EXHIBITION PARK DEVELOPMENT PLAN Prepared for City of Lethbridge Capital Improvement Program

Transcription

1 Trade & Convention Centre EXHIBITION PARK DEVELOPMENT PLAN Prepared for City of Lethbridge Capital Improvement Program Agriplex

2 ACKNOWLEDGEMENTS We would like to thank all those who were involved in this development plan process. There were hundreds of hours spent by volunteers who generously contributed their time, passion and expertise to this plan. We would also like to thank all the hundreds of shareholders, stakeholders, employees and residents involved in creating a development plan that is truly one that belongs not just to Exhibition Park but to the community it serves. Joint Committee Members ( ): Don Young, President, Lethbridge & District Exhibition Gord Scheurman, Past President, Lethbridge & District Exhibition Andy Cumming, 1 st Vice President, Lethbridge & District Exhibition Dennis Carrier, Director, Lethbridge & District Exhibition Herman Elfring, Director, Lethbridge & District Exhibition Tom Wickersham, Alderman, City of Lethbridge Joe Mauro, Alderman, City of Lethbridge Henry Doeve, County of Lethbridge, Councillor Bruce Galts, Team Lethbridge Member Dennis Chinner, Past President, Chamber of Commerce Randy Tremel, Past President, Chamber of Commerce Bary Beck, Director of Community Services, City of Lethbridge Rudy Friesen, General Manager, Exhibition Park Sub-Committee Members ( ) Dwayne Stratton, President Lethbridge Lodging Association Bruce Primeau, Past President Lethbridge Lodging Association Nikolaus Wyslouzil, General Manager, Chinook Country Tourist Association Jaylene Ulmer, Economic Development Lethbridge 2013 Board of Directors Lethbridge & District Exhibition (not already mentioned) Mike Davis, Director 2 nd Vice President Kai Yip, Director Bob Simonton, Director Ken Benson, Director Hazel Hart, Director Max Gibb, Director Rick Neudorf, Director Bev Lanz, Director Lorne Hickey, Reeve, County of Lethbridge Exhibition Park Staff Bridget Mearns, Development Coordinator Bryan Litchfield, Manager of Operations and Facilities Bruce Larson, Controller Doug Kryzanowski, Manager Corporate Relations, Events, Entertainment and Marketing Diana DiRocco, Executive Assistant City Of Lethbridge City of Lethbridge employees who worked with on this project from infrastructure, transportation and specifically Sam Conrad who led us through the CBA process. Page 2

3 Consulting Team David Woodman and Alex Whitehouse, MNP (Business Case Consultants), Blair Grier, Mission Beach Developments (Engineer Consultant) Mike McCready, Scott Construction (Engineer Consultant), Jim Goodwin, Dialog (Building and Site Design Consultants), Page 3

4 CONTENTS PAGE 1. Background 5 2. Executive Summary 7 3. Needs Assessment & Market Research 9 4. Site Plan & Design Principles Capital Cost Estimates Business Case Economic Implications of Development Capital Funding & Financing Strategy Community Support 25 Appendix A: Concept Drawings - Dialog Appendix B: Scope of Work Assumptions Mission Beach Developments Appendix C: Projected Revenue Sources MNP Appendix D: Statement of Estimated Revenues, Expenses and Net Operating Income MNP Appendix E: Letters of Support Appendix F: Petition Page 4

5 1. BACKGROUND For more than 115 years, the Lethbridge & District Exhibition has provided programming and facilities focused on agricultural, social, entertainment, cultural and economic needs of Lethbridge and Southern Alberta. Over this time the population of the area has increased dramatically and facilities and programming have been added at Exhibition Park to keep pace. Mission Statement Exhibition Park exists within its means, to provide the people of Lethbridge & District with an agricultural and community gathering place at which to participate in events, conduct business, learn and be entertained. At present, Exhibition Park has a significant impact, both socially and economically, on the city of Lethbridge and its surrounding areas. It serves a growing market area of 280,000, including the 89,074 residents of the Lethbridge. There was a total of 1574 rental days in More than 452 companies rented the facilities last year. Overall attendance at these events amounted to more than 850,000 visitors. A 2005 study of the economic and community benefits of Exhibition Park showed the activities conducted at Exhibition Park contributed to economic stimulation of almost $82 million annually. Pursuing a mandate focused on economic development, community development and entertainment, and agriculture, Exhibition Park has consistently involved other community and regional organizations and stakeholders in building its direction. Existing Facilities With the exception of the newer Main Pavilion, the facilities range in age from 25 to 87 years and average 51 years old. Heritage Hall built in 1926 (9,000 sq ft - 87 yrs) South Pavilion 1961 (31,700 sq ft - 52 yrs) North Pavilion 1971 (34,500 sq ft - 42 yrs) West Pavilion 1988 (17,00 sq ft - 25 yrs) Main Pavilion 2000 (28,910 sq ft - 13 yrs) The facilities are used for many purposes, including community events (Whoop Up Days, Children s Festival), trade shows (Home & Garden, Outdoor Adventure Show), consumer shows (RV & Auto Shows), large gatherings (Rotary Lobsterfest, Family Fest), and agricultural sales and events (eg. Ag Expo, 4H programming). Page 5

6 This development plan represents 3 years of comprehensive work by a Joint Committee made of members of City Council, Lethbridge & District Exhibition Board of Directors, Chamber of Commerce, County of Lethbridge and members from stakeholder organizations. The Joint Committee worked through a number of steps to ensure that this plan was comprehensive, methodical and responsive to community and market demands. They completed a financial review of Exhibition Park Operations, Facility Condition Audit of all buildings, Market & Needs assessment, Choosing By Advantages workshop in addition to a multiple accounts evaluation framework study conducted by MNP to arrive at the current site as the preferred site for development. The Financial Review revealed the law of diminishing returns, inability to grow shows and inability to generate incremental revenue due to functional and conditional constraints. The Facility Condition Audit, performed by MPE Engineering, indicated that facilities of EP are reaching the end of their life cycle, aging rapidly and require replacement. The Choosing By Advantages process identified 2 options (rebuild on current site and green site) as having equivalent benefit & cost profiles. Finally the Multiple Accounts Evaluation Framework, when all accounts, and the risks associated with the project as a whole were considered, it determined there was not enough compelling incremental economic impact and benefit to support the relocation to a greenfield site and concluded that the current site remains the preferred site for the renewed EP facilities. Gas King has been a proud corporate sponsor of Exhibition Park for over 10 years and knows firsthand the benefits of Exhibition Park programming. Brent Morris, President Page 6

7 2. EXECUTIVE SUMMARY The vision laid out in this development plan takes into consideration input from over 15 years of market research and community needs assessments and studies and 3 years of methodical work on the part of a Joint Committee made up of dedicated community volunteers and Exhibition Park staff. This document will not go into every detail of that research and assumes the reader is aware of the infrastructure, functional and condition restraints of the current facilities. This plan will focus on how the research and input was used to create the facility designs, site plan, business case as well as demonstrating current community support to have the development of Exhibition Park identified as a capital priority and funded in The City of Lethbridge Capital Improvement Program Along with previous market research, in 2012 the Joint Committee conducted a facilities tour of exhibitions Prairieland Park in Saskatoon and Westerner Park in Red Deer. These tours were invaluable in assisting the Joint Committee and consultants in ensuring that the facilities designs were building on their successes and challenges. The facilities and site designs are based on design principles determined by the community and market demand research. The trade and convention centre will have 172,000 square feet of connected open span space with a minimum height of feet and large bay loading doors. In addition, it will have 25,000 sq ft higher finished meeting and banquet space. On site will be an industrial kitchen to provide for in-house catering service. The design takes advantage of the views of Henderson Lake. The floor plan is designed with moveable partitions to maximize the space to accommodate multiple rentals and multiple configurations. The Trade and Convention Centre will also have break out rooms each equipped with audio/visual equipment. The site is designed to allow for current operations to continue while Phase one is being built minimizing the disruption to Exhibition Park programming and clients. The relocation of Pioneer Park to the former Henderson campground site allows for a continuation of outdoor festival space and programming. A site survey and a geotechnical evaluation were done to ensure that the facilities could be accommodated on the site. Phase two is a 75,000 sq ft agriplex allowing for dedicated livestock programming. This type of programming is currently not being well served under the current facilities, as dirt is brought in and out of the pavilions at a significant cost. This development plan is supported by a realistic and industry vetted business case with revenue and expense analysis which forecasts a positive sustainable net operating income. The new facilities will generate 3 sources of income existing, enhanced and incremental. The business case is a conservative financial model that plans for the operational and maintenance costs to be borne by Lethbridge & District Exhibition. This plan will have no ongoing pressure on the City of Lethbridge operating budget, and by leveraging the expected positive net operating income, Lethbridge & District Exhibition will also be in a position to support the debt servicing requirement of the project. The funding strategy anticipates using capital grants from Municipal, Provincial and Federal capital programs, potential reallocating of current CIP funding, corporate and community sponsorship in addition to Exhibition Park s ability to invest in the plan through financing and reinvestment of a capital asset (land in SE Lethbridge) and through their capital reserves. Further to the community at large, shareholders, stakeholders and industry guiding the vision and design of the facilities and site, the development plan has been shared with our community at large through community presentations, open houses, and public displays. Community support has been strong. The benefits of this development are far reaching from the direct and Page 7

8 indirect economic benefits to organizations, to being able to host regional conventions and events, to a better visitor experience at Exhibition Park. This is evidenced by the 32 letters of support from a variety of different private and public sector organizations and a petition signed by 638 citizens. An investment in exhibition infrastructure is made because of the economic and social benefits that accrue to the community from its use. While benefits exist in several areas, these benefits result significantly from spending in the community by attendees in connection with events staged at the facilities. Increased availability of exhibition space is expected to lead to increased attendance, notably by visitors to the community, more entertainment and other events that benefit the local population, and increased awareness and profile for the community. Exhibition Park development will provide positive and significant short and long term economic impacts and implications for Lethbridge and region. The impact is illustrated in the tables below. Note not included in these numbers are the economic impact of the events specifically. For example, 2010 Whoop-Up Days generated $5,282,082 in total demand side economic spending. Direct & Indirect Economic Benefit (Lethbridge & region) Provincial & Federal Tax Revenue FTE During Construction ( ) $ 70,000, $ 21,000,000 Direct & Indirect Economic Benefit (on incremental portion) Provincial & Federal Tax Revenue FTE At Steady State (over 10 year period, ) $ 30,000, $ 10,000,000 The addition of convention centre facilities in the development plan is a game changer for Lethbridge. It will bring convention business to Lethbridge that it is currently not attracting because the appropriate facilities do not exist- specifically the ability to accommodate a tradeshow, breakout rooms and banquet space under one roof. The economic impact of a convention centre in the local, regional, and provincial economics are significant and should be recognized when evaluating the need for such facilities. Many single purpose convention facilities in Canada and North America operate with an annual net operating loss. The Lethbridge & District Exhibition are proposing a multi-purpose convention tradeshow and exhibition facility that has been purposely configured to allow for maximum profitable capacity utilization, allowing different community and other programming to occur simultaneously within the complex. Adding exhibition infrastructure is adding community infrastructure. As municipalities grapple with increasing operating cost pressures partnerships such as the one between Exhibition Park and the City of Lethbridge are all the more relevant. As a Not-For-Profit Society (whose mandate is focused on community benefits and 115 year history of operating Exhibition facilities and programing) it is appropriate for Lethbridge & District Exhibition to facilitate this development. Page 8

9 3. NEEDS ASSESSMENT & MARKET RESEARCH The Development Plan and Design Concepts are based on years of market research and community needs assessments. Below is not a comprehensive summary of all the documents but rather a snap shot of the main themes. Existing Client Facility Condition audit performed by MPE Engineering indicated that facilities of EP are reaching the end of their life cycle, are aging rapidly and require replacement. Community and Exhibitor needs assessment conducted showed that needs of the community and other users are changing, evolving beyond the capability of the existing facilities, regardless of condition. Analysis shows that the capacity and state of the facilities at Exhibition Park limits growth on existing programming and rental demand. The facilities cannot accommodate growth that would result in new revenue and in fact, they are limiting the growth of the tenants. However, demand continues to grow. Ag Expo and Home & Garden Tradeshow both have a waiting list for Exhibitors and have for 10+ years. This is not only lost revenue to Exhibition Park but the direct and indirect spin off benefits are lost to the city. Southern Alberta is a livestock and agricultural hub and is world class. We should be seen as that and have more events, meetings and trade shows down here but we don t have the facilities to properly accommodate. Ag Expo Exhibitor Despite the condition and function of the current facilities, it should also be noted that Exhibition Park is considered an important community gathering place for its residents and vital economic generator for local business. This facility is the heart of our city and broader Community. Rick Casson, Former MP Lethbridge Convention and Meeting Space As early as 1999 it was identified in the City of Lethbridge report Fixed Roof Accommodation/Convention and Exhibition Space Analysis by PwC (Price Waterhouse Coopers) that Lethbridge was unable to effectively compete with other comparable destinations due to the limited range of facilities and infrastructure required to support the needs of various meeting/convention and exhibition groups. Increasingly conventions are both conferences and trade shows. Event organizers often use such events to build revenue for their organization from trade show exhibitor fees. As evidenced by the feedback letter from the recent Lethbridge Chamber of Commerce National AGM bid, Based on the proposal, as delegates would not be in the same venue as the Expo, exhibitors would have far less exposure, making the Expo less appealing to potential exhibitors and contributing to a loss of revenue for us. Marley Ransom, Event Planner, The Canadian Chamber of Commerce (2012) As the city grows, the need for superior convention and trade show space also grows. If Lethbridge wants to be seen as a vibrant city and the place to live, greater care needs to be afforded resources like Exhibition Park. Lethbridge Chamber of Commerce, Member Page 9

10 In 2012 the Joint Committee toured Prairieland Park in Saskatoon and Westerner Park in Red Deer. The executives at these two facilities confirmed much of what the research had already determined. Some key take aways were that demand for meeting space and breakout rooms continues to increase; there is value in providing in-house catering to be able to control cost and quality of food services; it is important to have separate agricultural space; and vital to have the ability to maximize the square footage to accommodate a variety of needs. The market and needs assessment research conclusively determines that Exhibition Park is vital part of the City s economic and social health of Lethbridge Condition and function of current Exhibition Park is not meeting current demands of the community Community (residents, businesses and stakeholders) of Lethbridge support a long term solution for EP and there is some impatience for the planning to begin To attract conventions to Lethbridge we must have facilities that can accommodate tradeshow, banquet & meeting spaces under one roof Demand for meeting space in Lethbridge is unmet and growing Below are some of the studies and documents considered in this development plan: 1999 Fixed Roof Convention & Exhibition Space Analysis City of Lethbridge by PriceWaterhouse Coopers PwC 2004 Community Needs Analysis Lethbridge College Student Research Study Embrace the Challenge Manecon Business Strategies - Market Analysis and opportunities, Demand for Facilities and Marketing 2006 Reputation/Brand Audit Kick Creative Group Inc Facility Market Study - Manecon Business Strategies 2007 Brand Audit Tracking Study Kick Creative Group 2008 Economic, Social & Educational Benefits Study (2008 Whoop-Up Days) Enigma Research Corp Facilities Condition Audit - MPE Engineering 2010 Extracted Demand-Side Economic Impact Reporting (2010 Whoop-Up Days) EventCorp Services Inc Choosing By Advantages workshop on site location (City of Lethbridge) Multiple user group needs assessment (presentations to Joint Committee) Exhibitor, Chamber members, and Community survey 2011 Multiple Accounts Evaluation Framework Study Meyers Norris Penny (MNP) Industry and stakeholder interviews - Meyers Norris Penny (MNP) 2011 Within Reach Strategic Direction for Alberta Agricultural Societies - Manecon Business Strategies Exhibition Park Site Survey Mike Spencer Geometrics 2012 Geotechnical Evaluation of Exhibition Grounds EBA Engineering Consultants 2012 Facility Site Tours and Facilities Comparison (Exhibition Park, Saskatoon Prairieland & Red Deer Westerner Park) Any of the above reports will be available upon request. As the province of Alberta moves to diversify its economy, it is expected tourism will play a major role. The many programs and service provide by the Lethbridge Exhibition Park now and in the future will impact not only the economic environment but have a significant impact on the quality of life for individuals in the Lethbridge region. Wynn McLean, Travel Alberta Page 10

11 4. SITE PLAN AND DESIGN PRINCIPLES Gateway Entry The Conceptual Design incorporates two gateways into Exhibition Park. The North Gateway entry will be utilized as the primary front entry to the Park, while the South Gateway will provide secondary vehicular access. Main Boulevard The main boulevard street that links the relocated Pioneer Park to the north, with the South Gateway will provide a perimeter, tailored edge to Henderson Lake to the west. The boulevard will segregate vehicular and pedestrian traffic. The entrances to the Trade and Convention Centre will be located adjacent to, and parallel with this street and take advantage of the elevation change between the Exhibition Park and Henderson Lake. Edge Conditions The Conceptual Plan recognizes the North Edge condition by the relocation of Pioneer Park to act as a green buffer between the Exhibition Park and the community of Henderson Lake. The south and east edges of the Park will incorporate perimeter landscaped fencing and treatments. Phasing Phase 1 will included construction of the Trade and Convention Centre and associated support services for this building. The Centre can be constructed while the Pavilion buildings continue to operate. Phase 2 includes the construction of the Agriplex, once work has been completed on TCC. It will be able to accommodate some interim function of the Agriplex, during its construction. Page 11

12 Parking Parking is distributed to the north and south portions of the site, albeit not evenly. A traffic demand assessment will be required to determine the best method to handle parking on the LEP site. Pioneer Park Pioneer Park (former location of Henderson Lake Campground) will be green festival space where outdoor festivals, concerts, barbeques and community events will be held. The Recreation and Culture Master Plan presented to the City of Lethbridge identified a need for more outdoor festival space. A geotechnical study and site survey of the property have been completed. Trade & Convention Centre (TCC) 250,000 sq ft Phase 1 The TCC building is planned on a regular structural grid and orientated so that pre-function spaces are facing west to take advantage of the views to Henderson Lake, and south to reduce the amount of solar shading required. The south orientation of the saw-tooth design enhances the ability of the building design to respond to solar heat gain through passive building strategies including solar shading devices and solar harvesting. The higher finished meeting space is located at the north side of the building to provide an animated façade to the community to the north. It will also provide an urban edge to Pioneer Park. This would be a two story structure. The space will take advantage of local and distant views into Pioneer Park and Henderson Lake through the extensive use of glazing, where possible. Access and circulation The linear, pre-function space of the building parallels the main boulevard street. A series of storefront entrances are located along this spine, so that separate entrances can be established during multiple events. The linear spine (pre-function space) will also feature primary north and south entrances, in addition to the multiple entrances described above. The Convention Centre will be accessed via the North Gateway. The northeast entrance of the building will serve as a passenger/dignitary pickup/drop-off area. Page 12

13 Back of House functions will be accessed from the east side of the building in order to segregate pedestrian traffic from vehicular functions. Stepped plazas will be established on the west side of the building, to take advantage of the elevation change between the building and Henderson Lake. Ramps will be provided for the disabled at all entrances. Indoor open span connected tradeshow space 172,000 sq ft Kitchen 8,000 sq ft (capable of hosting 2000 hot meals per seating) Meeting & Convention Space 25,000 sq ft Administration 5,000 sq ft Storage, maintenance & mechanical 30,000 sq ft Lobby & Common Areas 10,000 sq ft The Exhibition hall, or tradeshow space, is open span connected space which can be subdividable into numerous configurations based upon the final structural module. The structural module will be selected to enhance functionality, flexibility, buildability and cost. The ceiling height would be feet with oversized bay doors to accommodate large equipment & displays. 4-5 Break out rooms are located inside the open span space and designed in a way to also allow for size and function flexibility. Each breakout room would have system controls and Page 13

14 audio/visual equipment. They can be accessed from the pre-function space or from within the tradeshow space. The facility also has an 8,000 sq ft industrial kitchen to provide in-house catering. This is key in providing the client with one billing system, but also in controlling the cost and quality of food services. The kitchen will be capable of serving 2000 hot meals per seating. The Trade and Convention Centre will have the capacity for expansion to the south. Phase 1 will be designed to allow for limited disruption to EP activities during this construction. AGRIPLEX 75,000 sq ft Phase 2 The Agriplex is located on the north side of Exhibition Park to provide a presence to the community to the north. It also continues the edge of the TCC/Pioneer Park interface. The Agriplex building is also planned on a regular structural grid and orientated orthogonally with the TCC. Pre-function spaces are located to the southwest, so that they are visually accessible from adjacent Parking areas. Similar to the TCC, the south orientation of the saw-tooth design enhances the solar strategies. The Agriplex will be accessed via the North Gateway. The southeast entrance of the building will serve as a passenger/dignitary pickup/drop-off area. The pre-function/entry space of this building is orientated to the south west for easy access from the south portion of the TCC. Back of House functions such as loading and storage will be accessed from the east side of the building in order to segregate pedestrian traffic from vehicular and livestock functions. Similar to the TCC the structural module will be selected to enhance functionality, flexibility, buildability and cost. Page 14

15 100 x 200 sq ft dirt floor arena 150 to 175 livestock pens 12 to 15 livestock wash bays Seating for 1,000 to 1,500 Plus a concession, gallery space, show office etc. Agriplex will be built after the transition to the TCC and demolition of the current facilities. The facility will be designed to allow for future expansion. Refer to Appendix A for single page concept drawings Dialog Refer to Appendix B for the scope of work assumptions detail Mission Beach Developments Page 15

16 5. CAPITAL COST ESTIMATES Capital cost estimates for development plan have evolved over the past 3 years, and reflect Exhibition Park s best estimate of capital construction costs in the Lethbridge region, based on commonly accepted construction practices, validated by assessing similar costs on recent projects completed in Alberta and Canada and reflecting common construction methods that would be employed by a regional commercial/industrial contractor. Construction cost estimates for the proposed site development and facilities replacement at Exhibition Park were prepared based on the concept drawings. The capital cost estimates reflect an expectation of overall per unit cost at 2012, and capital cost estimates have been made at an AACE Class 3 level. Class 3 estimates are prepared to form the basis for budget authorization, appropriation, and/or funding. Class 3 estimates are used as the project budget until replaced by more detailed estimates. The figures used can be presumed to be approximately +20%/-10% accurate. Applicable taxes, such as GST have not been included in the capital cost estimate calculation that follows. The following table provides a summary of the construction cost estimates: Facility Component Gross Area Sq Ft Total Estimated Cost Phase 1 Construction 250,000 $62,651,000 Phase 2 Construction 75,000 $15,680,200 Construction Work Total 325,000 $78,331,000 Furniture, Fixtures & Equipment $ 1,500,000 Site Development Costs $11,000,000 Total Cost $90,831,200 Assumptions Costs to expand and renovate Exhibition Park were prepared by Mission Beach Development and based on unit costs ranging from $183/ft 2 to $305/ft 2.,depending on the nature and type of construction being done. All construction and other capital costs have been based on 2012 dollars. An allowance for soft costs has been included in each cost component noted above, estimated at approx. $4.5M. Soft costs include: o Design engineering, project site management o Other consulting, legal, etc. o Contingency Site development/infrastructure estimates only include costs to be incurred within the Exhibition Park property line. Exhibition Park anticipates that City projects already underway will be able to address external infrastructure requirements. Page 16

17 It is anticipated that the project will require 4-5 years to complete. Table below provides a preliminary assessment of the construction cash flows over the period 2013 to 2018: Preliminary Construction Cash Flow Assessment - Lethbridge Exhibition Facility Redevelopment Activity TOTALS Detailed Design / Tendering $500,000 $3,230,000 $500,000 $500,000 $4,730,000 Site Prep & U/G Infrastructure $3,600,000 $2,280,000 $500,000 $2,700,000 $1,032,500 $10,112,500 Phase 1 Construction $28,000,000 $22,503,000 $50,503,000 Phase 2 Construction $13,197,000 $13,197,000 Phase 1 FF&E $1,200,000 $1,200,000 Phase 2 FF&E $300,000 $300,000 Commissioning & Miscellaneous $1,032,500 $1,032,500 Project Management $150,000 $500,000 $500,000 $250,000 $100,000 $1,500,000 Contingency $54,000 $698,200 $3,128,000 $2,520,300 $1,610,700 $245,000 $8,256,200 TOTALS $554,000 $7,678,200 $34,408,000 $27,723,300 $17,757,700 $2,710,000 $90,831,200 Construction Timeline Page 17

18 6. BUSINESS CASE REVENUE & OPERATIONAL EXPENSE ESTIMATES Estimation of Operational Revenues Exhibition Park has determined that the redevelopment and replacement of the existing facilities will generate two major sources of additional revenue: Enhanced Revenue: o Site redevelopment and replacement of the existing aging facilities will enable additional revenues to be generated for existing events. Exhibition Park has documented evidence that demand for access to many existing events by promoters exists. It is expected that with the larger exhibition space available to exhibitors, existing programs such as Ag Expo and the Home and Garden Show events will support an increase in new exhibitors, driving and supporting a renewed local and regional public interest in attending existing programming at the new facilities. Incremental Revenue: o Site redevelopment and replacement of the existing aging facilities will enable net new programming to be added to the existing complement of programming being driven and managed by Exhibition Park, generating new and incremental revenues, over and above those being generated via existing programming. o It is expected that new programming related to conventions, large trade shows, large exhibitions, indoor equestrian and agricultural programs will be attracted to the new facilities and generate a significant amount of incremental income for the Park. Forecasted revenues are based on 2011 dollars, adjusted to 2020 values by escalating the base year at 3% per year. Additional details of the projected new revenue sources can be found in Appendix C. Exhibition Park site development and facilities replacement project will have 3 significant revenue stream associated with its operations; the Existing, the Enhanced and the Incremental revenue streams. At steady state operating condition, these 3 revenue streams are expected to generate annual operating revenue of $7,440,730, as noted in the table below: Steady State Revenue Streams Revenues (2020) Existing Revenues $3,922,231 Enhanced Revenues $653,189 Incremental Revenues $2,865,310 Total $7,440,730 Page 18

19 Estimation of Operational Expenses Redevelopment and replacement of the existing facilities at Exhibition Park will also result in the generation of new and incremental annual operating costs for utilities, supplies, staffing and the like. In calculating and estimating the total annual operating expenses for the redeveloped site and new facilities, Exhibition Park assumed: The operating expense associated with the Existing revenue streams would remain as per the 2011 actuals, escalating annually at 3%. This escalation factor is conservative, it represents the average annual operating expense increase year over year for Exhibition Park in the last 13 years. The operating expenses associated with the Enhanced revenue stream have been estimated to be equivalent, on a pro-rata basis, to those associated with the existing revenue streams, escalating annually at 3%. The operating expenses associated with the incremental revenue stream have been estimated to be 98% of revenues immediately upon completion of the facility, in This is equivalent to a net operating margin of 2%. This reflects the starting point for a 3 year ramp up period, related to improving expense management at the new facilities. With the concurrent introduction of new programming in 2018, operating expenses have been estimated to improve over a period of 3 years to 91% of operating revenues as facility operations reaches steady state (2020) and the management team is able to take full advantage of the anticipated reduced direct operating costs of the facility and the synergies and economies of scale anticipated within the indirect operating expense areas. This is equivalent to a net operating margin of 9%. Based on these assumptions, at steady state operations, the total annual operating expenses of Exhibition Park would be: Steady State Expense Streams Expenses (2020) Existing Expenses $3,562,604 Enhanced/Incremental Expenses $3,195,185 Total $6,757,789 Page 19

20 Estimation of Net Operating Income Over the past 10 years, Exhibition Park has continually operated within its means, with average operating margins over the past 10 years of 6.3%. The table below provides a breakdown of annual operating margin during the period (5 year) (10 year) Average Net Operating Income $ 215, $ 170, Average Operating Margin 7.1% 6.3% Despite the challenges of increasing costs of operating and maintaining the existing aging facilities, Exhibition Park has successfully managed to generate a healthy and positive net operating margin, on average, each year during this period as is required in its mandate. Based on the operating revenue and expense analysis that has been done to date, Exhibition Park forecasts positive and sustainable net operating income during and following the completion of the site development and facilities replacement project, as shown in the table below: $10,000,000 $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 Revenue vs Expenses Revenue Expenses Note: Initial revenue and expense values based on 2011 dollars and inflated at 3% per annum. Page 20

21 The steady state estimation of net operating income has been compared with reported financial information from similar exhibition facilities within Alberta and Saskatchewan, as outlined in the table below: Exhibition Facility Westerner Park Prairieland Exhibition Park (Red Deer, 2011 value) (Saskatoon, 2009 value) (2020 projection) Revenue $6,465,000 $16,197,651 $7,440,730 Operating Expense $5,660,316 $15,130,352 $6,757,789 Earnings Before $804,717 $1,067,299 $697,036 Amortization Margins 12.4% 6.5% 9.1% Details of the current and projected operating costs and revenues, and associated net operating incomes can be found in Appendix D. Page 21

22 7. ECONOMIC IMPLICATIONS OF DEVELOPMENT The Lethbridge Exhibition site development and facilities replacement project will provide positive and significant short and long term economic impacts and implications for Lethbridge and region. The ongoing commitment of Exhibition Park to present attractive and exciting programming to Lethbridge citizens and visitors underpins this economic impact. New programming at the facilities will create additional demand and participation, sustaining and growing this baseline economic value. To estimate these economic impacts and benefits, an industry standard methodology was followed, using economic multipliers released in 2011 by Statistics Canada for Alberta. The economic measures of GDP, Employment and Tax Revenue were calculated against the drivers of economic impact and benefit: Construction Spending and Operational Spending. Overall, the site development and facilities replacement project at Exhibition Park will deliver real and substantial benefit within Lethbridge and the Southern Alberta region. During the construction period of 2015 to 2018, the project will generate $70 million in total direct and indirect benefit, with respect to the added value of the construction aspects of the project. As well, Lethbridge & other regions can expect to see an increment of 750 full time jobs, on site and off site, during the construction period and over $21 million in provincial and federal tax revenue. Direct & Indirect Economic Benefit (Lethbridge & region) Provincial & Federal Tax Revenue FTE During Construction ( ) $ 70,000, $ 21,000,000 Once the facilities are built and operating at steady state, in the first 10 years of the project (2020 to 2030) approximately $30 million in direct and indirect regional economic contribution from new programming and incremental sources of revenue will be generated. During the same time period, an estimated 700 full time jobs will be created and maintained and over $10 million in net new provincial and federal tax revenues will be generated. Direct & Indirect Economic Benefit (on incremental portion) Provincial & Federal Tax Revenue FTE At Steady State (over 10 year period, ) $ 30,000, $ 10,000,000 In addition, there are a number of anticipated direct and indirect spin-off economic benefits to other businesses, service providers and related organizations in the Lethbridge region that are expected but have not yet been quantified, such as off-site visitor spending generated by conventions and the other enhanced and incremental activities at Exhibition Park. Further, new facilities such as those contemplated by the project have the potential to become catalysts of community and regional growth, acting to attract new business and new residents to the area because of their presence and availability. Page 22

23 8. CAPITAL FUNDING & FINANCING STRATEGY Funding & Financing Considerations Funding for the Exhibition Park Development Project could come from a combination of several sources, which could include: Lethbridge & District Exhibition contribution Municipal in-kind capital offset - completion of off-site infrastructure works, as required Municipal, Provincial & Federal capital grants Other - Community / Corporate Lethbridge & District Exhibition Contribution The Exhibition expects to contribute to the capital cost of the project in 4 ways: 1. Capital Cost Avoidance Lethbridge & District Exhibition has reviewed the planned use of the 2010 C.I.P. funds already received from the City of Lethbridge and estimates that of the $9.2 M in funds an amount can be used in a way to offset / avoid an equal amount of the Site Development costs accounted for in this project. Alternatively, only a small portion of the funds have been spent to date and the remainder could be realigned with this project. 2. Capital Asset Offset Lethbridge & District Exhibition currently owns approximately 156 acres of land in S.E. Lethbridge, which is zoned Residential. The land was acquired in 2007 for $4.6M and based on land values in that area of a similar location and size, has a current market value of $4.6 - $5.2M. Revenue from the sale of land would support this project. 3. Long Term Debt Servicing Support One of the most notable commitments that the Exhibition is able to make, relative to funding the facility development project is to fully accept the operating risk. In this context, the Exhibition is confident in its ability to retain existing, and attract new and profitable programming such that it fully anticipates that operating income will exceed operating expense in each year of operation once the facility has been constructed and is operating in a steady state mode (approximately 2020). This plan will have no ongoing pressure on the City of Lethbridge operating budget, and by leveraging the expected positive net operating income, Lethbridge & District Exhibition will also be in a position to support the debt servicing requirement of the project. 4. Capital Reserve Lethbridge & District has a capital reserve fund of $2 million which would be allocated to this project. Municipal in-kind Capital Offset It is anticipated that the City of Lethbridge will construct all necessary off-site underground and other off-site infrastructure Municipal, Provincial & Federal Capital Grants It is anticipated that municipal, provincial and federal capital grants will be available for the project. These grant options will be identified and applied for upon confirmation of the project being included in the City of Lethbridge Capital Improvement Plan. Page 23

24 Other - Community/Corporate Sources Other potential capital funding sources could include a Community Capital Campaign and/or naming rights. Private sector acquisition of the naming rights for all or some of the new facilities being constructed will contribute to the capital cost reduction. Page 24

25 9. COMMUNITY SUPPORT This development project is community driven, community designed and community supported. As much attention was spent to bringing the community up to date on the project as was done to include community input. The following is a list of presentations and public engagement milestones. Media Update November 20, 2012 Update Exhibition Park Staff December 12, 2012 Lethbridge MLAs Update December 19, 2012 Mayor and Council notification of project January 8, 2013 Media Launch January 9, 2013 Minister of Tourism Update January 15, 2013 City Management Team January 22, 2013 MP Update January 22, 2013 Minister of Culture Update January 29, 2013 Lethbridge & District Exhibition Shareholders January 31, 2013 Minister of Agriculture Update Feb 15, 2013 Ag Expo Booth February 27-March 1, 2013 Residents Open House March 5, 2013 Park Place Mall Booth March 9 & 10, 2013 Home & Garden BDO Breakfast Presentation (invite only) March 13, 2013 Public Presentations Home & Garden March 13, 2013 Booth at Home & Garden March 13-16, 2013 As of March 20, 1013, we have received 33 letters of support from the following organizations and a petition signed by 638 citizens. Where available and applicable we have included the number of members these organizations represent in our community. Name of Organization # of Members President / Chair 4H 6479 Marguerite Stark - Branch Head AAAS 284 Tim Carson CEO Alberta Fire Chief Association 450 Brian Cornforth - President Allied Arts Council 250 Gloria Torrance - President Canadian Association of Fairs & Exhibitions 790 Karen Oliver - President Chinook Country Tourist Association 220 Nikolaus Wyslouzil (Executive Director) Chamber of Commerce - Lethbridge 750 Darren Boras - President Deborah Ganger - General CKVN Radio n/a Manager Clear Sky Radio n/a Casey Wilson - General Manager Page 25

26 Name of Organization # of Members President / Chair Community Futures 10 communities in Region Darlene Sinclair - General Manager County of Warner n/a Ross Ford - Reeve CTV n/a Len Perry - Regional VP Economic Development Lethbridge 57 Cheryl Meheden, President Eldorado RV n/a Greg Knopp FarmPress n/a Jeff Sarich - General Manager Galt Museum 2100 Charleen Davidson - Chair Jim Hillyer, MP n/a Jim Hillyer, MP Lethbridge Lodging Association 11 Hotels Dwayne Stratton - President Mayors & Reeves of Southwest Alberta 34 Terry Kerkhoff - Chair Pattison Group n/a Gary Dorosz General Manager Town of Coaldale n/a Kim Craig - Mayor Travel Alberta n/a Wynn McLean - VP Jim Watt - Chief Governance UFA n/a Officer University of Lethbridge / Conference & Event Services n/a Erin Crane - Manager Rocky Mountain Turf Club n/a Max Gibb - CEO Lethbridge Senior Citizens Organization 2100 John Machielse, President Nord-Bridge Senior Centre 1293 Jim Hahn - President Lethbridge Construction Association 200 Roger Simpson - President Canadian Home Builders Association - Lethbridge 150 Anita Hartman, President Gas King Companies n/a Brent Morris, President Lethbridge Downtown Rotary 151 Stephen Graham, President Lethbridge Sports Council 75 Dr. Gary Bowie, Chair Refer to Appendix E for copies of letters We, the undersigned, have seen the development plans for Exhibition Park, and we support this project being identified as a capital priority for the City of Lethbridge and support it being funded in their Capital Improvement Program Signed by 638 citizens (2013) Refer to Appendix F. Page 26