The Carmen’s Group is asking the city for a new deal, after arguing it will be absorbing more loses than expected in the first year of the five-year deal to take over operating the Hamilton Convention Centre.
But councillors remained uncomfortable about the request, especially after a number of them believed the city would be required to rebate the company for potential financial losses.
City treasure Tony Tollis said Carmen’s and Global Spectrum/Live Nation won the tendering contracts to take over Copps Coliseum, Hamilton Place, and the Convention Centre last year with a proposal they would save the city about $1.6 million in 2013. The savings would escalate to $2.26 million.
But Carmen’s in its request to the city, argued since it won’t take over operating the centre until March or maybe later, it will lose revenue because of the limited number of convention bookings this year.
“They are looking not to lose money in 2013,” said City Treasure Tony Tollis. “They can’t guarantee the savings because of the loss of revenue this year.”
Tollis, attempting to explain the complicated deal to politicians at their Jan. 23 council meeting, said the city is expected to see a $663,000 savings this year. But with the timing of the takeover of the convention centre, Carmen’s says it may have more operating losses than projected. They are asking the city to give that expected savings to the company to cover any losses, he said. The money would only be provided to the company after Carmen’s provided the city with audited statements, said Tollis.
Tollis called it a “reasonable” request, that will not change the five-year agreement, nor will the city lose any money.
“We are not paying anything more,” he said. “We are just deferring the savings, not spending more.”
Ward 4 councillor Sam Merulla said he would agree to the revised terms of the deal, as long as the city provided no rebate to the company. When staff said the city may have to pay back the $663,000 to Carmen’s Merulla balked.
“That changes everything,” he said.
After over an hour of questions, politicians decided to defer the request to the next government issues committee on Feb.6.
Global Spectrum’s deal also proposed one-time capital spending of $500,000 to upgrade Copps and Hamilton Place, and a guarantee to absorb the first $500,000 of any operating losses with the city on the hook for any shortfall after that.
Carmen’s offered to spend $685,000 over five years to upgrade the Convention Centre. But Carmen’s after reviewing the centre, proposed spending about $700,000 to upgrade the aging facility, including the entrance, lights, and some roofs. The HamiltonEntertainment and Convention Facility Inc. board approved the deal.