A casino will not solve Ottawa’s infrastructure deficit

Below is my submission to Ottawa City Council’s FEDCO committee as it considered Mayor Watson’s proposal to invite Ontario Lottery and Gaming to build a new casino in Ottawa.

Mayor Watson and Councillors,

I am appearing here today to speak in my capacity as a resident and as Deputy Leader of the Green Party of Ontario. I’m opposed to a casino anywhere in Ottawa for many reasons, but tonight I will limit myself to addressing the infrastructure deficit the casino is purported to help solve.

A casino is being pitched to the residents of Ottawa as a way to address the infrastructure deficit. Unfortunately the revenue from any casino is tiny compared to the size of Ottawa’s bond and infrastructure debt. It simply won’t make any difference whatsoever. Discussing a casino in that context is a distraction, and is a disservice to the residents of Ottawa who deserve a clearer understanding of Ottawa’s debt problems.

Media coverage so far indicates many councillors are eager expand the City’s revenue base with a casino, but recent budgets show no eagerness to restrain the capital spending that built the infrastructure deficit in the first place.

For example, in 2011 the city approved $55 million for 1km of the Alta-Vista road corridor and took in $4.4 million in revenue from the Rideau Carleton Raceway. The addition of that single kilometer of road destroys any pretense that gambling revenue will help Ottawa deal with its infrastructure deficit. Almost 60% of Ottawa’s current gambling revenue is already spoken for just to pay for the interest on the new debt for the construction of that single kilometer of road. Once you factor in principal repayment and setting aside funds for a replacement kilometer of road, nothing is left.

By The Numbers

Council approved $55 million in spending for 1.2km the Alta-Vista road corridor. Source, CBC.

City of Ottawa debenture committee issued a $150 million bond series in July at %4.651 over a 31 year term. The terms for that debt require an annual interest payment of $6.9 million.

Assuming similar real-world terms, the debt obtained for the Alta-Vista corridor would require annual interest payments of $2.5 million, or 58% of the 2011 Rideau Carleton Raceway gaming revenue.

Council would need to set aside an additional $733k per year in an infrastructure fund in order to afford a replacement in 75 years.

Council would need to set aside an additional $1.7 million per year if it seriously intends to pay off the principal of the loan. That is unlikely.

Verdict: Council has already spent the casino money in 2011

There is no definitive answer for whether or not casinos are good for an economy. What is certain is that even in the best case, casino revenues barely add up to a rounding error on Ottawa’s existing bond and infrastructure debts.

The City of Ottawa has a spending problem and this Council must address it, not by seeking expanded gambling revenue but by curtailing Ottawa’s appetite for low-density road networks.

The Green Party of Ontario has good ideas for helping cities address their debt problems but I will not abuse this venue to list them. The topic at hand is the red herring argument that a casino will help. It won’t.

Let’s not pretend that a casino is an answer. There’s no proof it will be good for the economy and I’ve just established that it is moot in relation to Ottawa’s debt problems.

Instead, I would encourage council to focus on three priorities:

  • Convincing the residents of Ottawa that we can’t afford the road network we already have, let alone new or widened ones. Generations of learned expectations need to be undone and City Council is best positioned to start that conversation;
  • Second: convincing the Provincial and Federal governments to create permanent infrastructure funds. They helped build the roads we have, they must contribute to their replacement, and not by letting Ottawa share a few crumbs that fall of the $5 blackjack table;
  • Lastly, as we are rebuilding infrastructure, we must shift to more affordable transportation systems: walking, biking, and public transit. In the urban core, pedestrian and cycling infrastructure is cheap to build compared to any road and costs much less to maintain. In the sub-urban areas we need to convert existing infrastructure to public transit instead of relying only on new lanes to add bus lanes.

But that returns me to the first point and the top priority: someone needs to make the case to Ottawans that to have a solvent city, we have to change our ways. There simply is no other option.

That is why I’d like this committee to take this opportunity to reject a casino and instead demand real solutions from the Provincial and Federal governments. Other speakers tonight will address a casino’s negative social and aesthetic costs. My goal was address the lack of any significant financial benefit to the city.

On balance, it’s better to forego a casino and build something truly unique in Ottawa. It’s better that we wish our sister city Gatineau good luck by leaving a few gambling dollars on their side of the river.

It’s better that we focus on the business of balancing Ottawa’s books for good.