Earlier this week, Fredericton City Council was presented with a revised cost estimate for a new performing arts centre in the city, which came in at $81.7M, including $10.6M for contingencies. Councilors voted to increase the amount that the municipal government could borrow to cover the extra cost – that means of the $81.7M total potential cost, the City of Fredericton will contribute up to $22.6M. The remainder will come from other governments, a fundraising campaign and divesting of the existing Playhouse.
Is that a lot of money? Absolutely. Was council right to move forward with its construction at increased cost? Absolutely.
There’s no question that the current Fredericton Playhouse needs to be replaced, the facility is unsustainable with ongoing maintenance costs. Continuing to prop up that aging venue indefinitely would be throwing good money after bad and ultimately leave us without anything at some point. Arts in our community are a key part of our collective character and the performing arts are a big piece within that sector. Many of our local restaurants, bars, retail shops and hotels rely on the spin-off benefits of a thriving arts scene.
Our organization often says that it’s the private sector’s responsibility to grow the economy and create jobs while it is governments responsibility to create favourable conditions for that growth – and this is the lens that the Fredericton chamber views investment in the performing arts centre. Two key conditions for growth are relevant here – providing needed infrastructure, and fiscal stewardship/tax burden. Both are important to consider for businesses and citizens.
First, let’s get a handle on the finances. The cost estimates have certainly skyrocketed in the current inflationary environment that we are all living through (construction has been one of the hardest hit sectors) and governments are not immune to these increasing cost pressures.
Our position is that Fredericton needs a performing arts centre that befits a modern, capital city. If there is agreement on this point, then rising costs is not a reason to pull back on construction, but rather why we probably should have coalesced around the project five years ago and got it done then. At this point, any further delay will only cause costs to continue to increase. The best way to ensure cost certainty now is to get shovels in the ground. We are also pleased to see the $10.6M for contingencies built into this total as we would expect this to be the final cost increase.
Fredericton City Council has a self-imposed debt-serving cap of 8% – meaning they will not allow debt servicing to be more than 8% of an annual budget (they are permitted up to 20% under provincial legislation). If the costs of the new performing arts centre use the entire contingency fund, then Fredericton will be at 5.3%.
We are in this fiscally sound position because the City of Fredericton has been a good financial steward. Consider that as of the end of 2021 Fredericton had $39.1M in long-term debt on the books, compared with $172.6M in Moncton and $211.1M in Saint John. Fredericton has also had the lowest municipal tax rate amongst the three cities – in 2023 its 1.41 in Fredericton, 1.44 in Moncton and 1.62 in Saint John (prior to 2023 the gap was even wider and the role that assessments play in tax burden is a conversation for another day).
Would we like to see the tax burden for our members lowered further? Of course – and we expressed our disappointment to the City of Fredericton that the 2023 rate wasn’t lowered further, but business conditions aren’t just about the tax and regulatory environment.
The Playhouse is a key piece of Fredericton’s downtown and our local economy. The City of Fredericton’s capital investment plan allows them to make a major capital investment every four years – it’s now been 12. Like any investment, it’s not just a cost – it has returns. An economic impact statement by economist Pierre-Marcel Desjardins in 2015 pegged the annual GDP for a new performing arts centre in the York region at $3.3M. Provincially, the arts and culture sector adds $550 million to the GDP annually according to a 2020 Arts Link NB report.
However, investments like a performing arts centre are not just about the direct and indirect economic impacts. Performing arts are a key piece of being a growing and appealing community, which is critical to attracting highly skilled individuals to Fredericton – like doctors. Being a low-cost jurisdiction isn’t enough – we spent decades as being one of the most affordable jurisdictions in North America to live and we experienced stagnant population growth (or decline) until five years ago. Modest population growth in recent years has produced multiple crises – in part because we didn’t make investments when we should have – let’s not repeat those mistakes.
Our organization often says that governments could learn some best practices from business – and they can – but a government can’t be run exactly like a business – they have to make those investments that the private sector wouldn’t or couldn’t. We have to ask what we want our community to be – is it worth investing in ourselves to be the best we can be? To be a destination of choice for global talent? To be the most livable community in New Brunswick? In Atlantic Canada? In the country? For our organization, constructing a new performing arts centre is worth it.
Krista Ross is CEO of the Fredericton Chamber of Commerce, a nationally accredited organization with more than 1,000 members, is an active business organization engaged in policy development and advocacy that affects the competitiveness of our members and the Canadian business environment. The Chamber’s vision is ‘Stronger Community Through Business Prosperity’.