Payment schedule lasts until 2043, community centre name purchase is in perpetuity
BY SAMUEL PICCOLO
Some two months after a Freedom of Information request for the document was first made by the Voice, last week the Town of Pelham provided its community centre naming rights agreement with Meridian Credit Union to the newspaper.
The document reveals that Meridian’s $1 million dollar contribution to the community centre will be paid over 25 years.
This time frame was not disclosed by the Town, despite it being common practice to publicize such donation schedules.
Meridian is obligated to pay installments of $40,000 dollars, plus HST, yearly until 2043.
The agreement obligates the Town to pay $60,000 dollars toward the cost of Meridian signage on the building.
The original $37 million dollar financing plan for the community centre called for $12 million dollars to be repaid by future development (new construction) charges, $9 million in taxes, $12 million in the sale of “excess” East Fonthill real estate, and $3 million dollars in donations.
In order to begin construction, the Town took out loans based on the assumptions above.
Some $21 million dollars in debt was acquired from Infrastructure Ontario between 2016 and 2017, while the Town has obtained “bridge financing” to pay for the rest.
This additional financing must be repaid within 120 days of substantial completion of the community centre, which is expected to occur in June. This means that the bridge loan will have to be repaid by October.
While the Town has announced preliminary deals to sell some eight acres of East Fonthill land, the sales prices have not been disclosed, nor have these deals closed.
And while the Town asserts that it has gathered nearly $3 million dollars in pledges, many of these donations are spread over a number of years.
“The Town will have to borrow until all that land is sold and they have $3 million in donations [in cash],” said an accountancy expert consulted by the Voice.
“Whether it’s short-term or long-term, it’s still borrowed money that taxpayers will have to pay interest and principal payments on.”
The Town has previously said that its debt for the community centre has a 30-year term. The annual payments on $1 million dollars at three percent interest would total $50,592, substantially more than Meridian’s annual payment for naming rights.
“The Meridian payment doesn’t cover [the interest],” said the expert. “That means that taxpayers will pay the difference.”
The agreement gives Meridian naming rights to the community centre in perpetuity if the entire $1 million is paid over 25 years.
“Termination rights are in the contract,” said the financial expert. “If Meridian decides not to pay anymore, the Town can take the sign down and resell the rights. It is what it is, and will service most of a $1 million loan which should show up as long-term debt on the balance sheet.”
The agreement also provides Meridian with a host of other perks, from having four to eight reserved seats for Junior B hockey games and other events, to use of an arena surface once a year at no rental cost for a Meridian community skate. Meridian also has an option for free use of the small community room twice a year, as well as the large room twice a year.
The contract obligates the Town to rename Shaw Street, the road to the north of the centre, to Meridian Way. This decision was formalized by council in March.
The Voice first requested a copy of the Meridian agreement on March 23, including it in an FOI request for other, unrelated documents. On April 25, using the entire 30 days allowed under FOI legislation, Town Clerk Nancy Bozzato responded by saying that the Town was exercising a clause to extend the time period to 90 days.
“The reason for the time extension is due to the volume of requests and the time span over which records relate,” asserted Bozzato. Bozzato had previously fulfilled parts of FOI requests while taking longer to respond to others.
In response, five days later the Voice filed an FOI solely for the Meridian agreement. Bozzato again used the entire 30 days permitted before providing the document last Wednesday.
The Town charged the Voice $48 for a copy of the agreement, asserting that the 14-page document took 1.5 hours to locate and prepare.
One of the sections in the agreement, entitled “Non-Confidentiality,” provides that the Town may disclose the contents of the contract, including under FOI request.
“From the beginning, the Town should have publicly disclosed the terms of the agreement,” said Voice Publisher Dave Burket.
“Failing that, the agreement should have been provided when we filed the first FOI in March. Finally, we should not have been charged for it. There is literally a section in the contract that says Meridian acknowledges that it can be made public. It strains the imagination that it took an hour and a half to locate and print a fourteen-page document.”
Meridian’s $1 million dollar purchase of the naming rights was announced in March at a press event held at the community centre construction site. The Voice was neither informed of the announcement nor invited to it.
Shortly thereafter the newspaper requested general comment on the naming arrangement from Meridian. Toronto-based vice president of corporate communications, Scott Windsor, replied, saying that the bank’s comment was included in the Town’s press release.
“Meridian will not be disclosing the terms and conditions of our contractual agreement with the Town of Pelham,” concluded Windsor, an addition that piqued Burket’s curiosity.
“It was an odd thing to add. We never asked about the terms and conditions of the agreement,” said Burket. “Had word come down to keep the terms secret for some reason? It seems silly, but here we are.”
The credit union had not shown such reticence in the past. When the Meridian Centre in St. Catharines was announced, it was made public that the $5.2 million there would be paid over twenty-five years. In Barrie, where Meridian donated $100,000 to a health centre, it was disclosed that the money would be paid over four years.
In contrast to the perpetual rights it secured in Pelham, Meridian’s agreement with the City of St. Catharines is limited to the duration of the 25-year contract, according to St. Catharines Acting Manager of Corporate Communications, Maggie Riopelle.