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  • Lethbridge Chamber of Commerce 2017 Policies

  • Small Scale Renewable Energy (2017) Small Scale Renewable Energy (2017)

    Small-Scale Renewable Energy

     

     

    Issue

    AESO (Alberta’s Electricity System Operator) is pursuing a complex transition to move Alberta’s energy market from an EOM (Energy Only Market) to a CM (Capacity Market). One of the goals of this new market is to achieve 30% renewable energy generation by 2030. The chief obstacle to encouraging the kind of growth and diversification of generation required to move the energy market away from traditional carbon-based generation systems to renewable sources is a historically low market price for electricity combined with a government commitment to cap consumer power prices at 6.8 cents per KwH for the foreseeable future. (The pool price for generators is currently about 1/3 of this). This challenging price market has made it difficult for small-scale renewable energy projects to enter the market. However, there are distinct advantages to promoting the growth of small-scale renewable energy projects across the province. This paper will argue in favor of measures which will enable that growth.

     

     

    Background

     

    Due to new initiatives by the Government of Alberta, the province’s electrical systems is facing major changes over the next decade, changes that bring with them their share of challenges, as well as opportunities. Acting on the recommendations put forward by the Climate Change Advisory Panel, the government has directed AESO to pursue a target of “30 by 30”, or 30% renewable electricity generation by 2030, with the goal of eliminating coal-generated electricity by 2030. Furthermore, the very structure of the electrical market will be changing from an Energy-only Market, a market model where power plants are paid only for the energy they actually produce, to a Capacity Market Model, where generators are paid for having generation available to supply, whether or not any energy is actually produced and supplied. This market change is being made in the expectation that it will develop an energy grid that is more reliable and resilient.

    These changes are being made in a very challenging environment. For one, the operator is looking to phase out coal-generation, while growing renewable capacity, in a rapid-growth market. According to AESO, the demand for electricity in Alberta is projected to grow by 2% per year, for the next 20 years. That’s equivalent to adding a city the size of Red Deer each year.  Furthermore, Alberta is coping with a historically low energy price, a situation that is great for consumers, but which makes attracting investment – especially small-scale investment – a real challenge. In November, 2016 the provincial government also capped energy prices at 0.068$ per KwH (about double what it is now) in order to provide consumer protection in the event of rising prices.

    The result is that while the government is looking for new renewable energy generation projects to diversify the market, add capacity, and offer clean alternatives to traditional Firm Generation methods, market forces make it infeasible for new projects to be pursued. Even utility-scale projects cannot be attracted without the supports designed into the current Renewable Electricity Program to make them viable. The result is that investment is constrained and will be isolated into a small number of large-scale projects rather than diversified into numerous smaller projects.

    There are distinct advantages to encouraging the development of small-scale renewable energy projects through regulatory means. First, most large-scale renewable energy projects are Intermittent Generation facilities, meaning that they do not generate energy continuously, but rely on environmental factors such as wind or sunshine to produce electricity. With a growing portion of the electrical grid relying on these generation methods, and insufficient battery facilities available to distribute power production over time, it is important for AESO to explore ways to encourage Firm Generation methods that rely on renewable technologies. These facilities do exist in the form of biogas generation plants, geothermal generation, and several others, however they are relatively expensive to construct and operate, are more difficult to scale up, and most fall in the range of small-scale renewable energy projects (up to 5MW). However, encouraging the development of these facilities and technologies will build reliability, stability, and capacity into the electrical grid, while contributing to the ’30 by 30’ target. Investments in this sector will also encourage innovation in renewable energy production, as enterprising operators seek ways to make the processes more efficient, scalable, or pursue new methods of renewable production. Smaller generators such as these will necessarily be distributed more evenly around the province, creating local system dependability, relieving capacity pressure on expensive long-range transmission systems, and building firm generation capacity into local grids to off-set dependency on Intermittent Generation.

    In the current policy environment, while investment money exists in public coffers, it only makes sense to hedge our public bets by diversifying into the small-scale renewable energy market.

     

    The Lethbridge Chamber of Commerce recommends that the Government of Alberta:

    1. Create a program or carve-out for small-scale renewable electricity generators (0.1MW - 5MW) to specifically address the gap in market regulations and programs for renewable electricity generators exporting to the grid with a plant capacity of < 5MW.

    2. Use a levelized cost approach to subsidize electricity prices at a fixed price for these small generators in order to make the industry viable, as an investment in capacity building and innovation within the sector. The carve-out would allow project developers to apply to sell electricity at this price, within this carve-out, which would be fixed and guaranteed for 20 years in order to provide the necessary investor confidence. This fixed price system within the carve-out would foster investor confidence, ensure investment return and continued plant operation, while allowing small-scale renewable generators to operate, innovate, and contribute to the climate leadership plan and AESO’s ’30 by 30’ targets.

    3. Grandfather existing small-scale renewable generators into the new program or carve-out to support their continued operation.  

    4. Prioritize grid connection for small-scale, renewable (low-carbon) generation capacity. Grid connection costs, metering and infrastructure costs should be reduced or subsidised.

    5. Fund this program through an appropriate source, such as revenue generated from the Climate Leadership Plan.

     

    Download Pdf Here

  • Digital Broadband:The Essential Utility (2017) Digital Broadband:The Essential Utility (2017)

    Digital Broadband: The Essential Utility (2017) Policy PDF

    • Coauthored by: Hamilton Chamber of Commerce, ON

     

    • Cosponsored by: Edmonton Chamber of Commerce, AB ♦ Leduc Regional Chamber of Commerce, AB ♦ Spruce Grove & District Chamber of Commerce, AB ♦ Lacombe & District Chamber of Commerce, AB ♦ Three Hills & District Chamber of Commerce, AB ♦ Berwyn & District Chamber of Commerce, AB ♦ Strathmore & District Chamber of Commerce, AB ♦ Crowsnest Pass Chamber of Commerce, AB ♦ Kitimat Chamber of Commerce, BC ♦ Columbia Valley Chamber of Commerce, BC ♦ Cranbrook Chamber of Commerce, BC ♦ Ft. Nelson & District Chamber of Commerce, BC ♦ Chetwynd Chamber of Commerce, BC ♦ Surrey Board of Trade, BC ♦ West Shore Chamber of Commerce, BC ♦ Chambre de Commerce de Gatineau, QC ♦ Chambre de Commerce et d'Industrie de Vaudreuil-Soulanges, QC ♦ Meadow Lake & District Chamber of Commerce, SK ♦ Prince Albert & District Chamber of Commerce, SK ♦ Humbolt & District Chamber of Commerce, SK ♦ Chambre de Commerce du Grand Caraquet, NB ♦ Sydney & Area Chamber of Commerce, NS ♦ Yarmouth & Area Chamber of Commerce, NS ♦ Winkler & District Chamber of Commerce, MN

     

  • Creating a New Pharmaceutical Industry in Canada (2017) Creating a New Pharmaceutical Industry in Canada (2017)

     

    Creating a New Pharmaceutical Industry in Canada

     

    Issue

     

    A thriving pharmaceutical industry is growing poppies for medicinal use in the United Kingdom, Europe, and Australia - but not in Canada. The adoption of this industry not only presents a large diversification opportunity for the Canadian agricultural sector, but offers long term employment and growth opportunities across multiple sectors. The barrier to the establishment of this industry in Canada is an amendment to the Narcotic Control Regulations passed in June of 2016 that prohibits the commercial production of poppies in Canada regardless of their end use.

     

    Background

     

    A new variety of poppy with high levels of thebaine can be used to produce prescription drugs such as oxycodone and codeine, and does not contain the narcotic properties of traditional poppies.

     

    With thriving pharmaceutical industries growing poppies for medicinal use in the United Kingdom, Europe, and Australia, Canada - as a major importer of these products – has not been involved in the growing of poppies. Additionally, Canada is the only G7 country that does not grow or process the raw materials for pharmaceutical processing. With Canadians purchasing over $600 million in prescription medications derived from poppies in 2011, Canada has an opportunity to change this.

     

    In 2014 alone, Alberta saw domestic exports in excess of $121 billion. Of this figure, the U.S. accounts for 90.2%, or $109.5 billion of Alberta’s exports. Under trade agreements such as the North American Free Trade Agreement, this industry has the potential to serve a market in the U.S., in excess of $5 billion thereby increasing net exports from Canada as a whole.

     

    There are a number of provinces in our country that have the ideal growing conditions for a high thebaine content poppy crop. As such, this crop has the opportunity to provide several regions with a new industry through a diversification of the agricultural sector which will also promote continued long-term job creation and stability.

     

    Rationale for Domestic Growth

     

    There are numerous reasons why the Federal government should amend the Narcotic Control Regulations and encourage the growth of this industry.

     

    1. Thebaine, or codeine methyl enol ether, is an opiate alkaloid which is one of the primary ingredients in a suite of essential pharmaceuticals which are heavily relied on in the modern medical industry. Thebaine can be industrially converted into such essential medical compounds as oxycodone, oxymorphone, nalbuphine, naloxone, naltrexone, buprenorphine, and etorphine. By cultivating and processing thebaine in Canada we can secure a domestic supply for our medical industries, which would shelter Canada from international shortages or supply interruptions.

     

    Opponents will argue that the global distribution of poppy production sufficiently protects against supply shortages, however their conclusions are based on a myopic view that assumes supply interruptions will only be due to local weather or environmental factors, or regionally isolated geo-political disruptions. The history of the first half of the 20th century should serve as sufficient warning that much larger disruptions can and do happen periodically on a global scale, and wisdom would dictate that Canada should plan to secure a domestic source of these vital compounds against global trade disruptions on the scale experienced between 1914 – 1945. Moreover, other global environmental catastrophes beyond our ability to prevent offer additional imperatives for securing a domestic supply of key pharmaceuticals, including such uncertain factors as agricultural disruptions from climate change, or extreme geological, solar, and object-impact events.

     

    2. As the world’s largest producer of thebaine poppies, supplying nearly half the world’s demands, Tasmania grosses in excess of $100 million per year and the return to growers is estimated at between $70 to $90 million Australian dollars annually. In fact, Australia as a whole produces nearly 90% of the world’s supply of raw thebaine in a safe and economically viable fashion. With a similar economy and social structure, Canada’s entry into this market could create a substantial economic carve-out that would drive economic growth and diversification for the Canadian agricultural and medical production industries, while also decreasing our trade deficit. Following Australia’s example, we could become a prime, safe, and ethical producer.

     

    3. The majority of drugs manufactured from thebaine poppies are imported to Canada from American companies. Given the current protectionist attitudes prevalent in Washington, it is reasonable to assume that were an acute drug or supply shortage to occur, American pharmaceutical companies would focus on supplying American interests first. The development of a thebaine-based pharmaceutical industry here in Canada would protect our citizens against such a situation.

     

    4. The cultivation of thebaine poppies in Canada would be an easily achievable accomplishment for the Government of Canada in pursuit of their goals surrounding economic diversification, innovation, and key sector growth. This industry has the added advantage that it simultaneously breathes new life and vigour into multiple industries, including agriculture, pharmaceuticals, advanced manufacturing, and scientific research, and it opens up new opportunities for innovation research at the crossroads of diverse disciplines.

     

    It is critical for the federal government to allow the private sector to innovate and find new, value-added opportunities by using our soil, water, processing factories, and research scientists. Promoting the success of public-private partnerships in the growth and diversification of the agricultural market will contribute to a long-term sustainable economy.

     

    The Canadian Chamber of Commerce supports the creation of a cluster of biological science industries that would match farm commodities with biotechnical research. This approach has the potential to stabilize the foreign exchange fluctuations that negatively affect the international competitiveness of many agricultural and manufacturing sectors.

    The Canadian Chamber of Commerce recommends that the Government of Canada:

     

    1. Amend the relevant section of the Controlled Drugs and Substances Act - Narcotic Control Regulations, to allow for the commercial cultivation, gathering, and production of opium poppies for the development of a domestic pharmaceutical industry.

     

    1. Facilitate the creation of a new pharmaceutical industry by communicating to the federal Minister of Health that when reviewing applications for approval, the Minister recognizes the potential of farming and processing of high-level thebaine poppy in Canada for the pharmaceutical industry; and that these applications be expeditiously reviewed and approved by Health Canada and the Canadian Food Inspection Agency to help diversify the Canadian economy.

     

    1. Engage, invest in, and provide support to this new emerging industry as part of the long-term strategy for the economic diversification of Canada.

    Download PDF Here

  • Solicit Bids from Private Industry for Recycling Contracts (2017) Solicit Bids from Private Industry for Recycling Contracts (2017)

     

    Solicit Bids from Private Industry on Recycling Contracts

     

    Issue

     

    The City of Lethbridge’s Infrastructure Services Department has recommended to Council that they institute a city-run residential recycling service without issuing a call for proposals to explore the option of using private contractors in order to ensure that the taxpayers of Lethbridge receive the best value for their dollar.

     

     

    Background

     

    Over the past 12 months the City of Lethbridge has moved towards instituting a city-wide residential recycling service and the creation of a city-owned 14 million dollar, 10 tonne-per-hour MRF located at the civic Waste and Recycling Centre. In recent months it has become apparent that, acting on the recommendation of the City Administration, Council is poised to approve the provision of these services as an extension of the municipal garbage collection and waste services without exploring bids from private contractors.  

     

    The Lethbridge Chamber of Commerce is concerned by this trajectory and is calling for Council to direct the City Administration to issue requests for proposals for the proposed contracts to private industry before recommending a final plan for Council to review.

     

     

    Note

     

    The Lethbridge Chamber of Commerce wishes to emphasize that we support responsible municipal waste diversion/recycling and support the Residential Waste Diversion Strategy as set forward by the City of Lethbridge (November 30, 2015).

     

     

    Justifications

     

    The following list of reasons forms the basis of our request that City Council direct the administration to issue a call for proposals to private industry for the proposed recycling services.

     

    1. Most Lethbridge residents want the City to put out a request for proposals

     

    In the month of April, 2017 the Chamber of Commerce conducted an online poll of the general population of Lethbridge. This poll solicited enough feedback to be reasonably representative of the population as a whole with an estimated 95% confidence level (+ or – 3.37%) based on mixed snowball and random sampling via Facebook distribution algorithms and widespread posting through numerous online community forums


    The poll returned the following results:

       

    • 94% of residents regularly recycle

    • 60% of residents are not happy with current

       recycling options

    • 73% of residents think the city needs curbside

       recycling for all residents

    • 70% of residents think the city should ask for bids    

      from recycling businesses

     

    *Please note that these results are representative of the population of Lethbridge as a whole and are not necessarily the adopted positions of the Lethbridge Chamber of Commerce or its membership.

     

    1. The City has a responsibility to taxpayers to explore all options

     

    The study conducted by Skumatz Economic Research Associates Inc. into feasible options for providing curbside recycling recommended that the City pursue the public option based on a scoring of the various recycling alternatives. However, the assessment includes a number of unjustified assumptions. These include the assumption that profit margins for private industry would offset the increased cost of city-run labour and overhead, that stranding city assets by reducing garbage collection services or reducing city-staff employment are negative factors, that the city can provide better customer service, and that the city can provide more effective customer outreach.

     

    In addition, the same study looked at numerous comparable cities to see how they are conducting their waste diversion. Cities using private options and cities using public options reported a wide range of situations, reporting both positive and negative outcomes from public and private options. Significantly, the study offered a glowing report of the situation in Red Deer, Alberta, where the municipality has had a very successful relationship with a contracted hauler.

    The factors which yield success or failure in any of these scenarios seem to have much more to do with the quality and conscientiousness of the parties involved rather than whether or not the option is private or public. If this is the case, the City would be doing its citizens a disservice by defaulting to the public option and not exploring all options in order to ensure that they are giving residents the best deal for their dollar.

     

    1. Private industry should shoulder the risk instead of the tax payer

     

    If recycling contracts were to be issued to private industry, the financial risk of the project would be largely shouldered by the companies involved. This risk is a fantastic motivating factor to encourage companies to innovate and build systemic efficiencies that keep costs down in order to preserve their profit margin. If return on investment for private industry is unsupportable, they are forced to find or develop new efficiencies or else face going out of business. With a city-run option, if the system is unable to pay for itself, it is highly probable that taxpayers will shoulder the shortfall – even if there is no market for the recyclables. Additionally, if various factors divert recyclables to alternate processing facilities such that the MRF is not able to work at capacity, this will put financial pressure on the city-run system which could also lead to increased costs for tax-payers.

     

    1. Private industry is able to expand to provide regional services

     

    Smaller centres around Lethbridge and Southwestern Alberta might also be keen to participate in a waste diversion strategy. Private industry has the regulatory flexibility to operate and compete in multiple municipalities at a time. A Lethbridge-based private hauler could easily expand to provide regular recycling services to nearby communities, further improving the environmental return on the initiative for our region and off-setting costs.

     

    1. Private industry has a natural imperative to innovate to remain efficient and competitive

     

    If the commodity price of recyclables collapses, private industry has every incentive to find new markets for their products in order to move their goods and protect their profits. On the other hand, city run services are far less motivated to innovate, since their fiscal imperative is merely to break-even. In this sense, private industry is far more likely to develop innovative ways to use or market recyclables, and therefore private industry is likely to produce a greater environmental return. It is likely that if the City is unable to divert a recyclable product due to fluctuating commodity prices, it will be funnelled into the landfill or be placed in long-term storage.

     

    1. The City should not have a monopoly on waste diversion

     

    The creation of a city recycling service brings with it the effective monopolization of the waste diversion industry for our local area by that city service. Private enterprise is hardly likely to compete with a city-run and city-subsidized hauler that can operate with the freedom of not having to worry overmuch about their bottom line. With an effective monopoly on waste diversion in place, the city is free to set their rates to always yield break-even budgets, regardless of cost increases, inefficiencies, and fluctuating market prices which private enterprise would have to adapt to. The loser will always be the tax-payer who must shoulder any budgetary shortfalls. The environment could also lose out if growing diversion costs force local businesses to seek alternative waste diversion options outside of the region – provided by private enterprise. If this were to occur, the city service’s return on investment would drop, prompting further tax increases to subsidize the department’s budget. This is a very real risk if more companies move into the waste diversion industry and find ways to undercut municipal diversion rates.

     

    An additional fear is that the sheer size of the proposed MRF will necessitate that it must operate at or near capacity in order to fiscally justify its existence, which could lead to the city moving into commercial and industrial waste diversion – especially if private contractors in this market-segment opt for diverting their recyclables through a different facility other than the city-owned MRF.

     

    1. The City should not be in competition with private enterprise

     

    It has been a long-standing policy of the Lethbridge Chamber of Commerce that the Municipality should not compete with private industry, but should rather be a facilitator of local commerce. A city-run service threatens to put at least three local companies out of business without even offering them the opportunity to bid on the contracts, despite the demonstrated ability of at least one of these companies (eFutures) to secure capital for rapid expansion. We believe that wherever possible the city should encourage the provision of services by private industry with the belief that private industry can generally provide services that are more cost effective, more efficient, and more innovative.

     

    7.     Private Enterprise can have a greater environmental impact than the City

     

        The City is proposing to build their MRF on the same property as the City Waste and Recycling Centre. This location is highly convenient for diverting waste, but not for moving recyclables to market. It is very likely that without a clear strategy for transporting these goods to market, and without a fiscal imperative to be profitable, many products will sit in a stockpile, costing the tax payers money. Private industry would be motivated from day 1 to move profitable goods to market and to find ways to make this process as efficient as possible. Additionally, private industry would be strongly motivated to find new markets and/or new uses for less profitable waste products. Additionally, private industry would be highly motivated to find ways to divert additional waste to increase the scope and profitability of their operations. It is therefore likely that employing a private contractor would yield a greater environmental impact than relying on a city-run service.

     

        As an additional note, private industry is strongly motivated to gain resident participation in the program and is likely to work hard to educate and encourage residents to expand their use of the curbside recycling program in order to divert more waste and thus increase their profit margins.

     

    8.  Moving ahead with the public option without considering private industry would violate the City of Lethbridge’s 2014-2017 Strategic Plan.

     

    The decision by the City of Lethbridge to not put out a call for proposals for waste diversion contracts would, arguably, be contrary to many of the strategic goals laid out in the city’s 2014-2017 Strategic Plan. We have outlined the conflicts below.

     

    1. Strategic Goal 1.2

     

    (City Council will…) “Engage with citizens early and often using a variety of engagement tools and resources”

     

    City Council has moved ahead towards instituting a publicly run recycling service without genuinely engagement with the public on the issue of public vs. private. Local businesses currently providing recycling services were informed of the city’s decision after the option had already been selected, rather than consulted in advance of the decision to not put out a call for proposals.

     

    (City Council will…) “Identify and engage stakeholders in the decisions of City Council, and encourage active participation”

     

    The City has not engaged with local stakeholders regarding the decision to proceed towards a public option. As noted, the meetings held with local waste diversion businesses were held after the decision to proceed with the public option had ostensibly been made. Additionally, local interest groups and associations, such as the Chamber of Commerce - groups whose membership will likely be affected by these decisions, were not consulted on the issue of public vs. private. Furthermore, to our knowledge, the city did not consult with surrounding municipalities to consider the effects of the public option on regional partnerships and regional plans.

     

    1. Strategic Goal 2.0

     

    (City Council will…) “Budget to achieve the current and future priorities of our community by … Exploring the strategic risks and benefits of alternative funding options.

     

    In this issue, the private option has not been fully explored and so the City cannot claim to have achieved this strategic goal.

     

    (City Council will…) “Budget to achieve the current and future priorities of our community by … Promoting financial best practices to achieve economic sustainability”

     

    Best practice in this matter would have involved fully exploring the options available by putting out a call for proposals to private industry to better understand the options available – particularly since the most comparable city (Red Deer, AB) in the Skumatz study enjoys a thriving cooperation with private contractors who provide their waste diversion contracts.

     

    (City Council will…) “Review services levels to maximize community value”

     

    Without analyzing proposals from private industry, the city cannot know if it is maximizing service levels for its citizens and giving them the best value for their dollar on waste diversion services.

     

    (City Council will…) “Provide opportunity for the community to better understand the value proposition in taxes, service fees, and utility rates”

     

    Our call for a motion in this paper specifically arises from the fact that the City has not demonstrated that the course which we seem to be on represents the best value for citizens of Lethbridge. Without fully exploring the private option, there is a hanging question as to whether or not citizens are receiving the best deal – especially when comparable cities are getting good value from a private option.

     

    1. Strategic Goal 4.2

     

    (City Council will…) “Consider ways to streamline city processes and make them more business-friendly”

     

    This initiative increases the size and scope of the city administration without due consideration to how the services could be outsourced to private industry. Additionally, it sends a very negative message to industry, and discourages the growth of private industry in the waste diversion market for our region.

     

    (City Council will…) “Increase our engagement and consultation with the business community”

     

    This goal has simply not been pursued on this issue. No consultation was conducted with local business or interest groups on the decision to pursue a private or public option before the decision was made. The only consultations with local businesses followed the decision and were to inform those businesses that the decision had already been made and to indicate to them where market gaps might exist that they could divert their efforts into.

     

    1. Strategic Goal 5.1

     

    (City Council will…) “Investigate the implementation of curbside recycling”

     

    Our contention here is that the City will not have done their due diligence without fully exploring the options provided by private contractors.


     

     

    Recommendation

    The Lethbridge Chamber of Commerce recommends that City Council move to direct City Administration to issue Calls for Proposals for all proposed Waste Diversion Services which are being contemplated in support of the City’s Waste Diversion Strategy. Our chief concern is for the City to explore all options on behalf of the tax payer and our membership.


     

     

    Corollary

    To avoid any confusion The Lethbridge Chamber of Commerce wish to make it perfectly clear that we are not opposed in principle to a city-run recycling service if and only if it is demonstrably the most efficient option which yields the greatest value for the tax-payer. This cannot be determined without a request for proposals from private industry.

    Download PDF Here

  • Development of a Multi-Use Convention and Arts Centre (2017) Development of a Multi-Use Convention and Arts Centre (2017)

     

    Development of a Multi-Use Convention/Arts Centre

     

    Issue

     

    The Lethbridge Chamber of Commerce has been asked to provide support for a Convention Centre, an Art Gallery, and a Performing Arts Centre. While the Chamber sees the value in each of these projects, we believe there are compelling reasons to consider collaboration between the invested parties in order to deliver all three projects in a format which will create a competitive facility that will attract tourism and conference-attendee dollars, while also improving the cultural life of the city and acting as an economic driver for the city as a whole. Additionally, collocating these facilities offers an opportunity for increased economic diversity which could act as a stabilizing factor for when key industries experience another downturn.

     

     

    Background

     

    There has been a growing call in Lethbridge for the construction of a Convention Centre. The assumption is that this project would act as a key economic driver, bringing in millions of dollars in outside money from convention delegates, and helping to advance Lethbridge’s image as a future-forward city that is open for business. At the same time, there has been growing support for a new performing arts centre as the aging Yates Centre (built in 1965) struggles with capacity and technical issues and is embarking on costly renovations. Finally, the arts community has been calling for a civic art gallery to further invigorate the city’s cultural life, citing the University of Lethbridge’s art collection – one of the largest in Canada – as a world-class source of content. Such an art gallery could be one of the most significant facilities in the country. When considering each of these projects, the city needs to take a pragmatic view of the economic viability of these centres independently of each other and make careful decisions on how to minimize burdens on the public purse while maximizing economic payoff to the community as a whole.

     

    The Challenge for Convention Centres in Small Cities

     

    The allure of a convention centre is the possibility of attracting hundreds of new visitors to the city every year. This prize is made even more appealing by success stories coming out of such cities as London Ontario and Vancouver B.C. Cities like these report significant returns in the form of cash injections directly into the local economy. London, for instance, reported that the economic impact of their convention centre was over $16 million in 2015, based on an estimate of $309 per day, per delegate, with 110,941 delegate-days (less costs), and that since 2008, the Centre had helped to inject an estimated $141 million dollars into the local economy

     

    However, it is misleading to assume that these success stories constitute the norm. The convention centre craze took off in North America in the late 70’s and continued throughout the next few decades. During the ‘convention boom’ there was a growing demand for public hosting spaces. Yet the successes of early centres drove more and more cities to try and compete. Many cities aimed to capture even %1 of the convention market, a share which would have been lucrative, except for the fact that hundreds of cities jumped on board, over-saturating the market. Furthermore, there simply are no longer as many conventions to go around. The actual number of conventions hosted across North America has been steadily falling since the mid 1990’s and continues to decline as companies cut costs and new technologies bring the world closer together. In a 2005 Brookings Institution report on convention centres, Heywood Sanders wrote:

     

    The overall convention marketplace has shifted dramatically, in a manner that suggests that a recovery or turnaround is unlikely to yield much increased business for any given community. Less business, in turn, means less revenue to cover facilities’ expenses, and less money injected into local economies.

     

    In the Canadian market alone there are 53 Convention Centres, and the United States boasts hundreds. This is the market that the City of Lethbridge is considering jumping into.


    Convention Centres themselves typically operate at a loss. The economic impact figures from even the most successful centres are optically crafted to trumpet the benefit to the city in terms of cash injected into the local economy, while unflattering operating budgets are quietly filed away. Intense competition in the market segment means that booking such buildings is a challenge. Furthermore, the very nature of that challenge means that centres often offer fiscal incentives to convention groups in order to attract them. Due to the large public cost of financing a world-class facility, many municipalities have found themselves servicing large loans over a multi-decade period, while also funding much of the operating budget. This overhead can quickly add up and negate the economic benefits to the community.

     

    For small cities the problems are pronounced because in attracting customers to their centres, they have to compete against much larger centres that offer more and better amenities, tourist attractions, and more convenient travel options. In order to attract conventions away from larger centers, small city convention centres offer lower booking prices, which only further exacerbates the fiscal challenges that they already face.

     

    The Challenge for Arts Centres in Small Cities

     

    Dollars spent on growing the arts community in municipalities yield long-term economic benefits to a region. According to a recent study, municipalities with one or more professional symphonies, operas, or ballet/dance organizations were strongly correlated with an increased ‘knowledge class’, and cities with an increased ‘knowledge class’ are strongly correlated with increased economic development. Educated urban professionals want to live in a city with cultural options, and these kinds of individuals contribute significantly to the economic health of a city.

     

    However, while the health of the arts community may contribute to the health of the local economy, it is no secret that actual arts centres in small to medium size cities are plagued by fiscal problems and tend to operate at a loss. Consider, for example, the balance sheet of our own Yates Memorial Theatre here in Lethbridge.

     

    Figure 1.1: Operating Budget of Yates Memorial Centre 2013 - 2018

     


     

    Year after year the operating costs have exceeded the revenue brought in by the Centre to the tune of nearly $300,000. This is not uncommon. The River Run Centre in Guelph, Ontario operates year after year with a subsidy of around $600,000, in 2009 the Esplanade Arts and Heritage Centre in Medicine Hat face a shortfall of $669,707, and the projected subsidy required for the proposed Lethbridge Performing Arts Centre was originally estimated at $1.4 million for the first year of operation. Small cities seldom attract big enough acts to support the kinds of revenues needed for an arts centre to be self-sufficient. Additionally, the size of small city venues cannot support the kinds of crowds that revenue-generating acts demand.

     

    Public Art Galleries offer the same benefits and face the same problems. In small centres, the paying customer base for a public art gallery is simply not large enough to cover the expenses associated with operating such a facility, let alone expanding it.


    In the balance of probability, a civic Convention Center, a new civic Performing Arts Centre, or a public art gallery located in Lethbridge will struggle to balance their books and may need to have their budgets subsidized by public funding in order to remain viable.


     

    Spend Smarter, Not Harder

     

    However, if properly sited, with a smart business model, and with an eye for compounding efficiencies, these facilities could deliver a positive economic impact that compensates for the public investment over their lifespan, and offer a real opportunity for Lethbridge to continue diversifying its economy. We believe that these goals can be achieved by cooperation between the interested parties, and the collocation of these three facilities into a single building/location.

     

    The advantages are numerous.

     

    1. The spaces typically incorporated into these kinds of facilities can be used by multiple business sectors and the arts communities, allowing site managers an easier time booking up the facility and generating as much revenue from as many square feet for as many days of the year as possible. Theatre spaces can easily play host to conventions, and meeting spaces can easily play host to a wide range of arts-related activities or art exhibitions.

     

    1. The presence of a performing arts centre and a world-class art collection housed within a convention space would make the Lethbridge Convention Centre competitive in attracting arts-related conferences to this city, and would help to branch out the local economy into this sector. While also driving additional tourism. We would in fact, have our first significant tourist attraction.

     

    1. The collocating of these facilities offers an organic means of cross-promotion and greater civic inclusion. Separately sited civic facilities typically only play host to those already interested in the services offered by that facility. Collocating drives more individuals into a space where cross-promotion can yield results.

     

    1. The extensive operational efficiencies associated with the city only having to maintain one set of staff, pay one set of bills, and deal with ongoing maintenance issues for only one site are significant. The savings gained from engaging in only one construction project, instead of three, are also significant.

     

    Given the fiscal challenges that each of these facilities face, collocating to lower overhead and maximize utilization just makes sense.

     

    Location, Location, Location

     

    If such a centre is to be an effective economic driver, its’ location needs to satisfy two logical imperatives.

     

    1. The facility needs to be positioned to attract as many customers as possible.

    2. The facility needs to be positioned to drive as much economic activity in its’ immediate vicinity as possible.

     

    Point 1:  Numerous market studies have been conducted on what convention planners are looking for when selecting a facility. The City of Lethbridge needs to position any potential centre to appeal directly to the concerns of these potential customers. This means positioning it based on unbiased, data-driven analysis. Studies have looked directly at this issue and their results are easily accessible (see the 2014 Watkins Research Group survey of meeting and convention planners for example).

     

    Point 2: The location of the Centre also needs to drive as much associated economic activity as possible. It needs to be located somewhere that is walkable to hotels, restaurants, shops, entertainment, and other civic amenities. Again these decisions should be made based on unbiased, data-driven analysis. The centre itself, if placed strategically, could also help improve the image of the city by catching the eye of traffic passing through town, which would assist with the City’s efforts to rebrand Lethbridge as a vibrant urban centre.

     

    If the City of Lethbridge approaches these projects with an objective eye to reducing overhead by compounding efficiencies through collocating facilities, with the ultimate goal of driving as much economic activity as possible for the region, then we may just succeed in the highly competitive Convention industry and be able to further boost associated economic activity by diversifying our economy and growing our knowledge workforce.

     

     

    Recommendations

    The Lethbridge Chamber of Commerce recommends that the City of Lethbridge:

    1. Consider the development of a multi-use Convention Centre with an integrated Performing Arts Theatre and an Art Gallery (in cooperation with the University of Lethbridge) as a high priority in their Capital Improvement Program, with the key outcome of driving increased economic activity, economic diversity, and the growth of a knowledge workforce.

    2. Locate this facility based on an unbiased analysis of key factors which would yield a facility able to compete optimally in a highly competitive market. These considerations should include, but are not limited to:

      1. Attractiveness to Event Planners (data driven).

      2. Possibilities for flexibility of use in order to maximize utilization.

      3. Walkable access to hotels, restaurants, local shopping, entertainment, cultural locations, and civic facilities.

      4. Accessibility by transit and connectivity options to the local airport.

      5. Ease of access for parking and delivery, easy access from highways.

    Download PDF Here

  • Engaging the Voice of Business in Municipal Planning (2017) Engaging the Voice of Business in Municipal Planning (2017)

     

    Development of a Multi-Use Convention/Arts Centre

     

    Issue

     

    The Lethbridge Chamber of Commerce has been asked to provide support for a Convention Centre, an Art Gallery, and a Performing Arts Centre. While the Chamber sees the value in each of these projects, we believe there are compelling reasons to consider collaboration between the invested parties in order to deliver all three projects in a format which will create a competitive facility that will attract tourism and conference-attendee dollars, while also improving the cultural life of the city and acting as an economic driver for the city as a whole. Additionally, collocating these facilities offers an opportunity for increased economic diversity which could act as a stabilizing factor for when key industries experience another downturn.

     

     

    Background

     

    There has been a growing call in Lethbridge for the construction of a Convention Centre. The assumption is that this project would act as a key economic driver, bringing in millions of dollars in outside money from convention delegates, and helping to advance Lethbridge’s image as a future-forward city that is open for business. At the same time, there has been growing support for a new performing arts centre as the aging Yates Centre (built in 1965) struggles with capacity and technical issues and is embarking on costly renovations. Finally, the arts community has been calling for a civic art gallery to further invigorate the city’s cultural life, citing the University of Lethbridge’s art collection – one of the largest in Canada – as a world-class source of content. Such an art gallery could be one of the most significant facilities in the country. When considering each of these projects, the city needs to take a pragmatic view of the economic viability of these centres independently of each other and make careful decisions on how to minimize burdens on the public purse while maximizing economic payoff to the community as a whole.

     

    The Challenge for Convention Centres in Small Cities

     

    The allure of a convention centre is the possibility of attracting hundreds of new visitors to the city every year. This prize is made even more appealing by success stories coming out of such cities as London Ontario and Vancouver B.C. Cities like these report significant returns in the form of cash injections directly into the local economy. London, for instance, reported that the economic impact of their convention centre was over $16 million in 2015, based on an estimate of $309 per day, per delegate, with 110,941 delegate-days (less costs), and that since 2008, the Centre had helped to inject an estimated $141 million dollars into the local economy

     

    However, it is misleading to assume that these success stories constitute the norm. The convention centre craze took off in North America in the late 70’s and continued throughout the next few decades. During the ‘convention boom’ there was a growing demand for public hosting spaces. Yet the successes of early centres drove more and more cities to try and compete. Many cities aimed to capture even %1 of the convention market, a share which would have been lucrative, except for the fact that hundreds of cities jumped on board, over-saturating the market. Furthermore, there simply are no longer as many conventions to go around. The actual number of conventions hosted across North America has been steadily falling since the mid 1990’s and continues to decline as companies cut costs and new technologies bring the world closer together. In a 2005 Brookings Institution report on convention centres, Heywood Sanders wrote:

     

    The overall convention marketplace has shifted dramatically, in a manner that suggests that a recovery or turnaround is unlikely to yield much increased business for any given community. Less business, in turn, means less revenue to cover facilities’ expenses, and less money injected into local economies.

     

    In the Canadian market alone there are 53 Convention Centres, and the United States boasts hundreds. This is the market that the City of Lethbridge is considering jumping into.


    Convention Centres themselves typically operate at a loss. The economic impact figures from even the most successful centres are optically crafted to trumpet the benefit to the city in terms of cash injected into the local economy, while unflattering operating budgets are quietly filed away. Intense competition in the market segment means that booking such buildings is a challenge. Furthermore, the very nature of that challenge means that centres often offer fiscal incentives to convention groups in order to attract them. Due to the large public cost of financing a world-class facility, many municipalities have found themselves servicing large loans over a multi-decade period, while also funding much of the operating budget. This overhead can quickly add up and negate the economic benefits to the community.

     

    For small cities the problems are pronounced because in attracting customers to their centres, they have to compete against much larger centres that offer more and better amenities, tourist attractions, and more convenient travel options. In order to attract conventions away from larger centers, small city convention centres offer lower booking prices, which only further exacerbates the fiscal challenges that they already face.

     

    The Challenge for Arts Centres in Small Cities

     

    Dollars spent on growing the arts community in municipalities yield long-term economic benefits to a region. According to a recent study, municipalities with one or more professional symphonies, operas, or ballet/dance organizations were strongly correlated with an increased ‘knowledge class’, and cities with an increased ‘knowledge class’ are strongly correlated with increased economic development. Educated urban professionals want to live in a city with cultural options, and these kinds of individuals contribute significantly to the economic health of a city.

     

    However, while the health of the arts community may contribute to the health of the local economy, it is no secret that actual arts centres in small to medium size cities are plagued by fiscal problems and tend to operate at a loss. Consider, for example, the balance sheet of our own Yates Memorial Theatre here in Lethbridge.

     

    Figure 1.1: Operating Budget of Yates Memorial Centre 2013 - 2018

     


     

    Year after year the operating costs have exceeded the revenue brought in by the Centre to the tune of nearly $300,000. This is not uncommon. The River Run Centre in Guelph, Ontario operates year after year with a subsidy of around $600,000, in 2009 the Esplanade Arts and Heritage Centre in Medicine Hat face a shortfall of $669,707, and the projected subsidy required for the proposed Lethbridge Performing Arts Centre was originally estimated at $1.4 million for the first year of operation. Small cities seldom attract big enough acts to support the kinds of revenues needed for an arts centre to be self-sufficient. Additionally, the size of small city venues cannot support the kinds of crowds that revenue-generating acts demand.

     

    Public Art Galleries offer the same benefits and face the same problems. In small centres, the paying customer base for a public art gallery is simply not large enough to cover the expenses associated with operating such a facility, let alone expanding it.


    In the balance of probability, a civic Convention Center, a new civic Performing Arts Centre, or a public art gallery located in Lethbridge will struggle to balance their books and may need to have their budgets subsidized by public funding in order to remain viable.


     

    Spend Smarter, Not Harder

     

    However, if properly sited, with a smart business model, and with an eye for compounding efficiencies, these facilities could deliver a positive economic impact that compensates for the public investment over their lifespan, and offer a real opportunity for Lethbridge to continue diversifying its economy. We believe that these goals can be achieved by cooperation between the interested parties, and the collocation of these three facilities into a single building/location.

     

    The advantages are numerous.

     

    1. The spaces typically incorporated into these kinds of facilities can be used by multiple business sectors and the arts communities, allowing site managers an easier time booking up the facility and generating as much revenue from as many square feet for as many days of the year as possible. Theatre spaces can easily play host to conventions, and meeting spaces can easily play host to a wide range of arts-related activities or art exhibitions.

     

    1. The presence of a performing arts centre and a world-class art collection housed within a convention space would make the Lethbridge Convention Centre competitive in attracting arts-related conferences to this city, and would help to branch out the local economy into this sector. While also driving additional tourism. We would in fact, have our first significant tourist attraction.

     

    1. The collocating of these facilities offers an organic means of cross-promotion and greater civic inclusion. Separately sited civic facilities typically only play host to those already interested in the services offered by that facility. Collocating drives more individuals into a space where cross-promotion can yield results.

     

    1. The extensive operational efficiencies associated with the city only having to maintain one set of staff, pay one set of bills, and deal with ongoing maintenance issues for only one site are significant. The savings gained from engaging in only one construction project, instead of three, are also significant.

     

    Given the fiscal challenges that each of these facilities face, collocating to lower overhead and maximize utilization just makes sense.

     

    Location, Location, Location

     

    If such a centre is to be an effective economic driver, its’ location needs to satisfy two logical imperatives.

     

    1. The facility needs to be positioned to attract as many customers as possible.

    2. The facility needs to be positioned to drive as much economic activity in its’ immediate vicinity as possible.

     

    Point 1:  Numerous market studies have been conducted on what convention planners are looking for when selecting a facility. The City of Lethbridge needs to position any potential centre to appeal directly to the concerns of these potential customers. This means positioning it based on unbiased, data-driven analysis. Studies have looked directly at this issue and their results are easily accessible (see the 2014 Watkins Research Group survey of meeting and convention planners for example).

     

    Point 2: The location of the Centre also needs to drive as much associated economic activity as possible. It needs to be located somewhere that is walkable to hotels, restaurants, shops, entertainment, and other civic amenities. Again these decisions should be made based on unbiased, data-driven analysis. The centre itself, if placed strategically, could also help improve the image of the city by catching the eye of traffic passing through town, which would assist with the City’s efforts to rebrand Lethbridge as a vibrant urban centre.

     

    If the City of Lethbridge approaches these projects with an objective eye to reducing overhead by compounding efficiencies through collocating facilities, with the ultimate goal of driving as much economic activity as possible for the region, then we may just succeed in the highly competitive Convention industry and be able to further boost associated economic activity by diversifying our economy and growing our knowledge workforce.

     

     

    Recommendations

    The Lethbridge Chamber of Commerce recommends that the City of Lethbridge:

    1. Consider the development of a multi-use Convention Centre with an integrated Performing Arts Theatre and an Art Gallery (in cooperation with the University of Lethbridge) as a high priority in their Capital Improvement Program, with the key outcome of driving increased economic activity, economic diversity, and the growth of a knowledge workforce.

    2. Locate this facility based on an unbiased analysis of key factors which would yield a facility able to compete optimally in a highly competitive market. These considerations should include, but are not limited to:

      1. Attractiveness to Event Planners (data driven).

      2. Possibilities for flexibility of use in order to maximize utilization.

      3. Walkable access to hotels, restaurants, local shopping, entertainment, cultural locations, and civic facilities.

      4. Accessibility by transit and connectivity options to the local airport.

      5. Ease of access for parking and delivery, easy access from highways.

    Download PDF Here

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