Special Report: Education

City Needs More from McMaster to Justify $55 Million

Imagine the possibilities for downtown revitalization in a joint bid by McMaster and the City to build a student residence in the vacant Royal Connaught building.

By Joey Coleman
Published July 18, 2011

Hamilton City Council is considering a request from McMaster University for $55 million to build a medical arts building on the property that currently houses the Hamilton-Wentworth District School Board headquarters.

The McMaster building is being promoted as a major breakthrough for downtown redevelopment. McMaster estimates that the building will bring 450 jobs, 4,000 student visitors, and 54,000 patient visits to the core each year.

They are making an offer they believe City Council will be too afraid to turn down, lest they become known as the Council that kept McMaster from locating downtown.

We've already seen City Council make decisions motivated by fear of a major community stakeholder leaving the table. The stadium debate last year was the starkest example of this dynamic in play.

Repeatedly, members of Council would state variations on, 'I don't want to be remembered for losing the Tiger-Cats'. This unwillingness to walk away from negotiations, even if the other party was not negotiating, allowed the Ticats to dictate the terms of the stadium debate. The end result is a renovated stadium with limited city building potential.

City Council must not repeat this error: we need to ensure that the city-building potential of McMaster University downtown is not lost.

Council Needs More Value for $55 Million

This building will not fix what ails the core and City Council needs to receive more in return for the $55 million that McMaster is requesting.

McMaster is dangling the possibility that, in the future, the university may consider building commercial space and condominiums on the north side of the property where the school board parking lot currently resides.

Upon first glance, it appears McMaster is negotiating from a position of overwhelming strength. The University has the funding to build their medical centre anywhere they choose. None of the funding for the building restricts the location.

David Braley, now a member of Canada's Senate, donated $50 million to McMaster's Faculty of Health Sciences in 2007. $10 million of this donation is directed to the new family medicine centre. Braley was clear in 2007 when he stated, during the donation announcement in the McMaster University Student Centre, that McMaster should work with all three levels of government to locate in Hamilton's core.

During the media scrum following the announcement, Ted McMeekin, MPP for Ancaster-Dundas-Flamborough-Westdale, stated, "I cannot think of any place better where $10 million can go than here at McMaster to go towards building a family medicine building in the downtown core."

It is clear that the political direction that influences McMaster is pushing the university to locate the building downtown. The province and federal governments have both committed funding to the project.

Opportunity to Negotiate

McMaster's negotiating position is equal to City Hall. They need the money from the City to expand their medical program successfully.

The university's bond rating was downgraded in 2010 to AA by DBRS Credit Rating service. The downgrade was reflective of concerns about the university's high pension deficit and the expectation that McMaster will be returning to the bond market in the near future to raise $100-million.

McMaster, like all Ontario universities, received a partial reprieve from pension plan solvency obligations last summer. The province extended the usual five-year timeline for meeting solvency obligations to ten years for universities. McMaster's pension deficit previously stood at $373-million, the second highest of any Canadian university.

The University's unfunded pension and post-employment liabilities reached $589.9-million in 2009-10. The plan's most recent evaluation was completed on July 1. It was expected to return a higher liability figure. (No response was received from McMaster University's office of public relations to email sent last Monday, July 11 requesting the updated figure.)

McMaster's debt was $153.3 million as of April 30, 2010.

MIP: Trump Card or Bluff?

Patrick Deane, the new president of McMaster University, has wisely started addressing the long-term financial challenges facing the institution. It is in this context that one must view the University's requirement that City funding for the new building include a long-term lease commitment to house staff of the City's public health department.

McMaster's hand contains a we'll-move-it-to-Innovation-Park card. Will McMaster play this card or is it a bluff?

McMaster could play this card, but playing it will impact the long-term revenue of the university. The MIP lands are designed to generate revenue for the institution by housing private corporations (leasing revenue) and facilitating research that generates patents which can be licensed or otherwise commercialized.

(I wrote about IP policies for Maclean's in 2007.)

The family medicine centre will not be a revenue generating facility and there is a limited supply of land at the MIP. It is not in the long term interest of the University to locate the facility at MIP due to a lack of presently available capital funds.

The City does have its own trump card. McMaster needs the $20 million upfront and $35 million long term. It is not in the City's interest to overplay its hand either.

The City is facing the real possibility of a vacant building directly across from City Hall. It's not healthy for a prominent intersection such as the one housing City Hall to contain two vacant properties. It will further depress the downtown core.

The medical building will not correct the greatest problem facing the inner downtown core. It will not bring any new permanent evening population into the downtown.

Downtown Campus

What would really benefit downtown is for McMaster to locate a student residence building in the core with an eventual expansion of undergraduate programs there.

The City of Hamilton should request, in exchange for $55 million for the medical building, that McMaster sign a Memorandum of Understanding committing to locating their next student residence in the downtown core.

The City should include a commitment to assure a third of the mortgage on the building in exchange for a commitment from the university to operate the residence as a summer hotel. The addition of hundreds of hotel spaces in the summer will greatly assist the city to secure convention business (one of our main barriers is a lack of accommodation). Additional conventions will make HEFCI a more attractive asset to potential private sector operators.

Hundreds of students living in the core will spark a boom in businesses catering to a younger demographic. One only needs to look at King and Main streets west of Catherine to see the impact of a student residence on the core.

The Columbia College student residence in the former Holiday Inn on Catherine Street South is the driving force supporting a number of small businesses. The sushi restaurants in this area have become an attraction drawing people to the downtown core.

Imagine the possibilities that a joint bid by the City and McMaster University for the vacant Royal Connaught Building would create.

University conversions of high quality hotels are success stories for every institution that have expanded their residences using this method. It's also more cost-effective than the construction of a new building.

There's an opportunity for City Council to see great returns on $55 million. They just need to see the forest for the trees they are hiding behind.

This was first published on Joey's personal website.

Joey Coleman covers Hamilton Civic Affairs.

Read more of his work at The Public Record, or follow him on Twitter @JoeyColeman.

32 Comments

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By misterque (registered) - website | Posted July 18, 2011 at 09:39:54

This may sound too much like city building or planning? How about using the money to lever McMaster to distribute their student housing at LRT nodes through the core. This could be a good seed for node development, and would offer more affordable off campus housing with excellent university access via the LRT B-Line.

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By JoeyColeman (registered) - website | Posted July 18, 2011 at 09:56:01 in reply to Comment 66333

This is part of the idea.

A Super-Express bus starting at the Connaught, stopping at Gore Park, Jackson Square, and Queen Street then super Express to Mac would be a major step to getting students downtown.

Westdale was planned to be a single-family home area of the city. Downtown's are designed to be higher density, more "lively", and should attract single individuals.

Making downtown attractive to students will do more to correct housing problems in Westdale than any other measure the city can implement.

Winnipeg, where I attended first-year, operates super-express buses to the University of Manitoba (which is on the southern skirts of the city) from many regions of the city. There is no student ghetto because most students locate themselves in more affordable areas with super-express service.

The super-express operates inbound in the morning and outbound in the afternoon.

We had a huge opportunity to prove to students that downtown living was viable in 2008 when the Brandon Hall residence fire displaced hundreds of first-year students into downtown hotels.

Instead, we kept the same overcapacity bus service with no midday or evening express service. These students discovered that buses were just as likely to bypass you as they were to pick you up.

The lesson for these students - don't live anywhere that you need bus service to get to school.

We should've operated express buses for these students, added capacity, and held special events (such an outdoor movie night at City Hall or the AGH) to welcome them to the core.

In terms of LRT, we should be building McMaster to Downtown, Downtown to James St N GO Station first.

Comment edited by JoeyColeman on 2011-07-18 09:56:18

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By John Neary (registered) | Posted July 18, 2011 at 12:29:49 in reply to Comment 66337

I have thought for some time that an A-line "stub" would make sense as an initial project together with the B-line. LIUNA Station to St. Joseph's is 2 km. Adding an east-west spur from LIUNA to Hamilton General would be an extra 1 km and would link three of our four hospitals to the university, both train stations, and the downtown. The hospitals generate a massive amount of automobile traffic which might be mitigated by LRT connections.

And ending the A-line (for now) at SJH would defer the expense of tunnelling up the mountain.

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By Pxtl (registered) - website | Posted July 18, 2011 at 10:58:44 in reply to Comment 66337

"A Super-Express bus starting at the Connaught, stopping at Gore Park, Jackson Square, and Queen Street then super Express to Mac would be a major step to getting students downtown."

I don't see that as being substantially different from the Beeline. I mean, the Beeline has what, 2 stops between Queen street and McMaster? Not exactly really delaying the students all that much.

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By JoeyColeman (registered) - website | Posted July 18, 2011 at 11:07:24 in reply to Comment 66345

Much as the express is more attractive because of branding (it really only saves a few mins from downtown to Mac), a SuperExpress holds a greater attraction.

The Beeline no longer enters the campus and only every other stops in front of the hospital.

(It's a guessing game to decide which stop to wait at going downtown)

A super-express is designed to operate at peak times (arrive at McMaster for :20, leave McMaster at :30), the hourly change of classes.

It also better reflects the actual transit operation - many buses are full by Queen Street and operate "super-express" to McMaster due to capacity issues at those peak times.

A further extension would be three super-expresses in the morning to McMaster and three out in the evening from McMaster along two lines:

Valley Park - Eastgate - Downtown - McMaster

Limeridge Mall - Meadowlands Terminal - Main and Cootes - McMaster

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By Sigma Cub (anonymous) | Posted July 18, 2011 at 13:44:50 in reply to Comment 66346

SuperExpress service would have the added advantage of being an opening to right-size the costs of Mac's U-Pass, which offers HSR service at less than 18% market value.

https://www.msumcmaster.ca/services/hsr/overview.htm;jsessionid=B5480486809CF46B2BED39FCB92F2ADA

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By Fred Street (anonymous) | Posted July 18, 2011 at 10:36:23 in reply to Comment 66337

"In terms of LRT, we should be building McMaster to Downtown, Downtown to James St N GO Station first."

The first half seems like a no-brainer, especially if there's a McMaster campus downtown.

The second half would be a $60m, 1km direct line that extends the route without a guarantee of consistent ridership. While that would be consistent with the Metrolinx vision, so would extending it half as far, to James South and Hughson, where you enjoy the added advantage of an existing multimodal, multi-operator transit hub -- and an upmarket residential/professional base nearby, offering a walkable connection between St. Joe's, the Health Campus and MUMC -- or simply all the way to King and John, bringing you many of the same benefits as well as a hotel/residential/nightlife cluster and McMaster's existing downtown campus.

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By Fred Street (anonymous) | Posted July 18, 2011 at 10:49:03 in reply to Comment 66339

That said, I can certainly appreciate the romance of rails in the James North prioritization, and have no doubt that it would be a major self-image shift for locals and outsiders both. I guess I tend to get bogged down in the dour realpolitik of this town and would expect service to go where the numbers are. My own baseless prediction would be would that we'll see provisional hourly GO Service to LIUNA Station for the Pan Am Games, and if that experiment doesn't result in impressive adoption numbers, it'd be easier to backburner additional investments.

In any event, even the 5km from Mac to Bay Street would be an Olympian achievement given the current political climate. Anything else would be gravy.

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By JoeyColeman (registered) - website | Posted July 18, 2011 at 10:40:48 in reply to Comment 66339

My thinking was along the lines of making sure we connect both GO stations to the LRT ensuring that we can attract investment from Toronto into Hamilton's downtown office towers in the form of auxillary offices.

Instead of locating staff in Brampton, companies can locate in Hamilton with their staff able to make meetings in Toronto with ease.

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By Fred Street (anonymous) | Posted July 18, 2011 at 10:51:58 in reply to Comment 66340

That's certainly a compelling argument. It all depends on GO planning at this point. Lucky for us, Metrolinx is immune to political pressure! ;)

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By WRCU2 (registered) - website | Posted July 18, 2011 at 12:25:01

McMaster to Justify $55 Million? Not without more programs in human nutrition!

I like hearing what you have to say Joey and I wish you had said more about Crown Point and the rationale behind the improved literacy test scores among Queen Mary third graders. I know those revelations would have spawned more pointed discussions; Lord knows I tried although no one would listen. Folks don't yet accept the definitive connection between expensive disease research that cures NOTHING and the simple lack of personal nutritional accounting.

A Mac inspired Family Medical Centre downtown will not turn poverty, disease or a dying downtown around. Only slippery-slope reporting of facts that educate people can bring our prosperity back into everyone's equal.

Pointed community meetings are crowned on the third Monday of every month Joey, which is tonight BTW, just in case you were planning on going;-)

And thanks for sharing.

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By JoeyColeman (registered) - website | Posted July 18, 2011 at 15:03:32 in reply to Comment 66351

I'm volunteering on another Boys and Girls Club project tonight. Duane will be there as always representing the Club. Thanks for the invite, I will hopefully attend this fall.

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By Undustrial (registered) - website | Posted July 18, 2011 at 13:53:34

Does the integration/centralization of Public Health facilities here (the biggest reason for the extra floors neede) entail pulling the department out of the nearby Wright House? What's to happen with it?

Come to think of it, how many office buildings downtown are relying on rent from government offices? The Lister, Wright House, Standard Life tower, One James South, 21 King East, 250 Main, etc... Shifting these offices from tower to tower may help with various revitalization projects (pretty much the only reason non-residential stuff gets developed in the core), but what about the spaces they leave behind?

Downtown has suffered with an enormous excess of office space for years. More simply is not needed. We need to stop moving offices out of the core, and stop building new offices.

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By Zozo (registered) | Posted July 18, 2011 at 16:13:52

Any discussion at all on bringing students downtown definitely deserves our attention. In fact, I would go so far to say that it should be a #1 priority for the city. We need to do everything we can to not only attract the student population to downtown, but to retain them. We have two major post secondary schools in this city whose combined population is around 40 000. We need to show this body of population, not only why Hamilton is a great city to attend school, but why Hamilton is a great city to live in.

The vision statement of this city is: "To be the best place in Canada to raise a child, promote innovation, engage citizens and provide diverse economic opportunities."

This is a great vision, but it lacks conviction. If it is our goal to "To be the best place in Canada to raise a child" we need to realize that it is not the status quo that will be performing this action, but the youth of this city. This is a great strategy, because if you can make the 1st part true, the rest line up perfectly. We need to show the youth of this city (visiting or otherwise) how we are adapting to meet their needs.

The beautiful thing about getting campus living downtown; is that while the City does it's part to make student living the best possible, the free market will do its share by making sure there are youth oriented businesses downtown to provide.

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By Zozo (registered) | Posted July 18, 2011 at 16:14:03

A market place, studying a large population, with new ways to make money? Sounds pretty innovative to me.

A population that is peer oriented, that is all about talking to others on equal footing and maintaining strong social ties where ever they go? Is that an engaged citizen or what?

A population looking to work where they live, deciding to stay there afterwards, and make a life for themselves? A diverse and educated population, cementing their skills and knowledge into our economy. Now that's an opportunity!

We need to really look at this issue, and any related to attracting and RETAINING the educated youth these administrations bring to our city. It is quite simply a wasted strategic resource not to.

Comment edited by Zozo on 2011-07-18 16:14:57

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By Zozo (registered) | Posted July 18, 2011 at 16:21:14

As for LRT, let get the population first, and work with what we have. Get better bus service, more frequect trips and longer running times going. And then, once things realy start reving up (3-5 years) take advantage of this success story and spend some money on LRT (maybe even with the support/partnership, ie $$$, from local business who have gained so much from good city planning)

Comment edited by Zozo on 2011-07-18 16:22:00

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By -Hammer- (registered) | Posted July 18, 2011 at 17:17:04

I'm all for the "We'll give you the money, but the one string attached is a student residence in the core."

It might spurn action on the Connaught, or it might build a new building over the old BoE parking lot next to the art gallery and remove yet another block of surface parking. It also is the perfect thing for the Hamilton Bulldogs and Copps to capitalize on.

My only concern is the people asking to preserve the old building across from city hall, which apart from it's front mural and west side statue, is not worth preservation.

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By RenaissanceWatcher (registered) | Posted July 18, 2011 at 21:35:19

The $100 Million Vrancor project to build 628 condo units, two extended stay hotels and 20,000 square feet of retail space across the street from the Board of Education site is a major factor driving the City of Hamilton to shell out $20 Million up front and $35 Million in long-term rent in the proposed McMaster Family Medicine Centre/Hamilton Public Health Centre while offering little to no resistance to the demolition of the Board of Education building. Without the McMaster project, how long would it take for the Vrancor project to come to fruition? http://www.thespec.com/news/business/art...

Comment edited by RenaissanceWatcher on 2011-07-18 21:36:01

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By Shawn Selway (anonymous) | Posted July 19, 2011 at 10:28:24

Good and very informative article and comments. Thanks Joey.

Returning to the ostensible purpose of this project ( but remaining in the utopian mode with everybody else), if the intent is actually to deliver family and public health services to the eastern regions of the old city, then buildings modelled on the new North Hamilton Community Health Centre might be a better choice.

The Centre, which opened early this spring, is a very handsome two storey structure (McCallum and Sather) of 30,000 square feet. LEED certified. Located in the middle of the neighbourhood, beside the rec centre and a school. Ninety staff serve 8000 clients. Cost was about 16 million.

This would imply that you could build 4 more of the same for 64 million. Put them in the centre of four neighbourhoods. For example, one could go into a rehabilitated Sanford school,or on its site, beside the new Cathy Wever school and the Pinky Lewis recreation centre, all on the same block. "Synergies", as the apparatchiks say, would result.

Moreover, we would begin to move the built form of the city toward walkabilty and reduced auto dependence.

Allot one of the four centres a little extra dough, say 23 million instead of 16, and you could place it downtown in a rehabilitated Board of Ed building. (Assuming it merits retention) This totals out at 70 million, down from the 105 required under the current proposal.

House the students in a rehabbed Connaught and they would be on a main transit line between the university and med school campus and the various Community Health Centres to the East.

Of course, all of this presumes that health care delivery and training is in fact the object of Mac's exercise here. Personally, I believe with all my heart and soul that this is the case. I'm having a little trouble recruiting my mind, though. I must seek help.

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By mrjanitor (registered) | Posted July 27, 2011 at 15:17:56

This thread has probably died it's natural death, however I found this comment I wrote about Connaught student housing in Dec. 2010

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