanttonotethatrevenuesfromcasinosandslotsgointotheProvince’sConsolidatedRevenueFund,whichisthegeneralfundthroughwhichmostofthegovernment’srevenuesflow.Fromtheserevenues,theProvincepaysformanycommunitybenefits,suchashospitals,amateursports,communityservices,etc.TheProvincealsosupportstheOntarioTrilliumFund,whichprovidesfundingforcharitableandnot-for-profitorganizations.So,someofthesefundsmayandlikelydoflowbackintotheCity.However,thereisnowayofknowing(a)whethermoregamingfundsarechannelledbacktotheCitythanaretakenfromit;(b)whethertheProvincewouldspendanylessinSudburyifitdidn’thavetheslotsfacility;and(c)howmuchmoneygeneratedbyacasinoinSudburyisbeingusedtofundprojectsincommunitieswithoutgamingfacilities.

Thereislittledoubtthatthecurrentslotsfacilityisdrawingmoremoneyoutofthecommunitythanisdirectlyspentinthecommunitythroughwages,theCity’sshare,etc.Howmuch,ifany,oftheserevenuesthatarereinvestedinSudburyisnowcontrolledbytheProvince.

32OLGCommunityBenefitsSummaries2016/17.


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Goingforward,thesituationislikelytobelessfavourabletotheCity,assignificantlymoregamingexpenditureswillbedrawnfromSudburyresidentsandfutureprofitswillnowbesharedbetweentheProvinceandtheprivateoperator–whichisaBCCompanywhoseprincipalshareholderisaTorontoinvestmentfirm.UnliketheProvincewhohasadutytothepeopleofOntario,GatewayCasinosisaprivatecompanyobligatedtoitsshareholdersandisundernoobligationtoinvestitsprofitsinthelocalcommunity.

WhileGatewayCasinoshasindicatedthatitplanstoinvest$60millionintoanewcasinoontheGatewaysite,thisislessthanthenetcasinorevenuesthatareprojectedtobegeneratedinthefirstfullyearofoperation.Thecompanyhasindicatedthatthisconstructionprojectwouldgenerate700yearsofconstructionemployment.Thiswouldbetheequivalentofabout16fulltimepermanentjobs33.WhilemostofthisemploymentwillbederivedfromwithintheCity,somemayneedtobesourcedfromoutsidedependingonthelocalavailabilityoflabourandthespecializationofconstructionskillsrequired.

Whilea$60millioninvestmentwouldbeimportanttoSudbury,itisrelativelysmallincomparisontothenetrevenuesthatwillbeflowingtotheProvinceandthenewoperatoronanannualbasis.

Inouropinion,aneconomicimpactanalysisthatfullyexamineswhethertheCitywillbenefitfromtheproposedcasinohasnotbeenundertaken.Thisstudywouldbekeytothecommunity’sunderstandingoftheimplicationsofacasinopriortoprovidingpublicinputintotheproposedGatewaysite.

TheKingswayEntertainmentDistrictMayNotResultina12.0SignificantNetEmploymentGainfortheCity

WhiletheproposedKingswayEntertainmentDistrictwillbearelativelylargeemployerwithinSudbury,itwillnotlikelygeneratemanyactualnewjobswithinthecommunity.Thisistrueforseveralreasons:

• ThelargestproportionofjobswillsimplybetransferredfromtheOLGSlotsatSudburyDownsandtheSudburyCommunityArenatothenewsiteandwillnotrepresentnewjobs;

• Thegrowthincasinowin,forthemostpart,willbederivedfromSudburyresidents,whowouldotherwisehavespenttheirmoneyelsewhereinthelocaleconomyandwouldotherwisebesupportingjobselsewhereinthecommunity.

33Basedona45yearaverageworkingcareer.


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• Casinosandslotfacilitiesarenotefficientgeneratorsoflocalemploymentrelativetotheirrevenues,andrelativetootherhospitalityandentertainmentbusinesses,suchashotelsandrestaurants.Forexample,$1,000,000spentinarestaurantwillgeneratesignificantlymorejobsthan$1,000,000spentinacasino.EverydollartransferredfromrestaurantsandotherhospitalityvenuesinSudburytotheCasino,representsanetlossinemployment.Thisislargelyrelatedtothelargeprofitstakenbycasinosandtheirlowerstaffingcosttorevenueratio.

TransferofJobsfromExistingFacilities

TheproposedEntertainmentDistrictwouldencompasstheSudburyCommunityArena,acasino,ahotel,restaurants,andpotentiallyotherunspecifiedretail,hospitalityandentertainmentuses.Thearenawouldhaveaslightlylargercapacitythantheexistingdowntownarena,soitmayemployasmallnumberofadditionalemployees.However,thebulkofemployeeswouldsimplybetransferredfromtheexistingarena.Mostimportantly,anarenaontheKingswaysitewouldlikelynotemployanyadditionalemployeesthanifitwereredevelopedinthedowntowncore.So,withrespecttothearena,theKingswaysitewouldnotresultinanyadditionaljobstothecommunity.

GatewayCasinoshasannouncedthatitwouldemployupto400employees34.However,therearecurrentlysome141formerlyOLGemployeesattheSudburyDownssiteandanother50workersemployedbytheracetrackownerinmaintenance,janitorial,securityandotherpositions.Sothatthenetadditionalemploymentwouldbeapproximately210persons.Asthecasinowouldincludeasignificantincreaseinbarandrestaurantfacilitiesovertheformerslotsfacility,weestimatethatabouttwo-thirdsofthesenewjobswouldberelatedtothefoodserviceandgiftshopfacilities35.

Ahotelcouldalsobeincludedaspartoftheconcept.Wewouldnote,however,thattheconceptforthedowntownentertainmentcentre/arenaalsoincludedahotel,sothatifthelocalmarketdemandwasavailabletosupportanewhotel,theKingswayEntertainmentDistrictwouldsimplybetransferringthisemploymentopportunityfromthedowntown.

TransferofEmploymentfromOtherLocalSectors

Asthebulkofnewcasinoexpenditures(gamingandnon-gaming)willbederivedfromSudburyresidents,thevastmajorityofemploymentatthecasinowouldbecreatedfrom34NewsreleasebyGatewayCasinosJune13,2017andStatementbyGatewayCasinosJanuary3,2018.35OLGNon-resortcasinoscurrentlygenerateapproximately15%oftheirincomefromnon-gaming.Assumingthatthecasinogenerates$80millioninrevenuesthiswouldresultinapproximately$14millioninnon-gamingrevenues.Infull-servicerestaurants,salariescomprise30%to35%ofsales.At30%,thiswouldamountto$4.2millioninwagesandsalaries.Atanaverage(fullandpart-time)salaryof$25,000thiswouldresultin168employees.At$30,000averagesalarythiswouldresultin140employees.


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revenuesthatwouldhaveotherwisehavebeenspendelsewhereinSudbury.Forexample,ifacoupledecidedtogotohavedinnerandgambleatthecasino,whereaspriortothecasino’sopening,theywouldhavegonetoalocalrestaurantandamovie,theirexpenditureswouldsimplybelosttothelocalrestaurantandmovietheatre.Asthisoccursonabroaderscale,otherlocalcommercialoperationswillreducetheiremployment,dampeningoreliminatingtheemploymentbenefitsofthecasino.

CasinosareNotEfficientLocalEmploymentGenerators

Basedontherevenuestheytakein,casinosarenotefficientemploymentgeneratorscomparedtootherhospitalityandentertainmentbusinesses.Thisisbecauseaverylargeshareofrevenuesarepaidoutinprofitstotheoperatorsandnotpaidtoemployeesinwages.Forexample,in2017theformerOLGslotsSudburyemployedsome141OLGemployees,withsome50otheremployeesandgeneratedgamingrevenueof$42millionandamarginalamountofnon-gamingrevenue.Thisamountstoonlysome4.5employeesper$1,000,000inrevenues.BasedontheGatewayCasinoestimateof400employeesandassuming$80millioningamingrevenuesand15%non-gamingrevenues,theproposednewcasinowouldgenerateonly4.2jobspermilliondollarsrevenue.Incomparison,byindustrystandardsrestaurantandfastfoodfacilitieswouldemploysome10to12employeespermillioninrevenues.

So,anysalestransfersfromotherpartsofSudburyfrommoreefficientemploymentgenerators,suchasrestaurants,tothecasinocomplex,wouldrepresentanetlossinemployeesforthecommunity.

TheAdditionalRevenuestoSudburyfromTheKingsway13.0EntertainmentDistrictWillNotBeSignificant

ThetwoprincipalsourcesofongoingrevenuetheCitywouldreceivefromthedevelopmentoftheKingswayEntertainmentDistrictwouldbetheshareofgamingrevenuesSudburywouldreceivefromthecasinoandpropertytaxes.

ShareofCasinoRevenuestotheMunicipality

UndertheMunicipalContributionAgreementthatOLGsignswithhostmunicipalities,Sudburyreceives5.25%oftotalslotwinuptothefirst$65million,3%onthenext$135millionandlowerpercentagesthereafter.Inaddition,theCitywouldreceive4%ofthetablewin.Asof2016/17,theCityreceived$2.2millioninrevenuesfromtheOLGSlotsfacility.Withafull-scalecasinoandexpandedslotsfacilitiesproposedontheKingswaysite,therevenuesavailabletotheCitywouldincrease.

AsindicatedonFigure1,anewcasinogeneratingawinofbetween$75and$80millionwouldincreasemunicipalrevenuesbybetweenabout$1.5and$1.7millionannually.


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Figure1:AdditionalShareofGamingRevenuesfromKingswaySiteCasino

PropertyTaxRevenues

Propertytaxeswouldbeavailablefromthecasino,thehotelandotherhospitalityfacilitiesthatwouldbedevelopedonthesite.SudburyCommunityArenaiscurrentlyclassifiedforPropertyTaxpurposesasCode721–Non-CommercialSportsComplex.Assuchitisalmostentirelytaxexemptwiththeexceptionofasmallamountclassifiedascommercialandpaymentinlieu.Themunicipalshareofpropertytaxes(excludingtheEducationshare)isapproximately$8,000.Ifthearenaremainsatitscurrentstatusforpropertytaxpurposes,theannualtaxrevenueswouldnotchangesignificantlyifitweretorelocatetotheKingswaysite.Theprincipalsourceofpropertytaxrevenuewouldcomefromthecasinoandancillaryhospitalityfacilities(i.e.hotelandrestaurants).

Inordertoappreciatetheimpactofanewfacility,suchastheproposedentertainmentcomplex,ontaxrevenuestotheCity,itisnecessarytounderstandhowthepropertytaxsysteminOntarioworks.AnewdevelopmentprojectdoesnotsimplyaddnewtaxestotheCity,butrathercausesaredistributionoffundstheCitydeemsitmustcollectfromtaxes.Ultimately,thetaxratesareseteachyearbasedonthetotalassessmentbaseintheCityandtheamountofmoneyitdetermines,throughitsbudgetprocess,mustbecollectedintaxes.AnewdevelopmentprojectdoesnotprovidetheCitywithnewmoney,butrathercanreducethetaxburdenontherestofthecommunity.

InthecaseoftheproposedKingswayEntertainmentDistrict,theassessmentofthetaxbenefitstotheCitymustalsotakeintoconsiderationthetaxlossesfromotherpartsoftheCity,aswellas,thecoststhattheCitywillhavetobearasaresultofanynewdevelopment.

Revenue Revenue% $ % $

Slots 52,000,000$ 5.25% 2,730,000$ 56,000,000$ 5.25% 2,940,000$Tables 23,000,000$ 4.00% 920,000$ 24,000,000$ 4.00% 960,000$TOTAL 75,000,000$ 3,650,000$ 80,000,000$ 3,900,000$

Less:ExistingRevenues 2,200,000$ 2,200,000$

NetAdditionalRevenues 1,450,000$ 1,700,000$

MunicipalShare$75Million $80Million

MunicipalShare


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Forexample,theCitywilllosethetaxrevenueorpaymentinlieucurrentlygeneratedbythecasinoatSudburyDowns.AsanOLGSlotsfacilityatSudburyDowns,thefacilitywasassesseddifferentlythanitwouldasafull-scalecasino,whichcouldbedevelopedontheexistingsite.TheassessedvalueoftheOLGSlotsfacilityasofthe2018assessmentyear36was$2,309,000.BasedonthecommercialtaxrateinSudbury,thiswouldgeneratejustunder$80,000inpropertytaxes,ofwhichtwo-thirdswouldbeavailabletotheCityandtheremainderwouldbeforeducation.WewouldnotethatthecurrentassessedvalueisextremelylowincomparisontoothergamingfacilitiesintheProvince.Forexample,theCasinoinSaultSte.Marie,whichgeneratesalowerwinthantheOLGSlotsSudbury,isassessedatover$12,000,000.Similarly,thecasinoinThunderBay,whichgeneratesnetrevenuesabout60%morethanthoseoftheSudburycasinoslotsfacilityisassessedat$47million–over23timesthevalueoftheSudburyfacility.TheconversionoftheOLGSlotsfacilitytoaprivatelyoperatedfullcasinowilllikelyresultinachangeinassessmentmethodologyandultimatelyassessedvalue;regardlessofwhetherthecasinoremainsontheSudburyDownssite,isrelocatedtotheGatewaysiteorelsewhere.AnassessmentofpropertytaxrevenuestoSudburymusttakethisintoaccount.

Inaddition,inouropinion,therelocationofthearenawillcausesomeclosureordisplacementofbusinessesfromthedowntown,particularlyrestaurants,barsandeatingestablishmentsthataresupportedbyattendeesofhockeygames.ThecasinoandassociatedhospitalitycomponentswillalsodrawbusinessawayfromotherpartsoftheCity.Totheextentthatthiscausesbusinesslossesand/orvacanciesinothercommercialbusinessesandhotels,thiswillalsoresultinreducedpropertyassessmentsandtaxes.Again,thesemustbedeductedfrompotentialEntertainmentDistricttaxestofullyunderstandthetruetaximpact.

Finally,propertytaxesarenot“freemoney”toamunicipalitybutcomewiththeobligationofprovidingmunicipalservicestothebuildingowners,tenants,andemployees.AdevelopmentsuchastheKingswayEntertainmentCentrewillrequireongoingmunicipalservicesthatwillconsumetaxes,suchasroadmaintenance,police,fireandparamedicsservices,socialservices,wastedisposalservices,planningservices,generaladministrativeservicesandotherservices.AdetailedfiscalimpactanalysiswouldberequiredtodeterminewhetherthepropertytaxesgeneratedbytheKingswaysitewouldbesufficienttooffsetthemunicipalcostsrequiredtosupportthefacility.

Insummary,whiletheproposedKingswaydevelopmentmaygenerateadditionalpropertytaxesandgamingrevenuetotheCity,withoutadetailedfiscalanalysis,itisnotpossibletodeterminewhetherthesewouldactuallyprovideanetsurplustotheCityorrepresentaloss.36EventhoughthefacilityhadbeentransferredovertoGatewayCasinosinMay,2017,itwasstillbeingassessedasaracetrackwithslotfacilitybasedonMPACPropertyLinereports.


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Clearly,simplyexaminingthegrosstaxesandotherrevenuesavailabletotheCityfromtheKingswayprojectwouldsignificantlyoverstatethenetfiscalimpact.

SocialandPublicHealthImpactsMustAlsoBeRecognized14.0Inadditiontoeconomicimpacts,therearearangeofpotentialsocialandpublichealthissuesassociatedwithcasinogamingthatremaintobeaddressedwithrespecttotheestablishmentofanewcasinoinSudbury.ArecentreportfromtheSudburyHealthUnit,aswellasothersimilarandsupportingresearchundertakenbyTorontoPublicHealth,identifyanumberofspecificconcernsrelatingtoapossibleincreaseintheprevalenceof“problemgambling”.Thisresearchfurtheridentifiesanumberofmitigationstrategiestobeconsideredastothelocationandrequiredoperatingconditionsofanewcasino.37

ThesearequestionsthathavenotyetbeenansweredineitherthePwCreportsorelsewhereandshouldbeaddressedpriortomakingadecisiononthisproject.

EconomicAnalysisRequiredPriortoApprovingtheRelocation15.0oftheArena

Inouropinion,amoredetailedeconomicanalysisisrequiredtobetterunderstandthetrueimpactsofrelocatingthearenaoutsideofDowntownSudburytoaproposedentertainmentdistrict,besideacasino,ontheKingsway.Somekeyquestionsthatshouldbeaddressedinclude:

• WhatwillbethelossofbusinessandjobsinthedowntownifthearenaweretoberelocatedtotheKingsway?

• WhatwouldbethelossinattractivenessofthedowntownasabusinessandresidentiallocationifthearenaweretoberelocatedtotheKingsway?

• Whatnewdevelopment(residential,office,retail,other“employment”typeuses,etc.)couldbeattractedtothedowntownwiththedevelopmentofanewarena?

• WillanentertainmentdistrictontheKingswaysite,includinganarena,casino,hotel,restaurantsandretail,etc.increaseSudbury’sdrawfromoutsideoftheregion?

• IstheresufficientmarkettosupporttheproposedentertainmentdistrictontheKingswaysite?

• TowhatextentwilltheproposedentertainmentdistrictontheKingswaysitecannibalizeexistingbusinessesinSudbury?

37Sudbury&DistrictHealthUnitBriefingNote,Re:TheHealthImpactofGamblingExpansioninGreaterSudbury(February14,2013)


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• TowhatextentwilltheproposedentertainmentdistrictdrawrevenuesawayfromcommercialareasdesignatedintheSudburyOfficialPlan?

• WilltherebesufficienteconomicbenefitsfromrelocatingthearenatotheKingswaysitetooffsetthelossofbusinessestoandattractivenessofdowntownSudbury?

• WhatisactuallyrequiredintermsofsitepreparationandservicingwithregardstotheKingswaysite?

• WhatistheprecisecostdifferentialbetweendevelopingtheKingswaysiteandthedowntownsitetakingintoconsiderationactualsitepreparation,servicingandsiteacquisitioncosts?

• HowmuchparkingwouldberequiredtosupportarenasinthedowntownandtheKingswaysite?Similarly,arethereanyotherlong-termmunicipalinfrastructurecostsrelatedtotheKingswaysitethathavenotyetbeenidentified(e.g.,streetmaintenance,publictransit,etc.)?

• Issufficientexistingparkingalreadyavailabledowntowntosupporttheproposedarenaandhowfarawalkwoulditbetoreachtherequiredparkingamount?WhatwouldthedifferenceinwalkingdistancetoparkingbeattheKingswaysite?

• Wouldtheconstructionofadditionalparkinginthedowntown,asproposed,enhancetheattractivenessofthedowntownsite?

• WouldtherebedifferencesintrafficdelaysleavinganeventbetweenthedowntownandKingswaysites?

• Towhatextentwouldthecasino,aspartofanentertainmentdistrict,relyonlocalexpendituresandtowhatextentwoulditenhanceexpendituresfromoutsideofthecommunity?

• WhatisthemarketforahotelontheKingswaysite?WouldahotelontheKingswaysitecausetheclosureofotherhotelsintheCity?WouldahotelontheKingswaysiteimpedethemarketforanewdowntownhotel?

• HowwilltherelocationoftheCommunityArenatotheKingswaysiteimpactthemarketforaconventioncentredowntown?

• HowwilltheKingswayEntertainmentDistrictimpactthemarketforaperformingartscentreinDowntownSudbury?

• Wouldacasino,aspartofanentertainmentdistrict,detractfromtheCity’sabilitytodrawknowledgeandcreativeworkersandinvestmenttothecommunity?

• Wouldincreasedinvestmentinthedowntown,includinganarena/eventscentrebebetterabletoattractknowledgeandcreativeworkersandbusinessestothecommunity?

Inadditiontothevariousunansweredquestionsabove,theproductionofmoredetailedfinancialdataandotherinformationisneededtoprepareapropereconomicimpactstudythatconsidersallofthefactorsidentified.


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Inouropinion,theredevelopmentoftheSudburyArenawillhaveprofoundimpactsonthecommunityandthelocationdecisionwillhaveanimmediateandlastingimpactonthelocaleconomy.Ifthearenaismovedoutsideofthecore,itwillalsoshifteconomicprosperityoutsideofthedowntowntoanotherpartoftheCity.IftheKingswayentertainmentsiteisultimatelyselected,theimpactwillbetotransferwealthfromthedowntowncore,whereitisenjoyedbyamyriadofdowntownbusinessestoasinglelandowner.Similarly,recognizingtheremotelocationofSudburyandtheproximitytootherexisting/proposedcasinosthroughoutNorthernOntario,anewandexpandedcasinocomplexattheKingswaysiteisexpectedtoderivethemajorityofitsspendingfromlocalresidents.ThissuggeststhatmostrevenuesatthecomplexwouldsimplybedivertedfromotherpartsoftheCityintermsoffood,retail,accomodationandentertainmenttypeexpenditures,ratherthanrelyingonadditional,or“netnew”growthinrevenuesfromvisitorstothecommunityfrombeyondtheRegion,asisthecasewithothermajorbordercasinos(e.g.,NiagaraFalls,Windsor,etc.).

Whiletheeconomicandfinancialworkthathasbeenconductedtodateprovidesaverygeneraloverviewoftherequirementsofanewarena,questionsremainastotheaccuracyofsomeoftheassumptionsanddataconsideredaspartoftheanalysespreparedtodate.Consequently,thereisinsufficientinformationtoenableandsupportCityCouncilinmakinganinformeddecisiononthemostappropriatelocationforthisveryimportantcommunityresource.

TheabovequestionsneedtobemorefullyansweredaspartofaneconomicandfeasibilitystudyrelatedtotheredevelopmentandrelocationoftheSudburyArena,therelocationoftheGatewayCasinoandtheproposalfortheKingswayEntertainmentDistrict.

Inconclusion,theProposedKingswayEntertainmentDistricthasmanyeconomicdrawbacksfortheCityanditislikelythatitseconomicandfinancialcostswouldoutweighitsbenefits.Asaresult,wewouldstronglyrecommendthatamoredetailedeconomicanalysisbeundertaken,beforeadditionalstaffandfinancialresourcesareinvestedbytheCitytowardsthisproposal.


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AppendixA:BackgroundGamingData


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AppendixA:BackgroundGam

ingData

Gam

ingType

SlotsTables

Estimated

CasinoorSlotsWin

Visits

CanadianPopulationwithin40

kmRadius

US

Populationwithin40

KmRadius

TotalPopulationwithin40

KmRadius

VisitsPerPopulationwithin40km

TotalWin

PerVisit

SlotWinPer

DayPerMachine

TotalWinPer

PopulationBrantford

Casino861

58101,000,000

$1,300,000

1,070,322

1,070,322

1.21

78$

225$

94$

PointEdward

Casino450

2149,000,000

$600,000

110,207

178,894

289,101

2.08

82

$209

$169

$SaultSt.M

arieCasino

43411

29,000,000$

600,000

84,626

26,276

110,902

5.41

48$

128$

261$

ThunderBayCasino

45011

51,000,000$

800,000

123,999

123,999

6.45

64$

217$

411$

Average549

2557,500,000

$825,000

347,289

2.07

70

$201

$144

$

AjaxSlots

880

0209,500,000

$1,800,000

3,118,074

3,118,074

0.58

116$

652$

67$

CentralHuronSlots

123

011,000,000

$200,000

66,846

66,846

2.99

55

$245

$165

$CentreW

ellingtonSlots

252

042,000,000

$500,000

806,408

806,408

0.62

84

$457

$52

$Chatham

-KentSlots

148

013,000,000

$200,000

121,133

51,169

172,302

1.16

65

$241

$75

$Ham

iltonSlots

804

0121,000,000

$1,000,000

1,832,722

1,832,722

0.55

121$

412$

66$

HanoverSlots

196

023,000,000

$300,000

82,222

82,222

3.65

77

$321

$280

$Innisfil

Slots996

0

125,000,000$

1,100,000

586,212

586,212

1.88

114$

344$

213$

LondonSlots

738

0105,000,000

$1,100,000

565,269

565,269

1.95

95

$390

$186

$Milton

Slots925

0

151,000,000$

1,100,000

2,896,686

2,896,686

0.38

137$

447$

52$

Ottaw

aSlots

1,236

0118,000,000

$1,200,000

1,808,326

1,808,326

0.66

98$

262$

65$

SudburySlots

407

042,000,000

$400,000

162,490

162,490

2.46

105

$283

$258

$Toronto(W

oodbine)Slots

2,995

0521,000,000

$5,400,000

5,543,677

5,543,677

0.97

96$

477$

94$

Woodstock

Slots236

0

27,000,000$

300,000

552,213

552,213

0.54

90$

313$

49$

Average764

116,038,462$

1,123,077

1,395,560

1,399,496

0.80

103$

416$

83$

Source:BasedonDatafromOLG2016/17Com

munityBenefitSum

maries.W

incalculatedbyurbanMetricsbasedonthem

unicipalshareasreportedintheOLGCom

munityBenefits

Summariesandtheshareform

ula.


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40KMRadiifrom

OLG

CasinosandSlotsFacilities


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40and120KmRadiifrom

SudburyDow

nsGatew

aySiteandtheProposedKingswayand

NorthBaySites


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AppendixB:LicencePlateSurvey

urbanMetricsinc.wasprovidedwithlicenseplatedatafromSudburyDowns,thesiteofGatewayCasinoSudbury(formerlyOLGSlotsSudbury)forfourdaysinFebruaryof2018–ThursdayFebruary8th,FridayFebruary9th,SaturdayFebruary10thandSundayFebruary11th.Thesewerecollectedatduringvarioustimeintervalsthroughouteachday,from6amto12am.Atotalof600licenseplateswerecollected,allocatedasfollows:

• Thursday–100plates• Friday–150plates• Saturday–200plates• Sunday–150plates

TheoutputwasthensenttotheMinistryofTransportation(MTO),tosortbasedonDisseminationArea.Afterprocessing,MTOreturnedatotalof574entriestourbanMetricsforanalysis.ThesefindingswereplottedbothbygeographyanddistancefromGatewayCasinoSudbury.Thefindingsproducedareshowninthetablebelow:

Asshown,theoverwhelmingmajorityofvisitorstothecasinoarrivefromSudbury,some74.2%.

Municipality NumberofRecords %BreakdownSudburyCensusSubdivision(includesChelmsford) 426 74.2%WestofSudburytoSaultSte.Marie(includesElliotLakeandManitoulinIslands) 54 9.4%EastofSudburytoNorthBay 32 5.6%GreaterOttawa 8 1.4%GTA 16 2.8%AllOther 38 6.6%TotalPlotted 574 100.0%


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ThetablebelowshowstheresultspresentedasafunctionofdistancefromGatewayCasino:

Asshown,74.2%ofvisitorscomefromwithin40kmofGatewayCasino.Atotalof88.0%ofvisitorscomefromwithina120kmradius,orfromtheCityofNorthBay.

Additionally,asshown,thebreakdownofvisitorsacrossthevariousdatessurveyedwasrelativelyconsistent.

Boundary NumberofRecords %ofTotalWithin40km 426 74.2%Within120kmandNorthBay 505 88.0%Beyond120km 69 12.0%

NumberofRecords

%ofTotal

NumberofRecords

%ofTotal

NumberofRecords

%ofTotal

NumberofRecords

%ofTotal

Within40km 70 74.5% 97 70.3% 142 72.8% 117 79.6%Within120kmandmunicipalboundaryofNorthBay 79 84.0% 120 87.0% 170 87.2% 136 92.5%Beyond120km 15 16.0% 18 13.0% 25 12.8% 11 7.5%

Thursday Friday Saturday Sunday


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AppendixC:CellPhoneData

Geofencingisanewtechnologythatisbeingusedbymarketresearchersasanalternativetolicenceplatesurveysandon-sitesurveys.Itmakesuseofcellphoneusagewithinageographicarea.Typicallythisinvolvesidentifyingasmallgeographicareaandtrackingcellphoneactivitywithinthearea.Differenttypesofinformationcanbeobtainedthroughthistechnology,includingvisitationpatterns,placeoforiginanddemographicdata.

ThroughdataavailablefromtheBellcellularnetwork,urbanMetricswasabletoobtaindatarelatedtothehomemunicipalityofpatronsvisitingOLGSlotsSudbury(NowGatewayCasinosSudbury).Thedataexcludedemployeesatthesite.

Thedataincludedpersonsvisitingthesiteduringthesummerof2017(July,August,andSeptember)andinFebruary2018.ThesummerdatawasusedtomimicaperiodwithhighvolumesoftouriststotheSudburyarea,whiletheFebruarydatawasusedasacomparisonwiththelicenceplatesurveyresults.

Thedataismorecomprehensivethanthelicenceplatesurveydata,inthatitincludesallpatronsonthesamecellularnetwork,regardlessofhowtheyarrivedatthefacilityandavoidsmanyofthebiasesofthelicenceplatesurveysthattendtooverestimatenon-localvisitation.

Overthestudyperiod,thesampleincludedsome2,637patrons,ofwhich84%livewithintheCityofGreaterSudburyand90%livewithin120kilometresofthesite.

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