EXPANDING THE VANCOUVER CONVENTION AND EXHIBITION CENTRE BUSINESS PLAN

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					    EXPANDING    VANCOUVER
                        THE
CONVENTION AND EXHIBITION CENTRE
         BUSINESS PLAN




                       Prepared by:
     VANCOUVER CONVENTION CENTRE EXPANSION TASK FORCE
                       October 2000
EXPANDING
THE VANCOUVER
CONVENTION &
EXHIBITION CENTRE
                                                                                      BUSINESS PLAN


                                     TABLE OF CONTENTS


1.0    INTRODUCTION ..................................................................................................... 1
       1.1 The Vancouver Convention Centre Expansion Task Force.............................. 1
       1.2 Convention Centre Expansion .......................................................................... 2
       1.3 Project Objectives ............................................................................................. 5
       1.4 The Due Diligence Process............................................................................... 6
       1.5 Summary......................................................................................................... 10
2.0 RATIONALE FOR EXPANDED FACILITIES ..................................................... 13
    2.1 Introduction..................................................................................................... 13
    2.2 Purpose of the Vancouver Convention & Exhibition Centre.......................... 14
    2.3 Market Justification ........................................................................................ 14
    2.4 Expansion Parameters..................................................................................... 27
    2.5 VCEC Expansion: Economic Benefits ........................................................... 29
    2.6 Summary......................................................................................................... 34
3.0 TOP LINE MARKETING PLAN ........................................................................... 37
    3.1 Introduction..................................................................................................... 37
    3.2 Planning Philosophy ....................................................................................... 38
    3.3 Marketing Considerations............................................................................... 44
    3.4 Sales and Marketing Cycle ............................................................................. 45
    3.5 Business Targets ............................................................................................. 45
    3.6 Growing Marketing Investment...................................................................... 47
    3.7 Summary......................................................................................................... 49
4.0    DESCRIPTION OF FACILITIES ........................................................................... 51
       4.1 Overview......................................................................................................... 51
       4.2 Property Description ....................................................................................... 53
       4.3 Analysis Process ............................................................................................. 54
       4.4 Site Attributes ................................................................................................. 54
       4.5 The Concept .................................................................................................... 56
       4.6 Meeting the Functional Requirements ............................................................ 58
       4.7 Responding to the Market Opportunity .......................................................... 63
       4.8 Community Benefits ....................................................................................... 65
       4.9 City Context .................................................................................................... 66
       4.10 Renovations to the Existing VCEC................................................................. 67
       4.11 Completion of Expansion ............................................................................... 68
       4.12 Summary......................................................................................................... 68




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5.0    BENEFITS ANALYSIS .......................................................................................... 71
       5.1 Introduction..................................................................................................... 71
       5.2 Methodology................................................................................................... 71
       5.3 Economic Impact - Operations ....................................................................... 73
       5.4 Economic Impact - Construction .................................................................... 74
       5.5 Total Benefits to Industry - Operations and Construction .............................. 75
       5.6 Total Benefits to Governments - Operations and Construction...................... 76
       5.7 Job Creation .................................................................................................... 76
       5.8 Summary......................................................................................................... 77
6.0 FINANCIAL ANALYSIS ....................................................................................... 79
    6.1 Capital Cost Estimates of Convention Centre Expansion............................... 79
    6.2 Financial Analysis of Operations of the Expanded Convention Centre ......... 83
    6.3 Operating Cashflow Requirements from Opening to Normalized Operations84
    6.4 Incremental Marketing Funding Requirements for Expanded VCEC............ 85
    6.5 Revenue from Ancillary Assets ...................................................................... 89
    6.6 Summary......................................................................................................... 90
7.0 FUNDING ANALYSIS........................................................................................... 93
    7.1 Funding Overview .......................................................................................... 93
    7.2 Funding Proposal ............................................................................................ 94
    7.3 Federal and Provincial Government Participation.......................................... 97
    7.4 Municipal Government ................................................................................... 98
    7.5 Summary....................................................................................................... 100
8.0 GOVERNANCE .................................................................................................... 103
    8.1 Introduction................................................................................................... 103
    8.2 Recommendations of the Task force............................................................. 103
    8.3 Background ................................................................................................... 105
    8.4 Ownership ..................................................................................................... 106
    8.5 Summary....................................................................................................... 107
9.0    PRE-CONDITIONS FOR CONSTRUCTION START ........................................ 109
       9.1 Land Acquisition Commitment..................................................................... 109
       9.2 Funding Approval ......................................................................................... 109
       9.3 Complete Balance of Project Definition Report ........................................... 110
       9.4 Evaluation of Ancillary Assets ..................................................................... 111
       9.5 Project Schedule............................................................................................ 111
10.0     SUMMARY AND CONCLUSIONS ................................................................. 114
       10.1 The Investment.............................................................................................. 114
       10.2 What are the returns? .................................................................................... 115
       10.3 What are the Risks? ...................................................................................... 115
       10.4 What are the risks of not proceeding?........................................................... 116
       10.5 Governance and Management....................................................................... 116
       10.6 Market Driven Opportunity .......................................................................... 117
       10.7 Conclusion .................................................................................................... 117


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                                   APPENDICES
A.     Members of Vancouver Convention Centre Task Force
       Vision Statement, Mandate, Principles and Terms of Reference
       Business Plan Outline
B.     Expanding the Vancouver Convention & Exhibition Centre, Market Justification
       and Economic Benefits, KPMG, February 2000

C.     BC Input-Output Analysis for Vancouver Convention Centre Expansion, BC
       STATS, Ministry of Finance and Corporate Relations, Province of British
       Columbia, September 2000
D.     Project Cost and Evaluation Report, Executive Summary, Pacific Liaicon and
       Associates Inc.
E.     Governance of the Expanded Vancouver Convention and Exhibition Centre,
       Report to the Vancouver Convention Centre Task Force, The Vancouver Board of
       Trade, July 20, 2000
F.     Corporate Profiles
       •  Pacific Liaicon and Associates Inc.
       •  LMN Architects
G.     Technical Information
H.     Restrictions




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                             “The status quo is not an option.
   Without expansion, the current benefits realized by Greater Vancouver’s tourism
industry will decline as the VCEC is unable to effectively compete in an environment of
          increasing attendance and demands for additional exhibit space.”
 KPMG, Expanding the Vancouver Convention and Exhibition Centre, Market Justification and Economic Benefits



1.0    INTRODUCTION
This Business Plan is the culmination of a year’s work by the Vancouver Convention
Centre Expansion Task Force (“Task Force”) and encompasses:
   •   a summary of the results of the due diligence undertaken by the Task Force - due
       diligence that involved extensive meetings and consultation with industry
       representatives, with municipal, provincial and federal politicians and staff and
       with professional advisors; and
   •   the recommendations of the Task Force for a controlled and business-like
       construction and implementation of an expansion of the Vancouver Convention
       and Exhibition Centre (“VCEC”).

1.1    THE VANCOUVER CONVENTION CENTRE EXPANSION TASK FORCE
The Task Force was created in response to the cancellation of the Portside expansion
project by the British Columbia government.

CANCELLATION OF THE PORTSIDE PROJECT
On October 5, 1999 (then) Premier Dan Miller announced that the provincial government
had cancelled the $1 billion Portside development that had been proposed by Concert
Properties Ltd. (formerly Greystone). The Portside development was to have been one of
the larger infrastructure projects in Western Canada, comprising an expansion of the
existing convention centre, an upgrading of the Vancouver Port Authority’s cruise ship
facilities, a 1,000 room hotel, a public plaza, a retail complex and the relocation of the
SeaBus, WestCoast Express and Vancouver heliport terminals.

Premier Miller said that the need for an expanded convention centre had never been in
question and that expansion was an important part of keeping Vancouver competitive
with other destinations which were already expanding across North America and around
the world. However, he said that the province was cancelling the project because:
    1. the provincial government was not able to secure a financial contribution from the
       federal government;
    2. Concert was not able to secure a financial commitment for the hotel portion of the
       development; and
    3. the provincial government was not able to secure a project agreement with labour.



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Premier Miller said that the province would not consider the expansion further unless the
private sector came forward with a viable alternative.

FORMATION OF THE VANCOUVER CONVENTION CENTRE EXPANSION TASK FORCE
Following the cancellation, there was widespread agreement throughout the business
community and the tourism industry in particular that expansion of the convention centre
was too crucial to the economic future of British Columbia not to pursue.

Within days of Premier Miller’s announcement, an industry group comprising Tourism
Vancouver, Vancouver Hotel Association, The Vancouver Board of Trade and PAVCO
formed the Task Force with the express purpose of bringing convention centre expansion
to Vancouver. A complete list of members is included in Appendix A.

The Task Force undertook to provide leadership, direction and focus leading to a
workable, industry-driven Business Plan for expansion of the Vancouver Convention and
Exhibition Centre (“VCEC”). The Plan would be prepared on the premise that funding
would be provided by the federal government, provincial government and industry.

Members of the Task Force agreed that the Business Plan would be based on the
following, underlying premises.
    •  The expansion would take place on the waterfront adjacent to the Vancouver
       Convention and Exhibition Centre.
    •  The Business Plan would be limited to expansion of the convention centre and not
       any other components, however worthwhile.
    •  Industry, the federal government and the provincial government all would be
       required to contribute financially to the expansion.
    •  Gambling or gaming would not be considered as a component of expansion.

The development of this framework included agreement on a Vision, Mandate, Principles
and Terms of Reference. These provided the framework for the Business Plan and for the
operation of the Task Force. The Vision, Mandate, Principles and Terms of Reference are
included in Appendix A.

1.2    CONVENTION CENTRE EXPANSION

IMPORTANCE OF CONVENTION CENTRE EXPANSION
The cancellation of the Portside development, with its key component being the
expansion of the VCEC, was a huge economic loss, not only to the tourism and
hospitality industries locally and provincially, but also to the provincial and federal
treasuries.


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Convention centres are catalysts for generating net economic benefit from the spending
of overnight visitors. Through the collective efforts of the VCEC, Tourism Vancouver,
Vancouver hotels and the broader tourism industry, the VCEC has a proven track record
of meeting this objective since opening in 1987.

The services of KPMG and BC STATS were engaged to assist the Task Force. KPMG
reported that the current VCEC generates $245 million annually in delegate and visitor
spending and $73 million in revenue for local, provincial and federal governments. With
expansion, annual delegate and visitor spending would increase to $474 million (an
increase of $229 million) in 2009, the first year of normalized operations for the
expanded convention centre.

BC STATS, the statistical agency of the BC Ministry of Finance and Corporate
Relations, using its British Columbia Input Output Model, estimated that expansion
would increase annual local, provincial and federal government revenues by $76 million
and create 7,530 new, full-time jobs in Greater Vancouver and the rest of British
Columbia.

KPMG estimated that a typical city-wide convention of 1,750 delegates and 350
exhibitors generates $5 million in spending and $1.5 million in taxes for municipal,
provincial and federal treasuries.

Conventions attract foreign delegates. It is these people, mostly from outside British
Columbia and increasingly from outside Canada, who bring their money to spend here. It
is therefore foreign capital that fuels delegate spending, creates jobs and generates
resultant tax revenue for governments. These tax revenues can then be used by
governments for such things as health care, infrastructure, education and other
government programs at no cost to the taxpayer.

COMPETITION IN THE MARKET PLACE
Tradeshow Week, a respected industry publication, recently reported that there are 377
exhibition and convention facilities in North America offering 65.2 million square feet of
space. Canada has 40 facilities (10.6% of the market) providing 7.7 million square feet of
space (11.8%).

Cities throughout the world appreciate the importance of convention centres to their
economic well being and have invested heavily in the construction, upgrading and
expansion of convention centres. Currently in North America there are 87 new and
expanded facilities planned or under construction that will offer a total of 14.2 million
square feet of new exhibit space and 3.3. million square feet of meeting space.

In spite of the expansion activity, demand for space continues to outstrip supply in North
America. In 1999 the square footage of exhibit space that came on the market was .6%



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over 1998. For that same period the growth in demand for exhibit space at trade shows
was 5.8% – approximately 10 times the rate of supply.

While Vancouver competes with other Canadian facilities for some events, Vancouver
primarily competes with U.S. and international cities and this will become increasingly
so. KPMG estimated that 90% of the convention delegates to the expanded convention
centre will be attending North American and international conventions and, for this
reason, expansion is geared to the US and international markets.

The importance of the convention centre as an economic engine                              is not lost on
Vancouver’s competitors. Many of the VCEC’s direct competitors have                        either expanded
or propose to in the near future. Exhibit 1.1 illustrates the activities                   of the VCEC’s
competitors. (Toronto and Calgary were added to this chart to illustrate                   the relative size
of their recently renovated facilities.)

                                                   EXHIBIT 1.1
                                        CURRENT & PROPOSED EXPANSIONS
                                          VCEC COMPETITIVE MARKETS


                San Diego

             San Francisco

               Minneapolis

             Salt Lake City

                   Seattle

                   Denver
                                                                                          Current
                  Portland
                                                                                          Preliminary Stages
                  Montreal
                                                                                          Under Construction
                   Toronto
                                                                                          VCEC Expansion
                   Calgary

                Vancouver


                          -   100,000   200,000   300,000   400,000   500,000   600,000   700,000
                                              EXHIBIT SPACE (Sq. Ft.)



Source: KPMG, modified to show Toronto, Calgary and VCEC expansion.


WHY ONLY A CONVENTION CENTRE?
The Task Force agreed in its initial stages that it would focus on convention centre
expansion and not consider other components. The previous Portside project comprised
many components which frustrated the ability of the stakeholders to reach an agreement
on the cost sharing of the project. For example, the previous project included a hotel, but
the inability to secure a financial commitment for the hotel portion of the development
was one of the three reasons given by Premier Miller for cancelling the project.




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The Task Force is well aware that a hotel is important for the success of the project.
However, the Task Force believes that market forces will determine the size, location and
timing of a hotel. The Task Force is aware that a hotel site adjacent to the convention
centre expansion property is proposed and expects that a convention-style hotel meeting
the needs of meeting planners, delegates and exhibitors will be announced to open in time
for the expanded convention centre.

The Task Force also agreed that gaming or gambling would not be considered as a
component of expansion. The issue of gaming is one that continues to polarize the
community. The Task Force agreed that the priority was to build the convention centre
expansion and that the benefits to the citizens of British Columbia were so significant that
gambling revenues were not needed to justify industry and government investment in the
convention centre expansion.

WHO SHOULD CONTRIBUTE TO EXPANSION?
The Task Force believes that those who receive the financial benefits of expansion should
contribute to its development.

The prime beneficiaries of expansion are the federal government, the provincial
government and the tourism industry and it is an underlying premise of the expansion
plan that all three will contribute to the cost of convention centre expansion.

Because the tourism industry believes strongly that expansion will bring benefits to it and
to the community at large, the tourism industry has committed an investment of $90
million toward the total development cost of the project. Industry already contributes to
all levels of government in taxes ranging from property taxes, provincial sales taxes,
Good and Services taxes to payroll taxes. However, industry’s commitment is to provide
$90 million in funding for this project in addition to these taxes. (Industry made a similar
commitment to the Portside development.)

BC STATS estimates that expansion will generate $75.8 million annually in incremental
revenue for the federal, provincial and municipal governments (for the year 2009) and
will create 7,530 new, full-time jobs.

BC STATS estimates that construction will generate $88 million in incremental taxes to
governments and provide 6,702 person-years of employment.

1.3    PROJECT OBJECTIVES
The Task Force’s overall project objectives were to create an expanded facility that
would:
   •   allow Vancouver to remain competitive in convention markets by retaining
       existing events which are expanding and securing new meeting, convention and




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          event business;
      •   generate economic benefits through jobs and tax revenues from out-of-province
          visitors that will provide governments with the opportunity to reduce taxes for
          British Columbians and Canadians;

      •   complement the role of Canada Place as an internationally recognized symbol
          welcoming visitors to Canada and as a signature feature of the Vancouver
          waterfront
      •   provide significant public amenities and meet the requirements for a desirable city
          context;
      •   maintain and enhance features that have given Vancouver its competitive edge in
          the market; and
      •   meet the highest environmental standards for convention centres thereby
          enhancing Vancouver’s position in the marketplace.

Additional objectives that arose from the experiences of the previous expansion design
process were to:
   •   demonstrate industry initiative and support for an expansion proposal;
   •   contain costs and minimize public sector financial risk;
   •   provide an attractive return for the tourism industry, the federal government and
       provincial governments to encourage their investment in expansion;
   •   minimize design compromises which could impact the functionality and
       marketability of the expanded facility;
   •   minimize construction and operational impacts on existing facilities, including the
       Vancouver cruise ship terminal, the SeaBus terminal and the existing Vancouver
       Convention & Exhibition Centre; and
   •   eliminate the linkage with the design, construction and timing of the hotel
       component.

The Task Force also agreed that it would communicate regularly with industry and the
three levels of government and share its results during the due diligence process so that
the resulting Business Plan would reflect the consensus of those who were the
beneficiaries of expansion.

1.4       THE DUE DILIGENCE PROCESS
Members of the Task Force agreed unanimously there was no benefit in re-creating the
previous selection process that began formally in November 1995 with a Call for
Expressions of Interest issued by the provincial government and concluded four years
later with the cancellation of Portside, which would have been constructed to the east of
the VCEC.


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There was not the time, resources or appetite by industry, public or governments to re-
create that process. However, the Task Force concluded that there were significant
benefits in utilizing what had been learned from the previous process that ended in
October 1999.

The convention centre expansion represents a significant public/private partnership
involving millions of dollars and high profile in the community. The Task Force was not
prepared to recommend such a large infrastructure project without appropriate due
diligence.

The due diligence steps the Task Force undertook were to:
   •  confirm that expansion was warranted;
   •  evaluate the best site and design for expansion, one worthy of Vancouver’s
      waterfront, that enhances the Canada Place icon and is highly functional;
   •  evaluate the project and confirm the cost to build the project; and
   •  compile the results and present them in a business plan.

BUSINESS CASE
The Task Force was not prepared to consider such a large infrastructure project without
re-affirmation that expansion was warranted.

The Task Force therefore commissioned a study to:
   •  confirm the market potential for expanding the VCEC;
   •  confirm the appropriate facility parameters in respect of exhibit, meeting and
      other spaces; and
   •  quantify the incremental revenues to business and government resulting from
      expansion.

The business case was to be non site-specific. That is, the results of the study would be
relevant for waterfront sites on either side of the existing VCEC. This would allow the
Task Force to re-examine the case for expansion while reviewing site options.

The international consulting firm, KPMG, had previously conducted extensive analyses
on various aspects of expanding the VCEC in 1995 and 1996. The Task Force engaged
KPMG to update its previous work and analyse the benefits of convention centre
expansion. KPMG released its the study: Expanding the Vancouver Convention and
Exhibition Centre, Market Justification and Economic Benefits in February 2000. The
KPMG study concludes that there are compelling reasons to proceed with expansion.
(Results of the KPMG study are described extensively in Section 2 and throughout the
Business Plan.)




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SITE AND DESIGN SELECTION
The Task Force agreed to focus its investigation on those sites that had gone through the
extensive industry and public scrutiny of the previous Stage 1 – Expressions of Interest
and that were on the waterfront adjacent to the existing VCEC. There were a number of
solid business reasons for this decision.

    •   Canada Place has become one the world’s most recognized landmarks and has
        great appeal to delegates and meeting planners.
    •   The existing VCEC continues to be an excellent venue for events and will
        continue to be an integral part of the expansion plan.
    •   Meeting planners told Vancouver marketing personnel that a waterfront location
        was a critical part of the decision to select Vancouver over its competitors and
        accounted for increased business.
    •   A site adjacent to the existing VCEC provided efficiencies both for delegates and
        exhibitors and for management of the VCEC.

Two sites qualified for consideration – the Portside project site to the east of the VCEC
and the Discovery Place proposal on the Burrard Landing site owned by Marathon
Developments Inc. (“Marathon”) to the west.

Shortly after the Province cancelled the Portside project, Marathon notified the Province
that its Burrard Landing site was available for convention centre expansion. Marathon
was offering the site as a vendor, not in its role as a developer as it did in 1997. The
Province referred Marathon’s interest to the Task Force.

The Task Force was fortunate that the Marathon site was still available and the plans for
the Discovery Place proposal on the Burrard Landing site were essentially complete. The
Marathon proposal had been withdrawn from the previous process only a short time
before the deadline for submissions in 1997.

Given that:
   •   the Province had just cancelled the Portside project;
   •   the Portside project had been thoroughly investigated and was very well known to
       members of the Task Force;
   •   the Burrard Landing concept had been through the extensive public process as
       part of the Stage I Evaluation of the Vancouver Convention & Exhibition Centre
       Selection Process;
   •   the Burrard Landing site was on the waterfront adjacent to the VCEC; and
   •   the Burrard Landing concept was essentially complete




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the Task Force agreed that it should first focus its attention on the Burrard Landing
concept.

Pacific Liaicon and Associates Inc. (“PLA”), recognized for their extensive work on
major projects including the Vancouver International Airport expansion, conducted an
assessment of the Burrard Landing site. The assessment was conducted in close liaison
with PAVCO, who are responsible for managing the VCEC.

LMN Architects (“LMN”) were engaged to update the original design they had prepared
for Marathon. LMN are experts in convention centre design having participated in over
40 convention centre designs throughout the world and having won numerous design
competitions.

George Loschky of LMN described the site as “the most dramatic and attractive
location we have ever worked with”. LMN worked with VCEC management and staff,
and City of Vancouver planning staff to arrive at a final design concept that is functional,
spectacular, worthy of Vancouver’s waterfront and enhances the Canada Place icon.

The result of the analysis was that the Task Force unanimously recommended the Burrard
Landing site and design concept as its preferred choice for the convention centre
expansion.

BUSINESS PLAN
After concluding that the expansion would be of significant benefit to the citizens of
Greater Vancouver, British Columbia and Canada, the next step was to prepare a business
plan that would:
    •   provide accurate and detailed information for the financial participants in the
        project; and
    •   provide a blueprint for the controlled and business-like construction and
        implementation of the expansion.

The Task Force first approved a Business Plan Outline, which was forwarded to senior
officials in the provincial and federal governments for comment. The Task Force
provided this to governments to ensure that any and all information required by the senior
levels of government would be included in the Business Plan. The Business Plan Outline
is included in Appendix A.

The Business Plan uses a number of terms to describe the financial results – normalized,
nominal and net present value.

A “normalized year” or a “year of normalized operations” refers to a year in which the
expanded convention centre is again operating normally and all adjustments due to the
expansion have been made. Annual incremental spending and tax revenues are expressed




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in normalized dollars for the year 2009. It is assumed that the first normalized year of
operations will be 2009.

“Net present value” is a method of discounting future cashflows to state them in current
year dollars. All present values are stated in Year 2000 dollars.

“Nominal” refers to spending and taxes that are recorded at their value in the year that
they occur.

The report makes extensive use of the term “convention centre expansion”. For clarity,
convention centre expansion comprises:
   •   constructing new facilities on the Burrard Landing site to the west of Canada Place;
   •   renovating the existing facilities at Canada Place; and
   •   linking the two sites to form an integrated convention and exhibition centre.

1.5    SUMMARY

♦ After cancellation of the Portside project, the Task Force was created and undertook
  to provide leadership, direction and focus leading to a workable, industry-driven
  Business Plan for expansion of the VCEC.

♦ The convention centre expansion represents a significant public/private partnership
  involving millions of dollars and high profile in the community. The Task Force was
  not prepared to recommend such a large infrastructure project without appropriate
  due diligence.

♦ The Business Plan compiles and presents the information and results obtained as a
  result of the due diligence. The Plan addresses the fundamental issues including the
  cost of the expansion, the amount of benefits to be generated (and the recipients
  thereof), the recommended program of spaces and concept design, funding
  alternatives and recommended governance during the construction and operating
  phases.




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“The impact of losing tentative convention events and/or past users due to relocation of
 events elsewhere is significant. The relocation of a single 4-day, city-wide convention
    of 1,750 delegates could potentially result in the loss of more than $5 million in
                spending and over $1.5 million in government revenue.”
 KPMG, Expanding the Vancouver Convention and Exhibition Centre, Market Justification and Economic Benefits




2.0    RATIONALE FOR EXPANDED FACILITIES

2.1    INTRODUCTION
The first major step in the due diligence process for the Task Force was the re-affirmation
of the need for expansion. There had been no independent assessment of the need for
expansion or a review of the expansion parameters since April 1995 when KPMG
prepared its 1995 study, Assessment of the Market Potential for Expanded Convention
Facilities in Vancouver, for BC Pavilion Corporation (now PAVCO).

While members of the Task Force were confident that expansion was still warranted, they
were unwilling to recommend proceeding with such a large private/public infrastructure
investment without a current, independent assessment.

The Task Force engaged KPMG to update its previous study and provide a current,
independent report on whether expansion was warranted and what expansion parameters
would be appropriate. Specifically, the purposes of the new KPMG study were to:
    •  confirm the market potential for expanding the VCEC;
    •  recommend optimum expansion parameters; and
    •  quantify the economic benefits to business and government resulting from an
       expansion of convention facilities and the corresponding increase in visitors.

In completing its study, KPMG conducted extensive analyses on various aspects of
expanding the VCEC, including market research, development of expansion size
parameters and preparation of economic impact analyses.

The Task Force also engaged the services of BC STATS, the statistical agency of the BC
Ministry of Finance & Corporate Relations, to provide economic impact information that
was based on the spending estimates provided by KPMG in its report. BC STATS
employed its British Columbia Input Output Model (“BCIOM”) to produce the results.

This section describes the results of the KPMG and BC STATS reports. These entire
reports as presented to the Task Force are contained in Appendices B and C respectively.




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BUSINESS PLAN                                                               CONVENTION &
                                                                        EXHIBITION CENTRE


2.2    PURPOSE OF THE VANCOUVER CONVENTION & EXHIBITION CENTRE
Virtually no North American convention centres produce (or are intended to produce) an
operating profit. Rather, convention centres are investments in infrastructure whose
purpose is to generate economic activity and create jobs. As a result, operating losses are
balanced against the broader economic benefits to the community and to various levels of
government.

The objective of the VCEC is to generate net economic benefits at the local, provincial
and national level by attracting overnight visitors and to showcase British Columbia and
its role as a gateway to Canada.

Through the collective efforts of the VCEC, Tourism Vancouver, Vancouver hotels and
the broader tourism industry, the VCEC has a proven track record of meeting this
objective since opening in 1987.

However, more and more North American cities are recognizing the value of conventions
and trade shows as a means of generating out-of-town visitation and corresponding local
and regional economic benefits.

The marketplace is becoming increasingly competitive. Some 80 North American cities
have convention facilities larger than the VCEC’s 90,000 square foot exhibit hall and,
following completion of proposed expansions in Montreal (to 200,000 square feet) and
Ottawa (to 200,000 square feet), Vancouver will offer the fourth largest convention
centre in Canada.

KPMG reported that Vancouver is being overtaken, in terms of available convention
space, by North American cities with far less destination appeal such as San Antonio
(291,000 square feet), Columbus, Ohio (331,000 square feet) and Salt Lake City (256,000
square feet).

2.3    MARKET JUSTIFICATION

INTRODUCTION
The market analysis conducted by KPMG focused on reconfirming the demand for expanded
convention facilities in Vancouver. Specifically, the market analysis included a review of:
   •   North American convention demand trends;
   •   North American exposition/trade show demand trends;
   •   Greater Vancouver’s convention and leisure travel appeal;
   •   Historical convention activity in Greater Vancouver;
   •   VCEC performance to 1999 including industry focus and current event
       characteristics;
   •   the impact of VCEC size on future performance; and


14                                   VANCOUVER CONVENTION CENTRE EXPANSION TASK FORCE
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                                                                BUSINESS PLAN

    •   VCEC market opportunities.

NORTH AMERICAN CONVENTION DEMAND TRENDS
The 1998 Meetings Market Study (a bi-annual publication produced by Meetings &
Conventions Magazine) reported that medium and large-sized conventions are continuing
to assume a larger part of the market and that trend is accelerating. Space requirements
and average attendance at conventions is increasing and larger conventions with more
space and attendees are becoming more prevalent.

The Study found that between 1994 and 1998:
   •   the average amount of exhibit space used by North American conventions
       increased from approximately 41,100 to 69,200 square feet (an annual increase of
       11%);
   •   the average number of attendees at North American conventions increased by
       14%;
   •   the proportion of conventions with an average number of attendees greater than
       1,000 was found to have increased from 21% to 26%; and
   •   the largest increase was in the proportion of conventions requiring more than
       80,000 square feet, an increase of 20% to 29%.

                                      EXHIBIT 2.1
                               AVERAGE SQUARE FEET USED
                              NORTH AMERICAN CONVENTIONS


           50%                                          1994
           40%                                          1998
           30%
           20%
           10%
            0%
                    < 9,999     10,000-39,999   40,000-79,999    > 80,000
                                     SQUARE FEET USED




Source: KPMG



The number of North American events requiring more than 80,000 square feet was
estimated to be in excess of 3,200 in 1998.




                                                                                      15
                                                                                                 EXPANDING
                                                                                            THE VANCOUVER
BUSINESS PLAN                                                                                 CONVENTION &
                                                                                          EXHIBITION CENTRE
                                                EXHIBIT 2.2
                                      AVERAGE NUMBER OF DELEGATES
                                             PER CONVENTION
                                     ALL NORTH AMERICAN CONVENTIONS

                                                                        1994

       40%                                                              1998
       30%
       20%
       10%
        0%
                < 100      100-300     300 - 499   500-999    1,000-1,999      > 2,000


                                     NUMBER OF ATTENDEES




Source: KPMG


NORTH AMERICAN EXPOSITION/TRADE SHOW DEMAND TRENDS
Unlike convention events, which are focused primarily on information exchange, trade
show events are focused on the sale of goods and services. Exhibit space rather than
meeting space is the primary facility requirement.

An analysis of selected North American expositions by Tradeshow Week, illustrates that
demand for larger exposition space increased between 1994 and 1998 as set out in
Exhibit 2.3.

                                           EXHIBIT 2.3
                                      ANALYSIS OF SELECTED
                                NORTH AMERICAN EXPOSITIONS BY SIZE

                  50%
          50%        43%
          40%
                                 27%29%                                                    1994
          30%
                                                                                           1998
          20%                                  11%15%
                                                             7% 8%             5% 6%
          10%
           0%
                22,000-99,999     100,000-     200,000-      300,000-          400,000-
                                  199,999      299,999       399,999           500,000
                                             SQUARE FEET


Source: KPMG


In its 2000 study (released in February), KPMG reviewed exposition and trade show
demand and, based on estimated demand for the year 2000, reported that, between 1995
and 2000:
    •   the demand for total square feet would increase by 22%;
    •   the average show would increase from 208,000 square feet to 248,000 square feet;


16                                            VANCOUVER CONVENTION CENTRE EXPANSION TASK FORCE
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                                                                BUSINESS PLAN

    •   the number of trade shows would increase from 4,380 to 4,637;
    •   total attendance would increase significantly reaching 125 million by 2000,
        compared to 116 million in 1995; and
    •   average attendance per show would increase from 26,869 to 27,123.

EXHIBIT 2.4
CHARACTERISTICS OF NORTH AMERICAN TRADE AND CONSUMER SHOWS
                                    1995       1997        1999                       2000
                                   Actual     Actual     Actual                  Estimated

 Average Square Feet                   208,000      205,000           228,000      248,000
 Average # of Exhibiting Companies         306          291               335          300
 Average Attendance                     26,869       25,369            22,657       27,123
 Ratio of Attendees to Exhibitors       88 to 1      87 to 1           68 to 1      90 to 1

Source: KPMG.


NORTH AMERICAN CONVENTION/EXHIBITION FACILITIES SUPPLY
The 1990’s were active for the development of convention and exhibition supply
facilities. For the period between 1990 and 1999, the total supply of exhibit space in
North America grew by approximately 11.5 million square feet from 53.7 to 65.2.
Canada accounts for 10.6% of the facilities and 11.8% of the exhibit space as measured
by square footage.

EXHIBIT 2.5
NORTH AMERICAN EXHIBIT SPACE
            NO. OF FACILITES           %             EXHIBIT SPACE                   %
                                                     (Sq. Ft. millions)

 Canada                   40          10.6%                     7.7                 11.8%
 United States           326          86.5%                    55.7                 85.4%
 Mexico                   11           2.9%                     1.8                  2.8%
 TOTAL                   377         100.0%                    65.2                100.0%

Source: Tradeshow Week


The development of new facilities is projected to continue at an accelerated pace.
Between 1999 and 2004, 87 new and expanded facilities are projected to add an
estimated 14.2 million square feet of exhibit space and 3.3 million square feet of meeting
space to the North American market.

Successful convention and trade show facilities are continuing to expand in order to
capitalize on established markets and many of VCEC’s direct competitors have either
recently expanded or propose to do so in the near future.




                                                                                              17
                                                                                                 EXPANDING
                                                                                            THE VANCOUVER
BUSINESS PLAN                                                                                 CONVENTION &
                                                                                          EXHIBITION CENTRE


Toronto’s recent addition of 250,000 square feet (1997) and Montreal’s proposed
100,000 square feet expansion (2001) were justified based on anticipated demand from
U.S. groups for Canadian convention/exposition destinations.

KPMG reports that four of the VCEC’s direct competitors (San Diego, Seattle, Portland,
Denver) compared in the 1995 KPMG study have planned, are completing or have
completed expansion since the 1995 KPMG study.
                                             EXHIBIT 2.6
                                   CURRENT & PROPOSED EXPANSIONS
                                     VCEC COMPETITIVE MARKETS


                  ego
           S an D i

                  sco
        S an Franci

           nneapols
          Mi      i

        S al Lake C i
           t        ty                                                       Current
                    e
              S eattl
                                                                             Preliminary Stages
              D enver
                                                                             Under Construction
                  and
             P ortl
                                                                             VCEC Expansion
            M ontreal

              Toronto

                 gary
              C al

           Vancouver


                    -    100,000   200,000   300,000   400,000   500,000   600,000     700,000
                                         EXHIBIT SPACE (Sq. Ft.)



Source: KPMG, modified to show Toronto, Calgary and VCEC expansion.


As a result of this constant expansion activity, few major exhibit halls remain at the same
size for more than five years. The key reasons for this expansion trend are:
    •   Convention & Visitors’ Bureaux (CVB’s) and municipalities have placed an
        emphasis on attracting “business tourists” to their cities;
    •   competition for conventions and expositions, especially the largest events, is
        intense;
    •   trade shows are growing at a steady rate, but very few new events are launched on
        an annual basis; and
    •   all sizes and types of events, from mega-trade shows to small meetings have a
        wide array of venue options.

VANCOUVER’S CONVENTION AND LEISURE TRAVEL APPEAL
Vancouver offers most of the key success factors typical of major convention
destinations: ease of access, first-class facilities, tourism appeal and a reputation for
quality service.



18                                            VANCOUVER CONVENTION CENTRE EXPANSION TASK FORCE
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CONVENTION &
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                                                                                        BUSINESS PLAN

Vancouver continues to provide great appeal as a convention (and leisure) destination as
evidenced by strong growth in transient accommodation.
                                                                     EXHIBIT 2.7
                                                          GREATER VANCOUVER HOTEL DEMAND
                                                                 ROOM NIGHTS SOLD
        ROOM NIGHTS SOLD (000's)




                                   5,400

                                   5,000

                                   4,600                                                                    Actual

                                   4,200                                                                    Projected


                                   3,800

                                   3,400
                                            1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002


Source: KPMG, modified to show 1999 actual


Room nights sold in Greater Vancouver increased from 4.0 million in 1992 to 4.9 million
in 1999 and, by 2000, total room nights sold are projected to reach 5.0 million. Hotel
room demand is expected to continue to increase for the foreseeable future.

                                                                   EXHIBIT 2.8
                                                       ROOM NIGHTS SOLD BY SEGMENT - 1999
                                                              GREATER VANCOUVER
                                                                                   Individual
                                                   Individual Leisure              Corporate
                                                          21%                        25%




                                           Group Corporate                                 Group Tour and
                                              Meetings                                         Travel
                                                16%                                             11%
                                                       Group Convention        Other
                                                             13%               14%




Source: KPMG


As shown in Exhibit 2.8, the convention market (represented in the chart by Group
Corporate Meetings and Group Convention) is crucial to the success of the Vancouver
hotel community. In 1999, approximately 29% of total room nights were the result of
conventions and corporate meetings. Conventions at the VCEC accounted for
approximately 60% and corporate meetings at hotels accounted for approximately 40% of
these room nights.



                                                                                                                        19
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BUSINESS PLAN                                                                                               CONVENTION &
                                                                                                        EXHIBITION CENTRE


HISTORICAL CONVENTION ACTIVITY IN GREATER VANCOUVER
In Greater Vancouver total convention activity, including at the VCEC, local hotels and
other facilities, continues to experience tremendous growth. From 1995 to 1999 the
number of delegates has increased from 164,000 to 224,000 per year, while the number
of conventions remained relatively flat at approximately 355 conventions (Exhibit 2.9).
From 1997 to 1999, the annual number of city-wide conventions has averaged 16 per
year.


                                                            EXHIBIT 2.9
                                          GREATER VANCOUVER CONVENTION & MEETING ACTIVITY
                                                           1983 TO 1999
                     NO. OF CONVENTIONS




                                                                                                             NO. OF DELEGATES
                                          450                                                      295,000
                                          360                                                      245,000
                                          270                                                      195,000
                                          180
                                            90                                                     145,000
                                          -                                                        95,000
                                             83

                                                   85

                                                         87

                                                               89

                                                                     91

                                                                            93

                                                                                  95

                                                                                        97

                                                                                              99
                                           19

                                                  19

                                                        19

                                                              19

                                                                    19

                                                                          19

                                                                                 19

                                                                                       19

                                                                                             19
                                No. of Conventions                       No. of Delegates



Source: KPMG, modified to show 1999 actual


 Since 1993 the trend has been that the number of delegates to Vancouver has continued
to increase. Because four of the 16 city-wide events in 1997 were exceptionally large
(e.g, APEC) the number of delegates in that year jumped from 176,000 in 1996 to
252,000 in 1997.

Greater Vancouver’s successful convention activity is the result of a significant
investment targetted to attract convention business. The VCEC, Tourism Vancouver and
Vancouver area hotels aggressively market the city as a convention and meeting
destination. More than $20 million has been invested in destination marketing efforts
since 1996.

The current definition of a city-wide event is 1,000 or more hotel rooms consumed on the
peak night of the convention which are booked at a minimum of three hotels.

City-wide events are important because they make the tourism infrastructure operate
more efficiently and generate more hours of work for employees in the tourism industry
than do normal events. A recent study commissioned by Tourism Vancouver concluded
that occupancies increased by 11.1% at convention hotels and 7.9% at non-convention
hotels during city-wide events.


20                                                             VANCOUVER CONVENTION CENTRE EXPANSION TASK FORCE
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EXPANDING
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CONVENTION &
EXHIBITION CENTRE
                                                               BUSINESS PLAN


More than hotels benefit from city-wide events, where thousands of delegates spend an
average of $520 per day visiting local attractions, in restaurants, taxis and retail stores.
Taxis are busier with less waiting time between fares and hotels, restaurants and retail
stores call in more part-time staff to serve these consumption-hungry visitors.

The VCEC is the host facility for the majority of city-wide conventions held in
Vancouver. The VCEC’s (and Greater Vancouver’s) ability to successfully host very
large events (e.g., International Conference on AIDS) despite facility size constraints and
a limit on the number of hotel rooms, not only demonstrates the attractiveness of
Vancouver, but also suggests great potential to attract more of these events with
expanded facilities.

The current capacity for the number of city-wide events is limited to approximately 15 to
20 per year due to the space limitations of the existing VCEC. The ability to host city-
wide events will increase significantly with expansion with the resultant, associated
benefits.

VCEC PERFORMANCE TO 1999
Through the combined efforts of the VCEC staff, Tourism Vancouver and the hotel
community, the VCEC is achieving utilization levels well in excess of North American
convention centres. Between 1994 and 1999 exhibit space utilization increased from 63%
to 83% and ballroom space utilization increased from 59% to 77%. 70% is considered the
effective maximum utilization in the industry.

                                       EXHIBIT 2.10
                      VCEC EXHIBIT HALL & BANQUET ROOM UTILIZATION
                                       1994 TO 1999

     85%


                                                                     Exhibit Space
     75%
                                                                     Ballroom Space

     65%


     55%
               1994         1996     1997      1998     1999




Source: KPMG




                                                                                          21
                                                                                                       EXPANDING
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BUSINESS PLAN                                                                                       CONVENTION &
                                                                                                EXHIBITION CENTRE


VCEC INDUSTRY FOCUS
The top industry segments for North American exhibitions (i.e., part of a convention and
stand-alone trade shows) are Medical/Sciences (17%) and Technology (15%).
Medical/Sciences expositions accounted for 458 shows in 1999. Technology-based
(computer/electronic) shows, were the fastest growing category increasing by 104 shows
between 1998 (293 events) and 1999 (397 events), a staggering 35% increase. In general,
technology shows (i.e., Comdex mega show) are typically larger than medical shows.

Emerging industries (i.e., environmental technology, biotechnology) are estimated to
contribute 20% of all new medical/sciences trade shows during the next ten years.


                                            EXHIBIT 2.11
                                      LEADING INDUSTRY FOCUS
                                  OF NORTH AMERICAN EXPOSITIONS


                     20%
                     15%
                     10%
                      5%
                      0%
                           Sciences   Technology     Home         Sports and   Education     Building
                                                   Furnishings     Leisure




Source: KPMG


In 1999 (consistent with prior years), the industry focus of VCEC conventions was
primarily medical sciences, technology and business/finance events. The VCEC and
Tourism Vancouver marketing plans suggest a continued focus on these segments.

                     40%                                EXHIBIT 2.12
                                       LEADING INDUSTRY FOCUS OF VCEC CONVENTION
                     30%                            (>1,000 ATTENDEES)

                     20%

                     10%

                      0%
                           Medical    Technology   Business and   Management   Agriculture    Other
                           Sciences                  Finance




Source: KPMG




22                                      VANCOUVER CONVENTION CENTRE EXPANSION TASK FORCE
                                                       RATIONALE FOR EXPANDED FACILITIES
EXPANDING
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CONVENTION &
EXHIBITION CENTRE
                                                                                                             BUSINESS PLAN

CURRENT VCEC EVENT CHARACTERISTICS
In 1999, the VCEC hosted 61 events (35 conventions and 26 trade shows) compared with
46 in 1995. (Consumer shows were not included in the analysis as they draw primarily
from a local audience.)

                                                                          EXHIBIT 2.13
                                                                       VCEC CONVENTIONS
                                                                  BY PEAK ROOM REQUIREMENTS
                                                                          1995 TO 1999
                                     NO. OF CONVENTIONS


                                                          60
                                                                                                     2,500+
                                                          45
                                                                                                     1,000-2,499
                                                          30                                         600-999
                                                                                                     < 600
                                                          15

                                                          0
                                                               1995    1996   1997     1998   1999




Source: KPMG




                                                                              EXHIBIT 2.14
                                                                           VCEC TRADE SHOWS
                                                                      BY PEAK ROOM REQUIREMENTS
                                                                              1995 TO 1999
           NO. OF TRADE SHOWS




                                30
                                                                                                                   1,000-2,499
                                                                                                                   600-999
                                20
                                                                                                                   < 600

                                10


                                0
                                               1995               1996          1997          1998     1999


Source: KPMG


The number of city-wide conventions hosted by the VCEC over the past 5 years
(requiring 1,000+ peak hotel rooms) ranged from a low of 9 in 1996 to a high of 16 in
1997. U.S. and internationally-based convention groups consistently account for more
than 75% of all city-wide conventions and trade shows.




                                                                                                                                 23
                                                                                   EXPANDING
                                                                              THE VANCOUVER
BUSINESS PLAN                                                                   CONVENTION &
                                                                            EXHIBITION CENTRE


The convention and trade show events held at the VCEC generally do not overlap. Most
conventions (e.g., 26 of 35 in 1999) are held between April and October, with most city-
wide conventions (e.g., 10 of 14 in 1999) concentrated between May and September.
The majority of trade shows (e.g., 16 of 26 in 1999) are held between November and
April, except for December.

IMPACT OF VCEC SIZE ON FUTURE PERFORMANCE
The VCEC has between 10 and 16 confirmed and tentative city-wide conventions for
each year between 2000 and 2005.


                                          EXHIBIT 2.15
                                  VCEC CITY-WIDE CONVENTIONS
                                          1997 TO 2005

                    20
                                                               Tentative
                    15                                         Confirmed

                    10                                         Historical

                     5

                     0
                         1997   1999   2001   2003   2005




Source: KPMG


In order to estimate the impact of VCEC size on future performance, KPMG interviewed
representatives of events held at the VCEC from 1995 to 1999 and representatives of
selected tentative events in the future.

A significant proportion of city-wide conventions from 2003 onward are tentative
bookings only which reflects, not only the normal lead time in confirmation, but also
some concern regarding the adequacy of VCEC facilities. The concern about the
adequacy of facilities was raised during telephone interviews conducted in late 1999 by
KPMG with representatives of selected tentative events.

KPMG’s analysis of selected events occurring from 1995 to 1999 included a review of
space needs and interviews with event representatives. KPMG concluded that the annual
growth in attendance for these events ranged between 5% to 8% and the average number
of attendees at city-wide events (held at the VCEC) increased from 2,100 to 3,050.




24                                     VANCOUVER CONVENTION CENTRE EXPANSION TASK FORCE
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CONVENTION &
EXHIBITION CENTRE
                                                                                       BUSINESS PLAN

                                                                  EXHIBIT 2.16
                                                      AVERAGE ATTENDANCE OF VCEC USERS
                                                       REQUIRING 1,000 PEAK HOTEL ROOMS

                                                                                                   Actual



                 AVERAGE NO. OF ATTENDEES
                                            5,000                                                  Projected

                                            4,000

                                            3,000

                                            2,000

                                            1,000

                                               0
                                                    1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005


Source: KPMG


Interviewees suggested that the size of the VCEC is limiting their ability to maximize the
potential attendance. As the space needs of VCEC users (and potential users) continue to
grow, the VCEC’s space constraints become more of an issue.

VCEC NEW MARKET OPPORTUNITIES
An expanded convention centre presents two new areas of opportunity:
   •  the ability to host larger events; and
   •  the ability to host simultaneous or overlapping events.

In late 1999, KPMG conducted interviews with a sample of potential VCEC users each
requiring between 100,000 to 300,000 square feet of exhibit space. The majority of
interviewees expressed an interest in incorporating Vancouver into their rotation pattern,
assuming an adequate mix of exhibit and meeting facilities and a sufficient number of
hotel rooms proximate to the convention centre.




                                                                                                               25
                                                                                                           EXPANDING
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BUSINESS PLAN                                                                                           CONVENTION &
                                                                                                    EXHIBITION CENTRE


EXHIBIT 2.17
VCEC MARKET POTENTIAL
FACILITY REQUIREMENTS AND CHARACTERISTICS FOR FUTURE VCEC EVENTS
                                        EXHIBIT ATTENDANCE     HOTEL                                         YEAR
                                        SPACE                  BLOCK

 American Association of Cancer Research                                   275,000        9,000      5,800   TBD
 American Association of Orthodontists                                     250,000       19,000      5,200   2011
 American Academy of Neurology                                             220,000        7,000      4,000   2009
 National Association of Home Care                                         200,000        7,000      4,000   2006
 Canadian Pulp & Paper Association                                         167,000        9,200      8,500   TBD
 Special Libraries Association                                             135,000        6,000      3,000   2005
 American Society for Bone & Mineral Research                              125,000        5,000      2,900   2007
 American Institute of Ultrasound in Medicine                              100,000        2,500      1,800   2006
 Grain Elevator & Processing Society                                        90,000        2,000      1,100   2002


Source: KPMG



                                                                 EXHIBIT 2.18
                                                      NORTH AMERICAN CONVENTION ACTIVITY
                                                                  BY MONTH
               % OF CONVENTION ACTIVITY




                                          20%

                                          15%

                                          10%

                                          5%

                                          0%
                                                Jan Feb Mar Apr May Jun   Jul Aug Sep Oct Nov Dec




Source: KPMG


The ability to host multiple events (and/or events with overlapping move-in/move-out
schedules) is currently not possible at the VCEC with the exception of very small events.
The majority of North American convention events are held in June, or between
September and November and utilization of VCEC exhibit and banquet rooms during
these months has been in excess of 70% for each year since 1995.

MARKET POTENTIAL CONCLUSIONS AND EVENT LOAD PROJECTIONS
Based on interviews with potential users in late 1999, analysis of VCEC performance to
date, consideration of industry-wide trends and a review of the previous analysis, KPMG
concluded that additional convention facilities in Vancouver are necessary to meet


26                                                              VANCOUVER CONVENTION CENTRE EXPANSION TASK FORCE
                                                                               RATIONALE FOR EXPANDED FACILITIES
EXPANDING
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CONVENTION &
EXHIBITION CENTRE
                                                                               BUSINESS PLAN

demand, achieve Vancouver’s market potential and remain competitive in an increasingly
competitive environment.

The event load projections shown in Exhibit 2.19 were derived after considering
historical performance, potential expansion of existing events and the ability to attract
new (i.e., larger and contiguous) events.

The projections assume that:
   1. expansion is completed by 2005*; and
   2. 2009 is represented as a “normalized” year, with the VCEC projected to host:
       •   67 convention events of all sizes, including conventions with and without
           associated exhibit components; and
       •   35 trade shows of all sizes.
* The KPMG study assumed that the expanded convention centre would open in 2004 and that, by 2008, operations of
the expanded VCEC would be stabilized or “normalized”. Because the expanded convention centre will not open until
2005, the Task Force has adjusted the incremental impact of expansion to be shown one year later than in the KPMG
study and adjusted the financial spending estimates to account for inflation.




                                                  EXHIBIT 2.19
                                    EXPANDED VCEC POTENTIAL EVENT LOAD &
                                           SQUARE FOOT DAYS USED
                                         1999 (ACTUAL), 2005, 2009, 2013


                        80                                         80,000
                                                                            SQ. FT. DAYS USED
        NO. OF EVENTS




                        60                                         60,000
                                                                                                Trade Shows
                        40                                         40,000                       Conventions
                                                                                                Exhibit Space
                        20                                         20,000

                        -                                          -
                             1999     2005     2009      2013


Source: KPMG


The cyclical nature of the convention business suggests that event load estimates will
vary from year to year based on external factors and the marketing direction of the VCEC
and Tourism Vancouver.

2.4       EXPANSION PARAMETERS
Based on the market analysis, anticipated user profiles and event load projections, KPMG
considered what would be the optimum size parameters and physical characteristics of an
expanded VCEC including:




                                                                                                                27
                                                                                      EXPANDING
                                                                                 THE VANCOUVER
BUSINESS PLAN                                                                      CONVENTION &
                                                                               EXHIBITION CENTRE


     •        the size and divisibility of the main exhibit hall;
     •        the quantity of meeting space and number of rooms; and
     •        additional features and amenities.
KPMG considered the projected VCEC space parameters within the context of current
convention design trends in North America. It should be emphasized that these space
parameters are not location specific. Recommendations for the size and type of facilities
reflect market need and identified demand factors only.

INDUSTRY TRENDS & VCEC USER REQUIREMENTS
Current industry design trends of note include the following.
   •   There is a focus on flexibility. For example, multi-purpose rooms finished to a
       “hotel” standard for use as either exhibit space or plenary sessions.
   •   As conventions grow larger, the need for more and larger meeting rooms is
       becoming a necessity.
   •   The proximity of and facilities contained in convention centre hotels (i.e.,
       availability of major ballroom) will affect design and usage parameters.
                                                   EXHIBIT 2.20
                                         VCEC COMPETITIVE MARKET FACILITY
                                             SPACING MIX ALLOCATIONS

                                                                               Exhibit Space
             Seattle                                                           Meeting/Ballroom Space
            Portland

     Salt Lake City

         Minneapolis

             Denver

          San Diego

     San Francisco

          Vancouver

                       0%          33%                 67%              100%




Source: KPMG, modified to include Vancouver.


VCEC users (and potential users, based on telephone interviews) are somewhat more
meeting-focused. The ratio of current VCEC exhibit space to meeting/ballroom space is
approximately 2:1. This preference for greater meeting capacity reflects the convention
(as opposed to trade show) orientation of existing and projected VCEC clientele.




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CONCLUSIONS
Based on the event load projections outlined in Section 2.3 and on additional interviews
to determine current user needs, KPMG reconfirmed the facility mix recommendations
made in its 1995 report (as set out in Exhibit 2.21).

EXHIBIT 2.21
1999 VCEC FACILITY EXPANSION RECOMMENDATIONS
(Square Feet except where noted)
                                CURRENT    EXPANDED                     COMBINED

EXHIBIT SPACE                   91,200      250,000 - 300,000*       341,200-391,200
BALLROOM                        16,600                  50,000                66,600

MEETING ROOMS
   NUMBER                           20                 40 to 55              60 to 75
   SQUARE FEET                  43,000        83,000 to 88,000      126,000 to 131,000

THEATRE (SEATS)                     0                    1,500                  1500

* Contiguous exhibit halls
Source: KPMG


KPMG also reported that consideration should be given to the following.
  • With convention events attracting greater numbers of attendees, a 1,500 seat
    lecture theatre may be too small. However, a larger theatre may not be
    economically viable unless additional (probably local and/or community) uses are
    identified.
  • It may be advisable to create an additional multi-purpose room (up to 70,000
    square feet) to support exhibit needs, provide additional hospitality area and/or
    facilitate meeting requirements.
  • The 250,000 square foot (contiguous) exhibit hall should be divisible into at least
    three sections. If permitted by the floor plate, a larger exhibit hall (to 300,000
    square feet) may be considered.
  • The number of meeting rooms required could be reduced (but not the total square
    footage) if additional space is provided in an adjacent hotel or hotels.


2.5       VCEC EXPANSION: ECONOMIC BENEFITS
Expansion will generate significant benefits to communities, employers and taxpayers
There benefits will be realized in two stages; benefits due to construction of the facility
and benefits generated annually from ongoing operations. Benefits due to construction of
the expansion are discussed in Section 5, Benefits Analysis. Annual benefits due to
operation of an expanded facility are discussed below and also in Section 5.




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Benefits from operations are generated from the spending of out-of-town attendees and
delegates attending conventions and meetings at the VCEC. This spending converts into
profits to employers and tax revenues that would otherwise be paid by residents of British
Columbia.

The KPMG study quantified the benefits resulting from operations of an expanded VCEC
by addressing:
    •  incremental delegate/exhibitor spending;
    •  government revenues and employment impacts; and
    •  the impact of lost events.

The calculation of incremental revenue and associated economic impacts are based on the
event load projections for 2009.

DELEGATE AND EXHIBITOR SPENDING
Using the 2009 projected event calendar as a “normalized” year, KPMG estimated total
aggregate annual spending as a result of an expanded VCEC to be $474 million (Year
2009 dollars), consisting of:
   •   delegate spending of $327 million; and
   •   exhibitor spending of $147 million.

Spending estimates were based on the International Association of Convention and
Visitors Bureaus’ convention delegate spending data adjusted for the Vancouver market
and stated in Year 2009 dollars. In addition, delegate spending projections were revised
upward to account for pre- and post-convention tours as well as spending premiums for
retail and related purchases.

Exhibitor spending includes hospitality suites, accommodation for booth staff and booth
set up expenses. Spending by delegates and exhibitors occurs at a variety of hospitality
and tourism industry businesses, not just “traditional” suppliers such as hotels and
restaurants.

INCREMENTAL BENEFITS TO INDUSTRY
Exhibit 2.22. summarizes the benefits that all industry sectors enjoy from incremental
spending. For a 2009 normalized year incremental delegate and exhibitor spending totals
$228.9 million (say $229 million) as a result of expansion.




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EXHIBIT 2.22
ECONOMIC IMPACT
DELEGATE AND EXHIBITOR SPENDING YEAR 2009 DOLLARS ($ millions)
INDUSTRY SECTOR                          EXISTING    INCREMENTAL                     EXPANDED

    Accommodation                                          $ 57.6           $ 83.3        $ 140.9
    Food & Beverage                                          83.9             69.3          153.3
    Local Transportation                                     14.2             13.5           27.7
    Retail                                                   29.1             32.9           62.0
    Recreation                                               17.8              7.5           25.4
    Other                                                    42.2             22.3           64.5
    TOTAL Expenditures                                    $ 244.9          $228.9         $ 473.8

Source: KPMG, modified to show 2009 as normalized year.


INCREMENTAL GOVERNMENT REVENUE
Governments receive significant financial benefits and employment impacts from the
incremental spending of delegates and exhibitors attending events at the expanded
VCEC.

To quantify the annual benefits to governments and employment impacts for a
normalized year of operations, the services of KPMG and BC STATS were utilized. The
KPMG results were generated from the Tourism Economic Analysis Model (“TEAM”)
supplied by the Canadian Tourism Research Institute, a division of the Conference Board
of Canada. The KPMG results include “direct” and “indirect spending1.

The BC STATS results were generated from the BC Input Output Model (“BCIOM”),
which is derived from the 1996 Interprovincial Input-Output tables developed by
Statistics Canada. The economic impact summary from BC STATS includes direct,
indirect and a range of induced impacts of spending

On the recommendation of the Chief Economist of The Vancouver Board of Trade, a
total of the direct, indirect and induced (low end of the range) impacts were used for the
analysis of government benefits and employment impacts.

The Chief Economist of The Vancouver Board of Trade also recommended that the
BCIOM be used to calculate the output results because it uses data specific to British
Columbia.

Based on the BCIOM, the incremental delegate and exhibitor spending as a result of
VCEC-hosted events will generate $75.78 million (say $76 million) in incremental tax
revenues to the three levels of government.


1
 For definitions of terms, see Appendix C, BC Input-Output Impact Analysis for Vancouver Convention
Centre




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EXHIBIT 2.23
ECONOMIC IMPACT
INCREMENTALTAX REVENUES TO GOVERNMENTS ($ millions)
                                     Existing               Incremental            Expanded
Federal                              $ 35.80                     $ 29.43            $ 65.23
Provincial                              26.83                      36.82               63.65
Municipal                               10.81                       9.53               20.34
TOTAL                                 $ 73.44                    $ 75.78            $ 149.22

Source: BCIOM, modified for 2009.


EMPLOYMENT IMPACTS
The incremental spending also has a powerful impact on employment creation. Exhibit
2.24 summarizes the job creation impact due to delegate and exhibitor spending and due
to the need to expand the internal operations of the VCEC because of expansion.

This is an excellent illustration of the role of the VCEC as an economic generator. While
the facility will employ an additional 205 persons as a result of expansion, the
incremental delegates and exhibitors the VCEC attracts will create 7,325 new jobs in
Vancouver and around the province other than at the VCEC.

EXHIBIT 2.24
ECONOMIC IMPACT
NEW FULL-TIME JOBS
                                      JOBS                   %

Delegate Impacts                       5,665                75%
Exhibitor Impacts                      1,660                22%
Facility Operation Impacts               205                 3%
TOTAL                                  7,530               100%

Source: BC STATS.


THE IMPACT OF LOST EVENTS
Because the number of city-wide events in a given year is relatively finite (e.g., between
9 and 16 per year from 1995 to 1999), the potential loss of even one such event has a
significant negative impact on the VCEC and the tourism industry.

For illustrative purposes the economic impact of a city-wide event is profiled in Exhibit
2.25.




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EXHIBIT 2.25
PROFILE OF A CITY-WIDE EVENT AND ASSOCIATED IMPACTS

 EVENT PROFILE                              DELEGATE AND EXHIBITOR SPENDING

 Attendees (day)               1,750        Accommodation              $ 1,536,000
 Length of event (nights)        3.5        Food & Beverage              1,672,000
                                            Local Transportation           302,000
 Exhibitors                 350             Retail                         676,000
 Length of event (nights)     3             Recreation                     276,000
 Average spending per day 1,872             Other                          703,000
 Staff per exhibit            2             TOTAL Spending             $ 5,165,000

                                            Government Revenue
                                               Municipal                 223,000
                                               Provincial                555,000
                                               Federal                   738,000
                                            TOTAL Government Revenue $ 1,516,000



Source: KPMG, modified for 2009.


Given that more than 10 events held at the VCEC in 1999 were larger than the event
shown above, every event that the VCEC loses due to the absence of expansion will
result in a loss of substantial revenues to industry and governments.

ECONOMIC IMPACT - CONCLUSIONS
VCEC convention and trade show attendees currently generate significant economic
benefits to the Greater Vancouver and British Columbia economies.

Current revenues generated as a result of delegate and exhibitor spending associated with
events held at the VCEC are $245 million per year with over 90% of revenues dispersed
throughout the tourism and associated industries (e.g., accommodation, food and
beverage, retail and transportation providers).

The expansion of the VCEC will, as a result of increasing both the number and size of
convention events in Vancouver, generate still greater economic benefits to tourism and
service industry businesses and all three levels of government. Incremental spending by
delegates and exhibitors in 2009 will be approximately $229 million.

Governments will receive incremental annual revenues of $75.78 million ( $29.43 million
for the federal government, $36.82 million for the provincial government and $9.53
million for the municipal government).

The impact of losing tentative convention events and/or past users due to relocation of
events elsewhere is significant. The relocation of one typical, city-wide convention of
1,750 delegates could potentially result in the loss of more than $5 million in spending
and over $1.5 million in government revenue.




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2.6      SUMMARY


♦ Virtually no convention centres in North America produce an operating profit.
  Rather, convention centres are investments in infrastructure whose purpose is to
  generate economic activity and create jobs.

♦ The objective of the VCEC is to generate net economic benefits for the community
  and governments.

♦ The financial and economic benefits of an expanded VCEC are significant and are
  shared by a wide range of tourism industry businesses and the taxpayers through
  taxes collected at all levels of government.

♦ Incremental delegate and exhibitor spending for a normalized year of operations
  (2009) will reach $229 million and taxpayers will enjoy $75.8 million in taxes
  generated annually and 7,530 new, full-time jobs created by out-of-town, out-of-
  province and out-of-country delegates.

♦ Many of the VCEC’s conventions and trade shows are outgrowing the VCEC and are
  being forced to look to venues in other cities that are able to accommodate them.
  Vancouver’s direct competitors are planning, have planned or are expanding their
  facilities to meet the increased space demands of Vancouver’s target markets.

♦ An expanded VCEC will not only permit targeting of new and larger events but, more
  importantly, will permit the hosting of multiple events during peak convention
  season.

♦     Most, if not all, of the attributes associated with a successful convention destination
      (i.e., quality of service, easy access, tourist appeal, range of facilities and attractions)
      are in place in Vancouver as demonstrated by the City’s past successes in hosting
      conventions.

♦     “The status quo is not an option. Without expansion, the current benefits
      realized by Greater Vancouver’s tourism industry will decline as the VCEC is
      unable to effectively compete in an environment of increasing attendance and
      demands for additional exhibit space.”




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                        Build It, MARKET IT, and They Will Come



3.0      TOP LINE MARKETING PLAN

3.1      INTRODUCTION
As with any large project of this type, it is important to ensure that the facility is used to
its potential. Therefore, a carefully thought-out and properly financed marketing plan is
necessary to attract the attention of the convention community and secure customers,
thereby delivering the significant benefits to industry and governments created by
expansion.

The foundation of the marketing plan is the business vision for expansion. The following
statement summarizes what drives all decisions in the market development plan.

VISION
The convention centre expansion will be a major economic generator derived from the
incremental spending of additional overnight visitors.

EXPANSION AS A CATALYST FOR TOURISM IN BC
Tourism in British Columbia generates some $9 billion in annual revenues for the public
and private sectors. Vancouver and BC’s appeal as a destination is reflected by a
significant growth in revenues. A key marketing advantage of Vancouver and BC is the
strong position that it enjoys in key market segments, including outdoor adventure,
touring, urban and rural experiences, cruise, getaways, business and meetings and events.

In Greater Vancouver alone, tourism revenues have grown by 75% over the past decade.
Tourism accounts for $3.6 billion in annual gross visitor spending. The meetings and
conventions market comprises approximately $419 million (12%) of the total market.

As can be seen on Exhibit 3.1, convention centre expansion is a catalyst that drives the
economic benefits in the meetings and conventions segment of the industry.




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EXHIBIT 3.1
CONVENTIONS’ SHARE OF OVERALL TOURISM
 DESCRIPTION                                                         REVENUES                        %
 Convention Centre (Current)                                         $ 244.9                         7%
 Expanded Convention Centre (Incremental)                                 228.9                      6%
 Non-convention Centre Meetings                                           179.3                      5%
 Other Tourism                                                          2,987.1                     82%
 TOTAL Tourism                                                        $ 3,640.2                    100%

Source:   Economic Impact and Spending Data, Tourism Vancouver, June 2000 and KPMG, modified for 2009.


BUILD IT, MARKET IT, AND THEY WILL COME
Vancouver and BC are known around the world for their exceptional settings and there is
no question that the real estate maxim “location, location, location” has been an
important element in the success of marketing Vancouver and British Columbia.
However, the assumption that the physical beauty of our region will generate customers
to an expanded convention centre is far too simplistic in today’s complex environment of
tourism marketing.

It is naive to imagine that Vancouver’s customers (actual and potential) will get unduly
excited about expansion in Vancouver when more than sixty other cities in North
America are either in the preliminary stages of expansion or under construction.

The marketing plan needs to execute the following principles.
   •  Let strategies drive tactics.
   •  Focus on the customer.
   •  Think in the long term.
   •  Be accountable and performance driven.

Tourism Vancouver, the Vancouver Hotel Association (VHA) and the VCEC formed the
Marketing Group of the Task Force and collaborated to evaluate, deliberate and
recommend the best way to compete in the global marketplace. This marketing plan
reflects their collaborative effort.

3.2       PLANNING PHILOSOPHY
The planning approach follows a “pyramid” model whereby strategies to accomplish the
vision drive tactics in all decision-making.




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                                             Vision

                                             Focus

                                           Priorities

                                           Programs




FOCUS
Expansion will be a catalyst to elevate Vancouver and BC’s position as a convention
destination by focusing the actions of the community on delivering exceptional
customer experiences.

The expansion of the convention centre is not just about constructing a facility that will
attract more and larger conventions. With expansion, Vancouver will attract different
kinds of conventions that will bring heightened expectations of our offering as a
destination, not just as a convention centre. Although Vancouver and British Columbia
are known for excellent customer service, the challenge will be to create a destination
mentality that embodies the broader impact of expansion. Premier customer service is a
strategic difference that will keep Vancouver and BC at the top of the list of international
destinations.

   “The margin will be in the attributes that surround the product, not the physical
   product itself. The real product value is in the surrounding components, the
   atmospherics…service, delivery and responsiveness.”
   Alf Nucifora, speaking to the International Association of Convention and Visitor Bureaus, October 1997.

   “Tangible assets are no longer the primary driver of competitive advantage and
   profitability. Instead, intangible assets such as high-quality customer service and
   intellectual capital are increasingly the source of value in today’s most successful
   businesses”.
   Andersen Consulting, quoted in a marketing supplement in The Globe and Mail, May 2000.

The vision of expansion as a significant economic generator will be manifested by the
actions of the community, including the tourism industry, focused on the meeting planner
customer. Strong returns will be achieved through creating long-term loyalty and a
greater share of the market.

HIGH TECH, HIGH TOUCH
Increasingly meeting planners seek out destinations that provide a reasonable return on
investment (ROI) through superior customer service, highly efficient and workable




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facilities and overall quality experiences for their clients (i.e., delegates and exhibitors).
Technology plays a fundamental role in the expectations of these customers. The
destination sellers that fully appreciate and deliver in this area will be well positioned for
success.

     “There is a new power equation between buyers and sellers. In the traditional
     relationship, sellers had most of the cards – and held them close to the vest. Now,
     thanks to Internet connectivity, buyers have unprecedented access to information
     about products, competitive pricing, and sourcing options. They can make their
     voices heard to sellers”.
     Andersen Consulting, quoted in a marketing supplement in The Globe and Mail, May 2000.

However, in the extremely personal world of destination marketing to meeting planners,
high tech must be combined with high touch. Getting the attention of these customers in
an overly saturated environment of today’s cluttered media, be it advertising, direct mail
or the web, will be based on leveraging personal relationships with customers on an
ongoing basis.

STRATEGIC PRIORITIES
The Marketing Group considered a wide array of factors in the development of strategic
priorities, including customer trends, industry assets, stakeholder needs, sound business
opportunities and environmental (external) challenges. The strategic priorities set out
below will drive the investment allocation for market development programs.

1. Delivering Results
   Establish common short- and long-term business goals for the various customer
   groups that will be targetted, with the overall objective of surpassing the annual
   “delegate spend” by increasing the number of delegates that will be realized from
   expansion.

2. Maximizing the Yield
   Realize the return on investment for all stakeholders by targeting priority markets and
   managing the yield in the short- and long-term.

3. Innovative Customer Service
   Entrench Vancouver’s position as a premier international meeting destination through
   quality, innovative customer service experiences and standards that will aim to retain
   existing customers and acquire new business.

4. Successful Marketing Partnerships
   Create and maintain strategic marketing and/or investment partnerships and programs
   to maximize resources.



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COMPETITION
A coherent, integrated and aggressive marketing plan is predicated on assessing
Vancouver’s convention position in relation to the competition. Expansion will enable
Vancouver to strengthen its appeal amongst meeting planners in certain competitive sets.
With some competitors, expansion may not have much of an impact.

It is the opinion of the Marketing Group that the following competitors will be impacted
to some degree by Vancouver’s expansion. In addition to the information provided
below, the Marketing Group thinks it is extremely important that Vancouver’s
positioning in the marketplace is re-evaluated through customer research in the near
future.

Tourism Vancouver and the VCEC both obtain valuable and candid customer feedback
through customer advisory groups – a collection of meeting planners who are responsible
for organizing conventions for large organizations and who have a first-hand knowledge
of the needs of their clients. These customer advisory groups have cited that Vancouver
needs to work to overcome competitive disadvantages such as air accessibility, customs
clearance and the lack of a convention headquarter hotels (1,000 rooms).

EXHIBIT 3.2
KEY COMPETITORS FOR VANCOUVER
                         EXHIBIT SPACE                              # OF HOTEL ROOMS - METRO
                                                                              (1999)

 Vancouver (with Expansion)                341,000                                20,304
 Canada
    Toronto                                403,648                                32,250
    Montreal                               200,000                                24,964
    Calgary                                 50,000                                 9,530
 West U.S.
    San Diego                              525,701                                48,285
    San Francisco                          742,000                                60,000
    Seattle                                260,000                                26,000
    Salt Lake City                         369,000                                15,961
    Portland                               150,000                                16,000
 Other U.S.
    Boston                                 600,000                                25,931
    San Antonio                            440,000                                27,728
 International
    Sydney                                 292,680                                26,881
    Hong Kong                              456,000                                36,203



SOURCE: 9th Annual Competitive Analysis Report, Chicago Convention and Tourism Bureau, Inc. (1999).




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MARKET SEGMENTS
The market segments that are prime users of the VCEC are Conventions, International
Congresses, Meetings, Incentive Shows, Trade Shows, Industry Events, Consumer Shows
and Civic Activities. These market segments are defined further below.

CONVENTIONS
  •  1000-5000 guestrooms on peak night of convention.
  •  2-6 year booking period prior to actual convention year.
  •  Planners and delegates: 90% from U.S., 10% from Canada.
  •  Annual association meetings, usually in different cities each year.
  •  Privately held meetings for the benefit of association’s membership.
  •  Professional, trade, medical/research, scientific, government, fraternal, religious,
     union, educational, social.
  •  Include several general sessions, concurrent seminars, simultaneous workshops.
  •  May or may not include exhibits.
  •  Key selling points: delegate draw, exhibitor draw, destination appeal, cost, access,
     pre/post opportunities, safety.

INTERNATIONAL CONGRESS
   •  1000-5000 guestrooms on peak night of convention.
   •  3-10 year booking period prior to actual convention year.
   •  International headquarters for organizations usually in Europe, U.S. or Canada.
   •  Delegates from around the world.
   •  Many meetings are bi-annual.
   •  Host country/national body usually invites international organization to hold
      event.
   •  Emphasis on medical and scientific research.
   •  May or may not include exhibits.
   •  Key selling points: local support/relevance, delegate draw, cost, pre/post
      opportunities, destination appeal, safety.

MEETINGS
  •   Primarily classified as corporate.
  •   1000-3000 guestrooms on peak night of meeting.
  •   Meetings shorter in duration than conventions and congresses.
  •   0-3 year booking period prior to actual convention year.
  •   Primarily North American, 90% from U.S. and 10% from Canada.
  •   Product launches sales meetings, annual general meetings, shareholder meetings
      or training sessions.
  •   Key selling points: availability, access, meeting and function space, cost,


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      destination appeal, safety, pre/post opportunities.
INCENTIVE SHOWS
   •  Generated from corporate market, but with emphasis on destination attributes.
   •  Little or no meeting/business component and more emphasis on themed events
      requiring large indoor and outdoor spaces.
   •  Incentive travel is a reward given by companies to employees for high
      achievement.
   •  1000-2000 guestrooms.
   •  1-2 year booking period.
   •  Primarily from the U.S.
   •  Key selling points: availability, variety of program activities, destination appeal,
      cost, accessibility, pre and post opportunities, safety.

TRADE SHOWS
   •  Similar to conventions, but with a main focus on exhibits.
   •  1000-2000 guestrooms on peak night of event.
   •  1.5-3 year booking period.
   •  60% from U.S., 30% from Canada, 10% international.
   •  Exhibitors are both local and from out-of-town.
   •  Events are sometimes open to public interested in the field.
   •  Trade shows are owned and operated by professional trade show management
      firms.
   •  Key selling points: delegate and exhibitor draw, local support, facility/space, cost,
      access, safety.

OTHER SEGMENTS
   •  Industry events are part of conventions.
   •  Consumer shows are similar to trade shows, but focus on public attendance and
      retail sales.
   •  Civic activities are public events, such as Canada Day.




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CUSTOMER PRIORITY GRID
After identifying the market segments, the Marketing Group prepared a customer priority
grid in order to drive issues such as customer focus and booking priorities. Exhibit 3.3
ranks the customer segments in order of priority. Each segment is rated on three factors:
    •   Size of market: Volume of business that is generated by the segment.
    •   Economic return: Level of spending that occurs as a result of the event.
    •   Ability to influence: Degree to which marketing efforts will sway the decision-
        making with respect to the event.

EXHIBIT 3.3
RANKING OF MARKET SEGMENTS
RANK SEGMENT                            SIZE OF MARKET       ECONOMIC RETURN       ABILITY TO
                                                                                   INFLUENCE

     1   Conventions                            H                      H               H
     2   International Congresses               M                      H               M
     3   Meetings                               H                      M               M
     4   Incentive Shows                        L                      H               M
     5   Trade Shows                            L                      M               M
     6   Industry Events                        L                      M               H
     7   Consumer Shows                         L                      L               L
     8   Civic Activities                       L                      L               L


                            Level of Importance: H = High, L = Low, M = Medium

Source: Marketing Group (Tourism Vancouver, VCEC, VHA).


It is important to note that the “ability to influence” factor referred to in Exhibit 3.3 refers
to the ability to influence meeting planners who are the decision-makers, not the
delegates who attend the event. However, it is recognized that the role of the delegate is
not to be overlooked as the delegates’ opinions of a destination significantly influence the
meeting planner.

3.3      MARKETING CONSIDERATIONS
As stated in the Focus section of this chapter, Vancouver’s edge rests in its ability to
deliver exceptional experiences for its customers. At the same time, it is necessary to be
able to provide meeting planner customers with the basic pragmatic requirements they
require since meeting planners tend to be risk adverse.

Vancouver’s appeal has and will continue to lie in the “atmospherics” of service, delivery
and responsiveness, not in the square footages and dimensions that seem to be the
foundation of convention marketing strategies in many other cities.

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In addition to the customer-service focus, the Marketing Group identified three
considerations that should be followed in positioning Vancouver in relation to expansion.
These factors should be tested with key customer groups to determine the relative degree
of importance.
    •  Sell the uniqueness - Vancouver is obviously known for its beauty but is also
       known to be slightly foreign, young, different and somewhat unique. It is
       important that the marketing capitalizes on this edge.

      •   Sell Vancouver as a destination first - The success of the expanded facility will
          come from the overall appeal of Vancouver. A member of the Marketing Group
          commented that “the convention centre might be the front door to the conventions
          market, but it is what is behind the door (the essence of the city) that will sell it”.

      •   Diminish the business risk - An expanded, fully updated facility will remove the
          concerns raised by the market in the past.

3.4       SALES AND MARKETING CYCLE
There are four stages to the sales and marketing cycle:

1. Pre-Selling/Qualification
   (i.e., web sites, advertising, trade shows, direct mail, BestCities.net partnership, sales
   missions, familiarization trips, special promotions/events, e-business)

2. Building/Closing the Deal
   (i.e., bid preparation, bridge financing, site inspections, negotiating rates,
   implementing booking policies)

3. Customer Servicing
   (i.e., attendance building, customer support, on-site and welcoming activities)

4. Post-Event Follow-up and Re-Booking
   (i.e., regular customer contact, evaluation)

3.5       BUSINESS TARGETS
Business targets are necessary to monitor the progress toward realizing the overall
objective of expansion as an economic generator derived from overnight visitation. The
targets reviewed in this section reflect information reported in the 2000 KPMG study.

The KPMG report estimates that an expanded convention facility will generate
approximately $474 million in gross revenues from delegates and exhibitors in a
normalized year (2009). Incremental spending represents $229 million of the total,



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indicating that expansion will double spending over pre-expansion levels. The study
states that the growth in business will be enhanced not only by the ability to host larger
events, but the opportunity to host simultaneous or overlapping events.

According to the KPMG study, hotel room nights will accelerate at a pace faster than
delegate days because of a delegate profile weighted toward U.S. and international
visitors.

Exhibit 3.4 summarizes the impact of expansion on events, delegate days and hotel room
nights before and after expansion.

EXHIBIT 3.4
ANNUAL EXPANSION GOALS
                                   CURRENT            INCREMENTAL            EXPANSION        % GROWTH

 Events                                    61                     41                 102              + 67%
 Delegate Days                      395,0000                352,000             747,000               + 89%
 Hotel Room-nights                   247,000                357,000             604,000              + 145%
 Gross Revenues                    $244.9 mil.            $228.9 mil.         $473.8 mil.             + 93%
NOTE: All data above includes both delegates and exhibitors.
Source: KPMG, modified for 2009.

KPMG forecasts an event profile that is focused more on conventions than trade shows.
The expanded convention centre would potentially have a mix of 66% conventions and
34% trade shows. (The current mix is 57% conventions and 43% trade shows.)
EXHIBIT 3.5
TYPE OF ANNUAL BUSINESS FORECASTED
                             REGIONAL                          NORTH AMERICA        INT’L     TOTAL

 Conventions without Exhibitions                  5                     15          6           26
 Conventions with Exhibitions                    10                     27          4           41
 Trade Shows                                     17                     16          3           35
 TOTAL                                           32                     58         13          102
 Consumer Shows                                  26                      0          0           26

Source: KPMG

With respect to the number of city-wide events, the Marketing Group determined that 36
city-wide events after expansion would be a reasonable target.




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EXHIBIT 3.6
ANNUAL CITY-WIDE EVENT GOALS
 TYPE OF EVENT                                   PRE-EXPANSION                          POST-EXPANSION

 Conventions                                              10                                     18
 International Congresses                                  3                                      8
 Meetings (Corporate)                                      1                                      6
 Trade Shows                                               1                                      4
 TOTAL                                                    15                                     36

Source: Tourism Vancouver and VCEC, May, 2000.

The return to the tourism industry from expansion will be driven by events that cater to
overnight visitation. In particular, conventions that include exhibits are significant
generators of revenue ($6.73 million/event). The least beneficial events are consumer
shows ($0.99 million/ event) which draw from the local market.
EXHIBIT 3.7
GROSS REVENUES BY TYPE OF EVENT
                                                ROOM-NIGHTS                         SPENDING
                                                 PER EVENT                     PER EVENT ($millions)

 Conventions with Exhibitions                        9,309                                6.73
 Conventions without Exhibitions                     4,599                                2.76
 Trade Shows                                         2,888                                2.61
 Consumer Shows                                        49                                 0.99
NOTE: All data above includes both delegates and exhibitors.
Source: Derived from Market Justification and Economic Benefits, KPMG, February 2000.

Vancouver currently has sufficient hotel room inventory to accommodate the incremental
hotel room-night demand shown in Exhibit 3.4. At present there are 24,160 hotel rooms
in Greater Vancouver and 14,734 hotel rooms in the City of Vancouver, of which 12,975
are located in the downtown area demonstrating that Vancouver has adequate hotel room
inventory to host typical city-wide events. A number of new hotel properties were
developed in the past few years when the Portside project expansion was originally
announced.

Year-to-date hotel occupancies (to June 30) at Greater Vancouver hotels are 62.3 percent,
5.2 percent below the June year-to-date level for 1999. Based on year-to-date actuals to
June, the forecast for 2000 is 62.6 percent, 5.5 percent below 1999 actual occupancies of
68.1 percent.

3.6      GROWING MARKETING INVESTMENT
An estimate of the investment required to finance this market development plan is
described in the Financial Analysis section of the Business Plan.




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RESOURCE ALLOCATION
The business of building business with meeting planner customers is dominated by one-
to-one relationships. The market is somewhat finite – understanding the needs of the
customers and delivering exceptional experiences will differentiate one destination from
another. Members of the Marketing Group reported measurable benefits to investing in
developing one-to-one relationships. For example from 1998 to 1999 Tourism Vancouver
increased its conventions sales teams by one-third and, in the same period, reported that
the number of qualified prospects and converted business increased by 31% and 42%
respectively.

To grow the share of the meetings and events market, Vancouver will need to emphasize
outstanding customer service and continue to focus on building long-term relationships.
This approach should form the foundation of the way customers are serviced and become
even more of a focus as the market matures.

Technology will continue to play an increasing role in the ability to service customers.
The web is enabling the industry to offer more valuable, timely information and more
efficient, higher quality service.

At the appropriate time, key programs will need to be planned and developed by
members of the Marketing Group and the industry in general, by building on existing
initiatives and creating new marketing activities. The programs should be strategized with
the following in mind:
     •   Program description, business objectives and relevance to strategic priorities;
     •   Lead organization and other partners;
     •   Customer emphasis, in terms of type, life-cycle, origin and seasonality;
     •   Emphasis of various communications vehicles;
     •   Key measures of success;
     •   Key activities (tactics);
     •   Timing; and
     •   Anticipated staffing and investment resources, including leveraged amounts.




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3.7    SUMMARY

♦ In order to reach its potential, a highly functional and beautiful facility must be
  marketed, not as a stand alone, one-time event, but as a fully integrated and long-term
  feature within the broader context of destination marketing.

♦ Over the course of the past 13 years, the existing convention centre has proven itself
  to be an economic engine for Vancouver, British Columbia and Canada. An expanded
  facility is the next step in protecting and growing the future. But the promise will only
  be delivered with a long-term, strategic and highly accountable marketing plan that
  focuses on delivering exceptional customer experiences.




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           “The most dramatic and attractive location we have ever worked with.”
      George Loschky of LMN Architects, designers of more than 30 major convention centres in North America.




4.0      DESCRIPTION OF FACILITIES

4.1      OVERVIEW
The KPMG report concluded that the expansion should provide for:
   •  contiguous exhibit hall space of 250,000 to 300,000 square feet;
   •  ballroom space of 50,000 square feet;
   •  40 to 55 meeting rooms occupying 83,000 to 88,000 square feet; and
   •  theatre with seating for 1,500.

The Task Force agreed to focus its investigation on those sites that had gone through the
extensive industry and public scrutiny of the previous Stage 1 – Expressions of Interest
and that were on the waterfront adjacent to the existing VCEC. There were a number of
solid business reasons for this decision.
    •   Canada Place has become one the world’s most recognized landmarks and has
        great appeal to delegates and meeting planners.
    •   The existing VCEC continues to be an excellent venue for events and will
        continue to be an integral part of the expansion plan.
    •   Meeting planners told Vancouver marketing personnel that a waterfront location
        was a critical part of the decision to select Vancouver over its competitors and
        accounted for increased business.
    •   A site adjacent to the existing VCEC provides efficiencies both for delegates and
        exhibitors and for management of the VCEC.

Two sites qualified for consideration – the Portside project site to the east of the VCEC
and the Discovery Place proposal on the Burrard Landing site owned by Marathon
Developments Inc. (“Marathon”) to the west.

Shortly after the Province cancelled the Portside project, Marathon notified the Province
that its Burrard Landing site was available for convention centre expansion. Marathon
was offering the site as a vendor, not in its role as a developer as it did in 1997. The
Province referred Marathon’s interest to the Task Force.

The Task Force was fortunate that the Marathon site was still available and the plans for
its Discovery Place proposal on the Burrard Landing site were essentially complete. The




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Marathon proposal had been withdrawn from the previous process only a short time
before the deadline for submissions in 1997.
Given that:
   •    the Province had just cancelled the Portside project;
   •    the Portside project had been thoroughly investigated and was very well known to
        members of the Task Force;
   •    the Burrard Landing concept had been through the extensive public process as
        part of the Stage I Evaluation of the Vancouver Convention and Exhibition Centre
        Selection Process;
   •    the Burrard Landing site was on the waterfront to the west of the VCEC; and
   •    the Burrard Landing concept was essentially complete

the Task Force agreed that it should first focus its attention on the Burrard Landing
concept.

Pacific Liaicon and Associates Inc. (“PLA”), recognized for their extensive work on
major projects including the Vancouver International Airport expansion, conducted an
assessment of the Burrard Landing site. The assessment was conducted in close liaison
with PAVCO, who are responsible for managing the VCEC.

LMN Architects (“LMN”) were engaged to update the original design they had prepared
for Marathon. LMN are experts in convention centre design having participated in over
40 convention centre designs throughout the world and having won numerous design
competitions.

George Loschky of LMN described the site as “the most dramatic and attractive
location we have ever worked with”. LMN worked with VCEC management and staff,
and City of Vancouver planning staff to arrive at a final design concept that is functional,
spectacular, worthy of Vancouver’s waterfront and enhances the Canada Place icon.

The expanded convention centre on the Burrard Landing site will be able to
accommodate the KPMG expansion parameters and will offer a program of spaces
slightly larger than recommended by KPMG.

There are a number of advantages to the Burrard Landing site.

     •   The size of the Burrard Landing site allows the construction of a true purpose-
         built facility for conventions and exhibitions which is unfettered by site
         constraints. The proximity of the site to the existing VCEC allows a full
         integration with the existing building via multi-level linkages and service
         corridors.
     •   The existing VCEC is able to operate at full capacity (and therefore generate full
         benefits to governments and industry) during the entire construction period.


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      •   The specific design of renovations to the existing VCEC can be deferred until the
          Burrard Landing expansion is well underway, allowing time to assess any shifts in
          market requirements.
      •   Being able to build a convention centre that offers spaces slightly larger than
          recommended by KPMG addresses an originally stated requirement that
          opportunities for future expansion be included.
      •   The form of expansion will provide space for larger groups and multiple smaller
          events.

As stated previously, the term “convention centre expansion” comprises:
   •    constructing new facilities on the Burrard Landing site to the west of Canada Place;
   •    renovating the existing facilities at Canada Place; and
   •    linking the two sites to form an integrated convention and exhibition centre.

4.2       PROPERTY DESCRIPTION
The property is situated to the west of Canada Place on property designated in the City of
Vancouver Official Development Plan by-laws as the Burrard Landing precinct.

The property includes legal lots 23 through 28, Plan LMP29892. Lots 29 and 30 are
owned by Marathon and have been rezoned for possible development as hotel or office
towers to permit a minimum of 500,000 buildable square feet on each property.

The lands proposed for the expanded convention centre are a reconfiguration of Lots 23,
24, 25, 26, 27 and 28 and comprise a total area of approximately 18.37 acres (800,215
square feet). Under a proposed neighbourhood development plan, the shoreline would be
altered slightly so that the entirety of lot 23 would be a water lot (578,364 square feet)
and the remaining four lots (221,851 square feet) would be completely filled. Under the
proposed plan for the convention centre expansion, the size of the water lot would be
reduced because of less cutting away of the shoreline.

The property is currently zoned CD-1 which permits a variety of uses including cultural
and recreational, marina, institutional, marine terminal, office, retail and service. The
current zoning also requires that the developer include the following amenities:
    •   arts centre;
    •   day care facilities; and
    •   public amenity spaces.

The City has indicated that it would favourably consider re-zoning of the property
permitting the development of a convention centre. As part of the rezoning, Marathon has




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already made application to sub-divide the property – one parcel for the convention
centre expansion and two parcels for office and hotel development.

IMPACT ON THE PROPOSED ARTS CENTRE FOR BURRARD LANDING
The Business Plan assumes that an arts centre originally proposed as part of the
development of the Burrard Landing site is relocated. The Task Force supports the
establishment of an arts centre and is working with the City to resolve this issue.

4.3    ANALYSIS PROCESS
The Task Force engaged the services of Pacific Liaicon and Associates Inc. (“PLA”) to
conduct a third party assessment of the convention centre expansion. PLA is recognized
for its project management work on major projects including the Vancouver International
Airport expansion.

In coordination with the Task Force, PLA carried out the following steps:
    •  requested that Marathon develop an updated version of the original “Discovery
       Place” proposal which would take into account new developments in convention
       centre design since the project was originally conceived;
    •  directed technical and operating staff of the VCEC to work with project architects
       and engineers to ensure all functionality requirements were met or exceeded;
    •  met extensively with regulatory authorities including City of Vancouver Planning,
       Engineering and Cultural Affairs departments, Vancouver Deputy City Manager,
       the Vancouver Parks Board and the Department of Fisheries and Oceans to
       identify any issues having the potential to impact the proposal; and
    •  assisted in discussions with Marathon as to the cost and conditions associated
       with purchase of the necessary property.

4.4    SITE ATTRIBUTES
Attributes of this site include the following:

LOCATION
The site is in a premier position on the Vancouver harbour, consistent with the industry
position that an adjacent waterfront site is required to maintain the continuity of market
expectations and the highly successful image built by Vancouver since the opening of the
VCEC in 1987.




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PROXIMITY TO VCEC
The site is immediately adjacent to the existing VCEC at Canada Place and can be readily
linked and functionally integrated with this facility through both existing and new
connectors via available rights-of-way.

VIEW ASPECT
The site is endowed with Vancouver’s signature harbour, mountain and park views,
unobstructed by either the existing VCEC facility or other adjacent development. It is
entirely removed from industrial port and rail activity, and opens to what will be an
extensive park area associated with the Coal Harbour development to the west.

CITY ACCESS AND LINKAGES
The site offers multiple immediate, direct linkages to the downtown core via established
corridors. It is adjacent to the downtown hotels, restaurants and retail areas that represent
the needs and interests of convention delegates as well as to the major parking facilities
associated with the business district.

LOW PROFILE
The site offers a natural drop in elevation from the level of the existing street grid to the
harbour front. This allows for the construction of the exhibition hall below city grade
where it will not impede city views. At the same time, it enables the development of a
significant street level public plaza, which provides direct access to the harbour edge
from the downtown core.

MINIMAL CONSTRUCTION IMPACTS
The location of the site is such that there would be minimal adverse impact on either the
cruise ship terminal, the SeaBus terminal or existing VCEC facilities during construction.
During the construction period, it will be serviced by the existing Waterfront Road which
affords direct site access without the need to impact downtown streets.

ADVANCED STAGE OF ZONING/APPROVALS
The site is part of the Burrard Landing development, which has already received zoning
approval from the City of Vancouver. The change of use contemplated by the expansion
proposal will require only modest changes to existing agreements with a reduction in the
number of structures to be built from what is already approved. With expansion the four
high-rise towers originally approved for the Burrard Landing development would be
reduced from four to two. Other approvals, such as those for environment and fisheries,
are also well advanced.




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4.5    THE CONCEPT
The design optimizes the balance between internal efficiency and external views by
arranging exhibit and sessional spaces in the interior of the building, but taking full
advantage of the surrounding views for social and breakout functions.

The “icon” of the sails at Canada Place will remain the most dominant architectural
feature, with new views to the sails opened up from the expansion wing.

SIMPLIFYING RELATIONSHIPS
The site for expansion would be created by subdividing the required portion of the overall
Burrard Landing property to create an independent site, which would be owned by an
appropriate, designated entity agreed to by the funding participants. Two sites, potentially
for hotels, would be created immediately to the south on adjacent private property with
separate ownership.

This separation has the advantage of simplifying what were previously complex
relationships among the various components of the overall development.
    •   The convention centre expansion could proceed independently of other
        components, minimizing any real or perceived cross-subsidies and conflicts
        regarding their associated design, construction and infrastructure.
    •   The adjacent hotel(s), while functionally part of the overall development, would
        proceed as independent private sector projects according to market conditions.
    •   There would be no need to link the start of expansion construction to a parallel
        start of construction on a cruise ship terminal expansion as the expansion would
        not require the shutdown of the VPA’s berths during the construction period.
        With the Vancouver Port Authority’s January 2000 announcement that it is
        proceeding with the third cruise ship terminal, the two projects are now
        proceeding independently and will not interfere with each other in any significant
        way.

PHASED EXPANSION PROCESS
As construction on this site would not result in any immediate impacts on either the
cruise ship terminal or the existing VCEC, it is recommended that construction would
proceed in two phases.

The first phase is the construction of the Burrard Landing site. During construction there
will be no interruption in the operation of the VCEC. The ability to operate without
interruption is a major economic advantage to the tourism industry and the three levels of
government.




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The second phase is the renovation of existing facilities at Canada Place. With the
Burrard Landing expansion now completed and open for business, there will be no
interruption in VCEC operations while renovations to the VCEC are being carried out.

At the conclusion of the second phase, the link between the two phases will be completed
creating a single functioning facility linked by multi-level access corridors. This will be
the final step in the completion of the convention centre expansion.

There are significant advantages to this phased approach:
   •   With the full program of spaces accommodated in the Burrard Landing expansion,
       there will be neither compromises in the efficiency of design, nor an interruption
       in the ability to meet customer needs until the Canada Place renovations have
       been completed.
   •   The start of construction on the renovations to the existing VCEC will commence
       following completion of the Burrard Landing expansion. Renovations in Canada
       Place will then take place, which can respond to changes within the meetings
       market.
   •   On completion, this expanded program of spaces will allow Vancouver to keep
       pace with expanding business opportunities and defer consideration of a second
       expansion program.

CONTAINING COSTS
The construction of a single purpose-built building on its own site reduces the complexity
and overall cost of the project.

In addition to the simpler design, there are a number of other factors that contribute to a
lower project cost. The design team was able to modify the original Discovery Place
design by moving the building footprint approximately 200 feet further on to the shore,
significantly reducing marine and site preparation costs.

The expansion will require renovations only, rather than retrofitting, to bring the existing
VCEC up to the standard of the entire expansion. Therefore, the renovated VCEC will
continue to generate revenues for a relatively modest investment only.

Collectively, these measures helped to reduce the overall cost of the project while still
delivering the full program of required components.

ARCHITECTURAL CONCEPT
LMN have designed more than 40 major convention centres throughout the world. A
corporate profile of LMN is contained in Appendix F. Project designer George Loschky
described the site as “the most dramatic and attractive location we have ever worked
with”.




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The architects’ approach is one that appreciates the setting, maintains full functionality
and respects both the views and the existing prominence of the sails at Canada Place as
an international signature statement.

Mr. Loschky described the concept as follows:
      “The architectural concept creates a fully linked expansion to the west of Canada
      Place that takes maximum advantage of the site proximity to the central business
      district, upland concentration of hotels, topographic slope of the site to the
      harbour, connection to Harbour Green Park, and to the unsurpassed sweeping
      views from Stanley Park to the sails of Canada Place.

      The design of the expansion is to be sensitively developed as a complement to the
      internationally recognized imagery of Canada Place. An emphasis on the
      horizontal orientation of the program of spaces will be the foundation of the
      concept.

      The design vernacular is built around the concept of landscape as architecture.
      All development to the upper ballroom level is conceived as landscaped terraced
      ground form, rich in its context of northwest ecology, Vancouver culture and
      history. Metaphorically above the landscape terraces will be a floating sculptural
      roof structure of waves washing to the shore. The rolling horizontal orientation of
      the structure will reinforce the maritime concept of Canada Place without
      copying or competing with the ship metaphor.”

4.6      MEETING THE FUNCTIONAL REQUIREMENTS

ARCHITECT’S DESCRIPTION
Functionality was a high priority for the design of the expansion. In describing the
proposed program of spaces Mr. Loschky said,

      “The design program proposed is a highly functional one that was developed in
      full consultation with the managers and operators of the existing VCEC and
      endorsed by them as meeting their most ambitious standards for operating
      efficiency. The design concept also responds fully to the concerns expressed by
      the industry users on reviewing the Portside project at the one day Industry
      Advisory Forum held on February 22, 1999.

      By meeting the entire space requirements in the first phase of expansion, there is
      an opportunity to create a fully integrated facility and eliminate the design and
      functionality compromises inherent in an adaptive refit of the existing facility.”




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PROGRAM OF FUNCTION SPACES
The expansion will meet all of the program function and support area space requirements.
Exhibit 4.1 summarizes the program of spaces following expansion.
EXHIBIT 4.1
FUNCTION SPACE SUMMARY (Square Feet)
FUNCTION SPACE                            EXPANSION     EXISTING      COMBINED
                                                                       FACILITY
Exhibit Space                                 250,000     91,000        341,000
Meeting Space                                  83,000     26,000        109,000
Ballroom Space                                 50,000     17,000         67,000
Signature Room                                 12,000          –         12,000
Lecture Theatre                                24,000          –         24,000
TOTAL                                         419,000    134,000        553,000

Source: Pacific Liaicon and Associates Inc.


ORGANIZATIONAL CONCEPT
The vertical organization is very simple. Three floors accommodate the main public
space requirements of the program. Each level has a defined function – Level 11.5 for
Exhibition Halls, Level 52.5 for Meeting Rooms and Registration and Level 76.0 for the
Ballroom/Signature Room/Lecture Hall.

A mezzanine at 31.9 feet provides an enclosed connection between Canada Place,
Waterfront Centre, the potential new upland hotel developments, Sinclair Centre and the
CP station hub for SkyTrain, SeaBus and commuter rail. It also provides one of the two
levels of parking between Canada Place Way and Waterfront Road.

ARRIVAL
The topography of the site from the existing street grade to the waterfront below has
facilitated a multi-level arrival concept, which will provide efficient and convenient
traffic management for the project.

The focus for pedestrian traffic will be the Burrard Landing Plaza and the Thurlow
Gardens Plaza, where arriving delegates will encounter sweeping views of the waterfront
and mountains, free from bus lines and taxi queues. Access from both the east and west to
the registration lobby will provide a vehicular free environment for pedestrians.

Between Burrard and Thurlow on the north side of Canada Place Way will be a formal
ceremonial vehicular drop off that will lead directly into the registration area. A level
below the street will be a large taxi and limousine arrival area with entries to the 31.9-
foot mezzanine, which will link to the registration lobby above. Below the mezzanine at
exhibit level is located a convention shuttle bus terminal adjacent to an arrival lobby
linked to the levels above with escalators and elevators. The functionality and efficiency
of this arrangement will make a significant contribution to the arrival experience.




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Convenient, efficient and accessible visitor parking for 425 vehicles is provided on two
levels, both immediately adjacent to the mezzanine. Entry from Canada Place Way is by
way of a two-way ramp located to the east of Thurlow Street. 100 parking spaces for
harbour related activities are located on the exhibit level at the east end of the building
with access from Waterfront Road.

REGISTRATION
A 25,000 square feet dedicated registration lobby is provided at the Canada Place Way
street level. Access is provided to this area for pedestrians from the Burrard Landing
Plaza, the Thurlow Gardens Plaza, the vehicular street drop off zone and from the lobby
connections to the taxi and bus lobbies. The lobby is set back out of the circulation paths
to provide a controllable dedicated environment for registration. Conference/Meeting and
registration support rooms ring the registration area.

MEETING ROOMS
All meeting rooms are in one location, on one level, with full back-of-house support and
are surrounded by a wide pre-function concourse. All meeting rooms have 16-foot high
ceilings.

This provides a total of 83,000 square feet of meeting and conference rooms,
subdividable into 37 rooms, which can be used in various combinations to provide an
infinitely flexible combination of function space.

Creating an enjoyable, easy to use environment is essential to having a successful facility.
All of the meeting pre-function, concourse and lounge spaces have views of the city
skyline, the plazas, Stanley Park, Lions Gate Bridge, The Lions, Burrard Inlet, Harbour
Green Park and Canada Place. The extrovert quality of the pre-function space will
provide a constant visual orientation reference for delegates.

EXHIBITION HALL
The Exhibit Hall is a single contiguous hall of 250,000 square feet, with 30-foot clear
ceiling height that can be subdivided into three separate halls. Each hall can be
independently operated, offering a variety of combinations that will accommodate the
most demanding scheduling requirements.

A 90-foot x 106 – 120-foot column spacing, along with a 30 foot x 30 foot floor utility
grid, meets all of the industry standards. Unlimited future utility additions can be
accommodated by the under floor utility tunnel.

Each hall has direct escalator and elevator access from the mezzanine level, which acts as
a control point distributor for multi event conditions. The openness of the lobbies to the
exhibit space provides an interesting orienting overlook for delegates. The lobbies are


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 also highly visible from the exhibit floor providing an easy reference for delegates
leaving the floor.

A ceremonial escalator, stair and elevator rotunda connects the street level lobby entries
to the mezzanine level. The openness of this feature area will bring natural light to the
mezzanine. At the street level lobby the escalators, stairs, and elevators will continue on
to the ballroom level.

BALLROOM/SIGNATURE ROOM/LECTURE THEATRE
The Ballroom, Signature Room and Lecture Theatre are located one level above the
meeting/street level.

The 50,000 square foot ballroom is sub-dividable into three separate rooms that can be
used in various combinations with separate back-of-house service or as a single room.
The ballroom has a 30-foot high ceiling.

At the north end of the ballroom is the 12,000 square foot Signature Room. This room is
designed with an operable wall separating it from the main ballroom, allowing for the
combined rooms to provide a single 62,000 square foot room. The Signature Room’s
east, north, and west walls have floor to ceiling glazing opening the room to the
extraordinary surrounding views. The room has direct access to outdoor terraces to the
east and west.

A 1,500 seat lecture theatre is located directly above the main entry lobby. It will have
back-of-house access to the stage and direct access to vehicle-size freight elevators that
connect to the truck dock.

A ceremonial escalator, stair and elevator rotunda connects the street level lobby entries
to a large pre-function area overlooking the plaza to the west. Secondary escalator, stair
and elevator access at the north end of the pre-function space connect to the meeting level
below.

The pre-function space opens to outdoor terraces on the north and west. From the west
terrace, a monumental stair sweeps down to the plaza physically and visually linking the
two.

FOOD SERVICE
The quality of food service is extremely important to those considering a meeting site.
Association planners have ranked it second only to the number, size and quality of
meeting rooms. Emphasis was placed on a concept that provides for efficient and
innovative food preparation to accommodate the tastes of the convention centre’s world-
wide clientele.


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Provisions for portable bars and food vending carts are provided throughout lobby and
pre-function areas. Each section of the exhibit hall features a permanent concession stand.
They will be equipped with modular portable cooking equipment systems that will allow
the centre to offer a custom-developed concession stand menu to suit each event.

The concession stands will be designed to be convertible from walk-up quick service
units to kitchen/pantries capable of providing stir fried and other hot entrees as well as
hot and cold beverages, for large functions in the exhibit halls. The exhibit halls also have
provisions for portable bars, portable cafeteria modules and food vending carts.

The main banquet kitchen will be located adjacent to the ballroom. Satellite
pantry/kitchens will be located on the meeting room level with direct back-of-house
service to the meeting rooms.

All food service areas will be vertically connected by two large vehicle-size elevators and
two cart-size elevators.

SUPPORT AREAS
All support area requirements have been reviewed with the VCEC staff for location and
operation. The following is a brief summary of the essential support components:
    •  secure loading dock area with direct truck access to each hall subdivision and 22
       truck docks with all necessary dock support;
    •  employee support areas located on the mezzanine below the Burrard Landing
       Plaza (which allows easy access to all the various public transportation options for
       the employees and is in a central location to all of the areas of the facility);
    •  administration offices located on the mezzanine level at the east end of the exhibit
       hall in an area central to all areas of the facility, with offices looking out to the
       east at Canada Place and having window overviews of the exhibit hall; and
    •  large FF&E storage areas throughout the facility (in back-of-house locations
       adjacent to the ballroom and meeting rooms they support, insuring operational
       efficiency).

4.7    RESPONDING TO THE MARKET OPPORTUNITY
The expansion design as developed responds to the key marketing factors identified as
critical to exploiting the best business opportunities available to Vancouver over the next
decade.

MAINTAIN AND ENHANCE KEY SALES FEATURES
The signature location, views and architectural statement which have distinguished the
VCEC in the meetings market for the past 13 years are fully developed.




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The design optimizes the balance between internal efficiency and external views by
arranging exhibit and sessional spaces in the interior of the building, but taking full
advantage of the surrounding views for social and breakout functions. The “icon” of the
sails at Canada Place will remain the most dominant architectural feature, with new views
to the sails opened up from the expansion wing.

DELIVER A POWERFUL MIX OF NEW EVENT SPACES AND FEATURES
The size and proportion of all program spaces will be enhanced and new function spaces
such as a plenary theatre added to the sales mix. All areas meet minimum industry
standards for height, dimension and finish. A series of feature rooms are incorporated to
develop the full potential of the waterfront location, and access to plazas and waterfront
walkways is available throughout. The plaza can be configured to provide manageable
spaces for event functions, and direct access to charter vessels and other waterfront
amenities can complement the event experience.

PROVIDE MAXIMUM FLEXIBILITY TO ACCOMMODATE A WIDE VARIETY OF EVENTS
The program is designed to allow a wide range of space and access configurations to
accommodate a full range of events from convention to international congress to stand-
alone exhibition and banquet functions. Multiple access points and a large, adaptable
registration lobby will provide flexible combinations of delegate traffic flow to meet the
varying needs of different event types.

RESPOND REALISTICALLY TO THE BUSINESS MIX
While the consolidated facility will be capable of delivering over 750,000 square feet of
pre-function and function space for events of up to 20,000+ delegates, the largest
proportion of the available business opportunity will continue to be for events in the
range of 2,000 to 5,000 delegates. This means that the ability of the facility to adapt to
accommodate multiple simultaneous events is more important than a single large event
configuration.

The design provides the capability for multiple event business between the two wings as
well as the ability to combine the two major areas for the largest events.

APPEAL TO EVENT ORGANIZERS
The site and design address the top priorities of event organizers such as building access,
arrangement of spaces, adjacencies, traffic separation, loading efficiency and flexibility
of spaces. It also addresses a number of deficiencies in the existing facility that have been
ongoing issues with clients. These include limited access, loading facilities and
overlapping traffic flows.




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REDUCE OR ELIMINATE DOWN TIME
A key feature of the phased design is that it allows the VCEC to continue operations
during the entire construction period. This will have an important impact on client
relations and on the economic benefits of VCEC-hosted events.

4.8      COMMUNITY BENEFITS
The proposed expansion has been designed to create a compatible mix of community
benefits and the functionality required for a highly marketable facility that addresses the
needs of the meetings industry. It is able to achieve this balance because major event
spaces are either below grade or enclosed in a low level structure, while the development
as a whole is surrounded by public open spaces, walkways and plazas animated by
landscaping, dramatic harbour views and compatible retail areas.

There are two major public plazas, each incorporating a number of features designed to
attract and hold community interest.

BURRARD LANDING PLAZA
The Burrard Landing Plaza is a gathering place and grand forecourt to the convention
centre and the city. The growing importance of Burrard Street has demanded that a great
deal of attention be paid to its arrival at the waterfront.

The footprint of the Burrard Landing Plaza incorporates an entry to historic Burrard
Street and the formal or ceremonial arrival to the convention centre. The plaza has
unparalleled views to the Canada Place sails, cruise ships and north shore mountains. A
feature light beacon sits on the centre line axis of Burrard Street at the north edge of the
Burrard Plaza. The 20-foot high transparent structure recalls the notion of a maritime
navigation beacon. It marks the end of Burrard Street and acts as a visual focal point for
pedestrians and vehicles travelling down Burrard Street to the water’s edge.

THURLOW GARDEN PLAZA
The Thurlow Garden Plaza, located at the base of Thurlow Street, is a significant open
space which includes the following.

      Civic Performance Park
      The plaza is an open space capable of accommodating public performance
      gatherings, displays and noon-hour concerts, and allowing people to stand, sit and
      watch or move comfortably through to the city’s edge.

      Coal Seam Gardens
      Recognizing the site’s unique heritage, the Coal Seam recalls the significance of
      The Three Greenhorns Brick Kiln and the discovery of coal at Coal Harbour. The




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      ‘Coal Seam Gardens’, the brick kiln and the slabs of black granite that represent
      the coal seam, are on an axis with the Marine Building and Brockton Point.

CIVIC GARDENS
The Civic Gardens provide a garden link between Canada Place Way and the Civic
Performance Park. The gardens provide the public and convention delegates with a place
to sit, rest and socialize in smaller groups in a landscape which displays Vancouver’s
floral attributes.

      The Narvaez Channel Water Feature
      The pedestrian connection from Thurlow Street is designed as The Narvaez
      Channel. The name recognizes the Spanish explorer José Narvaez who first
      charted the Coal Harbour Inlet and waterways. This water feature bisects the
      Civic Performance Park level.

      Marina Promenade
      The Marina Promenade provides waterfront pedestrian access around the entire
      downtown peninsula. The promenade is animated by retail frontage with seating
      opportunities overlooking a marina and with Stanley Park as a backdrop. The
      promenade continues along the water’s edge linking to Waterfront Road.
      Pedestrian access to the Civic Plaza level is by stairs or elevator.

      Amphitheatre
      The Amphitheatre provides a venue for staged events with terraced seating and
      unparalleled views of the Marina, Coal Harbour, Stanley Park and the north shore
      mountains. The stage of the Amphitheatre depicts an historic map of the British
      Columbia coastline. The Amphitheatre will offer unobstructed views of such
      events as the Canada Day fireworks and the Christmas Carol ships.

      Heritage Walk
      The Heritage Walk takes pedestrians via a gently sloped walkway from the
      water’s edge to the mid-level walkway and continues up to the main plaza. The
      walkway provides historic storytelling and interpretive opportunities.

4.9      CITY CONTEXT
Both the site and the proposed facility represent a good fit with the surrounding city and
integrate well with existing uses, corridors and streetscapes. As a “hospitality hub” and a
converging point between the community and visitors, the expansion will serve as an
excellent transition between the commercial downtown and the residential/recreational
areas to the west.




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HOTELS
The site is immediately adjacent to the highest concentration of both existing and planned
hotel accommodation in the city. Marathon is also in the process of applying for rezoning
of the two adjacent parcels for hotel use. While this process is independent of the Task
Force activities, it is expected that one or two hotels would be announced coincident with
or shortly after the announcement of the convention centre expansion.

OTHER TOURISM INFRASTRUCTURE
The site is immediately adjacent to the cruise ship terminal and the Vancouver
TouristInfo Centre (visitor information) in the Waterfront Centre, which both service
visitor and delegate interests. Nearby transportation options include the floatplane
terminals, SeaBus/SkyTrain terminals, the Helijet terminal, Westcoast Express station
and major bus connections. A major commercial marina, which would likely include both
charter and rental boats, would be located immediately in front of the new facility.

COMPATIBILITY WITH ADJACENT USES
The convention centre will provide direct street level access to major downtown retail,
restaurant and attraction areas. In recent years many businesses have relocated to the area
in anticipation of convention and cruise ship expansion.

TRAFFIC AND PARKING
The design of the expansion provides for three-level access as an effective means of
separating service, bus, taxi, private vehicle and pedestrian traffic. Off-road staging areas
are provided for trucks, buses and taxis. The site is also immediately adjacent to the
highest concentration of parking in the downtown area, much of it office related. As a
result, more parking access is more likely to be available during peak requirement periods
for local users (evening and weekend) as opposed to midweek convention use, which has
minimal parking requirements.

THE STREET GRID
The north-south orientation of Burrard and Thurlow Streets allow taxis and other vehicles
to approach the centre with a clear view of Burrard Landing Plaza and the convention
centre main lobby along Canada Place before descending to the parking areas. This
provides an opportunity for visitors to orient themselves before arriving or parking.

4.10 RENOVATIONS TO THE EXISTING VCEC
Renovations to the existing VCEC are scheduled to take place as soon as the Burrard
Landing portion of the expansion is able to host events. Renovations to the existing
VCEC will consist mainly of upgrading the existing facilities including floor and wall
coverings, washrooms and public areas.




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The construction period for the Burrard Landing site will allow for an assessment of
industry trends to determine the program of modifications to the existing VCEC.

The separation of the existing VCEC and the Burrard Landing component of the
expansion will allow the VCEC to attract multiple events that will appeal to a number of
VCEC clients.

The close proximity of the two buildings will allow the VCEC to host much larger events
than could be contemplated at this time.

4.11 COMPLETION OF EXPANSION
The final stage of expansion is the construction of the links that will integrate the entire
facility. At the present time it is proposed that there will be two links – one at street level
and the other a protected walkway below grade that offers views to the water.


4.12 SUMMARY

♦ The Burrard Landing site and design offer great opportunities for Vancouver to
  capitalize on the growing demand for quality space for the convention and meetings
  market. With the completion of expansion Vancouver will be able to provide high-
  quality space for conventions and meetings with great views, yet still with the
  amenities provided by a downtown core location.

♦ The expanded convention centre will appeal to a broad range of convention and
  meeting planners – for a city-wide convention that takes over the entire space or for a
  smaller convention that wants to retain a sense of identity. With expansion, many
  events can be operated simultaneously.

♦ The expansion will also complement the City, providing many community benefits
  such as public open spaces, open plazas, gardens, an amphitheatre and harbour
  access.




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“VCEC convention and trade show attendees currently generate significant economic
 benefits to the Greater Vancouver, British Columbia and Canadian economies. The
  expansion of the VCEC will …generate still greater economic benefits to tourism
                industry businesses and all three levels of government.”
 KPMG, Expanding the Vancouver Convention and Exhibition Centre, Market Justification and Economic Benefits




5.0    BENEFITS ANALYSIS

5.1    INTRODUCTION
The VCEC is a significant economic generator of the Vancouver, British Columbian and
Canadian economies due to spending by delegates and exhibitors to VCEC-hosted events.
At the present time, the VCEC generates $245 million per year in delegate and exhibitor
spending which, in turn, generates $73 million per year in taxes and supports 3,930 full-
time jobs.

Building on the proven success of the existing VCEC, the expanded convention centre
will provide even greater benefits to the community at large. In its first year of
normalized operations (2009), expansion will generate an incremental $229 million in
spending, $12.5 million in net profits to industry, $76 million in taxes to all levels of
government and 7,530 new, full-time jobs.

Construction will generate $88 million in taxes to governments and create 6,702 person-
years of employment. These are incremental net benefits produced solely as a result of
expansion.

One of the benefits not quantified in this report is that the form of expansion
recommended in this Business Plan will allow the VCEC to continue to operate at
capacity and generate its $73 million in benefits for governments and $245 million in
delegate spending during the construction period.

5.2    METHODOLOGY
The Task Force engaged the services of BC STATS to summarize the incremental
impacts of the construction and annual operations of convention centre expansion. The
Task Force provided BC STATS with:
   •   capital cost estimates (prepared for the Task Force by PLA);
   •   incremental spending estimates (prepared for the Task Force by KPMG); and
   •   VCEC proforma net profit statements (prepared by VCEC management).




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BC STATS used its British Columbia Input Output Model (“BCIOM”) to estimate tax
revenues and employment impacts. While the report noted that not all municipal tax
revenues will necessarily occur in Vancouver, the Business Plan assumes that all taxes
occur in Vancouver.

OVERVIEW
Tax Revenue and Industry Profit
As industry and governments are proposed investors in expansion, it is appropriate to
compare the returns they receive from their investment. It is also important that an
equitable measurement is used to compare their respective returns.

For industry, the Task Force assumed that delegate spending is equivalent to gross sales
and the appropriate comparison to government revenues should be net profit. For
government, collection mechanisms are already in place to collect these incremental taxes
and there is no appreciable incremental collection cost. Therefore, an equitable
comparison is tax revenues for government and net profits for industry.

CONSTRUCTION
BC STATS estimated the economic and employment impacts for construction based on
capital costs provided by PLA.

OPERATIONS
BC STATS estimated annual tax revenues and employment impacts for a normalized
year based on the delegate and exhibitor spending estimates prepared by KPMG (Section
2) and the operating proforma prepared by VCEC management.

The KPMG spending estimates and the BCIOM tax revenue estimates formed the basis
of a financial model that was prepared to estimate the benefits of expansion over the
thirty-year life of the project. The financial model made assumptions about growth,
inflation and a discount rate that are described below.

Pattern of Growth in Spending
The financial model assumed that all components of spending would increase at 2.5% per
year beginning in 2010. This is a more conservative estimate than a 3% estimate
contained in a recent report to Tourism Vancouver.

Pattern of Growth in Delegate Days
The opening of the expanded convention centre will bring an immediate increase in
delegates that will continue well past the 2009 normalized year. Based on an index of 100
for 2009, VCEC management estimated growth in delegate and exhibitor days by year
which is set out in Exhibit 5.1.




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EXHIBIT 5.1
GROWTH IN DELEGATE AND EXHIBITOR DAYS
                 YEAR             PERCENTAGE OF NORMALIZED YEAR

                     2005                                 65
                     2006                                 70
                     2007                                 80
                     2008                                 90
                     2009                                100
                     2010                                100
                     2011 onwards             an additional 2% per year


Net Profit Margins for Industry Sectors
Using reference data obtained from Statistics Canada, the Task Force calculated net profit
margins (as a percentage of sales) and applied them to the spending estimates to
determine net profits.

Selection of Discount and Inflation Rates
A nominal discount rate of 6.5% was used to determine the net present value of the
benefits. All net present values are stated in Year 2000 dollars. That rate is equivalent to
the long-term bond rate for borrowings of the provincial government. Provincial
government officials from the Ministry of Employment and Investment confirmed that
this was an appropriate nominal discount rate for net present value calculations for this
project. An inflation rate of 2% was assumed.

5.3    ECONOMIC IMPACT - OPERATIONS
The VCEC operates at close to break-even, but is an economic generator that produces
benefits to industry and to governments. For the thirty years from 2005 to 2034 the
incremental benefits include:
    •   incremental delegate and exhibitor spending:
        •   $229 million per year
        •   $15.3 billion over 30 years (net present value of $3.8 billion)
    •   incremental net profit to industry:
        •   $12.5 million per year
        •   $835 million over 30 years (net present value of $208 million)
    •   incremental government tax revenues:
        •   $76 million per year
        •   $5.036 billion over 30 years (net present value of $1.246 billion)
        •   7,530 new, full-time jobs

BENEFITS TO INDUSTRY - OPERATIONS
For the thirty-year review period, the expanded convention centre will generate $15.3
billion in incremental revenues and $835 million incremental net profits to industry.
Revenues and net profits by industry sector are summarized in Exhibit 5.2.




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EXHIBIT 5.2
ECONOMIC IMPACT - OPERATIONS
INCREMENTAL REVENUES AND NET PROFITS TO INDUSTRY BY SECTOR ($millions)
2005-2034
                         GROSS REVENUES    NET PROFIT   NET PROFIT AS A
                                                        PERCENTAGE OF GROSS
                                                        REVENUES

Accommodation                              $ 5,560.79                $ 425.40                 7.7%
Food & Beverage                              4,627.11                  155.47                 3.4%
Local Transportation                           902.09                   61.07                 6.8%
Retail                                       2,192.82                   80.48                 3.7%
Recreation                                     503.32                   51.34                10.2%
Other                                        1,489.74                   61.08                 4.1%
TOTAL                                       15,275.86                  834.84
Note: Net Profit As a Percentage of Gross Revenues was determined from information obtained from Statistics Canada.


The net present value of incremental net profits to industry is $208 million.

REVENUES TO GOVERNMENTS – OPERATIONS
For the 30-year review period, incremental revenues to governments as a result of
expansion are $5.036 billion. Federal, provincial, and municipal government revenues are
summarized in Exhibit 5.3.

EXHIBIT 5.3
ECONOMIC IMPACT-OPERATIONS
INCREMENTAL REVENUES TO GOVERNMENTS ($millions)


Federal                                                       $ 1,956
Provincial                                                      2,447
Local                                                             633
TOTAL                                                         $ 5,036

The net present value of incremental government revenues is $1.246 billion.

5.4      ECONOMIC IMPACT - CONSTRUCTION
The construction of the expanded VCEC will generate significant revenues to industry
and governments. These impacts are of a shorter duration than those of operations, but
have significant economic and employment impacts. Construction is projected to begin in
2001 and complete in 2005.




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For the construction period, the benefits include:
   •    benefits to industry:
        •   $495 million in incremental revenues
        •   $9.9 million in profits (net present value of $8.3 million)
   •    benefits to governments:
        •   $87.8 million in incremental tax revenues (net present value of $73 million)
   •    6,702 person-years of employment

BENEFITS TO INDUSTRY - CONSTRUCTION
Based on a net profit margin of 2% (determined from Statistics Canada data and
discussions with industry representatives), the net profit to the construction industry on
the $495 million construction cost is $9.9 million.

The net present value of the profit to the construction industry is $8.3 million.

REVENUES TO GOVERNMENTS - CONSTRUCTION
BC STATS estimates that the construction of the expanded convention centre will
generate revenues of $87.8 million to governments and create 6,702 person-years of
employment. Incremental revenues to each level of government are shown in Exhibit 5.4.

EXHIBIT 5.4
ECONOMIC IMPACT – CONSTRUCTION
INCREMENTAL REVENUES TO GOVERNMENTS ($ millions)



Federal                                         $ 44.84
Provincial                                        36.21
Municipal                                          6.75
TOTAL                                           $ 87.81

Source: BC STATS, BCIOM.


The net present value of incremental tax revenues to government is $73 million.

5.5     TOTAL BENEFITS TO INDUSTRY - OPERATIONS AND CONSTRUCTION
Incremental revenues and net profits to industry from the construction and on-going
operations of the expanded VCEC for the period from 2001 to 2034 are estimated at
$15.8 billion and $845 million respectively.

The industries that benefit from the construction phase differ from those who benefit
from the on-going operations once the expanded VCEC opens. The benefits to the
tourism industry have been identified separately from those of the construction industry.




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The net present values of the benefits to the tourism and construction industries are
$208.1 million and $8.3 million respectively (for a total of $216 million). These are
summarized by industry sector in Exhibit 5.5.

EXHIBIT 5.5
ECONOMIC IMPACT - OPERATIONS AND CONSTRUCTION
NET PROFIT BY SECTOR
NET PRESENT VALUE ($ millions)
INDUSTRY SECTOR                                                      $

Tourism & Hospitality:
       Accommodation                                             $ 106.0
       Food & Beverage                                              38.8
       Local Transportation                                         15.2
       Retail                                                       20.1
       Recreation                                                   12.8
       Other                                                        15.2
       Total Tourism & Hospitality                                 208.1
Construction                                                         8.3
TOTAL INDUSTRY PROFIT                                            $ 216.4


5.6     TOTAL BENEFITS TO GOVERNMENTS - OPERATIONS AND
        CONSTRUCTION
The net benefits to governments are the taxes received by governments as a result of the
construction and operations. Total incremental revenues received by governments during
construction and the first thirty years of operations are $5.1 billion.

The net present value of the incremental government revenues from expansion is $1.319
million as detailed in Exhibit 5.6.

EXHIBIT 5.6
ECONOMIC IMPACT – OPERATIONS AND CONSTRUCTION
REVENUES TO GOVERNMENTS
NET PRESENT VALUE ($millions rounded)
                                CONSTRUCTION OPERATIONS              TOTAL           %

 Federal                             $ 37           $ 484        $   521           40%
 Provincial                            30              606           636           48%
 Municipal                              6              157           162           12%
 TOTAL                               $ 73           $1,246       $ 1,319          100%


5.7     JOB CREATION
Exhibit 5.7 summarizes incremental employment impacts created by construction and
operations generated by the expanded VCEC. All employment impacts from construction
occur from 2001 to 2004. Employment impacts from operations are shown for the 2009
normalized year.



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EXHIBIT 5.7
ECONOMIC IMPACT - OPERATIONS AND CONSTRUCTION
INCREMENTAL EMPLOYMENT IMPACTS
                            CONSTRUCTION                      OPERATIONS
                           (PERSON-YEARS)                   (FULL-TIME JOBS)
 Employment Impacts             6,702                            7,530

Source: BC STATS, BCIOM.



5.8     SUMMARY

♦ Industry and governments are significant beneficiaries of economic activity generated
  by the expanded convention centre.

♦ From construction and from the first thirty years of expanded convention centre
  operations, industry will enjoy incremental revenues of $15.8 billion and net profits
  of $845 million. The net present value of these profits is $216 million.

♦ For the same period, governments will receive incremental revenues of $5.1 billion
  with the federal government receiving 40%, the provincial government 48% and the
  municipal government 12%. The net present value of these government revenues is
  $1.319 billion.

♦ Construction of the expansion will generate over 6,702 person-years of employment
  and the spin-offs from the incremental spending of delegates attending VCEC-hosted
  events will support over 7,530 new, full-time jobs in Vancouver and throughout the
  province.




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“Every year that the opening of the expansion is delayed, $229 million in delegate and
 exhibitor spending, $75.8 million in tax revenues and 7,530 new, full-time jobs are
                                      being lost”
                         Vancouver Convention Centre Expansion Task Force




6.0    FINANCIAL ANALYSIS
This section sets out the costs of building the convention centre expansion and costs of
operating the expanded convention centre during the period from opening of the
expanded convention centre to normalized operations. Section 6.1 describes the capital
cost estimate issues and Sections 6.2 through 6.5 describe operating issues.

6.1    CAPITAL COST ESTIMATES OF CONVENTION CENTRE EXPANSION
PLA provided expert services to the Task Force in completing the technical components
of the Business Plan including the site preparation and foundation work portion of the
Project Definition Report. A corporate profile of PLA with its project experience is
contained in Appendix F.

The total capital cost for the convention centre expansion, including soft costs, land cost,
interest during construction, as well as a provisional sum for retrofitting and linking to
the existing VCEC, is $495 million.

This capital cost estimate provided by PLA is based on an updated construction cost
estimate developed by PCL Constructors for Marathon Developments in December 1999.
The estimate has been revised to reflect the latest approach to site preparation/foundation
costs, as well as land costs and interest during construction. These estimates are stated in
Year 2000 dollars. No provision is made for GST in the capital cost estimates. The
Business Plan assumes that the project will be GST neutral.

The development calls for approximately 1.2 million square feet of construction on three
main levels and four intermediate levels. The first main level is the 250,000 square foot
hall located completely under Canada Place Way. The other two main levels are
comprised of the main convention centre entrance, registration and meeting room level at
the same elevation as Canada Place Way (effectively 52.5 feet above sea level), with the
ballroom/lecture space located above the meeting room elevation at elevation 76 feet.

Approximately half of the exhibition hall area below the Canada Place Way elevation is
covered by the low profile two-storey building that houses the ballroom/lecture theatre,
meeting rooms and registration. The remaining half of the area that covers the exhibition
hall is a plaza of public open spaces animated by landscaping, dramatic views and
compatible retail areas. The four intermediate levels are comprised of the utility tunnel



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under the exhibition hall, mezzanine level overlooking the exhibition hall, two parking
levels and an elevated perimeter walkway.

Details of the project by square footage are set out in Exhibit 6.1.

EXHIBIT 6.1
GROSS FLOOR AREA SUMMARY
(SQUARE FEET)
COMPONENT                                                            SQUARE FEET

 New Convention Facility                                                      885,385
 Parkade                                                                      135,574
 Marine Support                                                                 7,491
 Retail                                                                        36,872
 Loading/Bus Staging                                                           98,423
 TOTAL (square feet)                                                        1,163,745
Note: Parking area on deck of 34,679 square feet is not included in area calculations.
Source: LMN Architects


Detailed drawings are yet to be completed for the convention centre expansion. However,
relying on PLA’s experience with large projects, the Task Force is confident that the
preliminary capital cost estimate can be adopted as a not-to-exceed project budget. This
confidence is based on PCL Constructors’ work on the cost estimates for the above
ground structures and the estimates for site preparation/foundation costs provided by
Sandwell Engineering in consultation with the contractors who did the caisson drilling.

PCL Constructors (“PCL”)has significant convention centre experience in Canada and
the United States. As well, PCL has recently worked on other major projects in western
Canada/USA, including the Vancouver International Airport expansions. Sandwell
Engineering provided the cost estimate with assistance from Malcolm Drilling and Peter
Kiewit Sons Co. Ltd. for the site preparation/foundation based on the recently completed
test drilling and caisson program on the Burrard Landing site.

DETERMINING THE COSTS OF THE EXPANDED CONVENTION CENTRE
When PLA presented the capital cost estimates to be incorporated as part of the Proposal
for Expansion of the Vancouver Convention and Exhibition Centre in January 2000, PLA
expressed confidence in the level of the cost estimate for the Convention Centre building,
parkade, plaza and infrastructure. However, it expressed concern about its ability to
control cost and schedule if the originally proposed site preparation and foundation
installation methodology were to be implemented. It has been PLA’s experience that
failure to meet budget and schedule, in most cases, can inherently be traced back to
“getting out of the ground.”

On PLA's recommendation, the Task Force decided that it would be prudent to identify
and firm up a site preparation and foundation installation approach that would provide the
same level of confidence in the cost and schedule of the site preparation and foundation


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components as the building components. The Task Force funded a detailed examination
of this component of the project, in order to firm up the capital cost estimate and schedule
that is incorporated into this Business Plan.

The original Marathon Discovery Place proposal proposed that all the landfill material
and marine sediment under the development area be removed to the glacial till and
replaced with more seismically stable material that was less likely to be a problem during
an earthquake event. It was anticipated that approximately one million cubic metres of
material would require removal to an ocean dump site and be replaced with 1.5 million
cubic metres of structural fill material. Franki-type piles would then be driven into the
new fill material to a depth of 12 metres to support the structure.

Although the proposed convention centre lands have been remediated satisfactorily in
compliance with Ministry of Environment, Lands and Parks generic and matrix
commercial standards for (i) residential land use and (ii) commercial land use and a
Certificate of Compliance provided, PLA had concerns about the ability to obtain the
necessary permit to ocean dump. The area had been used as a landfill site during the early
development of the City, and even with the Certificate of Compliance, there remained the
prospect that contaminants that had escaped detection may lie beneath the surface. In the
event that contaminated soil was discovered during the removal, it is likely that any
ocean dumping permit, would be suspended. The alternative of moving this massive
amount of material to landfill would be prohibitively costly and would seriously disrupt
the project schedule.

Sandwell/Golder were engaged to recommend a more controllable alternative. Based on
extensive investigation of alternative methods used in their overseas assignments, they
recommended the installation of a series of large diameter caissons (steel tubes) into the
bedrock that would support the structure on land and over the water. These caissons
would be filled with concrete. This alternative would result in minimal disturbance of the
soil and eliminate the need to remove any soil. In addition, some soil densification
treatment was recommended to reduce the lateral movement of the soil during an
earthquake.

During the tendering process for the equipment trials, it was determined that there had
been a recent technological advancement in North America in the installation of large
diameter caissons. The new caisson equipment used a drilling technique to install a
casing to and into the bedrock in contrast to the more traditional pile driving technique.
This technique was considered superior because there was concern that contractors might
not be able to force the piles through some of the debris. This new technique would allow
them to cut through the debris. A test caisson was arranged to confirm its adaptability to
the site soil conditions.

The site preparation cost evaluation project confirmed that the equipment was capable of
drilling through the site soil conditions and that the cost of the site and foundation works



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for the project was well within the cost estimated for ocean dumping the fill and marine
sediments and replacing with structural fill.
PLA’s work on this project was funded by contributions from Task Force members at a
cost of $550,000.

CAPITAL COST ESTIMATES
With the completion of the Project Cost and Evaluation Report, PLA was able to provide
very definitive cost estimates of the single component that offered the greatest risk to the
project cost and schedule. The December 1999 estimates from the Marathon proposal
were then updated to incorporate the revised site preparation and foundation costs.

PLA estimates that the total capital project cost will not exceed $495 million, stated in
Year 2000 dollars. The total cost includes purchasing the land, planning, designing and
constructing the new expansion, renovating the existing VCEC and providing the
appropriate linkages.

The capital cost estimates of the convention centre expansion, include the linkage and
renovations to the existing VCEC, marine support, retail and loading/bus staging areas.
Capital cost items by cost area are summarized in Exhibit 6.2.

EXHIBIT 6.2
PRELIMINARY CAPITAL COST OF CONVENTION CENTRE EXPANSION BY COST AREA
(YEAR 2000 $)
 COST AREA

 Hard Construction Costs
       New Convention Facility                                                 $ 233,500,000
       Parkade                                                                    12,300,000
       Plaza                                                                      10,100,000
       Infrastructure                                                             10,000,000
       Site Preparation/Foundations                                               58,100,000
       Renovations and linkage to existing VCEC                                   15,000,000
       Total Hard Construction Costs                                             339,000,000

 Soft Costs, Land & Interest During Construction                                 111,000,000

 Contingency                                                                      45,000,000

 TOTAL Capital Cost                                                            $ 495,000,000
Note. Soft Costs include architect, engineering and project management fees.
Source: Pacific Liaicon and Associates Inc.


A greater level of detail for the capital cost areas has been prepared. However, the project
has not yet gone out to tender and for competitive bidding reasons, this greater level of
detail has not been provided in the Business Plan.




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6.2    FINANCIAL ANALYSIS OF OPERATIONS OF THE EXPANDED
       CONVENTION CENTRE
In conducting the financial analysis of the operations of the expanded VCEC, the Task
Force focussed on the following three primary issues:
    1. estimating the operating performance of the expanded VCEC;
    2. estimating the cashflow requirements of the expanded VCEC during the first
       years of its operation; and
    3. estimating the level of incremental marketing investment required to attract the
       incremental business.

OPERATING PROFORMA FOR THE YEARS FROM 2005 TO 2009
VCEC management worked with KPMG to estimate the level of activity for the
normalized year and determine the projected operating results for the expanded VCEC
for a normalized year. VCEC management then estimated the operating performance of
the expanded VCEC for the years from 2005 leading up to 2009. VCEC management
developed the proforma statements by applying revenues and costs to the projected level
of delegate activity (as measured by the number of events and the number of delegates
per event) for each event type.

The VCEC currently generates a modest operating profit and, while there is demonstrated
demand for an expanded convention centre immediately, it will take several years for the
expanded convention centre to absorb the increased capacity and return to normalized
operations. Until then, the expanded VCEC will incur a modest operating loss and require
funding assistance.

Exhibit 6.3 summarizes the projected net income statement for the years 2005 to 2009.




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EXHIBIT 6.3
PROFORMA NET INCOME STATEMENTS ($000’s)
EXPANDED VCEC
                            Current             2005             2006              2007              2008               2009
                            $    %          $       %        $       %         $       %         $       %          $       %

 REVENUE
    Rent                    3,100     22   4,378        23 4,530         23    4,650       23    4,847       23     4,977    22
    Food & Beverage         7,600     54   9,943        52 10,341        53   10,910       53   11,524       54    12,105    54
    Event Services          3,000     21   4,375        23 4,525         23    4,618       23    4,806       22     4,912    22
    Sponsorship &             300      2     245         1    255         1      255        1      260        1       265     1
    Miscellaneous
    Total Revenue          14,000   100 18,941       100 19,651       100     20,433    100     21,437     100     22,259 100

 DIRECT EXPENSES            7,700     55   9,991        53 10,373        53   10,818       53   11,380       53    11,845    53

 GROSS MARGIN               6,300     45   8,950        47   9,278       47    9,615       47   10,057       47    10,414    47

 FACILITY EXPENSES          6,100     44   9,817        52   9,888       50   10,033       49   10,033       47    10,033    45

 NET INCOME/ (LOSS)           200      1    (867)       -5   (610)       -3    (418)       -2        24       0      381      2

Note: No provision for depreciation or amortization in the statements.
Source: VCEC


Based on the proforma income statements the expanded VCEC will post modest losses
through 2007 and return to profitability in 2009, the first year of normalized operations. It
is expected that the expanded VCEC will continue to enjoy a modest profit in the years
following 2009.

Descriptions of the revenue and expense items used in the projected net income
statements are outlined in Appendix G, Technical Information.

6.3       OPERATING CASHFLOW REQUIREMENTS FROM OPENING TO
          NORMALIZED OPERATIONS
The management of the VCEC anticipates that a capital replacement program should
begin in 2008, the third operating year of the expanded VCEC. Projected amounts are
shown in Exhibit 6.4.

EXHIBIT 6.4
PROJECTED NET CASHFLOW ($000’S)
EXPANDED VCEC
                           CURRENT                   2005             2006              2007               2008             2009

 Revenue                          14,000         18,941              19,651            20,433             21,437         22,259
 Net Income (Loss)                   200          (867)               (610)             (418)                 24            381
 Capital Requirements                300              -                   -               100                300            500
 Net Cashflow                      (100)          (867)               (610)             (518)              (276)           (119)

Source: VCEC.




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Estimated funding assistance until the VCEC reaches normalized operations is $2.39
million. It is assumed that the Province through PAVCO will continue to be responsible
for any cash requirements of the expanded VCEC during this transition period as has
been the case since the VCEC first opened.

6.4    INCREMENTAL MARKETING FUNDING REQUIREMENTS FOR
       EXPANDED VCEC
As described in previous sections of the Business Plan, the facilities market is becoming
increasingly competitive. With more than sixty new facilities planned or under
construction in North America, the mere construction of a new facility is no longer
sufficient to guarantee business. To compete effectively in this market environment will
require an increasing investment in marketing. The industry will have to build on its
successes, convert potential business and service customers in a manner that is superior
and more aggressive than ever before.

At present Tourism Vancouver, the VCEC and the local hotels invest in excess of $5
million per year in convention marketing. Expansion will create an additional 395,000
square feet of function and the incremental marketing investment required to market the
expanded facility is beyond the financial ability of those who currently fund the
marketing programs.

The Task Force reviewed two methods of estimating the incremental marketing
investment that would be required to secure the new business for the expanded VCEC.
The first method was to review historical spending and performance and use that as a
determinant of future requirements. The second was to compare the marketing budgets of
the VCEC’s main competitors.

INCREMENTAL MARKETING INVESTMENT             BASED ON     HISTORICAL SPENDING       AND
PERFORMANCE
In 1999 the VCEC attracted 35 conventions whose delegates and exhibitors generated
spending of approximately $245 million. During the same year the estimated marketing
budgets of Tourism Vancouver, VCEC and the convention hotels were approximately $5
million - equivalent to $49 in spending generated for every marketing dollar invested or
an average marketing dollar investment of $142,900 per convention.

The KPMG report estimates that expansion will attract 32 additional conventions by the
first year of normalized operations (2009). These conventions will generate $229 million
in incremental revenues in 2009. Assuming the direct ratio of $49 of spending for every
$1 of marketing, expansion would require an additional $4.7 million in marketing
funding to generate the additional $229 million in spending bringing the total marketing
investment to $9.7 million.




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Assuming a marketing expenditure of $142,900 per convention, the 32 additional
conventions forecasted would require $4.6 million in investment for a total investment of
$9.6 million for marketing.

A gross incremental marketing expenditure of $4.65 million was determined, based on
the average of the two calculations.

It is expected that there will be economies of scale in accessing some markets that are
already being served through the existing marketing programs. Economies of scale are
assumed to result in efficiencies of 25 percent of program costs.

It is also reasonable to expect that there would be some administrative cost savings in the
application of these incremental marketing funds. Administrative savings are assumed to
result in efficiencies of 10 percent of program costs. Applying these cost efficiencies to
the incremental marketing investment calculated above will result in an incremental
funding requirement of approximately $3 million.

EXHIBIT 6.5
ESTIMATED ANNUAL MARKETING INVESTMENT REQUIRED ($000’s)
                                       Existing    Expanded                Incremental


 Delegate and Exhibitor Spending            $244,851,000   $473,433,000   $ 228,582,000
 Number of Conventions                                35             67              32
 Spending per Budget $                                49
 Budget per convention                           142,900

 Marketing Budgets
     Gross Budget                             $5,000,000     $9,650,000      $4,650,000
     Less: Efficiencies on incremental
           funding                                          (1,650,000)     (1,650,000)   35%
 Net Budget (rounded)                         $5,000,000     $8,000,000      $3,000,000


INCREMENTAL MARKETING INVESTMENT BASED ON VANCOUVER’S COMPETITORS
A second method is to compare Vancouver’s budget relative to its competitors.

As Tourism Vancouver’s investment makes up approximately 70% of the total
investment in convention marketing, the budgets of other convention and visitors bureaux
in the cities that are Vancouver’s primary competitors were reviewed.

The source information for the comparison is the 9th Annual Competitive Analysis Report
prepared by the Chicago Convention and Tourist Bureau, Inc., which annually undertakes
a survey of Convention and Visitors Bureaux (CVB’s) in Canada and the United States.
The survey queries the CVB’s in the areas of budgets, exhibit space, labour rates, meal
costs, hotel and room rates and overnight group meeting travel. 85 of 105 cities receiving
the survey, responded to it. While not all CVB’s have identical responsibilities, the study

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provides a reasonable comparison of budgets and other categories for the industry in
North America.

The Task Force compared the Vancouver Convention and Visitors Bureau (Tourism
Vancouver) with the 49 CVB’s with budgets of US$5 million or greater. Vancouver’s
rankings are at the mid or lower end of the rankings according to overall budget, the
budget per number of hotel rooms and the budget per square foot of exhibit hall space.
These are detailed in Exhibit 6.6.

EXHIBIT 6.6
RANKING OF TOURISM VANCOUVER’S BUDGET
AS COMPARED WITH OTHER CONVENTION AND VISITORS BUREAUX
                                                                      VANCOUVER’S RANKING

                                                                               TH
 CVB Budget                                                                 38 of 49
                                                                               TH
 CVB Budget / Number of Hotel Rooms (1999)                                  26
                                                                               TH
 CVB Budget / Exhibit Hall Space (Expansion)                                24

Source: 9th Annual Competitive Analysis Report, Chicago Convention and Tourism Bureau, December 1999


The Task Force then compared Tourism Vancouver’s budget against the budgets of those
cities that KPMG listed as Vancouver’s main competitors in its March 2000 study
(Exhibit 6.7). The comparison is intended to set out the level of marketing investment
that Vancouver is making relative to its competitors.

EXHIBIT 6.7
RANKING OF VANCOUVER (POST-EXPANSION)
AS COMPARED WITH COMPETITIVE CONVENTION AND VISITORS BUREAUX
                       BUDGET            SIZE OF          HOTEL ROOMS           BUDGET/            BUDGET/
                                       EXHIBIT HALL        METRO AREA         SQUARE FOOT        HOTEL ROOM

 Denver                    4                 1                    3                  9                  8
 Minneapolis               9                 5                    5                  6                  9
 Montreal                  3                 9                    6                  1                  2
 Portland                  8                 2                    8                  8                  3
 Salt Lake City            5                 6                    9                  5                  1
 San Diego                 1                 7                    2                  2                  5
 San Francisco             2                 3                    1                  4                  7
 Seattle                   6                 8                    4                  3                  6
 Vancouver                 7                 4                    7                  7                  4

Source: 9th Annual Competitive Analysis Report, Chicago Convention and Tourism Bureau, December 1999.


With expansion, Vancouver’s exhibit hall will rank fourth largest of the nine cities, but its
overall budget will rank seventh. Vancouver also ranks seventh in budget per square foot
of exhibit space and fourth in budget per hotel room.

These rankings demonstrate that Vancouver’s marketing budget is at the lower end of the
range compared with its competition.




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To elevate Vancouver’s ranking to a mid-ranking position among Vancouver’s
competitors requires that Vancouver’s total budget increase to $10.5 million (expressed
in Canadian dollars for 1999). (The budget for Salt Lake City and Denver are CDN$10.4
million and CDN$10.6 million respectively.) Based on the budgets of its principal
competitors, Vancouver requires an incremental investment in excess of $5 million to
remain competitive.

SUMMARY OF INCREMENTAL MARKETING INVESTMENT REQUIRED
The two methods of determining the incremental marketing investment estimate that
between $3 million and $5.5 million per year is required. For the purposes of determining
external investment requirements, the lower limit of $3 million has been assumed as the
minimum incremental investment required. This amount is expressed in Year 2000
dollars.

The current sources for this funding are Tourism Vancouver, VCEC and the convention
hotels, with Tourism Vancouver providing approximately 70% of the funds through its
operating budget. In the longer term, Tourism Vancouver should be able to provide some
of the additional funding required through additional revenues created by the voluntary
two percent hotel tax that it receives for destination marketing. However, Tourism
Vancouver’s ability to provide these funds is constrained by the increase in hotel room
revenues (which generate the voluntary 2% hotel tax proceeds) as a result of the
convention centre expansion and growth in other visitor markets. Hotel room nights are
estimated to increase by 10 to 15 percent as a result of expansion. Consequently Tourism
Vancouver’s contribution toward the incremental marketing investment would represent
no more than 20 percent of the external investment required and would likely only be
available to contribute at this investment level when the VCEC reached the first year of
normalized operations (2009).

Given that the lead time for attracting larger conventions is often several years, the
marketing initiatives to book these additional conventions should begin as soon as
expansion is announced. Therefore, the investment in marketing should be funded as
soon as expansion is announced and continue beyond the first year of normalized
operations (2009).

EXHIBIT 6.8
INCREMENTAL MARKETING INVESTMENT REQUIRED (millions)
                 2001   2002  2003  2004   2005    2006        2007   2008    2009 TOTAL
Investment
Required          $3.1   $3.2  $3.2  $3.3   $3.4     $3.4      $3.5    $3.6   $3.6   $30.3




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6.5    REVENUE FROM ANCILLARY ASSETS
The project will be the owner of a number of assets that, while not core to a convention
centre operation, have the potential to contribute to the profitability of the expanded
VCEC. These include parking, retail and commercial marina.

The Task Force has not formally evaluated how to obtain the best return on these assets
and recommends that the funding partners undertake an assessment of these assets.

PARKING
The development plan provides for a total of 525 parking spaces – 425 underground for
the convention centre expansion and 100 for marina-related purposes. There will be
demand for parking by event attendees and neighbouring office tenants that should
provide a significant revenue stream.

Options for the parking operation include:
   •   leasing to a third party operator in return for a fixed fee or revenue sharing; and
   •   operating the parking by the ownership group.

The Task Force has not researched the business and financial benefits of each of the
above alternatives for parking. However, based on comparable facilities, net revenues of
$700,000 per year could be expected.

Preliminary discussions have taken place with Canada Place Corporation who is
responsible for the parking at Canada Place with a view to integrating the parking
operations at Canada Place with those created by the VCEC expansion.

MARINA
The Burrard Landing site includes a water lot and existing zoning allows for a
commercial marina to the north of the expanded convention centre. The marina would
replace and improve on the temporary facilities and short-term leases that are currently
on the Burrard Landing site. The convention centre expansion will occupy part of the
water lot, but it is expected that the remainder water lot would be re-developed as a
marina with commercial float plane access. As with the parking, there are a number of
options available to develop the marina.

Options for the marina include:
   •   lease the water lot to an operator who would be responsible for all required
       permits and undertake all the improvements necessary to operate as a commercial
       marina;
   •   improve the water lot for use as a commercial marina and lease to an operator;
       and
   •   sell the water lot for use as a commercial marina.



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Preliminary estimates are that the marina could generate net revenues of approximately
$350,000 per year assuming the first option.

RETAIL
The development plan also proposes approximately 36,000 square feet of retail along the
north perimeter of the expansion. There is a concern about the amount of traffic it will
draw because of its location on the north side of the expanded convention centre and
further investigation will be required. Revenue estimates from retail have been estimated
at approximately $50,000 per year.

Total net revenues from these sources is estimated at $1.1 million dollars per year
expressed in Year 2000 dollars. It is assumed that the parking, marina and retail would
begin to produce income coinciding with the opening of the convention centre expansion
in 2005.

6.6    SUMMARY


CAPITAL FUNDING
♦ The capital funding requirements for the convention centre expansion are $495
  million expressed in Year 2000 dollars.

OPERATING FUNDING
♦ Additional operating funds will be required both to fund operations from the time the
  expanded convention centre opens until it achieves normalized operations and to fund
  the additional marketing investment that will be required to secure the new business
  and generate the profits, taxes and jobs.

♦ It is important that this funding be part of any overall funding program for the
  convention centre expansion. It is assumed that this funding will be part of the
  discussions among the funding partners who participate in the governance of the
  expanded convention centre.




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               Those who benefit from the convention centre expansion
                       should contribute to its development.



7.0    FUNDING ANALYSIS

7.1    FUNDING OVERVIEW
Construction of the existing Vancouver Convention and Exhibition Centre was funded
entirely by the federal government who constructed the facility as the Canada Pavilion
for Expo 86. Following Expo, the facilities were turned over to the Vancouver Port
Corporation who now owns them through its subsidiary Canada Place Corporation.
Canada Place Corporation leases the facilities to PAVCO for a nominal rent. PAVCO
operates the facilities and is responsible for capital improvements.

There are a number of funding options that are available for the financing of the
convention centre expansion. Most U.S.-based models for financing are not relevant to
the VCEC expansion as funding vehicles such as tax-free municipal bonds are not
available in Canada.

Most models that have a private funding component have the convention centre as an
element of a larger development where the traffic that the convention centre generates
enhances the value of the other elements in the overall development. Most other models
consist mainly, if not entirely, of funding from federal and provincial governments for
reasons discussed in the next section.

The original public/private partnership funding model proposed by the provincial
government in the Portside project changed substantially during the development process.
Originally the private developer was to have been the developer in the private industry
sense. However, given the large financial stake that the provincial government had in the
project, the developer’s role migrated to that of a project manager for most of the
development.

The funding model contemplated for the convention centre expansion is a public/private
partnership with industry and governments providing funding and also having a decision-
making role in the structure and development of the expansion.

RATIONALE FOR PARTICIPATION BY INDUSTRY AND GOVERNMENTS
From the outset, a basic tenet of the Task Force has been that those who benefit from the
convention centre expansion should contribute to its development. The tourism industry




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and governments will receive substantial incremental economic benefits (i.e., in addition
to the benefits generated by the existing VCEC) as a result of the convention centre
expansion and financial participation by industry, the provincial government and the
federal government is considered necessary for the expansion to proceed.

This is not punitive or oppressive. There are compelling economic reasons for
governments and industry to want the convention centre expansion to proceed. Expansion
will bring significant incremental revenues to industry in revenues from the sale of goods
and services to the delegates and exhibitors and to governments in taxes resulting from
those sales and services.

Each of the three proposed funding partners has expressed interest in participating in the
funding of the convention centre expansion and each has criteria that must be met prior to
agreeing to invest.

Representatives of the federal government have said that it declined to invest in the
Portside project because the cost of important elements of the project were never clarified
and because a proper business plan was never prepared.

Following Portside, the provincial government indicated that it would require meaningful
financial participation by industry and the federal government as a condition of
participation in any future expansion plans.

The tourism industry has maintained that it is prepared to participate in a significant
financial way, with the proviso that its investment would not endanger its destination
marketing programs.

The Task Force believes that there are positive reasons for the federal government,
provincial government and industry to participate in funding the convention centre
expansion. The convention centre expansion project is a well-defined project with very
specific costs and with economic benefits that have been quantified for all proposed
financial participants.

The project is straightforward in that it involves only the development of the convention
centre expansion. The costs are known and are well defined for all components of the
development – as are the benefits. Independent experts have quantified the benefits to
industry and to government.

7.2    FUNDING PROPOSAL
The paragraphs below set out the Task Force’s framework for discussion of the funding
of the $495 million project cost by the three proposed funding partners.




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The Task Force proposes that the tourism industry contributes $90 million and that the
federal and provincial governments contribute the remaining $405 million. The tourism
industry proposes that it lead discussions with the federal and provincial governments to
expedite a mutually satisfactory funding agreement.

TOURISM INDUSTRY PARTICIPATION
Background
Discussions with the Province of British Columbia about an industry contribution began
in 1998 during Stage III – Detailed Negotiations and Re-Zoning Approval of the previous
project. The conclusion of discussions with the provincial government was that the
tourism industry would provide $90 million toward the development of the Portside
project. The $90 million industry commitment has survived the cancellation of the
previous project and is a stated condition of provincial participation in the convention
centre expansion.

The tourism industry is fully aware of the significant incremental financial benefit that
will flow as a result of the convention centre expansion and is prepared to invest in a
meaningful way to make expansion a reality.

Tourism Vancouver and the Vancouver Hotel Association (“VHA”) have shared the lead
role in structuring a tourism industry contribution that is designed to satisfy the needs of
the industry and governments.

How the tourism industry will finance its investment
The tourism industry intends to finance its investment against the security of the income
from the voluntary hotel tax generated in Vancouver. Private funding sources may be
available, but based on current discussions, industry expects that the Province will
finance its investment against the security of the voluntary hotel tax in Vancouver and
industry will repay the government the principal and interest over a thirty-year term.
Provincial officials indicate that the government would expect to charge industry a small
premium above its thirty-year long-term borrowing rate for the credit facility.

Industry did not pursue discussion with the federal government in respect of up-front
funding by the federal government as none of the collection methods contemplated for
repayment of the loan is under the federal government’s jurisdiction.

The voluntary two percent hotel tax was initiated by the private sector as a fair and
effective collection mechanism to fund tourism marketing and initiatives. In 1988, the
tourism industry, together with the City of Vancouver, approached the provincial
government to implement a voluntary incremental 2% levy on the room tax for hotel and
motel accommodations in the City. The voluntary 2% hotel tax has been in place in
Vancouver since 1988 and has been implemented in a number of other municipalities
around British Columbia. In 1999, the voluntary 2% hotel tax proceeds provided for
destination marketing of Greater Vancouver were in excess of $8 million.



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The voluntary two percent hotel tax is an example of an income stream that provides the
Province with appropriate security and administrative simplicity. The Province collects
the tax under a provincial statute, remits it to the City, who in turn remits it to Tourism
Vancouver.

Tourism Industry Investment
The tourism industry proposes that it will fund its $90 million investment from two
sources:
   •   $33 million from the current operating funds of Tourism Vancouver; and
   •   $57 million from a .5% increase in the voluntary Vancouver hotel tax from 2% to
       2.5%.

With respect to the investment of $33 million from Tourism Vancouver operating funds,
Tourism Vancouver’s Board of Directors has already committed these funds.

With respect to the $57 million to be raised by an increase in the voluntary hotel tax from
2% to 2.5%, the process to obtain this increase has been initiated. Provincial guidelines
now state that a majority of the hotels and a majority of the hotel rooms in the
municipality must agree to the implementation of the hotel tax before it will be
considered by the province. At the present time, the Vancouver Hotel Association is
working with the Vancouver accommodation sector to gain the support necessary. The
Vancouver Hotel Association is hopeful that the required majorities will be secured in the
near future. In addition, the City will be required to approve this arrangement and make
formal application to the Province to increase the rate.

It is proposed that the Province would advance funds against the security of the revenues
from voluntary hotel tax charged on hotel rooms in Vancouver and collected by the
province. The tax would continue to be directed to Tourism Vancouver, who would be
responsible for payments to the Province.

Tourism Industry Investment - Economic Benefits
The incentive for industry to invest in the convention centre expansion is powerful. For
the first normalized year of the expanded convention centre operations, the incremental
net profit for the tourism and related industries will be $12.5 million. For the first thirty
years of operations, these net profits will total $835 million. The net present value of
these benefits is $208 million. This compares with industry’s investment of $90 million.

The thirty-year stream of incremental profits from delegate and exhibitor spending will
yield an average annual rate of return of 11.5% to the industry for its $90 million
investment. The net profits earned by the construction companies who will build the
expansion were not included in the calculations of the return on the tourism industry’s
investment.


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EXHIBIT 7.1
MEASURES OF ECONOMIC BENEFITS TO INDUSTRY
30 YEAR TERM (2004 – 2033)
 MEASUREMENT                                                  AMOUNT

 Investment (millions)                                        $ 90.00
 Annual return (normalized year) (millions)                   $ 12.51
 Net Cashflow
    Face Value (millions)                                     $ 834.84
    Net Present Value (millions)                              $ 208.10
 Annual return on investment (%)                                11.5%

NOTES: No assumption is made of the funding source.
       Net present value rate is 6.5%.



7.3      FEDERAL AND PROVINCIAL GOVERNMENT PARTICIPATION

BACKGROUND
Both the Federal Government of Canada and the Provincial Government of British
Columbia have a long history of successful involvement with the Vancouver Convention
and Exhibition Centre.

The international icon created by the VCEC’s sails on Vancouver’s waterfront first
housed the Canadian pavilion for EXPO 86, the 1986 World Exposition. The federal
government selected the site and design to provide a long-standing legacy for Canadians
in the form of a world-class convention and exhibition centre. That investment in
infrastructure can be looked upon with significant pride as it gave cause for community
pride and stimulated a surge in tourism business that has yielded a financial return to
Canadians many times over the original investment. Canada Place stands as an important
symbol of federal government involvement in British Columbia.

2000 marks the thirteenth year that the British Columbia government has had
responsibility for management of the VCEC. Managed by the Provincial Crown
Corporation, PAVCO, the VCEC has experienced growth and success that now demands
expansion. It was the provincial government that launched the process to arrive at the
best means of expanding the existing convention and exhibition facilities.

With the cancellation of the Portside project, BC’s former Premier charged industry with
responsibility for developing a viable alternative. The assumption remains that the
provincial government will make a significant financial contribution to the expansion, in
keeping with the sizeable revenue stream for government that expansion will provide.

While the federal government has at no time made a financial commitment to expansion
it is assumed the federal government will consider the project an expansion of the highly
successful Canadian icon they first established, Canada Place. It is also assumed that the



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demonstrable significance of the revenue stream to the federal government will deem
involvement an excellent investment in the expansion of infrastructure the government
previously established. Finally, the senior Minister for British Columbia, the Honourable
David Anderson, requested that a Business Plan be developed to provide the opportunity
to carefully review the investment opportunity. The Business Plan confirms the business
case for proceeding with this project.

The Task Force makes no assumptions as to the vehicles government will utilize to
contribute to the expansion. Further, in recognition of the ongoing nature of financial
relationships between federal and provincial levels of government the Task Force
assumes the two levels of government will negotiate the contribution each will make to
the project.

MEASUREMENT OF ECONOMIC BENEFITS
By any economic measure, the argument for federal and provincial participation in
convention centre expansion is persuasive.

The federal and provincial governments will receive $88 million in taxes from the
construction of the convention centre expansion. In the first year of normalized
operations the federal government will receive $29.4 million, the provincial government
$36.8 million and the municipal government $9.5. Over the period from the start of
construction in 2001 until 2034, the governments will receive $ 5.1 billion in incremental
taxes from the convention centre. These amounts are all expressed in nominal dollars.

Rather than recommend that each government invest a specific amount, the Task Force
assumed that each government’s investment would fall in a range from one-third to two-
thirds of the $405 million investment required from governments for the project to
proceed. The Task Force then calculated a number of financial performance indicators for
the governments for each end and the mid-point of the suggested range. (Exhibit 7.2)

The Task Force is not attempting to prejudge the criteria for investment by either
government. These returns are shown for illustrative purposes to demonstrate the
financial viability of the convention centre expansion to the two senior levels of
government in their roles as investors in the expansion.

7.4    MUNICIPAL GOVERNMENT
The City will not be a direct contributor to the development costs, but it is expected that
the City will agree to provide a number of concessions such as foregoing property taxes
for the convention centre expansion.

The City will receive annual revenues of $9.5 million and total revenues of $633 million
over the thirty years. The net present value of the benefits is $157 million.



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The City of Vancouver is responsible for issuing all necessary development approvals.
The convention centre expansion is subject to the normal City zoning applications and
required public hearings. No estimates of the value of the City’s contribution has been
made at this time.

EXHIBIT 7.2
MEASURES OF ECONOMIC PERFORMANCE
BASED ON SELECTED FUNDING OPTIONS – INDUSTRY AND GOVERNMENTS
                                                                                  Low end     Mid-point    High end
FEDERAL GOVERNMENT
   Investment (millions)                                                            $ 135.0      $ 202.5     $ 270.0
   Annual Return 2009 ($millions)                                                   $ 29.43      $ 29.43     $ 29.43
   Net Cashflow
                      Nominal Value (millions)                                      $ 1,866      $ 1,798     $ 1,731
                      Net Present Value (millions)                                    $ 386        $ 319       $ 251
   Annual Return on Investment (%)                                                   23.6%        16.9%       13.5%
   Payback (years)                                                                      8.4         10.6        12.5

PROVINCIAL GOVERNMENT
   Investment ($millions)                                                           $ 135.0      $ 202.5     $ 270.0
   Annual Return 2009 (millions)                                                    $ 36.82      $ 36.82     $ 36.82
   Net Cashflow
                      Nominal Value (millions)                                      $ 2,348      $ 2,280       2,213
                      Net Present Value (millions)                                    $ 501        $ 433       $ 366
   Annual Return on Investment (%)                                                   25.6%        18.7%       15.2%
   Payback (years)                                                                      6.8          8.4         9.8

MUNICIPAL GOVERNMENTS
   Annual Return 2009 ($millions)                                                    $ 9.53       $ 9.53      $ 9.53
   Net Cashflow
                    Nominal Value (millions)                                         $ 633         $ 633        $633
                    Net Present Value (millions)                                      $157          $157        $157

TOURISM INDUSTRY
   Investment                                                                        $ 90.0       $ 90.0      $ 90.0
   Annual return (normalized year)                                                  $ 12.51      $ 12.51     $ 12.51
   Net Profits
                      Nominal Value (millions)                                    $ 834.84      $ 834.84    $ 834.84
                      Net Present Value (millions)                                 $ 208.10     $ 208.10     $ 208.10
   Payback (years)                                                                      7.9          8.9          9.9
   Annual return on investment (%)                                                   11.5%        11.5%        11.5%

Note: Industry measures of performance do not include profits from construction




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7.5    SUMMARY
♦ The Task Force is proposing that industry provide $90 million and governments
  provide $405 million to fund the convention centre expansion.

♦ Based on this funding proposal, industry will receive an acceptable 11.5% annual rate
  of return on its investment and governments will receive impressive annual rates of
  return ranging from 13.5% to 25.6% depending on the level of investment. Payback
  to government will vary depending on the level of investment, but in most cases
  governments will recoup their entire investment in ten years or less.

♦ The annual rate of return for the three partners based on their investment in three
  funding options is summarized in Exhibit 7.2. Industry’s investment and return rate is
  shown for comparative purposes.




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  “The governance, marketing and operation of the existing Vancouver Convention
Centre appears to be very good. We recommend that the existing arrangements be used
                  as the model for the expanded convention centre.”
      The Vancouver Board of Trade, Governance Report to Vancouver Convention Centre Expansion Task Force,
                                                   July 2000




8.0       GOVERNANCE

8.1       INTRODUCTION
This section addresses ownership, management and operation of the convention centre
expansion.

Following formation of the Task Force, the Task Force requested that The Vancouver
Board of Trade prepare a report of its recommendations for governance of the convention
centre. The Vancouver Board of Trade’s recommendations were endorsed by the Task
Force and The Vancouver Board of Trade’s complete report is attached to the Business
Plan as Appendix E.

8.2       RECOMMENDATIONS OF THE TASK FORCE
The Task Force recommends a governance model using an Authority for the ownership,
management and operation of the convention centre expansion. The recommendations of
the Task Force for the Authority model are outlined below.

STRUCTURE
The Task Force recommends that a non-share capital corporation be established under the
Canada Corporations Act, Part II to own, manage and operate the expanded convention
centre. The new Authority should be designed through consultation with the Task Force,
other key stakeholders such as the two senior levels of government, the City of
Vancouver and selected business organizations. A proposed name for the Authority is the
Vancouver Convention and Exhibition Centre Authority .

Among its general powers, the Authority would have the power to conduct business,
enter into agreements, borrow funds and issue debentures.

The Authority model is similar to that set up for the Portside project and recommended
for the proposed Ottawa Convention Centre.




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The Task Force supports The Vancouver Board of Trade’s recommendation that the
Authority set up for the Portside project be wound up and not be used for this convention
centre expansion.

OWNERSHIP
The owners of the Authority would be the investing partners – Federal Government,
Provincial Government and tourism industry – who will provide the investment for the
expanded convention centre.

The Task Force also recommends that the Province assign the VCEC lease including
options to the Authority. This would allow for common control over the entire expanded
convention centre.

BOARD OF DIRECTORS
The board of the Authority would comprise nominating entities representing industry and
governments. If the City of Vancouver were to make a contribution to the infrastructure
required, the City might be given a seat on the board. The industry representatives would
need to be designated by industry, not selected by government. The nominating entity
model utilized to identify board members for the Vancouver International Airport
Authority board might be an appropriate mechanism for this selection process, provided
that sufficient provision for accountability is included.

REPORTING
The disclosure requirements for the Authority should be the same as for public bodies in
British Columbia.

MANAGEMENT
The Task Force recommends that the Authority have a supervisory role in the affairs of
the expanded convention centre rather than a “hands on” operating role. It recommends
that the board of the Authority contract for the management of the expanded convention
centre rather than take on these roles itself. Contracted functions would include
operations and marketing.

The Task Force recommends that the Authority enter in to an agreement with PAVCO for
the operations. The Vancouver Board of Trade in its report recommended that the
informal arrangement between Tourism Vancouver and PAVCO be formalized. The Task
Force also recommends that the Authority enter into an agreement with Tourism
Vancouver/PAVCO for marketing once a formal agreement has been entered in to (that is
acceptable to the Authority).




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GOVERNANCE DURING CONSTRUCTION
The Task Force recommends that that there be additional representation on the board of
the Authority during the construction period. These additional representatives would have
expertise in construction and development. Their term would expire at the conclusion of
the construction period.

8.3    BACKGROUND

THE CURRENT GOVERNANCE MODEL
The existing VCEC is part of the Canada Place development, which is owned by the
Canada Place Corporation as agent for the Federal government. Canada Place
Corporation leases the VCEC property to the Provincial Government, who have engaged
PAVCO, a provincial crown corporation, to operate the VCEC (and other facilities in
British Columbia).

PAVCO is responsible for the operations of the VCEC. The marketing of the VCEC is a
collaborative effort between Tourism Vancouver and PAVCO. While no formal agreement
exists between the parties, Tourism Vancouver, in its role of marketing Greater
Vancouver as a destination, plays a major role in the marketing of the VCEC. The
Vancouver Hotel Association and its member hotels also assist in providing significant
hotel room blocks required by larger events.

In preparing its report The Vancouver Board of Trade representatives met with a number
of industry stakeholders to determine the level of effectiveness of the current governance
model. These stakeholders included representatives from the tourism industry, hotel
community, PAVCO, Tourism Vancouver and others. The consensus was that governance,
marketing and operation of the existing VCEC appear to be very good. The Vancouver
Board of Trade recommended that the existing arrangements should be used as the model
for the expanded convention centre and the roles of PAVCO and Tourism Vancouver
should be continued and expanded to encompass the expanded convention centre.

GOVERNANCE OPTIONS FOR THE EXPANDED CONVENTION CENTRE
The current governance model is relatively straightforward in large part because it
involves few parties. The Federal Government leases the property to the Province who,
through PAVCO, operates the VCEC.

The governance model for the expanded convention centre is more complex because the
underlying ownership of the two properties on which the expanded convention centre will
be located will be different.




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In preparing its report The Vancouver Board of Trade of Trade set out a number of
criteria for ownership, management and operations of the expanded convention centre.
These included the requirement for:
    •   seamless operation of the expanded convention centre;
    •   formal agreements between parties for the marketing of the expanded convention
        centre;
    •   broad industry-dominated governance of the operations; and
    •   full disclosure and transparency in reporting.

Each of these issues is dealt with in the context of ownership, management and operation.

8.4    OWNERSHIP
The Vancouver Board of Trade examined a number of ownership options in its report
prior to recommending ownership by an authority. These included ownership by the
Federal Government, Provincial Government, by industry and by an authority.

Single ownership by either the Federal or Provincial Governments or industry, when each
party was making a substantial contribution, was rejected because it seemed illogical that
one party would own the entire development, when three parties were making significant
contributions.

A convention centre funded entirely by a private developer was considered impractical
because virtually no North American convention centre produces (or is intended to
produce) an operating profit. As a result, a private-sector developer would have no ability
to finance the development cost of the project from operations of the centre.

FORMAL AGREEMENT AMONG STAKEHOLDERS
There will need to be a formal agreement among the owners and/or operators as to how
the initial and any ongoing operating deficits and any ongoing operating surpluses are to
be shared. It is expected that parking and retail revenues from the expanded convention
centre would flow to the Authority. These items should also be considered in any
agreement.

The assignment of overheads to the convention centre would need to be spelled out in
advance. The rights of the owners of the buildings to make improvements and then
charge them to the lessee(s) would need to be negotiated.

Participants in these agreements would be the two senior levels of government, industry,
potentially the City of Vancouver, PAVCO and Tourism Vancouver.




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8.5    SUMMARY

♦ The Vancouver Board of Trade was asked by the Task Force to prepare a report on
  governance. The consensus was that governance, marketing and operation of the
  existing VCEC appear to be very good. In its report, The Vancouver Board of Trade
  recommended that the informal arrangement between Tourism Vancouver and
  PAVCO for marketing be formalized.

♦ The Task Force recommends a governance model using an Authority for the
  ownership, management and operation of the convention centre expansion.

♦ The owners of the Authority would be the investing partners – federal government,
  provincial government and tourism industry – who will provide the investment for the
  expanded convention centre. The Task Force also recommends that the Province
  assign the existing VCEC lease including options to the Authority. This would allow
  for common control over the entire expanded convention centre.

♦ The board of the Authority would comprise nominating entities representing industry
  and governments. There would be additional representation with expertise in
  construction and development on the board of the Authority during the construction
  period.

♦ The board of the Authority would contract for the management of the expanded
  convention centre rather than take on these roles itself. Contracted functions would
  include operations and marketing.

♦ The Authority would enter in to an agreement with PAVCO for the operations and
  with Tourism Vancouver and PAVCO for marketing once they have formally entered
  into an agreement.

♦ There will need to be a formal agreement among the owners and/or operators as to
  how the initial and any ongoing operating deficits and any ongoing operating
  surpluses are to be shared.




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 “The expansion project could be complete and operational fifty months from the date
                                of project approval.”
           Pacific Liaicon & Associates Inc., Project Evaluation and Cost Report, September, 2000




9.0    PRE-CONDITIONS FOR CONSTRUCTION START
The following major items are considered pre-conditions requiring resolution prior to the
start of construction. The items are listed in the general order of priority.

In respect of pre-conditions it is assumed that the Task Force and the boards of the
founding group members will have ratified the Business Plan prior to its release.

9.1    LAND ACQUISITION COMMITMENT
PAVCO is currently in the final stages of concluding a purchase agreement with Marathon
Developments Inc. for the property to expand the convention centre on the Burrard
Landing site. Among the proposed conditions, the agreement requires that the purchaser:
   •  pay a non-refundable downpayment;
   •  commit additional funds to advance the facility design;
   •  begin the rezoning process with the City of Vancouver; and
   •  finalize the Burrard Environmental Review Committee (“BERC”) habitat
      compensation requirements.

The purchase agreement will contain provisions to assign the property to an authority or
other ownership entity once the governance issues have been resolved.

9.2    FUNDING APPROVAL
Funding approval from industry, the federal government and the provincial government
will be required for the project to proceed.

INDUSTRY
Tourism Vancouver’s Board of Directors has already approved in principle the $33
million contribution from Tourism Vancouver. The process to increase the voluntary
hotel tax from 2% to 2.5% to generate the additional $57 million has been initiated as
outlined in Section 7. After this process is completed successfully, industry will then be
in a position to enter into a formal loan agreement with the Province for its $90 million
secured by the proceeds from the Vancouver voluntary hotel tax.




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FEDERAL AND PROVINCIAL GOVERNMENTS
The expansion project will need $405 million from the federal and provincial
governments to proceed. An agreement of the level of the investment by each party will
be required.

9.3    COMPLETE BALANCE OF PROJECT DEFINITION REPORT
PLA’s work program to date on behalf of the Task Force has included the development
of a concept design, a detailed project schedule and a not-to-exceed capital cost estimate.
PLA has also prepared a Project Definition Report level of analysis on the site
preparation/foundation portion of the Burrard Landing site.

As part of the commitment to acquire the Burrard Landing property, funds will be
required to complete the balance of the Project Definition Report (“PDR”) including
updated schedule and final apportioning of costs within the not-to-exceed capital cost.

The PDR will contain a more detailed description of the facilities, permitting, project
schedule and capital cost breakdown. The PDR will also contain a Policies and
Procedures Manual, which will dictate the process for the project. Once approved, the
PDR will set out the procedures and guidelines for proceeding with the project to its
conclusion. It is expected that the PDR will require approximately four months to
prepare.

The following planning and design issues will need to be resolved during the preparation
of the PDR (and prior to the start of construction):
    •   resolve the issue of the location of the civic arts centre which is currently a City of
        Vancouver requirement on the Burrard Landing site;
    •   amend existing environmental approvals granted to the Burrard Landing site by
        BERC;
    •   coordinate the planning and construction with adjacent construction sites;
    •   resolve use of building density currently attributed to the site;
    •   finalize parking, traffic, and loading requirements associated with the
        development;
    •   address design and location issues of the civic arts complex currently located on
        the Burrard Landing site;
    •   determine final elevation of the Thurlow Garden plaza relative to existing street
        grades;
    •   resolve outstanding urban design issues, including open spaces, sidewalks, bicycle
        paths, and public waterfront access;
    •   determine final road widths for Waterfront Road and Canada Place Way; and
    •   schedule public hearings for the rezoning and permitting process.



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The following planning and design issues will be partially addressed during the PDR
stage:
    •  modify the approved zoning and City agreements currently in place on the
       Burrard Landing site; and
    •  address City enactment conditions, sub-division and legal agreements including
       services and amenity agreements (i.e., daycare, public art).
It is anticipated that approval-in-principle will be granted by the end of this stage and
final rezoning and final enactment will be reached four and ten months later, respectively.

Every effort is being made to include approval agencies early in the planning/design
process. Ongoing discussions with the City of Vancouver and BERC regulatory
authorities lead the Task Force to believe that these issues are manageable, and there is a
real desire to resolve them successfully in a timely manner.

Immediately following the final approval of the PDR by the stakeholders, the plan is to
tender, award and start construction of the site preparation and foundation work which
will be the first major construction contract of the VCEC Expansion Project.

Based on an approval in principle by the funding partners by January 1, 2001 the
summary project schedule shows that the convention centre expansion would be
completed in 2005. A project schedule is shown as Exhibit 9.1.


9.4    EVALUATION OF ANCILLARY ASSETS
The expansion project has three assets that, while not core to the operations of the
convention centre, have the potential to contribute significant revenues to the operation of
the expanded convention centre. These include parking, retail and a commercial marina.
Options for the development of these assets should be evaluated by the Authority.

9.5    PROJECT SCHEDULE
Based on an approval in principle by the funding partners by January 1, 2001 the
summary project schedule shows that the convention centre expansion would be
completed in 2005. Exhibit 9.1 is a project schedule provided by PLA.




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SUMMARY PROJECT SCHEDULE
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 “Convention centre expansion is a low risk project that will create significant benefits.
        It is strongly recommended that this project proceed without delay.”
                        Vancouver Convention Centre Expansion Task Force



10.0 SUMMARY AND CONCLUSIONS
When the Task Force was formed, its vision was to provide leadership, direction and
focus leading to a workable industry-driven Business Plan for expansion of the VCEC.
The Plan was to be prepared on the premise that funding would be provided by the
federal government, provincial government and industry.

Approximately one year later the Task Force is delivering on that vision. The Business
Plan provides overwhelming evidence that an investment in convention centre expansion
is a great business decision – for industry and for governments.

The convention centre expansion project is not a speculative investment – it builds on
past successes. The KPMG report states “Most if not all attributes associated with a
successful convention destination (e.g., quality of service, easy access, tourist appeal,
range of facilities and attractions) are in place in Vancouver – as demonstrated by the
City’s past successes in hosting conventions”. The convention centre expansion is a
well-planned project that builds on the long history of success of the existing VCEC and
is poised to generate even larger revenues for industry and governments.

10.1 THE INVESTMENT
Expanding the existing VCEC requires an investment of $495 million.

It is proposed that the project is funded by industry and by governments. Industry has
committed to provide $90 million and proposes that the federal and provincial
governments together contribute $405 million to the project.




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10.2 WHAT ARE THE RETURNS?
The returns are very attractive for the tourism industry and for governments. For the
construction period, the incremental benefits include:
   •   benefits to industry:
       •   $495 million in incremental revenues
       •   $9.9 million in incremental profits (net present value of $8.3 million)
   •   benefits to governments:
       •   $87.8 million in incremental tax revenues (net present value of $73 million)
   •   6,702 person-years of employment

For the thirty years from 2005 to 2034 the incremental benefits from operations include:
   •    incremental delegate and exhibitor spending:
        •   $229 million per year
        •   $15.3 billion over 30 years (net present value of $3.8 billion)
   •    incremental net profit to industry:
        •   $12.5 million per year
        •   $835 million over 30 years (net present value of $208 million)
   •    incremental government tax revenues:
        •   $76 million per year
        •   $5.036 billion over 30 years (net present value of $1.246 billion)
        •   7,530 new, full-time jobs

Payback of the investment will take place in less than 11 years.

What makes the investment particularly attractive is that the profits to industry and
revenues to governments are generated by delegates attending VCEC-hosted conventions
and trade shows who are predominantly from outside BC and increasingly from outside
Canada. In essence, these delegates are injecting foreign capital into our economy and
creating these significant revenues to industry and governments.

The funds generated will be available to governments for programs such as health care,
infrastructure and education.

An additional return is the opportunity of the entire tourism industry to capitalize on the
increased number of foreign visitors to British Columbia who will be exposed to tourism
opportunities throughout the province.

10.3 WHAT ARE THE RISKS?
The convention centre expansion is a major project involving construction bridging water
and land and as such, involves the usual risks associated with such projects. However, the
Task Force has addressed these risks through its due diligence and, specifically, by



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obtaining a detailed technical plan and cost estimates which include appropriate
contingencies.

On a theoretical basis, there is a risk that the market for conventions and trade shows may
not increase in the future. However, all studies and indications strongly support the view
that the conventions and trade show market generally will continue to be very strong and
Vancouver will continue as a premier destination for that market.

10.4 WHAT ARE THE RISKS OF NOT PROCEEDING?
The existing VCEC is a good facility. However, the market has outgrown the ability of
the VCEC to service its clients.

The KPMG study reported that “… the size of the facility is causing:
   •  existing users to outgrow the building;
   •  potential users to bypass the VCEC in favour of larger facilities; and
   •  VCEC management to decline business that could be accommodated in parallel
      with another group were the VCEC facilities suitable for hosting multiple events.”

Not proceeding puts at risk the current $245 million spent annually by delegate at VCEC-
hosted events. This spending accounts for $12.5 million in profits for the tourism industry
and $73 million for governments annually. They provide 3,930 full-time jobs.

The KPMG report was conclusive on this issue. “The status quo is not an option. … the
current benefits realized by Greater Vancouver’s tourism industry will decline as the
VCEC is unable to effectively compete in an environment of increasing attendance and
demands for additional exhibit space.”

Time is of the essence. There is a great risk that the Task Force will lose the property if
this project does not proceed expeditiously. The Task Force has tied up the Burrard
Landing site only for enough time to secure the project funding. If funding approval is
not obtained in the near future, the site will revert to Marathon and likely be sold as a
hotel or office tower. It will not be available for consideration as a convention centre.

10.5 GOVERNANCE AND MANAGEMENT
The Task Force recommends a governance model that provides an appropriate balance of
industry and government representation.

The VCEC continues to be a well-run facility with a long history of success. Building on
that success, it is proposed that the current operators would continue to manage the
expanded facility.




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In addition, the tourism industry, and its ability to market the City and provide the
tourism products and services has an outstanding international reputation and is often
looked to by other cities as a model of excellence.

10.6 MARKET DRIVEN OPPORTUNITY
What could be a better situation than to have customers who want your product or
service? Meeting planners want to bring events to Vancouver. Delegates love to come to
Vancouver where the warmth of its citizens and the safety of the surroundings are a
wonderful complement to its physical beauty – and the market is growing.

The KPMG study concluded that “… additional convention facilities in Vancouver are
necessary to meet demand”.


10.7 CONCLUSION

Convention centre expansion is a low risk project that will create significant benefits.

The Task Force strongly recommends that this project proceed without delay.




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                                 APPENDICES

A.     Members of Vancouver Convention Centre Task Force
       Vision Statement, Mandate, Principles and Terms of Reference
       Business Plan Outline
B.     Expanding the Vancouver Convention & Exhibition Centre, Market Justification
       and Economic Benefits, KPMG, February 2000
C.     BC Input-Output Analysis for Vancouver Convention Centre Expansion, BC
       STATS, Ministry of Finance and Corporate Relations, Province of British
       Columbia, September 2000
D.     Project Cost and Evaluation Report, Executive Summary, Pacific Liaicon and
       Associates Inc.
E.     Governance of the Expanded Vancouver Convention and Exhibition Centre,
       Report to the Vancouver Convention Centre Task Force, The Vancouver Board of
       Trade, July 20, 2000
F.     Corporate Profiles
       •  Pacific Liaicon and Associates Inc.
       •  LMN Architects
G.     Technical Information
H.     Restrictions




                                                                           APPENDICES
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                        APPENDIX A


MEMBERS OF VANCOUVER CONVENTION CENTRE TASK FORCE

VISION STATEMENT

MANDATE

PRINCIPLES

TERMS OF REFERENCE

BUSINESS PLAN OUTLINE




                                                APPENDICES
                   VANCOUVER CONVENTION CENTRE EXPANSION TASK FORCE
                                    BUSINESS PLAN OUTLINE




I.      Executive Summary

II.     Introduction
        1)     Brief Statement of how Task Force was created

III.    Rationale for Expanded Facilities
        1)    status and position of existing facilities
        2)    client and market demands

IV.     Market Analysis
        1)    Historical Performance
        2)    Potential for increased business
        3)    Competitive analysis
        4)    Marketing Plan reference
        5)    Marketing resources (funding and organizations)
        6)    Constraints (hotels, infrastructure, etc.)

V.      Overview and Description of Facilities
        1)    General site description
        2)    Expansion
              i)      Description of facilities
        3)    Retrofit
              i)      Description of facilities
        4)    Integration of existing and new facilities

VI.     Benefits Analysis
        1)     Economic Impact Model
        2)     Economic Impact Results
               i)     Industry
               ii)    Federal Government
               iii)   Provincial Government

VII.    Funding Partners
        1)    Funding overview
        2)    Industry investment
        3)    Federal Government investment
        4)    Provincial Government investment




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VIII.   Financial Analysis
        1)    Preliminary Capital Cost Estimates of Convention Centre
              i)     Expansion
              ii)    Retrofit

        2)         Operating proforma
                   i)   Pre opening
                   ii)  Opening
                   iii) Normalized
                   iv)  Sensitivity analysis (best, worst, expected cases)

IX.     Governance
        1)   Capital phase
        2)   Operating phase

X.      Pre-conditions for Construction Start

XI.     Conclusions and Recommendations
        1)    Brief synopsis and review of alternatives
        2)    Timelines and action steps

Appendices




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                              APPENDIX B

EXPANDING THE VANCOUVER CONVENTION CENTRE,
MARKET JUSTIFICATION AND ECONOMIC BENEFITS
KPMG
February 2000
(Will be available shortly)




                                                  APPENDICES
VANCOUVER CONVENTION & EXHIBITION CENTRE EXPANSION PROJECT
PROJECT EVALUATION AND COST REPORT




                                 APPENDIX C

BC INPUT-OUTPUT ANALYSIS FOR VANCOUVER CONVENTION CENTRE
EXPANSION
BC STATS
Ministry of Finance and Corporate Relations
Province of British Columbia
September 2000




                      1.0 EXECUTIVE SUMMARY / page 7
                                                                                        1




                                                BC STATS
                                                Ministry of Finance & Corporate
                                                Relations


    BC Input-Output Analysis for Vancouver Convention Centre Expansion
This report summarizes the estimated economic impacts of the construction and operation of
an expanded Convention Centre in Vancouver. This work was undertaken at the request of
the Vancouver Convention Centre Expansion Task Force and relies on data supplied by the
Task Force. The 1996 British Columbia Input Output Model was used to generate the
results. A description of the BCIOM, and the assumptions underlying input/output analysis,
is included in the Appendix.
Estimates generated by the BCIOM
The economic impact of a change in the demand for a commodity or group of
commodities is made up of the following three components:
•   The direct effect, which measures the change in domestic output required to satisfy
    an initial change in demand. This would include the actual expenditures and the
    employment directly generated in the scenario.
•   The indirect effect, which measures the change in domestic output generated by
    the activity of sectors that supply goods and services used in the construction or
    operating phases of the project.
•   The induced effect, which measures the overall impact of more income accruing to
    the household sector. It is assumed that BC residents spend 75% of their gross
    earned income on goods and services. The migration (no safety net) scenario
    assumes that all new jobs are filled by people who previously earned no income in
    BC or, in the case of a negative impact, that the income of everyone who loses their
    job drops to zero. The no migration (safety net) scenario assumes that those who
    lose their jobs stay in the province and collect employment insurance or social
    assistance, or use their savings; new jobs are assumed to be filled by people who
    formerly received social assistance. The induced impacts in this report are shown
    as a range of values with the low end corresponding to the safety net case and the
    high end corresponding to the no safety net case.


Economic impacts take a number of forms; specifically,
•   Output is the simple sum of all expenditures in the BC economy which result from
    the project under study; however, this figure to some extent exaggerates the impacts
    because the purchase of finished products often involves the purchase of
    components of those products at some earlier stage in the overall production
    process.
•   Gross Domestic Product (GDP) is a measure of the value added (the unduplicated
    total value of goods and services) to the BC economy by current productive activities
    attributable to the project and taking place within the province.
•   Provincial and Federal Revenues are estimates made up of the provincial and
    federal shares of personal income taxes and commodity taxes (PST and GST), as




BC STATS                                                                        10/19/00
                                                                                        2


    well as other commodity taxes like gas taxes, air tax, etc. Specifically excluded from
    these estimates are corporation taxes and royalties on natural resources.
•   Municipal Revenues have been estimated by using a provincial average of the
    share of indirect taxes on production which is received at the local level. Because
    the BCIOM is a provincial model, not all of these revenues will necessarily occur in
    the municipality where the direct effects occur.


Summary of Results
(all results are in thousands of dollars unless otherwise specified)
Construction Phase
Project expenditure: $494.8 million
Economic Impact                   Direct      Indirect        Induced              Total
Output                           428,000      210,886    77,673 – 191,367   716,559 – 830,253
GDP                              188,915      94,601     43,267 – 106,598   326,782 – 390,114
Employment (person years)         4,275        1,715        712 – 1,755        6,702 – 7,745
Provincial Revenues              22,786        6,960       6,464 – 15,925     36,210 – 45,671
Federal Revenues                 16,298        7,768       5,759 – 14,190     29,826 – 38,256
Municipal Revenues                3,514        1,306       1,834 – 4,518       6,654 – 9,338



Operations Phase (annual)
These impacts have been estimated in three components: (1) those impacts resulting
from the other spending of non-residents who come to Conventions or Trade Shows; (2)
impacts resulting from the expenditures of exhibitors at Trade Shows and Consumer
Shows; and (3) those expenditures associated with the operation of the facility itself.


1. Delegate Impacts (estimated for the year 2008)
Economic Impact                   Direct      Indirect        Induced              Total
Output                           318,200      136,123    60,339 – 151,608   514,663 – 605,932
GDP                              175,616      55,466      33,611 – 84,451   264,694 – 315,533
Employment (jobs)                 4,414         814         437 – 1,097        5,665 – 6,325
Provincial Revenues              15,885        4,776       5,021 – 12,616     25,683 – 33,278
Federal Revenues                 12,970        4,120       4,474 – 11,242     21,564 – 28,332
Municipal Revenues                4,428        1,717       1,424 – 3,579       7,569 – 9,724




2. Exhibitor Impacts (estimated for the year 2008)


BC STATS                                                                       10/19/00
                                                                                       3


Economic Impact                Direct      Indirect       Induced               Total
Output                        138,300      57,869     17,978 – 45,034    214,147 – 241,203
GDP                            45,087      25,042     10,014 – 25,086     80,144 – 95,215
Employment (jobs)               1,155        375         130 – 326         1,659 – 1,855
Provincial Revenues             5,906       1,995       1,496 – 3,748     9,397 – 11,649
Federal Revenues                3,067       1,910       1,333 – 3,339      6,311 – 8,317
Municipal Revenues               566         596         424 – 1063        1,586 – 2,225


3. Facility Operation Impacts (estimated for the year 2008)
Economic Impact                Direct      Indirect       Induced               Total
Output                         21,218      27,954       2,805 – 7,019     51,977 – 56,191
GDP                             3,320       6,891       1,563 – 3,910     11,774 – 14,121
Employment (jobs)                79          106          20 – 50            205 – 235
Provincial Revenues              123         663         233 – 584         1,019 – 1,370
Federal Revenues                 237         535         208 – 520          981 – 1,293
Municipal Revenues              N.A.         124          66 – 166              N.A.




Total Operating Impacts (estimated for the year 2008)
Economic Impact                Direct      Indirect       Induced               Total
Output                        477,718      221,946    81,122 – 203,661   780,787 – 903,326
GDP                           224,023      87,399     45,188 – 113,447   356,612 – 424,869
Employment (jobs)               5,648       1,296        588 – 1474        7,529 – 8,415
Provincial Revenues            21,914       7,434      6,750 – 16,948     36,099 – 46,297
Federal Revenues               16,274       6,565      6,015 – 15,101     28,856 – 37,942
Municipal Revenues             4,994+       2,437       1,914 – 4,808    9,345+ - 12,239+


Assumptions and Caveats
1. Construction impacts were estimated using total construction cost and the Non-
   residential building construction, Repair construction, and Professional services
   industries in the BCIOM database. It was not possible to use detailed specific
   construction costs because the categories differ from those required by the BCIOM
2. Delegate impacts were estimated assuming the delegate spending estimates
   prepared by KPMG for the Task Force.
3. Exhibitor impacts were estimated assuming the exhibitor spending estimates
   prepared by KPMG for the Task Force.

BC STATS                                                                    10/19/00
                                                                                       4


4. Facility operation impacts were estimated using detailed information on operating
   expenses and facility costs (for the year 2008) supplied by the Task Force. No GST
   or PST were estimated for the direct expenditures in these categories. Direct
   employment (79) in this category has been estimated using industry average wages
   so if the actual number is known, that figure could replace the estimate.
5. Municipal Revenues associated with the operation of the facility itself have not been
   estimated because it makes more sense to estimate these using known
   characteristics of the facility and appropriate Vancouver mill rates, etc.
6. Note that these estimates may overstate the true net provincial impacts to the extent
   that: (1) some attendees and/or exhibitors are from the lower mainland and therefore
   do not spend as much as has been assumed; (2) the Vancouver facility may capture
   business which otherwise would have occurred elsewhere in the province; (3) if the
   delegates or exhibitors spend some of their food & beverage money in the facility
   itself there may be some double-counting because the groceries that are bought to
   satisfy these demands are counted twice: once as part of the Operations impacts
   and again as part of the Delegate/exhibitor impacts.
7. On the other hand, the government revenue estimates may be somewhat
   understated because not all sources of government revenue have been estimated.




BC STATS                                                                       10/19/00
Appendix                                                                                5


Some background on input-output models and analysis
Input-output analysis is based on statistical information about the flow of goods and
services among various sectors of the economy. This information, presented in the form
of tables, provides a comprehensive and detailed representation of the economy for a
given year. An input-output model is essentially a database showing the relationship
between commodity usage and industry output. It consists of three components:
•   a table showing which commodities–both goods and services–are consumed by
    each industry in the process of production (the input matrix)
•   a table showing which commodities are produced by each industry (the output
    matrix)
•   a table showing which commodities are available for consumption by final users (the
    final demand matrix).
These data are combined into a single model of the economy which can be solved to
determine how much additional production is generated by a change in the demand for
one or more commodities or by a change in the output of an industry. Changing the
usage or production of a commodity or group of commodities is often referred to as
shocking the model. The known relationship between goods and services in the
economy is used to generate an estimate of the economic impact of such a change.
If a change in demand is met by increasing or decreasing imports from other
jurisdictions, there is no net effect on domestic production. All of the benefits or costs
associated with employment generation or loss, and other economic effects, will occur
outside the region. Therefore, it is important to identify whether or not a change in the
demand for a good or service is met inside or outside a region.
The British Columbia Input-Output model
The BCIOM can be viewed as a snapshot of the BC economy, taken in 1996. It is
derived from the 1996 Interprovincial Input-Output tables developed by Statistics
Canada and includes details on 679 commodities, 243 industries, 180 “final demand”
categories, and a set of computer algorithms to do the calculations required for the
solution of the model. It can be used to predict how an increase or a decrease in
demand for the products of one industry will have an impact on other industries and
therefore on the entire economy.
Limitations and caveats associated with input-output analysis
Input-output analysis is based on various assumptions about the economy and the inter-
relationships between industries. These assumptions are listed below:
•   Input-output models are linear. They assume that a given change in the demand for
    a commodity or for the outputs of a given industry will translate into a proportional
    change in production.
•   Input-output models do not take into account the amount of time required for
    changes to happen. Economic adjustments resulting from a change in demand are
    assumed to happen immediately.
•   It is assumed that there are no capacity constraints and that an increase in the
    demand for labour will result in an increase in employment (rather than simply re-
    deploying workers).



BC STATS                                                                       10/19/00
Appendix                                                                            6


•   It is assumed that consumers spend an average of 75% of their personal income on
    goods and services. The remaining 25% of personal income is consumed by taxes,
    or goes into savings.
•   The BCIOM is based on a “snapshot” of the BC economy in 1996. It is assumed that
    relationships between industries are relatively stable over time, so that the 1996
    structure of the economy continues to be applicable today. However, it should be
    noted that employment estimates have been adjusted to reflect wage levels for the
    year 2000.
•   The BCIOM does not distinguish between regional effects. It will not, for example,
    differentiate between the economic impact of a plant located in one region of the
    province and a similar plant elsewhere in BC.




BC STATS                                                                    10/19/00
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                                      APPENDIX D


PROJECT COST & EVALUATION REPORT
EXECUTIVE SUMMARY
Pacific Liaicon and Associates Inc.
September 2000




                                      VANCOUVER CONVENTION CENTRE EXPANSION TASK FORCE
                                                                           APPENDICES
Vancouver Convention & Exhibition Centre Expansion Project
PROJECT EVALUATION AND COST REPORT



1.0    EXECUTIVE SUMMARY
In June 2000, B.C. Pavilion Corporation (PAVCO) and Tourism Vancouver, on behalf of the
Vancouver Convention Centre Expansion Task Force, retained Pacific Liaicon and Associates
Inc. (PLA) to develop updated and refined capital cost estimates for a Vancouver Convention &
Exhibition Centre (VCEC) Expansion at the “Burrard Landing” site immediately to the west side
of Canada Place. The conceptual design on which the cost estimates are based is described in the
Burrard Landing Design Proposal Evaluation, which was endorsed by the Vancouver
Convention Centre Expansion Task Force in March 2000.

The proposed site is located on property currently owned by Marathon Developments Inc.
(Marathon) and designated in the City of Vancouver Official Development Plan By-Laws as the
Burrard Landing precinct. Refer to Figure 1.1 attached at the end of this section. PAVCO has
secured the property with an agreement in principle to purchase the proposed convention centre
lands. The formal purchase and sale agreement is currently being finalized for respective Board
approvals and signatures.

Preliminary construction cost estimates were prepared based on the Burrard Landing Design
document and with the benefit of pricing developed for the 1997 Marathon Development Inc.’s
“Discovery Place” concept and the 1999 Concert Properties Ltd. “Portside” concept. The pricing
for both of these concepts had been estimated by PCL Constructors Canada Inc. The expansion
costs include provisions for an integrated link, on two levels, to a fully renovated existing VCEC
facility at Canada Place. Additional engineering and costing completed in the Site Preparation
and Foundation Report, dated September 2000 by Sandwell Engineering Inc. and Golder
Associates Ltd. resulted in the development of an alternative site preparation/foundation
methodology, which can be implemented with a lower risk impact to schedule and cost.

The capital cost estimate for the proposed VCEC Expansion Projects presented in this Project
Evaluation and Cost Report (Table 1.1) is $495 million, based on the following premises.

•   The project will consist of the following components, as described in the Burrard Landing
    Design Proposal Evaluation and modified by the Site Preparation and Foundation Report:
               –   New Convention Facility
               –   Parkade
               –   Plaza
               –   Infrastructure
               –   Site Preparation/Caisson Installation
               –   Renovations and Linkage to Existing VCEC at Canada Place

•   The VCEC Expansion Project provides the opportunity to construct the full program of
    meeting spaces within a purpose-built facility with a total facility area of approximately
    1.2 million square feet.


                          1.0 EXECUTIVE SUMMARY / page 1-1
Vancouver Convention & Exhibition Centre Expansion Project
PROJECT EVALUATION AND COST REPORT




    The proper combination of meeting spaces in one building provides for a greater flexibility
    and efficiency in accommodating the movement of delegates between the various meeting
    spaces and the cost-effective back-of-house servicing of these spaces. Including the meeting
    spaces within the existing facility at Canada Place and in response to the fact that the largest
    proportion of the available business opportunity will continue to be for events in the range of
    2,000 to 5,000 delegates, the design of the combined facilities has created opportunities for
    discrete, separated modules that can accommodate multiple simultaneous events.

•   The new convention facility will not require a new cruise ship berth, SeaBus terminal, retail
    pavilion or hotel.

•   As discussed later in this Executive Summary, an Arts Complex is required by the City of
    Vancouver. The capital cost estimate not only does not include an amount for building the
    Arts Complex adjacent to the new convention facility, it is in fact, predicated on satisfactorily
    relocating it off-site.

•   Once the project has received approval to proceed, a project management team will be
    established and a formal Project Definition Report will be prepared. The Project Definition
    Report will form the “road map” for managing the project, as scoped, through to on-time and
    on-budget completion. The Soft Costs include provisions for a project management
    consultant and the costs of preparing a Project Definition Report, as well as other design and
    inspection costs.

•   The major land acquisition costs have been negotiated and include provision for land costs,
    shared Arts Complex commitment costs and shared site servicing costs as part of the overall
    budget estimate.

•   The site preparation/foundation methodology, described in Sandwell’s Site Preparation and
    Foundation Report, dated September 2000, will be the accepted alternative to removal and
    ocean dumping of existing fill and marine sediments and backfilling with structural fill
    proposed in previous reports.

•   The project assumes commencement by early 2001 and will be operational in early 2005
    based on a 50-month schedule. All estimates for hard construction, soft and land costs are in
    end of year 2000 dollars and include provisions for escalation. During the completion of the
    balance of the Project Definition Report, the detailed cost breakdown will be prepared and
    the anticipated cost escalation over the construction period will be estimated.

•   With a project duration of four years, the capital cost estimate provides for interest during
    construction using a rate of 6.5%.



                           1.0 EXECUTIVE SUMMARY / page 1-2
Vancouver Convention & Exhibition Centre Expansion Project
PROJECT EVALUATION AND COST REPORT


•   Designs are conceptual at this stage; therefore, a 10% project contingency is included in the
    capital cost estimate.

The major outstanding issue that must be dealt with by the City of Vancouver before the
rezoning process begins, is the location of the proposed Arts Complex. The Arts Complex site is
a City registered encumbrance within the Coal Harbour Project, Phase 2, Burrard Landing
precinct. The Arts Complex site sits on the western edge of the proposed convention centre
lands. To remain at this location, the Arts Complex will have major implications to project
design, schedule and costs. As a result, PLA recommended that a formal study be undertaken to
investigate the feasibility of converting the now vacant Ford Theatre into meeting the functional
and design requirements of the proposed Arts Complex. With study terms of reference and a
team of design specialists assembled by the City’s Office of Cultural Affairs, PAVCO and
Tourism Vancouver commissioned PLA to undertake the four-week study, which started on
September 21, 2000. Moving the City registered encumbrance to the Ford Theatre will permit
the design and construction of the expanded convention centre to proceed in the most effective
and efficient manner which will have a positive impact on both schedule and costs.

Two other minor property issues that will be resolved during the rezoning stage with the City of
Vancouver are as follows:

•   A small portion of the southeast corner of the convention centre footprint including the
    integrated link to the existing VCEC facility is on Vancouver Port Authority (VPA) property.
    The building encroachment does not affect the docking of ships in the west berth of Canada
    Place. As a counterpoint to this item, the cruise ships cross the corner of the water lot, that is
    included within the convention centre lands, during their docking manoeuvres.

•   A small portion of the perimeter waterfront walkway on the west end of the convention
    centre expansion extends over and into the adjacent water lot north of the City’s Harbour
    Green Park.

In conclusion, it is PLA’s professional opinion that if funding agreements are finalized and
project approval to proceed is granted by the end of 2000, the expanded convention centre could
be completed and operational in 2005 within a budget of $495 million, subject to the above
premises. This opinion is based on PLA’s project management experience on similar-sized
projects, PLA’s role as Provincial representative on the Portside Project and the cost estimates
developed for this report.




                           1.0 EXECUTIVE SUMMARY / page 1-3
Vancouver Convention & Exhibition Centre Expansion Project
PROJECT EVALUATION AND COST REPORT


                                              Table 1.1
                                      VCEC Expansion Projects
                                   Capital Cost Estimate Summary
                                     (in end of year 2000 dollars)


Hard Construction Costs                                                                       $339,000,000
     New Convention Facility                                         $233,500,000
     Parkade1                                                          12,300,000
     Plaza                                                             10,100,000
     Infrastructure                                                    10,000,000
     Site Preparation/Caisson Installation                             58,100,000
     Renovations and Linkage to Existing VCEC2                         15,000,000
Soft Costs, Land Costs and Interest During Construction                                         111,000,000
Contingency                                                                                      45,000,000

Capital Cost Estimate                                                                         $495,000,000

1. Parkade structure cost includes the costs of providing support for the Canada Way extension.
2. No design work has been undertaken on the VCEC Canada Place Renovation Project at the time
   of writing this report. It is envisioned that the design will take place during the construction of the
   VCEC Expansion Project and will be renovated to market condition requirements after the
   opening of the new expansion facility. A cash allowance of $15,000,000 has been set aside for the
   renovation work in Canada Place and for the linkage to the new facility.

Note:
1. Line estimates and unit prices have been obtained from contractors, suppliers and wherever possible
   from historical data from similar projects.
2. Estimates have been compiled using industry standard estimating techniques and procedures.
3. All estimates include PST, but exclude Goods and Services Tax (GST).




                              1.0 EXECUTIVE SUMMARY / page 1-4
Vancouver Convention & Exhibition Centre Expansion Project
PROJECT EVALUATION AND COST REPORT




                                            Figure 1.1: City Context Plan
                                       1.0 EXECUTIVE SUMMARY / page 1-1
VANCOUVER CONVENTION & EXHIBITION CENTRE EXPANSION PROJECT
PROJECT EVALUATION AND COST REPORT




                               APPENDIX E

GOVERNANCE OF THE EXPANDED VANCOUVER CONVENTION AND
EXHIBITION CENTRE, REPORT TO THE VANCOUVER CONVENTION
CENTRE TASK FORCE

The Vancouver Board of Trade
July 20, 2000




                     1.0 EXECUTIVE SUMMARY / page 9
July 20, 2000




                                               EST. 1887




                                                   ER BOARD
                                     THE VANCOUV              OF TRADE
                           The Vancouver Board of Trade

GOVERNANCE OF THE EXPANDED VANCOUVER CONVENTION AND EXHIBITION
                           CENTRE
                        REPORT TO THE
      VANCOUVER CONVENTION CENTRE EXPANSION TASK FORCE




Terminology

This report has been prepared for the Convention Centre Expansion Task Force by
representatives of The Vancouver Board of Trade who are concerned with the
proposed expansion of the centre. Accordingly, it is assumed that those reading the
report will be familiar with the terminology employed and the different components of
the expanded convention facility. In particular, the “existing facility” is the existing
Vancouver Convention and Exhibition Centre. The “new structure” refers to the new
convention centre structure which it is proposed be built on the Burrard Landing site
immediately to the west of the existing facility. The “expanded convention centre” is the
combination of the existing facility and the new structure. Throughout this document the
term “industry” refers to the business community and specifically to that part of the
private sector involved with and concerned with the convention centre and with ancillary
enterprises such as hotels, attractions, and convention-related transportation.


1.0   GOVERNANCE

1.1   Existing Convention Centre

The governance, marketing and operation of the existing Vancouver Convention Centre
appears to be very good. We recommend that the existing arrangements be used as
the model for the expanded convention centre. The roles of PAVCO and Tourism
Vancouver should be continued and expanded to encompass the expanded facility. In
addition, there should be a formal involvement of the Vancouver Hotel Association to
help ensure the ongoing optimization of marketing and sales efforts for the expanded
facility.
                                                                                 Page 2
                   Governance of the Expanded Vancouver Convention and Exhibition Centre
                                                                          July 20, 2000




1.2    Requirement for Seamless Operation

The effective and efficient operation of the expanded Vancouver Convention Centre will
require seamless management of the combination of the existing facility and the new
structure (i.e., common management, a common operating entity, and common
marketing). The expanded convention centre must seem to be and must operate as a
unified entity.

1.3    Ownership of Existing and New Facility

The underlying ownership of the existing facility and the new structure may be different.
The existing facility is owned by the Federal Government, and leased to the Province to
operate. The new structure may have underlying ownership reflecting various financial
contributions made towards its development. Thus the Federal and Provincial
Government, industry, and potentially the City of Vancouver could have an ownership
interest in the new structure based on their respective contributions.

1.4    Lease of Existing Facility

The existing convention centre is leased to the Provincial Government by the Federal
Government. The lease was assigned to PAVCO by the Province. The first 20-year
term expires in 2007; there are options to extend the term for three further 20-year
terms at the option of the Province.

1.5    Ownership of the New Structure

1.51   Federal Government Ownership as an Option

While it might be simpler to try to arrange Federal Government ownership of the new
structure to parallel the ownership of the existing facility, that might not be easily
achieved. As outlined above, the other major contributors to financing the expansion
might logically wish to hold an interest in the new structure, and to have a voice
together with the other owners.

1.52   Provincial Government Ownership as an Option

Provincial Government ownership of the new structure is another option. In that case
for the duration of the existing lease and its extensions the operating control of the
existing facility and the new structure could be joined in a seamless manner. However,
as discussed later, this option was already rejected for the previously proposed
extension to the east of the existing facility.
                                                                                 Page 3
                   Governance of the Expanded Vancouver Convention and Exhibition Centre
                                                                          July 20, 2000




1.53   Convention Centre Authority Option

A newly created Convention Centre Authority (“Authority”) is recommended as the
approach to providing an effective mechanism to offset the potential differences in
ownership of the existing facility and the new structure. The ownership and high-level
management of the new structure would be vested in this Authority. A board of directors
would direct its governance with representation from the stakeholders providing the
financing, and representation from other key community stakeholders.

The Authority should be established as a not-for-profit corporation under federal
legislation, in the same way that the Vancouver International Airport Authority is
incorporated.

Note: This envisions the winding up of the existing convention centre authority which
was established to undertake development and operation of the expanded convention
centre which would have resulted from constructing an expansion to the east of the
existing structure. This pre-existing authority should be extinguished once its existing
financial obligations are discharged. The new Authority should be designed through
consultation of the Convention Centre Expansion Task Force with other key
stakeholders such as the two senior levels of government, the City of Vancouver, and
selected business organizations.

1.6    Board of Directors for New Convention Centre Authority

The board of the Authority in which would be vested the ownership of the new structure
should reflect the ownership of the new structure, and also reflect key community
interests. Assuming that both senior levels of government and industry make financial
contributions to the expanded centre, board members could be appointed by each of
the Federal Government, Provincial Government, and industry (relevant private sector
organizations). If the City of Vancouver were to make a contribution to the infrastructure
required, the City might be given a seat on the board. The industry representatives
would need to be designated by industry, not selected by government.

The “nominating entity” model utilized to identify board members for the Vancouver
International Airport Authority board might be an appropriate mechanism for this
selection process, provided that sufficient provision for accountability is included. The
members of the Authority should be the nominating entities. These entities would
appoint the directors, and the board of directors would be accountable to the
nominating entities. There is precedent for this at the provincial – federal government
level for joint initiatives, with indications that this arrangement works well.
                                                                                  Page 4
                    Governance of the Expanded Vancouver Convention and Exhibition Centre
                                                                           July 20, 2000



It is important that the business community lead the board of directors, with nominees
from all nominating entities individually and collectively having experience and
qualifications to help ensure sound management of the convention centre.

1.7    Reconciliation with Existing Arrangements

The arrangement proposed above would leave the Province through PAVCO with the
operating responsibility for the existing facility, and the need to extend that responsibility
to the new structure part of the expanded convention centre. That should be done by
the provincial government reassigning to the Authority the lease for the existing facility,
and the Authority then contracting with PAVCO for the operation of the whole
convention centre. This would ensure that PAVCO continued to play its existing role,
but for the expanded convention centre.

1.8    Marketing of Expanded Convention Centre

The marketing plan for the expanded convention centre is in the process of being
developed, and will be one of the core documents guiding progress towards the
expanded facility. The activities and responsibilities outlined below would be undertaken
in support of that plan.

Marketing of the expanded centre should continue to be shared between Tourism
Vancouver and PAVCO, with participation as well by the Vancouver Hotel Association.

It would be helpful to the situation to have a marketing accord that would spell out the
relative responsibilities and involvement of each of these three organizations. For
example, Tourism Vancouver could have primary responsibility for marketing the
expanded convention centre beyond an agreed time horizon, while PAVCO could have
primary responsibility for marketing the centre from the current date up to that horizon.
The Vancouver Hotel Association would need to participate on an ongoing basis to help
ensure coordination and cooperation with the convention-oriented hotels.

The three organizations would need to work together regardless of the time horizon,
and should be formally charged with responsibility to coordinate their activities and
cooperate in their efforts to market the facility.

A mechanism likely would be required to help achieve the synergy outlined above. The
three key organizations involved are separate entities, but need to work coherently and
in concert. A structured process should be established involving the executive and
senior management of each of the organizations. This group should meet at least
annually to review and update the marketing plan. Personnel involved in marketing and
sales for each organization should carry out preparatory work and draft the revised
marketing plan. The executive and management of each of the organizations should be
                                                                                  Page 5
                    Governance of the Expanded Vancouver Convention and Exhibition Centre
                                                                           July 20, 2000



programmed to meet annually to update the marketing plan. It may prove worthwhile to
hold regularly scheduled quarterly meetings of the three participants to maintain
continuity of dialogue and ongoing updates of the marketing plan. Ongoing operational
cooperation would need to continue in any event.

There should be equal accountability and performance measures for each of the
participating organizations. As required, an outside facilitator and other resource
personnel could be added to help ensure that the process achieves the desired results.

1.9    Formal Agreement Between Stakeholders

A number of aspects of the situation would need to be covered in an agreement
between the stakeholders, including the two senior levels of government, industry,
potentially the City of Vancouver, PAVCO, Tourism Vancouver and the Vancouver
Hotel Association. There will need to be agreements between the stakeholders as to
how the initial and any ongoing operating deficits are to be shared, and how any
operating surpluses are to be shared. Similarly, there would need to be agreement on
the utilization or splitting of returns from the parking and retail part of the new structure
and other revenue opportunities from that facility.

The assignment of overhead to the expanded convention centre would need to be
spelled out in advance. The rights of the owners of the existing facility and new
structure to make improvements and then charge them to the lessee(s) would need to
be negotiated.

1.10   Transparency/Public Disclosure

The disclosure requirements for the Authority in essence should be the same as for
public bodies in British Columbia. The Authority should be transparent and open in its
operations and governance.

1.11   Governance During Construction of New Structure

The construction of the new structure would require some different board of directors
expertise from that outlined above for ongoing operations. During construction of the
new structure, the Authority should add directors whose background is appropriate to
governance of that type of project.

The composition of the board should be changed as required when construction is
completed and operation of the expanded convention centre begins. This could be
achieved by having the terms of some of the directors with appropriate construction
oriented expertise expire after completion of construction.
                                                                                  Page 6
                    Governance of the Expanded Vancouver Convention and Exhibition Centre
                                                                           July 20, 2000



1.12   Governance of Convention Centres in Other Cities

Governance of convention centres in other cities in North America varies. Those
variations include ownership by a city, county, state/provincial government or
government authority. Private ownership is infrequent. Management may be
government, private, or not-for-profit. There are numbers of situations where the
marketing of the facility is undertaken jointly by the facility operator and a
tourism/visitors bureau.

1.13   Need for Public Sector Involvement

Governments recover their investment in convention centres through the increased tax
revenues which they receive as a result of the economic impact of the facilities.

As noted in the business plan for the previously proposed convention centre expansion
in Vancouver, a convention space developer could never recover through rent the cost
of constructing convention and exhibition space. Almost all major convention centres in
North America are financed through tax measures of one kind or another. A public
sector role in governance therefore follows.

1.14   Summary

•   The governance, marketing and operation of the existing Vancouver Convention
    Centre appears to be very good.

•   The effective and efficient operation of the expanded Convention Centre will require
    seamless management of the combination of the old and new facilities, including
    operations and marketing.

•   The current roles of PAVCO, Tourism Vancouver and the Vancouver Hotel
    Association should be continued and expanded to encompass the expanded
    convention centre.

•   The underlying ownership of the existing facility and new structure may be different.

•   To accommodate that and the current lease arrangements for the existing facility, a
    Convention Centre Authority should be utilized.

•   The ownership and high-level management of the expanded convention centre
    would be vested in the Authority. A board would direct its governance with
    representation from the stakeholders.
                                                                                  Page 7
                    Governance of the Expanded Vancouver Convention and Exhibition Centre
                                                                           July 20, 2000



•   This arrangement for the new structure could be reconciled with the current
    arrangements for the existing facility by the provincial government re-assigning to
    the new Authority the lease for the existing facility. The Authority then would contract
    with PAVCO for the operation of the whole of the expanded convention centre.

•   Marketing of the expanded centre should continue to be shared between Tourism
    Vancouver and PAVCO in coordination with the convention-oriented hotels through
    the Vancouver Hotel Association. This should involve a marketing accord between
    these three organizations.

•   An agreement between the stakeholders in the expanded convention centre would
    need to cover the arrangements selected, together with how the initial and any
    ongoing operating deficits are to be shared, and how any operating surpluses and
    revenues would be used or shared.

•   The disclosure requirements for the Authority should be the same as for public
    bodies in British Columbia.

•   The governance of the construction phase of the expanded convention centre
    should use the same Authority as for operations, but with part of the expertise on
    the board changing when construction is complete.

•   Governance of convention centres in other cities in North America varies. Those
    variations include ownership by a city, county, state/provincial government or
    government authority. Private ownership is not frequent. Management may be
    government or private.

•   Governments recover their investment in convention centres through the increased
    tax revenues which they receive as a result of the operations of the facilities.

•   There are numbers of situations where the marketing of the facility is undertaken
    jointly by the facility operator and a tourism/visitors bureau.

•   The convention centre expansion, which was proposed for the site immediately to
    the east of the existing convention centre in Vancouver, was to have been governed
    by a convention centre authority.

•   That authority still exists, and carries with it the debt associated with the project that
    was terminated.

•   Accordingly it is important that the new authority be quite separate, and that the
    previous authority be extinguished to ensure that there is a fresh start.
                                                                                 Page 8
                   Governance of the Expanded Vancouver Convention and Exhibition Centre
                                                                          July 20, 2000



                                      APPENDIX

    Approach to Governance of Previously Proposed Expansion in Vancouver

Options

The convention centre expansion proposed for the site immediately to the east of the
existing convention centre in Vancouver involved the development of an extensive
business plan document that included consideration of ownership options. The
documentation concerning that proposed development notes that the proposal
presented six ownership scenarios, which were simplified into two basic options as
follows.

1. A private sector developer finances, builds and owns and leases the facility back to
   the Province.

2. The Province finances and owns the facility, using (the development company) as
   builder/developer.

Convention Centre Authority

“The first option has been rejected for reasons of cost, lack of risk transfer from the
Province and uncertainty ---. (The) business plan accordingly (assumed that) the
project (would be) built and owned by the Vancouver Trade and Convention Centre
Authority (VTCCA) ---.”

The proposal for the convention centre expansion involving the existing facility and new
construction to the east of the existing facility “--- did not have a solution for the
logistical issues which arise when the two portions of the expanded and retrofitted
facility are owned by two different landlords under different lease terms. Neither the
retrofitted portion owned by Canada Place Corporation nor the expanded portion owned
by (another entity) would be able to operate independently ---.”

“To eliminate the legal and financial problems associated with the --- arrangement, a
non-share, not for profit corporation was incorporated, the Vancouver Trade and
Convention Centre Authority, (VTCCA) as a vehicle to own both leases, to represent
the interests of the federal, provincial and industry stakeholders and to maintain the
common areas of the project. The VTCCA is incorporated under the Canada
Corporations Act, Part II.”

The VTCCA structure, objectives, relationship to PAVCO and the financial benefits of
the proposed structure are outlined in the Appendix to the Vancouver Convention &
                                                                               Page 9
                 Governance of the Expanded Vancouver Convention and Exhibition Centre
                                                                        July 20, 2000



Exhibition Centre Expansion Summary Business Plan. That Appendix previously was
distributed to members of the Convention Centre Expansion Task Force.
EXPANDING
THE VANCOUVER
CONVENTION &
EXHIBITION CENTRE
                                                BUSINESS PLAN

.



                          APPENDIX F


CORPORATE PROFILES
       PACIFIC LIAICON AND ASSOCIATES INC.
       LMN ARCHITECTS




                           VANCOUVER CONVENTION CENTRE EXPANSION TASK FORCE
                                                                APPENDICES
Pacific Liaicon and Associates Inc.
Consulting Engineers / Management Consultants


CORPORATE PROFILE

Managing projects on schedule and budget on a corporate level has been the primary
service provided by Pacific Liaicon and Associates Inc. (PLA) to private industry and
governments since it was established in 1970 by Henry Wakabayashi. As Owner’s
Representative and Project Managers on a variety of private industrial and public sector
developments, PLA specializes in handling the requirements of Project Owners through
all development phases, including:
                 –    conceptual design
                 –    feasibility and environmental assessment studies
                 –    project definition (scope, schedule and cost)
                 –    design and engineering
                 –    regulatory approvals and permitting
                 –    construction
                 –    start-up and commissioning

PROJECT MANAGEMENT EXPERIENCE
While the company’s past focus of expertise was the pulp and paper sector, PLA has
during the past 30 years undertaken project management contracts for a wide variety of
public projects, namely the Advanced Light Rapid Transit System (SkyTrain first phase),
North East Coal Development and Expo 86. Some of the present assignments include:
        Vancouver Convention & Exhibition Centre Expansion, Burrard Landing Project
        For the BC Pavilion Corporation (PAVCO), 1999 to present
        Owner’s Representative and Project Manager to evaluate the design and construction cost
        of a new convention centre expansion site immediately west of Canada Place.
        Vancouver International Airport Expansion Projects
        For the Vancouver International Airport Authority, 1992 - present
        Owner’s Representative and Project Managers for a number of expansion projects:
        •    New International Terminal Building and Parallel Runway Projects, 1992 – 1996
             $400 million project to build the new International Terminal Building and Parallel
             Runway
        •    International Terminal Building (ITB) Expansion Projects, 1996 – 2000
             $120 million expansion including: East Concourse Expansion, East Apron
             Expansion, East Chevron Expansion, and Transborder Apron Holdroom Upgrade
        •    West Apron Expansion and ITB Passenger Flow Enhancement Projects, 1999 -
             present
             $39 million expansion of the West Apron including associated works, and $3 million
             in upgrades to the ITB to improve passenger movement through the building


A202 – 3823 Henning Drive
Burnaby, British Columbia, Canada V5C 6P3
tel: (604) 299-8860 / fax: (604) 299-8722 / website: www.pla.bc.ca
Pacific Liaicon and Associates Inc.
Corporate Profile
Page 2 of 2


        Drinking Water Treatment Program
        For the Greater Vancouver Water District, 1995 – present
        Under contract to provide program management services for the first phase (over
        $300 million budget) of the following components of the Drinking Water Treatment
        Program:
        •    Primary Disinfection and Corrosion Control Facilities (design and construction)
        •    Secondary Disinfection Stations (design and construction)
        •    Pilot Plant Study and Predesign for Seymour Filtration Plant to be constructed under
             a design-build-operate approach
        Berth 4/5 Redevelopment Project
        For Vancouver Wharves Limited, 1997 - present
        Project Manager for upgrades and expansion to Vancouver Wharves’ facilities,
        completion of which will allow more efficient handling of specialty agricultural products,
        fertilizers and sulphur. This $110 million project is comprised of the following major
        components:
        •    Sulphur Project, including a new rail car dumper, storage and reclaim system feeding
             the existing Berth 4 shiploader
        •    Agri Project, including a new dumper, storage and reclaim system feeding a new
             Berth 5 shiploader
        •    Related work
        2010 Olympic Games
        For the Vancouver Whistler 2010 Bid Corporation, 2000
        Project Advisors for the bid submission phase of the 2010 Olympic Games to be held in
        and around Vancouver and Whistler, British Columbia

THE PACIFIC LIAICON AND ASSOCIATES INC. PROJECT TEAM
The PLA team on the Vancouver Convention & Exhibition Centre (VCEC) Expansion
Project is headed by three of PLA’s principals.
        •    Henry Wakabayashi, P.Eng.
        •    Ray Zibrik, P.Eng.
        •    Verne Janzen, P.Eng.

Their combined project management experience is over 90 years. Although Ray Zibrik
joined the company in 1988 and Verne Janzen, in 1998, both Ray and Verne were
involved in PLA projects prior to joining the company.

PLA has a core group of 25 professional and technical staff, more than 6 support
personnel, and has ready access to other associate consultant resources for specific
project requirements.




A202 – 3823 Henning Drive
Burnaby, British Columbia, Canada V5C 6P3
tel: (604) 299-8860 / fax: (604) 299-8722 / website: www.pla.bc.ca
VANCOUVER CONVENTION & EXHIBITION CENTRE EXPANSION PROJECT
PROJECT EVALUATION AND COST REPORT




                        APPENDIX G

TECHNICAL INFORMATION




               1.0 EXECUTIVE SUMMARY / page 11
VANCOUVER CONVENTION & EXHIBITION CENTRE EXPANSION PROJECT
PROJECT EVALUATION AND COST REPORT



TECHNICAL INFORMATION

DETERMINATION OF NET PROFIT MARGINS
Net profit margins as a percentage of sales were derived based on data obtained from
Volume III, Small and Medium Firms, Principal Financial Ratios by Detailed 4 Digit
SIC, published by Statistics Canada. The E series SIC (SICE) classify companies
according to primary activity. The publication contained Financial Performance
Indicators for 1996, 1997 and 1998.

Using the SICE classifications, net profit margins were recorded for those industries that
are sub-sectors of the six industry spending sectors set out in the KPMG report.
Specifically, the Net Profit Margin (as a percentage of sales) was collected for the top
quartile of Canadian small businesses in each industry sub-sector for 1996, 1997 and
1998 (the last years for which information is available). An average of net profit margins
was taken for the three years for each SICE industry. From these average net profit
margins for each SICE classification, a weighted average net profit margin for each of the
industry sectors was calculated based on the number of businesses in each sector. These
net profit margins were applied to the KPMG spending estimates to determine the net
profit by industry sector.

The derivation of the net profit margin is shown below for the Accommodation sector.

        Accommodation Sector
SICE    Industry                  No. of Firms     1996       1997        1998
 9111   Hotels and Motor Hotels          2,168    5.70%      6.20%       6.90%
 9112   Motels                           1,812    8.20%      9.10%      10.70%
 9114   Guest Houses                       105    6.00%      6.20%       5.20%
 9121   Lodging Houses                     248    7.00%      8.20%       9.50%
        Total                           4,333

        WEIGHTED AVERAGE NET PROFIT MARGIN          7.65%


There is an argument that a marginal profit rate on the incremental sales to delegates and
exhibitors is higher than an overall net profit rate in the short term because only operating
costs are required to create the incremental profit. While acknowledging this argument’s
validity in the short term, over the longer term market pressures in the form of additional
competition will return profitability to historical levels. Because the Task Force is
measuring the impact due to VCEC-hosted events over a thirty-year period, it considered
that industry net profit percentages would be more reliable than marginal profit
percentages.

The Task Force appreciates that industry profit percentages used to estimate net profits in
the Business Plan may not represent the precise profits earned by companies affected by
the spending by these delegates and exhibitors. However, the profit estimates are


                          1.0 EXECUTIVE SUMMARY / page 13
EXPANDING
THE VANCOUVER
CONVENTION &
EXHIBITION CENTRE
                                                               BUSINESS PLAN

designed to provide a reasonable indicator of the incremental benefits to industry as a
result of the convention centre expansion.

VCEC PROFORMA STATEMENTS
Definitions of a number of the terms used in the VCEC proforma statements in Section
6.0 of the Business Plan are shown below.

Revenue and Direct Expenses
Revenue for the expanded VCEC is derived from the sources shown in the statements.
Room rent is based on the number of Events, Food & Beverage on the number of
Delegate Days and Event Services on the number of Event Days. These three revenue
components are the primary sources of revenue from events. Sponsorship is for
agreements with sponsors and suppliers who provide cash or services in kind for
promotional affiliation with the VCEC.

Direct expenses are the direct charges that relate to these expense categories.

Facility Expenses
Facility expenses include staffing, fees, general administration, business development,
operations, property taxes and lease costs.




                                      VANCOUVER CONVENTION CENTRE EXPANSION TASK FORCE
                                                                           APPENDICES
VANCOUVER CONVENTION & EXHIBITION CENTRE EXPANSION PROJECT
PROJECT EVALUATION AND COST REPORT




                        APPENDIX H

RESTRICTIONS




               1.0 EXECUTIVE SUMMARY / page 15
RESTRICTIONS

The results of this Business Plan are based on estimates and assumptions that are
inherently subject to uncertainty and variation depending upon evolving events. We do
not represent them as results which will actually be achieved. Assumptions may not
materialize and unanticipated events may occur; therefore actual results achieved during
the estimate period will vary from our projections and these variations may be material.

We reserve the right (but are under no obligation) to review all calculations included or
referred to in this report and, if we consider it necessary, to revise our conclusions in light
of any information which becomes known to us after the date of this report.

The report and financial projections contained herein pertain only to the facilities and
locations described and conditions prevailing during the course of the research completed
on September 20, 2000.

				
DOCUMENT INFO