No ‘deep, dark secret’ in downtown Hamilton venues deal: Mayor Fred Eisenberger

A private consortium the city has tapped to refurbish and operate Hamilton's downtown entertainment venues will not pay property taxes.

That tax status is a term of the confidential master agreement the city struck with the group last year.

The exemption is allowed under provincial legislation, but the deal's decades-long confidentiality provision invites suspicion, Coun. Brad Clark says.

We're wide open to accusations from the public that these are sweetheart deals and all of the other allegations."

Last July, council approved a lease agreement - for a guaranteed 30 years and as long as 49 - with the Hamilton Urban Precinct Entertainment Group (HUPEG) to renovate and operate the arena, convention centre and concert hall.

City officials celebrated the deal as a way to save taxpayers $155 million in operating and capital costs over 30 years.

In exchange for investing tens of millions into revamping the city-owned venues, the consortium also picks up three municipal properties.

They include the York Boulevard parkade, a parking lot behind it on Vine Street and another parcel at York and Caroline Street North. A long-term, incremental tax break is also tied to the development of those parcels.

HUPEG - which includes the Carmen's Group, labour union LIUNA, Meridian Credit Union and Paletta Group - aims to build mixed-use residential highrises and spur the creation of shops and eateries in a rejuvenated corridor.

On Wednesday, city staff told councillors the deal's master agreement would remain confidential for the life of the lease.

So theoretically, this could be an existing relationship forever and the public never gets to see what the agreement is," Clark said.

But Mayor Fred Eisenberger responded when the city released the broad strokes" of the agreement and listed its benefits to the city" last summer.

Contractual details should remain confidential so as not to potentially" reveal proprietary information, he said.

I just didn't want to leave the impression that we're keeping some deep, dark secret here, so that's not the case."

In interviews, staff have said the city won't share the HUPEG agreement, citing a need to protect the municipality's competitive advantage in future ventures.

In August, the city rejected The Spectator's freedom-of-information request for a confidential report and appendices related to the deal, noting they were discussed in camera under a clause of the Municipal Act that allows private discussions for real estate matters.

On Wednesday, responding to Clark's concern over the confidentiality, city manager Janette Smith said staff could examine if there's any legal risk" to publicizing the agreement.

Staff could also revisit the city's general protocol" of keeping such information under wraps from a philosophical standpoint" in line with its push for access by design."

Council agreed to direct staff to provide annual reports on the entertainment venues initiative and to investigate information that could be released.

HUPEG's tax exemptions for FirstOntario Centre, FirstOntario Concert Hall and the Hamilton Convention Centre are allowed under the Municipal Act through a municipal capital facilities agreement" with the city, which owns the buildings, staff reported.

It's just that we're allowing the HUPEG group to have the same status as the city would currently," said Ray Kessler, the city's real estate manager.

The exemptions apply to portions of the venues that are used for cultural, recreational or tourist uses, he explained.

There are taxes currently being paid for some of the uses, so commercial uses such as concessions, etc. the subleases that currently exist there would pay municipal taxes."

Some HUPEG members, including PJ Mercanti, who leads the consortium, are also involved in a pitch to host the Commonwealth Games in Hamilton in 2030.

Teviah Moro is a reporter at The Spectator. tmoro@thespec.com