In the November 29 edition of the North Grenville Times, there was an article entitled “Need to Consult on Kemptville College Acquisition”, written by Ralph Raina, which posed 3 questions to Council. In response Mayor David Gordon made the following statement at the Committee of the Whole meeting on December 4:
Question 1: Will you advise the taxpayers, before the 90 day deadline is reached, what is your business plan for the former Kemptville College?
With respect to the 90 day deadline, it is specific to the timeframe for the Municipality to complete a due diligence process following the official Agreement of Purchase and Sale having been accepted by both parties. The deal will only be ratified if the conditions to the Agreement of Purchase and Sale can be met by both the Municipality of North Grenville and the Province of Ontario within the 90-day timeframe. If not, the transaction will not proceed.
As for the Business Plan, in October of 2014, the Municipality released an Expression of Interest which describes our intentions to renew the Kemptville Campus and speaks specifically to a vision for the future, campus operations and maintenance, governance, our due diligence and the Municipality’s capacity to deliver. This was supplemented in March of 2016 by a Business Feasibility Assessment completed by BDO, an international accounting and business advisory firm, which concluded, based on an extensive review of the market, a technical assessment, the organizational model and financial projections, that the proposed Municipal non-profit corporation and community hub are feasible.
Copies of both of these documents were made available on the Municipality’s website when they were released in 2014 and 2016 respectively and continue to be available for those who wish to find out more details about our plan for Kemptville Campus.
Question 2: Currently, and until early 2018, the costs of maintaining the College buildings and property is paid for by the University of Guelph and, considering that there are only two schools and three government offices using about 10% of the entire campus, where will the remaining revenue come from to pay for the bulk of the $2 million basic operating costs of the campus and the additional staff that will be required for this new venture?
Currently on the campus there are four (4) school boards, three (3) government offices and one (1) social enterprise, and this in addition to short term rentals of other facilities for special events. The Municipality of North Grenville is currently involved in discussions with a number of organizations, some of international status, that have expressed a desire to locate on the campus. The BDO Business Feasibility Assessment confirms that the price of tenancy on campus will be established through cost-based pricing. As the primary revenue stream, tenancy will be priced to recover the costs of campus operations and management, not the Municipality of North Grenville. It is important to note that the business model applied by the University of Guelph as the only service provider to operate the College was quite different from the proposed model to operate and manage the education and community hub.
The multi-tenant campus will see all partners contribute to the vision of climate change adaptation, low carbon innovation and agricultural resiliency in all common areas on the campus and their specific locations. The Municipality takes the position that the $2 million figure referenced by the University of Guelph in applying their business model on campus is not reflective of the lower costs that will be incurred to operate and maintain the education and community hub as proposed by North Grenville.
Question 3: Considering that the University of Guelph backed out, and the Municipality will have to hire and pay an experienced entrepreneurial business person, or persons, to operate this new Corporation, how many years will it be before this new venture becomes profitable and, while we wait for that to happen, will the taxpayers of North Grenville be required to subsidize any potential deficits that may occur?
BDO is one of the leading accounting and advisory firms in Canada combining personalized, local advice and service with national resources and experience. As a member of the International BDO network, this firm has access to advisors around the globe with over 1,300 offices in more than 150 countries. This experience and knowledge, combined with the expertise of our Municipal employees who have managed multi-million dollar budgets to provide many public services in our community have given us a solid recommendation. The Business Feasibility Assessment completed by BDO in 2016 projects that the education and community hub will report a loss for the first three years of operations.
The Municipality however, is addressing the possibility of an operating deficit as a condition to the Agreement of Purchase and Sale with the intent that any potential losses would not be borne by the taxpayers of North Grenville. While we cannot provide any further details on this particular area of our discussions, we will make them public as well as all other financial matters surrounding the acquisition of the campus once we have signed the Agreement of Purchase and Sale.
I trust this information responds to Mr. Raina’s questions and reassures all residents of North Grenville that the Municipality is working in their best interest. Again, we would respectfully ask for everyone’s patience and assure you that we will be transparent and provide disclosure that taxpayers deserve once the Agreement of Purchase and Sale is finalized.
All those interested to know more about this exciting opportunity for our community as well as the vision for the renewal of Kemptville Campus to please contact our CAO Brian Carré at 613-258-9569 ext. 155.