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2. EXPOSITION
HALL FACILITY - ECONOMIC AND SOCIAL BENEFITS ESPACE D’EXPOSITION – AVANTAGES ÉCONOMIQUES ET
SOCIAUX |
COMMITTEE
RECOMMENDATION
That Council consider this report as
supplementary information to the Lansdowne-Results
of the RFP Process-Exposition Hall Facility report.
Recommandation du ComitÉ
Que le Conseil étudie ce rapport à
titre de supplément d’information au rapport Lansdowne - Résultats du processus
de DP - Espace d'exposition.
DOCUMENTATION
1. Deputy City Manager’s report,
Infrastructure Services and Community Sustainability dated 31 May 2010 (ACS2010-ICS-CSS-0005).
2. Extract
of Draft Minute, 1 June 2010 for items 1 and 2.
Report to/Rapport au :
Corporate Services and Economic Development Committee
Comité des services
organisationnels et du développement économique
and Council / et au
Conseil
Submitted by/Soumis par : Nancy Schepers, Deputy City Manager/
Directrice
municipale adjointe, Infrastructure Services and Community
Sustainability/Services d 'infrastructure et Viabilité des collectivités
Contact Person/Personne ressource : Johanne Levesque, Director/Directrice,
Community Sustainability Services/Services de viabilité
des collectivités
(613) 580-2424 x 12257
Johanne.Levesque@Ottawa.ca
SUBJECT:
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OBJET :
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REPORT RECOMMENDATION
That the Corporate Services and Economic Development
Committee receive this report for information and refer it to the Special
Council Meeting for the Lansdowne Partnership Plan and Implementation and
Related Reports for Council to consider as supplementary information to the Lansdowne-Results of the RFP
Process-Exposition Hall Facility report.
RECOMMANDATION DU RAPPORT
Que le Comité des services organisationnels et du
développement économique examine le présent
rapport et le porte devant le Conseil à sa réunion extraordinaire concernant le
Plan de partenariat du parc Lansdowne et sa mise en œuvre ainsi que les rapport
connexes à titre d’information supplémentaire relativement au rapport sur Lansdowne – résultats du processus de dp – espace
d’exposition.
BACKGROUND
On November 16, 2009, Council considered a report from the City manager, dated November 12, 2009 regarding the Lansdowne Partnership Plan (LPP) Implementation.
In this report responding to the April 22 Council motion for enhanced trade and consumer show space at Lansdowne Park, it indicated that in order to meet the goals set out by Council for achieving the greening of the front lawn, enhanced facilities would be best provided by a new purpose built trade and consumer show facility at a different location.
Subsequently, one of the conditions of the November 2009 LPP Implementation report, set out as recommendation 2a) iv), was to direct The Shenkman Corporation to submit a formal proposal to the City for the construction and operation of a Trade and Consumer Show facility at the Ottawa airport prior to February 15, 2010.
In consideration of recommendation 2a) iv), Council approved Motion No. 77/21 as follows:
“That staff be directed to commence the Request for Expressions of
Interest to the proposal process for the construction, operation and finance of
a Trade and Consumer Show facility in Ottawa as soon as possible and that any
proposal from the Shenkman Corporation be received through the RFEOI process
and that a Request for Proposals process be immediately commenced upon the
successful completion of the RFEOI process, to be completed prior to Council’s
June 2010 consideration; and that Recommendation 2 a) iv) of the LPP
Implementation Report be modified to reflect this revision;
and that Council direct staff to commission a study to assess the
following:
1) Social value to community residents of a new
trade and consumer show facility;
2) Indirect economic benefits and value to local
business to promote and grow their business;
3) Direct economic benefits to the community and
broader region from visitor spending by (new money to the community,
jobs/employment);
4) Development spin-off potential (e.g. hotels
and other facilities, improved airport services);
5) Review municipal investments practices in
Trade and Consumer Show facilities;
6) Other Benefits.”
On February 10, 2010, Council approved an amendment to Motion 77/21 requiring staff to proceed directly to the Request for Proposals (RFP) process for the design, construction, operation and financing of an exposition hall facility in Ottawa. At this time, Council also approved the facility specifications, evaluation criteria and evaluation team for the RFP. The RFP was issued on February 19, 2010 and closed May 6, 2010. A second report has been prepared to respond to the RFP submissions and business plan evaluation (Report # ACS2010-CMR-REP-0033 “Lansdowne – Results of the RFP process – Exposition Hall Facility”)
This report responds specifically to the second component of Motion 77/21 which directed staff to undertake a study to assess social and economic benefits of an exposition hall facility. In carrying out the assignment, the City of Ottawa engaged HLT Advisory Inc. (HLT). HLT Advisory was asked to examine the following:
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Comparative
analysis of competitive/comparative trade and consumer show as well as
convention centre venues to include: Public versus private ownership,
Governance structure, Capital cost, Size and facility offering, Financial data
(to the extent publicly available), Market focus
•
Analysis
of Lansdowne Park data to understand past usage and future potential.
•
Comparative
rental rates (to the extent information is available) and comparison to
Lansdowne Park rates.
•
Interview
with the President of the Ottawa Association of Exhibition Managers (“OAEM”) to
validate industry view of the space requirements in Ottawa for consumer and
trade shows.
•
Tax
increment financing options used in other Canadian cities for major public
infrastructure.
•
Previous
economic impact analyses undertaken for Lansdowne Park and the trade/consumer
show industry in Ottawa. In doing so, prepared
a revised template for estimating economic impact of proponents as well as a
current estimate based on recent Lansdowne Park results.
•
Social
impacts from additional trade and consumer show facilities and comment on the
impact from potential loss of such space.
•
Economic
impact from the preferred proponent’s proposal based on inputs contained in the
preferred proponent’s submission, adjusted as determined necessary by the City
of Ottawa review team.
As a project deliverable, HLT Advisory Inc. prepared a report for the City of Ottawa entitled “New Trade and Consumer Show Facilities in Ottawa” which is attached as Document 1.
DISCUSSION
Economic and Social Impact Summary
Findings
In response to the Council motion to assess the economic and social impacts of a new exposition hall facility, staff with the assistance of HLT Consultants examined previous research related to the economic and visitor spending impact of existing trade and consumer show events at Lansdowne Park facilities (see Document 1). The economic impact assessment of the preferred proponent’s proposed facility, based on relevant financial data provided by the preferred proponent, was then assessed. The objectives of the exercise were to determine if the proposed facility could realistically preserve the current economic impact realized at the existing facilities at Lansdowne Park and to identify any additional economic impacts that would need to be accommodated should facilities remain at Lansdowne Park.
The economic impact analysis indicates that the proposed new facility, should at a minimum, achieve the recent economic impact benefits of the Lansdowne Park facilities and should exceed total visitor and exhibitor spending of $7.47 million by year five, 25 per cent more than current spending at Lansdowne Park.
In terms of operational spending,
insufficient financial data exists to run the numbers through an economic
development model; however, it would not be unreasonable to project that there
would be an increase in spending in the order of 25 per cent of total operating
costs given increased volume. The additional impact may be significantly higher
if one-off events and non-consumer/trade show events materialize to the extent
projected.
In addition, the City would benefit from a brand new facility reducing annual maintenance costs in comparison to the existing facilities at Lansdowne Park. As well, a new design layout would provide for more efficient operations, and the potential for an economic impact beyond what is realized at Lansdowne Park. The City would also enjoy the short-term employment and direct spending generated from the one-time capital investment of approximately $39.2 million to design, construct and fit-up the new facility that would create 237 new direct jobs and a total of 346 direct, indirect and induced full time equivalent jobs. As well, an additional annual economic impact of $5.26 million would be generated due to operational spending. Finally, an associated hotel indicated in the preferred proponent’s site plan indicates an additional spin-off benefit that would result from the development of the exhibition hall facility proposal.
The social impacts, which are detailed more fully in the body of this report include:
• The catalytic impact from public-sector investment incenting private-sector investment in hotels, retail and related support amenities as well as support services such as transport, food and beverage and the like.
• The sense of civic pride and quality of life from public access to quality venues (and programming within these venues).
• Networking and industry knowledge exchange - organizations and individuals share a fundamental need to meet in person to interact, make connections and maintain relationships through trade shows and other business events. These networking and educational opportunities promote the exchange of information in industry best practice, latest technologies and leading research. It is generally accepted by the industry that the benefits of a business event are maximized in the host destination.
• Leading by example on subjects ranging from social goals and objectives such as environmental and sustainable building practices.
• Exposition facilities (dating back to the large, international world’s fair structures of the later 19th and early 20th centuries) make a positive contribution to industrial development by providing marketing and hosting opportunities for local industry.
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Current Estimates of Visitor Spending- Lansdowne Park Facilities
Lansdowne Park offers approximately 146,000 square feet of rentable space in four separate buildings. The Consumer and Trade show industry at Lansdowne Park has grown to the extent that event managers are now responsible for over 490 employment positions supporting 28 consumer and trade shows including commercial stage shows, sporting events and the Central Canada Exhibition (planned for new location) for a total of over 50 shows and events annually. These events occupy over 250 facility days, welcome nearly 300,000 visitors and feature approximately 3000 exhibitors.
From a trade and consumer show perspective, revenue from trade and consumer show events at Lansdowne Park has increased substantially from 2001 through 2009, largely a result of an increased number of events and associated sales (e.g., food and beverage).
A review of Lansdowne Park operating data, and Ottawa-area knowledge, suggests:
• A solid base of regular events producing a core income stream.
• Significant reliance on about two dozen recurring consumer show events. Recurring events produced 85 per cent of total revenue in 2009. This amount is consistent over the past five years.
• Lower attendance in 2009; however, as with many other consumer and trade show venues across Canada, this is understood as a reflection of recent economic challenges as opposed to a general trend.
• A range of space and separate building facilities resulting in inefficient operations of individual events.
• Lansdowne Park trade and consumer show clientele differs from the anticipated clientele at the new Ottawa Convention Centre wherein participating companies, exhibitors and attendees have different facility support and parking expectations.
• Pricing (for space rental at Lansdowne Park) does not reflect seasonal variances in business demand.
The figures in the following table represent a significant increase in total spending from the 2007 study prepared by the Corporate Research Group (see Document 1) due mainly to the increased number of attendees at Lansdowne Park consumer and trade show events:
According to the Ottawa Association of Exposition Managers, it is the lack of contiguous exposition hall space that has significantly limited the ability of the trade and consumer show industry to grow in Ottawa. Despite the rising spending above, the industry leaders feel the potential for growth is limited at the existing Lansdowne facilities. Therefore, based on the new facility specifications and locational requirements approved by Council outlined in the RFP and which the preferred proponent has responded to, a new facility should meet or exceed Lansdowne Park economic impacts realized for trade and consumer show events.
Economic Impacts from
the New Facility as Per the Preferred RFP Proponent
The information related to the proposal from the preferred proponent was examined from the perspective of a stabilized operational facility with the intent of identifying any incremental impacts realized beyond that of the existing facilities for Trade and Consumer Show events at Lansdowne Park.
In order to assess the combined economic impact of the preferred proponent’s proposal, three aspects were evaluated by HLT Advisory including: offsite spending attributed to attendee and exhibitor visitation, annual operational costs, and one-time capital costs associated with the proposal.
These data were used to populate the Ontario Ministry of Tourism and Culture’s Tourism Regional Economic Impact Model (TREIM). This produced estimates of the direct, indirect and induced impacts related to tourism activities, labour income and jobs and the direct and total impacts related to Federal, Provincial and Municipal Tax Revenues.
Visitor and Exhibitor Spending Impact
The economic impact associated with goods and services (e.g. overnight accommodation, restaurant meals, retail) purchased by attendees and exhibitors as well as exhibitor set up costs (e.g., booth preparation), as described in the preferred proponent’s proposal, was assessed using selected financial data in the submission. The financial data that was reviewed included:
- Stabilized number of trade and consumer show events;
- Stabilized average number of exhibitors and attendees at each event; and,
- Any event where the expected proportion of out-of-town exhibitor and/or attendees is greater than 15 per cent.
Adjustments were made to reduce the preferred proponent’s proposal visitation estimates for existing Lansdowne Park to levels consistent with recent actual performance. Otherwise, the remaining preferred proponent’s assumptions (e.g., additional events, percentage of events generating 15 per cent plus out-of-town visitation) were accepted. These revised assumptions were then used by HLT to estimate total visitor and exhibitor spending of $7.47 million by year five, 25 per cent more than current spending at Lansdowne Park.
Operational and One-time capital spending
impact
In addition to attendee and exhibitor spending, the economic impact generated by ongoing operations (Year five operating costs contained in the preferred proponents proposal) and one-time project investment costs were evaluated. Project investment represents the capital costs to plan, design, construct and equip the proposed facility. The total project investment costs in the Shenkman proposal is $39.2 million and the ongoing economic impacts from operational spending is estimated at $5.26 million.
Combined Total Economic Impact
The breakdown of the
visitor and exhibitor spending estimates, one-time capital costs and annual
operational costs are presented in the table below:
Insufficient data exists to
estimate the additional impact of operating costs at a new facility or to take
into account the magnitude of efficiencies generated through a new structure. However,
as with visitor and exhibitor spending, it would not be unreasonable to project
that there would be an increase in spending in the order of 25 per cent of
total operating costs given increased volume.
The additional impact may be significantly higher if one-off events and
non-consumer/trade show events materialize to the extent projected.
Regarding new trade show activity, the current Lansdowne Park business mix is heavily weighted towards consumer shows that draw the majority of visitation from Ottawa-area residents. A purpose-built consumer and trade show building will permit more aggressive marketing to trade show producers. Trade show events are much more likely to attract out-of-town exhibitors and attendees. Ottawa is not likely to become a leading trade show destination but improved facilities and aggressive marketing will provide some additional opportunity in this regard.
Given the incremental visitor and operational spending impacts expected in the preferred proponent’s proposal, the economic impacts are significant.
Social Value
Economic and social values are linked but unlike economic impacts, it is difficult to quantify the social impacts. However, the following social benefits can be conveyed to a community as a result of business, trade and consumer events:
Quality of Place - Among the most fundamental benefits of an active and vibrant consumer and trade show facility is its impact on the sense of well being, relevance and vibrancy of place. Ottawa’s ability to attract and retain new residents and companies is largely dependent on its infrastructure and reputation as a great place to live and work and play. Having a variety of modern and appropriate venues for trade and consumer shows as well as conventions is an important part of this draw.
Collaboration and industry platform - Exposition facilities make a positive contribution to industry development. Ottawa is renowned for the abundance of its research and learning institutions. By providing marketing event opportunities, local industry professionals and students have the opportunity to gain further knowledge and industry expertise from international and national experts and discipline leaders and allow local business to showcase their capabilities and resources to a large and influential audience leading to further trade opportunities.
Direct Income Expenditure - Direct expenditure contributes directly to a variety of goods and services in the community including hotels, restaurants, transport, printers, food and beverage suppliers, florists, audio visual and touring activities.
Community Infrastructure - The financial benefit of business events also encourages infrastructure development within the city or destination. The degree of development spin-off potential is a function of location and development potential in the vicinity of the exposition facility wherein business services are able to capitalize on its activities and visitors (e.g. hotels, restaurants, catering services etc.).
Networking and industry knowledge exchange - Organisations and individuals share a fundamental need to meet in person to interact, make connections and maintain relationships through trade shows and other business events.
These networking and educational opportunities promote the exchange of information in industry best practice, latest technologies and leading research. It is generally accepted by the industry that the benefits of a business event are maximised in the host destination.
Employment Benefits - The exposition industry has sometimes been underestimated as a critical success factor in high performing markets and vibrant and thriving cities. The employment that is generated for the tourism and hospitality industries has both an economic and social dimension. Many employed in these industries are part time, casuals or tertiary students, being in the 18- to 25-year age range. These job opportunities allow young workers to gain and improve their experiences. Also, products and services that rely on business event income contribute to the enjoyment of the local community residents and other visitors.
Quality of Life - Consumer and trade show events also offer exciting activities and opportunities for residents and visitors to better pursue their interests and activities. This enhances our quality of life and civic pride.
Municipal
Investment Practices Trade and Consumer Show Facilities
With the exception of a few privately-owned facilities, most Canadian venues are run by not-for-profit, single purpose entities reporting to a board of directors. The majority of these are subsidized on a capital or operating basis, often both, and are purpose-built facilities for trade and consumer shows (in addition to a venue dedicated to convention meetings). Also, the majority of exposition facilities across Canada are located on publicly owned land similar to Lansdowne Park.
RURAL IMPLICATIONS
The economic and social benefits noted in this report equally apply to residents and businesses in Ottawa’s rural area.
CONSULTATION
Staff has consulted with the Ottawa Association of Exposition Managers (OAEM) and also held a meeting held on January 28, 2010, with members of that organization in regard to the Request for Proposal process and associated facility specifications. The OAEM also provided the City with an overview document pertaining to the Exposition Industry at Lansdowne Park dated June 23, 2009. This document has been reviewed as part of the economic and social impact evaluation. HLT Advisory also interviewed Michael Rodgers, President of OAEM to validate the industry view of space requirements in Ottawa for consumer and trade shows.
COMMENTS BY THE WARD COUNCILLOR(S)
This is a city-wide report. Comments were not obtained.
LEGAL/RISK MANAGEMENT IMPLICATIONS
There are no legal implications associated with this information report.
CITY STRATEGIC PLAN
This report is associated with Section C6 – “Infrastructure Renewal” of the City’s Strategic Plan which is to identify key municipal facilities of city-wide significance and implement an effective remediation and restorative plan where possible.
TECHNICAL IMPLICATIONS
N/A
FINANCIAL IMPLICATIONS
There are no financial implications associated with this information report.
SUPPORTING DOCUMENTATION
Document 1 New Trade and Consumer Show Facilities in Ottawa (Previously distributed and held on file with the City Clerk).
DISPOSITION
The Community Sustainability Department will implement any Committee and Council directions.