Management Plan & Destination | Attraction Development Business

GATEWAY SITE Sault Ste. Marie, Ontario, Canada | March 19th 2012 | Final Draft Report

Management Plan & Destination | Attraction Development Business Plan

Gateway Site | Sault Ste. Marie, Canada | Final Report - Draft | March 19th 2012 2

Contents

1.0 Introduction 3

2.0 Market Analysis 17

3.0 Programming and Capital Costs 34

4.0 Planning 55

5.0 site Analysis 58

6.0 site Design 66

7.0 Architectural Design 70

8.0 Primary Attraction 74

9.0 Visitation Projections 90

10.0 Development and operating Framework 109

11.0 Financial Analysis 118

12.0 ssM Gateway Corporation operating Plan 141

13.0 Capital Funding Plan 150

14.0 economic Impact Analysis 162

15.0 Implementation strategy 173

1.0 INTRODUCTION


1.0 Introduction

February 13, 2012

Mr. Bill DurnfordChairman, Gateway Committeec/o tourism sault ste. Marie99 Forster Drivesault ste. Marie, ontario P6A 5X6

Dear Mr. Durnford, Forrec Ltd. in association with PKF Consulting Inc. are pleased to submit this report to tourism sault ste. Marie for the Gateway site Management Plan and Destination Attraction Development. the work over the past year has been intense and challenging but ultimately very rewarding, as we believe that what we are presenting to Council is an approach that creates a new heart for the Waterfront. this new mixed-use development displays the attributes of sault ste. Marie in the most exciting manner to all visitors, and most importantly, has great prospects for success.

We want to thank the Committee for their energy, insight and enthusiasm for the project. We look forward to presenting our findings to Council, and utlimately seeing how the new vision for the waterfront is received by the general public, funding sources and private enterprise as we believe the thoughtful development of the Gateway site is an unparalleled opportunity for the City of sault ste. Marie.

sincerely,

John Plumpton senior DirectorForrec Ltd.


1.0 Introduction

The Opportunity

the Development at the Gateway offers the citizens of sault ste. Marie an incredible opportunity.

It is the unparalleled chance to create a focal point for the City. sitting at the axis of all the major destinations in the City including the exit from the International Bridge, the Waterfront, the Casino, the station Mall, essar Centre, Agawa Canyon train station and Bondar Pavilion, this prime location can be a catalyst for an even more energetic downtown and waterfront.

This brings up a very important thought- is this a Gateway? Maybe yes, as it is an opportunity to open up more possibilities along the waterfront. However, we think it can be much more than that- it can become the real heart of Sault Ste. Marie.


1.0 Introduction

Project Goals

the goals of the Gateway are understandably extensive:

the original RFP stated the goals as creating a major tourist destination for the City that will:

• Make a significant and lasting economic contribution for the Sault Ste. Marie area;

• Act as a catalyst for additional economic development

• Create new jobs

• Showcase Sault Ste. Marie and area as a significant gateway from the U.S. to ontario and Canada

these are all important items to strive for but don’t address the more heartfelt desires. to address these more emotive ambitions the Gateway working committee along with Forrec and PKF expanded the list to include:

• to create a 12 month project

• to create a major public gathering and celebration space for the City

• to create an additional attraction for the City that will appeal to locals and tourists

• to create a “postcard” icon for the city

• To be a significant new asset in the continued development of the downtown and the waterfront

• to promote the sault’s unparalleled interest in sustainable energy

• to build on the City’s image of being “naturally Gifted”


1.0 Introduction

Project Approach

You can understand that to focus on creating a single identifiable demand generating attraction while trying to respond to the project goals is no simple task.

the study has to consider a project that is more comprehensive in nature. It has become apparent that to maximize our opportunity for success we need to take an approach that will not create a single, destination attraction but to

create a place that will attract locals and tourists throughout the year- bringing them back time and time again.

Why have we taken this unique approach? There are two primary reasons.

one, we do not have the market to support a single experience type of attraction and two, the opportunity to do something much greater for the city is too great to ignore.


1.0 Introduction

Methodology

to accomplish our goals the entire team, including the Gateway Committee and the Consultants, started the entire process from scratch, creating an approach that was totally different from the past.

there are many ways to consider the task- first we could establish a program or, we could concentrate on the complex planning issues and resolve what can fit on the site. Maybe we should consider what the waterfront should feel like or the urbanscape along Bay st.?

these are all very important issues, but the most important first task is to consider (with our project goals in mind) how the visitor (both local and tourist) might enjoy the place.We call this the visitor experience narrative and while we assume the physical environment will be a “wow”, we need to be sure the overall experience be a “wow”. We think it will be as here is how we see a year in the life of the Gateway.


1.0 Introduction

Experience Narrative

Using the experience narrative approach, and basing program ideas on meetings with the working committee we have described potential experience through all four seasons.

springIn March, we are always looking for something fun to do with the kids and the Gateway is the place. First stop is the incredible exhibit on the flying dinosaurs presented by Science North in The Gateway Exhibit Centre. this intriguing exhibit is a perfect complement to the wonders of the 18,000 square foot Sault Exploration Centre, an interactive science and entertainment attraction that tells the story of the sault from it’s geological origins to today’s aspirations.

spring is great time for business and conference functions. the beautifully landscaped 14,000 square foot atrium provides a unique environment to support these events.

the Gateway Plaza is also a great start finish for the various fun runs and walks throughout the year.Did we mention the incredible celebrations for the Greyhounds Memorial Cup success?


1.0 Introduction

Plaza - Spring


1.0 Introduction


summerAt the first sign of summer there is nothing is better than a Farmer’s Market. Fresh produce, food and interesting crafts are on display, and the experience gets even better as you can enjoy some shopping followed by a stroll along the river.

Shopping at the Gateway provides you with all kinds of opportunities to fit yourself for summer fun. An active lifestyle is the inspiration for an exciting mix of outdoor themed destination shops as the Gateway is the destination for adventurers of all types- bikes, hiking, camping gear, watercraft- it’s all available at the Gateway.

summer is always the season of celebration- the weather, the holidays and Canada. Canada Day festivities have an incredible new home. Kids splash about in the interactive fountains stages are set up for some of Canada’s best known bands. the plaza is full of stalls, buskers and activity as everyone anticipates the incredible fireworks show visible on the river.

summer is also a time to celebrate the First nations. the Pow Wow extends along the waterfront to Whitefish Island and the Gateway Plaza is a buzz of activity. In the evening the space transforms into an incredible sound and light show.


1.0 Introduction

Plaza - Summer


1.0 Introduction


Autumn

september in the north is a time when life gets back to normal and a more regular pace. If you are lucky enough to be a resident of the on-site condominiums, the Gateway provides a wonderful setting for some leisurely activities- coffee in a tranquil Café, dinner at the restaurant overlooking the river, exploring the aquarium and the shows in the theatre. of course active life is still brought to the Gateway in the fall by students from the public schools visiting the Exploration Centre and by undergrads from Algoma University filling the two storey brewpub.

october is the most beautiful month of the year and there is nothing like taking the Agawa Canyon train through the brilliantly coloured forests to the canyon. the guests will leave for their journey from the new train station but not before waking themselves up at the Gateway Café with a hot coffee and a breakfast treat. When the travelers get back they might have the luck to enjoy some events of the Algoma Fall Festival. the train station also doubles as a unique gallery telling the story of how the Group of seven was captivated by the region.

Autumn is also the time for northern ontario’s largest minor hockey tournament. We can’t forget it’s still a hockey tournament and the opening of the rink is a perfect time for the sault Winter Classic- the first outdoor game of the year!


1.0 Introduction

Plaza - Autumn


1.0 Introduction


Winter

The last month of the year starts with a full slate of Christmas celebrations and finishes with a grand new Year’s celebration. All month long the rink is buzzing with activity, the restaurants are full of company parties and the holiday performance at the theatre was just perfect. on new Year’s eve the Broadcast Centre helps us connect our celebration to others across the country with huge video screens and then just before midnight the Sault Tower erupts into an incredible sound and light show to countdown to the new Year.

the weather is chilly but the Bon soo Festival makes it fun for everyone. the Gateway plaza sparkles with ice sculptures as the river style ice rink is filled with skaters. Onlookers enjoy hot chocolate from rink side vendors. to warm up you can spend a little time inside the magnificent all season atrium full of exotic plants and water features.


1.0 Introduction

Plaza - Winter

2.0 maRkeT aNalysIs


2.0 Market Analysis

Introduction

2.1 Introduction

In order to determine the potential gaps in the sault ste. Marie attraction and tourism infrastructure inventory, PKF undertook an analysis of ssM’s current tourism infrastructure and market, as well as competitive destinations and attractions in bordering Michigan, and other northern ontario communities.


2.0 Market Analysis

City of Sault Ste Marie

2.2 City of sault ste Mariethe City of sault ste Marie is located at the gateway to Algoma Region on the st. Mary’s River, which connects Lake superior and Lake Huron. the City is strategically located in north-Central ontario. It is also located at the northern terminus of United States Interstate 75 (which links Michigan to Florida), and draws significant international traffic from a core base of 20 million people in the U.S. mid-west. From a Canadian perspective, Sault Ste. Marie is at the midpoint of the transCanada Highway 17, and is also midway between toronto and thunder Bay. the next closest cities are elliot Lake, at 220km, and sudbury, at 305km in distance.

the City of ssM has an aging population of approximately 75,400 residents, which is projected to reach 82,500 people by 2026, with an estimated 20,200 people aged 65 years – 6,000 residents greater than in 2011. It is expected that the local residents will make use of the ssM Gateway Attraction development on a year-round basis.

the City of Sault Ste Marie is officially part of the Ontario Tourism Region 13B, and Algoma District. This region hosted 1 million visitors in 2009 – a 13% decline over 2006 volumes. Approximately 58% of the visitors to the area spend at least one night in the Region, while 42% are same-day visitors. the sault ste Marie area is highly dependent on US visitation with approximately one-third of overall visitor volumes comprised of Americans. The decline in US visitor volumes to Ontario and Canada has been an ongoing challenge in the past decade. US visitors entering Canada at the ssM International bridge by automobile totaled 253,660 persons in 2010, which is down by 24% from the 334,000 US visitors which crossed into SSM in 2007. However, with 1-in-every-3 visitors to the Region stemming from the US, this market should not be ignored when developing the concept for the SSM Gateway attraction.

In terms of party composition, there were close to 658,000 total household visits to the Region, of which an estimated 86% consisted of adult only parties, while the other 14% included children. the average party size was 2.5 visitors. over 35% of the visitor volumes occurred during the summer months of July to september, followed by the winter months at 23%, spring at 22% and the fall months at 19%.

It is estimated that the City of ssM hosted an estimated 740,000 visitors in 2009 (73% of the visitor market to Region 13B), of which 642,420 visitors were visiting the City for pleasure or to visit friends and relatives – both prime target markets for the subject Gateway attraction development.


tourism in sault ste. Marie, ontario is directly related to the abundant natural habitats and historic landmarks located in and around the City. Much of the tourist activity in sault ste. Marie is concentrated around outdoor and arts/culture/heritage activities. the primary attractions within the City include:

• Agawa Canyon tour train• Canadian Bushplane Heritage Centre• Art Gallery of Algoma• ermatinger-Clergue national Historic site• sault ste. Marie Museum• sault ste. Marie Canal national Historic site• oLG Casino sault ste. Marie• Roberta Bondar Park & Pavilion• Hiawatha Park & Conservation Area• treetop Adventures• stokely Creek Lodge• spuce Haven Zoo• eagle Feather Aviation (Helicopter Rides)• Buttermilk Mountain Resort• Museum ship norgoma• Crimson Ridge Golf Club• silver Creek Golf Course• searchmont ski Resort

overall attendance levels to sault ste. Marie’s key attractions during the peak months have declined by 11% in 2010 over 2005, as shown in the table below. the launch of the new Agawa Canyon train tour in June 2011 is expected to help to reverse this trend, with projected stabilized attendance levels of 40,400 by Year 3.

2.0 Market Analysis



SSM ATTRACTIONS - Seasonal Attendance (May to Oct) – 2005, 2010

2005 2010 % Chg

Agawa Canyon Train Tours 43,151 24,740 -42.7%

Art Gallery of Algoma 11,971 12,107 1.1%

Canadian Bushplane Heritage Centre 13,076 11,484 -12.2%

Ermatinger-Clergue National Historic Site 4,903 5,075 3.5%

Lake Superior Provincial Park 119,649 117,623 -1.7%

Pancake Bay Provincial Park 65,637 61,784 -5.9%

Sault Ste. Marie Museum 8,249 8,607 4.3%

Searchmont Resort (Non-Skier Visits) 50,307 40,000 -20.5%

totAL 316,943 281,420 -11.2%

source: ssM tourism

2.0 Market Analysis



Various annual festivals and events also take place in sault ste. Marie, which draw visitors from the surrounding areas. the majority of these take place during the summer months form June through september.

• Bon soo Winter Festival - February• shadows of the Mind Film Festival - February-March• new to the sault - May• Lilac & Lavendar Festival - June• the Great tug Boat Race - June-July• Arts at the Docks - July• echoes of the World Drum Festival - July• Rotaryfest - July• Blueberry Festival - August• Bushplane Days - september• Chilifest - september• War of 1812 Rendezvous & Fur trade - september• Algoma Fall Festival - october• Festival of trees - november

In addition to the typical tourist attractions and festivals/events, sault ste. Marie has a large casino that draws demand from surrounding areas. the Casino attracted an estimated 656,000 visitors in 2010, with an average per spend of $47. the casino market is largely comprised of resident demand (85%), with the facility located directly across the street from the subject Gateway site.

Also in close proximity to the Gateway site is the provincial travel Information, which serviced an estimated 110,000 visitors in 2010, down 46% from 2004 levels (95,000 fewer visitors), however demand levels have improved since 2008.

the primary attractions in the sault ste. Marie surrounding areas tend to focus on several key themes: history/heritage, destination retail, outdoors and family entertainment. the competitive analysis helped to distinguish that what might be missing within the City is an attractor the reflects the history and culture of Sault Ste. Marie – something that provides a draw to the City, while providing a sense of pride and community for the residents, and is part of a critical mass that might entice people to make the drive to the sault.

2.0 Market Analysis



2.0 Market Analysis

Michigan Visitor Volumes and Attractions

2.3 Michigan Visitor Volumes and Attractions

the state of Michigan hosted an estimated 181 million visitor-days in 2009, down 3.4% or 6.42 million over 2008 volumes. the Leisure market comprises approximately 147 M visitor-days or 82% of Michigan’s total visitation. Michigan residents represent 61% of the market (110 M), and non-residents account for close to 70 million visitor-days.

Primary Attractions in ssM, Michigan tend to focus on arts/culture and water and ship-related themes, including:

• soo Locks, Visitor Centre, tower of History (210 ft), soo Locks boat tours• shipwrecks – edmund Fitzgerald• Water street Historic Block – dates back to 1820’s, historic homes• Museum ship Valley Camp• River of History Museum• Art Galleries• Kewadin Casino• Lake Superior State University Arts Centre (675 seats)• soo theatre (750 seats)• Historic Hydroelectric plant


Mackinaw City and Island, which is approximately 1 hour south of ssM, is a national historic landmark, featuring: Victorian-inspired shopping, dining and entertainment centre, 50 specialty shops, a 10,000 gallon fish aquarium, 5 museums, Grand Hotel & Island Resorts, horse-drawn carriage rides, biking, hiking, and boating. the Mackinaw Bridge, a suspension bridge which spans the straits of Mackinaw recorded at 2.6 million crossings from May to october 2010, down 6% from 2005 levels.

Alpena is located in northeast Michigan, approximately 2.5 hours southeast of ssM, on Lake Huron and builds on its historic, maritime theme including:

• Michigan’s “Advenshore”• Diving, kayaking, snorkelling• thunder Bay national Marine sanctuary• Great Lakes Maritime Heritage Center• Maritime Heritage trail• shipwreck tours (glass bottom boat)• Beaches• Historic Downtown - Alpena Mall, Farmer’s Market• Wine tasting – Wine & Hops trail

2.0 Market Analysis



traverse City is located in northwest Michigan, approximately 3 hours southwest of ssM, on Lake Michigan and is a resort destination known for its beaches, family fun, arts and culture, gaming and recreational activities including:

• Family fun – bowling, museums, children’s theatre, mini golf, waterparks (Pirate’s Cove Adventure Park)• tall ships & Boating• Beaches - sleeping Bear Dunes• 2 Casinos: turtle Creek Casino & Hotel; Leelanau sands Casino• 3 Destination spas with a north Woods / Lake Michigan theme• Wineries – Wine tours (Leelanau Peninsula & the old Mission Peninsula)• Dining & Foodie tours (self-guided)• Golf Courses• Arts & Culture – traverse symphony orchestra, City opera House, Dennos Museum Center (w/ performance hall), Interlochen Center for the Arts, old town Playhouse• Winter activities – skiing/snowboarding (shanty Creek Resort), snowmobiling, etc.• over 4,000 guest rooms, including 3 indoor waterparks: Great Wolfe Lodge (280 rooms), Pirate’s Cove and Adventure Park and Grand traverse Resort & spa (600 rooms)• Ziplines and high rope courses have recently been added at some resorts

2.0 Market Analysis



the following table provides an indication of the seasonal visitation to Michigan attractions over the May to october period between 2005 and 2010.

MICHIGAN ATTRACTIONS - Seasonal Attendance (May to Oct) – 2005, 2010

2005 2010 % Chg

Mackinac Bridge 2,793,871 2,627,457 -6.0%

Soo Locks 432,570 n/A

The Canada Store 114,870 85,755 -25.3%

source: ssM tourism

2.0 Market Analysis



2.0 Market Analysis

Northern Ontario Attractions

2.4 northern ontario Attractions

the primary attractions in northern ontario are science north and Fort William Historical Park, both of which receive significant provincial government subsidies. Science North operates both of Canada’s second and eighth largest science centres, located in sudbury, ontario. On average, operating subsidies at comparable Northern Ontario attractions comprise 50% to 70% of the attraction budget. the following table provides an indication of attendance to the largest attractions in northern ontario during 2010.

NORTHERN ONTARIO ATTRACTIONS

Market 2010 Attendance

Science North (Only) sudbury 125,000

Dynamic Earth (Only) sudbury 42,000

Science North, Dynamic Earth, IMAX Theatre & Planetarium (Combined)

sudbury 260,000

Fort William Historical Park thunder Bay 100,000

Agawa Canyon Train ssM 25,000

Cdn Bushplane Heritage Centre ssM 14,000

Polar Bear Habitat Cochrane 13,000

Shania Twain Centre and Gold Mine Tour timmins 6,500

Hockey Heritage North Kirkland Lake

2,000

source: PKF Research


In addition, the City of thunder Bay is currently planning a $130 Million waterfront multi-use project to be developed on a 60 acre site, including:

1. Private sector Components

• 2 condominium buildings, each with 52 units• A 120-room boutique hotel, with 3,500 sq.ft. of meeting space• 24,000 sq.ft. of mixed commercial space, including retail, restaurants, and spa/wellness centre

2. Public sector Components

• Artisan market and marketplace for festivals, markets, etc• skateboard / BMX plaza• Ice rink / model pond• Gardens, trails, pond• 4 km of additional boardwalk, park and bike paths• 750 parking spaces• new /revitalized marina with 300 additional boat slips and new marina building• new /revitalized cruise ship dock and terminal• Improvements to existing piers

the City recently issued a RFP for improvements to the existing piers (June 2011).

2.0 Market Analysis

Northern Ontario Attractions


2.0 Market Analysis

Travel Trends

2.5 travel trends

the following section considers the needs and wants of travellers to Canada generally and northern ontario specifically. Consideration towards current trends in the tourism sector will be essential during the development of the subject Gateway site.


2.0 Market Analysis

General Travel Trends

General travel trends

According to Canadian tourism Commission (CtC) research in the explorer Quotient, April 2009, the top travel trends for visits to Canada are:

1. Experiential Travel travellers are increasingly seeking to immerse themselves in experiences and partake in local culture e.g., local food and wine, spa, culture and soft adventure activities.

2. Fully Independent Travel More travellers are feeling more confident about travelling on their own, and are moving away from traditional group tours.

3. Responsible/Sustainable Tourism A growing number of travellers are more concerned with environmental issues, which is beginning to affect their travel decisions

4. The Aging Traveller As the baby boomer generation ages, it is becoming more active in travel, and demand a different set of products and experiences (i.e., Authentic high-quality goods and services)

5. Multi-generational Travel there is a trend for larger groups of the family to travel together, including a couple travelling with their parents, grandparents, in-laws, cousins and so on.


2.0 Market Analysis

US Travel Trends

US Travel Trendsthe U.S. baby boomers market segment is by far (44%) the largest group with the disposable income and desire to travel to Canada. Baby boomers make up 26% of all travelers and are the older tribe (mean of 52); More than one-third (36%) are grandparents. they tend to be wealthy empty-nesters seeking urban cultural experiences with a particular interest in museums and the theatre and prefer boutique hotels and resorts.

tAMS 2007 data indicates that the US travellers to Northern Ontario prefer nature, outdoor activities, adventure, peace and tranquility and alone time; they are not as interested in “touristy” places, top-notch accommodations and amenities, man-made stimuli and interaction with people and/or culture. The U.S. overnight market for Northern Ontario seems to be drawn by the Region’s fishing (60%), shopping (40%), and sightseeing opportunities (33%). It should be noted that the predominance of fishing as an outdoor activity enjoyed by US travellers to Northern Ontario is likely skewed by the popularity of fishing in Northwestern Ontario, specifically. To a greater extent than their Canadian counterparts, U.S. visitors go to historic sites (19%) and to national or provincial parks (22%) on their trips.

the CTC has identified the top U.S. High-Yield Markets as:

1. Authentic Tourist / Nature Tourist• the American traveler is seeking a natural setting and would like to integrate into local culture. there is some research done before the trip by the traveller in order to learn about the culture• of these tourists, 55% are men and 45% are women, coming from high income households• More often, these tourists are empty nesters, looking to enhance their cultural knowledge

2. Cultural Tourist• Cultural tourists are always excited about the next trip, interest in ancient history and modern cultures, travel is a journey, relaxed, seek an authentic experience, chart their own courses (less guided tours); 42% men, 58% women• Boomers in north America are travelling more, but the purpose of their travel has changed from escapism to enrichment. A growing majority is travelling to experience and learn from different cultures, generating an in creased demand for cultural products.• tourists travelling primarily for cultural reasons are called cultural tourists and they can be divided into four cohorts according to their primary motivation for travel. the four cultural cohorts will grow by 35% over the next decade and demand for heritage experiences will lead the way. they are: • Heritage enthusiasts • Visual Arts enthusiasts • Wine & Culinary enthusiasts • Performing Arts enthusiasts.


• Demand for cultural experiences will far exceed person trips for sport, casino or theme park visits in Canada over the next decade.

• The Cultural Tourist is well-educated, middle- to high-income, and specifically interested in cultural experiences. they tend to be mature (baby boomers and the 60+ market), retired, (20% vs. 16% of regular tourists) have higher education (33% university graduates vs. 28% among other travelers), take longer trips (5.1 nights vs. 3.4 nights), tend to shop more, spend more per trip and spend more in the destination they visit.

• Where once the family defined the travelling market, the adult visitor as singles or couples seeking cultural experiences will dominate the tourist market for the next two decades. Approximately 86% of the visitor parties to Region 13B are comprised of adults-only; with 14% travelling with children. the average party size is 2.6 persons, with 37% of visitor parties comprised of single travelers; 34% travelling in groups of 2; and 29% travelling in parties of 3 or more. While there is a growing trend in multi-generational travel, the market remains dominated by adult-only visitor parties.

• Museums and living history sites are the highest visited tourist draws because cultural tourists are keenly interested in authentic, quality learning experience. they seek these experiences because knowledge of other places helps them develop and refine who they are. Museums provide windows to the past and visitors seek these experiences to help them understand themselves and the culture they are visiting.

2.0 Market Analysis

US Travel Trends


2.0 Market Analysis

Summary and Implications

2.6 summary and Implications

Based on these conclusions, and the original goals set out by the client with respect to creation of a major tourist destination in sault ste. Marie, the consulting team has determined that the sustainability of the Gateway site will need to meet the following objectives:

• Attract visitors on a year-round basis• Appeal to both locals and tourists• Create new jobs• Help to retain youth markets in the City• Instill local pride• Provide a major public gathering and celebration space for the City• Provide a “postcard” or “must-see” icon for the City• Act as a catalyst to instill further economic development, particularly for the waterfront and downtown• Build on the City’s image of being “naturally gifted”• Build on the region’s cultural heritage• Highlight the City’s new position as the “Alternative energy Capital of north America”• Create a project that approaches sustainability in every way – physically and economically.

It is a well-known fact that in order to attract and keep visitors in a community, there must be a critical mass of retail, dining establishments and attractions within walking distance. Furthermore, it is essential to keep visitors busy four times longer than it took them to get there. this implies that the Gateway Attraction site would be best suited to a range of attractors. Furthermore, it is recognized that this market is not suited for a standalone attraction for sustainability reasons.

3.0 PROGRammING


3.0 Programming

Approach

Based on the project goals, the meetings with the working committee and our experience narratives we set out to finalize the actual programming for the site. the Programming Approach involved creating a list of all potential programs that could be imagined on the site. the team then set up a matrix of issues and weighted them on importance. this allowed the team to narrow down their suggestions based upon qualitative rationale. the program had to meet essential criteria including:

• Alignment with project goals

• Feasibility within the overall approach to the site

• Feasibility with respect to competitive attractions or amenities

• the proposed attractions will be of a type that allows for constantly new or changeable experiences so that they encourage repeat visits and do not quickly lose appeal for the local market

• the mix of programs will have an ability to create a well-rounded experience


3.0 Programming

Proposed Program EvaluationCore Attractions

Appeal Feasibility

Thrill factor

Tourist Appeal

Local Appeal

Unique Fit- Site/Other Uses

Capital Require-ments

Operating Sustain-

ability

Market Potential

Financial Viability

Subtotal Imple-mentation

Total Comments

Criteria 10 10 10 10 10 10 10 10 10

Weighting Factor 10% 15% 10% 10% 15% 10% 10% 10% 10%

Attractions

Arts and Cultural

Live Performance theatre 7 6 8 8 10 4 3 7 5 66 90% 59 Community Group interest

Art Gallery 6 8 7 3 8 5 4 6 5 60 20% 12 Have to move existing facility

Hall of Fame 6 9 7 6 7 6 4 5 5 63 50% 32 obtaining a collection is an issue

travelling exhibit Gallery 8 8 8 8 8 6 4 7 6 71 90% 64

Interpretive Centre/ Museum

science 8 10 10 5 10 4 4 3 4 68 10% 7 science north 3.5 hours away

environment/Biodome 8 10 10 10 10 4 4 9 6 81 80% 65

Great Lakes 7 3 8 7 10 4 4 6 5 60 50% 30 Great Lakes Maritime Heritage Centre, Alpena, Mi

Aquarium 9 10 10 10 10 3 3 8 5 78 80% 62

Heritage 3 8 5 7 8 4 4 7 5 60 80% 48 Mackinaw Island - US National Historic Landmark

Aboriginal 6 9 7 5 10 4 4 6 5 65 100% 65

Great outdoor Activities 7 9 7 6 3 4 4 6 5 57 50% 28

Rail 1 7 6 6 10 4 4 6 5 57 50% 29

Air 2 7 6 4 10 4 4 3 4 52 50% 26 Museum exists

ships 6 9 8 7 10 4 4 6 5 68 50% 34 Museums in Mackinaw

Aerospace 8 9 8 10 10 4 4 7 5 75 50% 37

Forestry 4 7 6 7 10 4 4 5 4 60 50% 30

Industry/steel 4 7 6 6 10 4 4 5 4 59 50% 29


3.0 Programming

Proposed Program EvaluationCore Attractions

Appeal Feasibility

Thrill factor

Tourist Appeal

Local Appeal


Capital Re-

quire-ments

Operating Sustain-

ability

Market Potential

Financial Viability

Subtotal Implemen-tation

Total Comments

Entertainment/Attractions

tourist train (ACR) 7 10 3 10 10 7 6 10 8 81 100% 81 Would involve moving ACR station to site 3 in traverse City

Indoor Water Park 10 9 10 10 8 2 7 6 5 76 0% 0

Indoor Amusement Park / FeC

10 7 9 10 5 4 7 5 5 68 50% 34 Mackinaw Crossings has some facilities

outdoor Amusements 9 7 9 7 1 5 6 5 5 58 50% 29 traverse City

observation tower 9 10 8 7 10 2 7 7 5 75 80% 60 tower of History (210 ft), ssM, MI

IMAX theatre 10 10 8 7 10 2 6 4 4 71 50% 35 At science north - 2hours away

Bowling Centre 7 5 7 7 4 6 7 5 6 59 50% 29 Limited Demographic Market

Games Centre/UEC 7 6 6 7 5 6 7 7 7 63 50% 32

Interactive simulators 9 8 7 7 5 5 6 7 6 67 20% 13

Convention/Conference

Convention/trade Centre

2 5 4 4 8 3 3 4 3 43 10% 4 Potentially High operating deficit

Support Amenities

Visitor Information

Visitor Interpretive Centre 2 8 1 4 8 6 2 7 5 51 20% 10 Would require moving Prov VIC to site

Recreational

Indoor Pool 4 1 7 3 3 3 4 3 3 33 20% 7 other Facilities in the city

outdoor skating Rink/Fountains

8 7 10 8 10 9 7 10 9 86 100% 86 Seasonal Use

trail system 6 6 10 6 6 10 8 9 9 76 100% 76 City-operated

Public Park/Plaza 10 8 10 8 10 8 5 10 8 86 100% 86


3.0 Programming

Proposed Program EvaluationCommercial & Accomodation

Appeal Feasibility

Thrill factor

Tourist Appeal

Local Appeal


Capital Re-

quire-ments

Operating Sustain-

ability

Market Potential

Finan-cial

Viability

Subtotal Implemen-tation

Total Comments

Commercial

Outfitters/Sports Store 8 8 9 9 10 5 10 6 7 81 80% 65

Farmer’s Market 8 7 10 7 8 7 8 9 8 80 90% 72 Local regional market appeal

outlet Mall 4 7 8 7 4 5 10 5 7 62 50% 31 May be considered competition for station Mall

Traditional Office 1 0 6 3 9 6 10 5 7 52 100% 52

traditional Retail 6 1 6 3 9 6 10 5 7 58 50% 29 station Mall would not appreciate competition

Health and Wellness

Day Use Spa 4 4 6 2 4 5 10 4 6 49 100% 49 Better suited if part of a hotel development

outdoor spa 6 7 7 7 5 6 10 1 6 61 10% 6 not a “desirable” location

Fitness Club 4 3 5 2 1 6 10 5 7 45 100% 45

Food Service

specialty Food and Beverage

5 8 6 4 7 7 10 8 8 71 100% 71

Destination Dining 8 9 4 7 6 2 10 5 6 64 50% 32

Fine Dining/Wine Bar 5 7 3 3 5 2 10 5 6 52 60% 31 Does not appeal to a broad market

Upscale Casual 8 9 10 8 10 5 10 8 8 85 100% 85 Fills a need in the market

Brew Pub/Brewery 8 9 9 9 8 3 10 6 6 77 90% 69

Accommodations

Freehold townhouses 0 0 5 5 0 4 10 5 6 35 50% 18

Waterfront Condo Housing

2 0 8 5 9 7 10 6 8 59 100% 59

seniors Lifestyle Housing 2 0 8 5 9 6 10 7 8 59 100% 59

transient Hotel 4 7 3 3 5 6 10 3 6 53 10% 5 Current supply demand levels

Waterpark Resort 10 10 8 8 7 2 10 7 6 77 50% 38 Induces new demand to marketplace

Boutique Hotel & spa 9 7 3 8 5 1 10 3 5 57 10% 6 Current supply exists demand levels

University Residence 3 5 3 3 1 5 10 2 6 41 50% 20 not appropriate location for student residences


3.0 Programming

Proposed Program

• Urban Plaza with skating in winter and interactive fountains in summer

• Landscaped Atrium event space

• environment/entertainment Attraction

• Flexible attraction space

• Relocated station for the Agawa Canyon tour train

• Farmer’s Market Facilities

• Destination retail

• Upscale Casual Dining

• Café

• Condominium Residences

• Iconic tower

this program will be infused with the latest in sustainable technologies to re-inforce the sault’s position as the north American leader in renewable energy.

Based upon the program evaluation and project goals we believe that the correct approach is to create a site that is firstly appealing to locals year-round, who in turn will make this desirable to all visitors. therefore, we propose the program for this site will include:


3.0 Programming

Proposed Program Data

Areas GFA (m2) Coverage Occupancy/ Capacity

Budget Base Building

Budget Fit-out Soft Costs Budget Total Parking Spaces

Parking Area

site n/A $4,900,000

Land Costs $2,000,000

soil Remediation 71,347 n/A n/A $0 n/A $0 $900,000

Infrastructure 71,347 n/A n/A $0 n/A $0 $2,000,000

Public space 5,500 5,060 4,217 $7,060,000 $250,000 $580,000 $7,890,000 20 600

Public Plaza 5,000 5,000 4,167 $5,000,000 n/A $400,000 $5,400,000 n/A n/A

Icon tower 500 60 50 $2,000,000 $250,000 $180,000 $2,430,000 20 600

Parking $60,000 $60,000

Core Attractions 4,500 4,200 1,860 $10,882,400 $10,100,000 $1,500,000 $22,482,400 744 22,324

Flexible exhibition Area 700 700 140 $1,050,000 $700,000 $140,000 $1,890,000 56 1,680

exploration Centre 1,600 1,300 320 $3,200,000 $6,400,000 $768,000 $10,368,000 128 3,840

Landscaped Atrium 1,600 1,600 533 $3,200,000 $2,400,000 $448,000 $6,048,000 213 6,400

train station/ Gallery 600 600 867 $1,200,000 $600,000 $144,000 $1,944,000 347 10,404

Parking $2,232,400 $2,232,400


Areas GFA (m2) Coverage Occupancy/ Capacity

Budget Base Building

Budget Fit-out Soft Costs Budget Total Parking Spaces

Parking Area

Commercial 4,580 4,520 1,102 $8,504,355 $280,000 $615,200 $9,399,555 365 10,944

Destination Retail 3,000 3,000 652 $4,500,000 n/A $360,000 $4,860,000 150 4,500

Restaurants 800 800 250 $1,600,000 n/A $128,000 $1,728,000 100 3,000

Café 220 220 69 $440,000 n/A $35,200 $475,200 46 1,375

Broadcast studio 60 0 6 $120,000 $30,000 $12,000 $162,000 6 194

Farmers Market 500 500 125 $750,000 $250,000 $80,000 $1,080,000 63 1,875

Parking $1,094,355 $1,094,355

Accomodations 8,064 1,344 96 $11,529,600 $3,225,600 $1,161,000 $15,916,200 80 2,400

64-unit Condominium Building 8,064 1,344 96 $11,289,600 $3,225,600 $1,161,000 $15,676,200 80 2,400

Parking $240,000 $240,000

totALs 17,644 10,124 7,275 $37,976,355 $13,855,600 $3,856,200 $60,588,155 1,209 36,268

3.0 Programming

Proposed Program Data


3.0 Programming

Public SpacePublic Plaza


3.0 Programming

Core AttractionFlexible exhibition Area


3.0 Programming

Core AttractionLandscaped Atrium


3.0 Programming

CommercialDestination Retail


3.0 Programming

CommercialUpscale Casual Dining


3.0 Programming

CommercialCafe


3.0 Programming

CommercialFarmers Market


3.0 Programming

AccomodationsCondominium Residence


3.0 Programming

Alternative EnergyWind turbine


3.0 Programming

Alternative Energysolar Cladding


3.0 Programming

Alternative EnergyLiving Wall


3.0 Programming

Alternative EnergyWater Retention

4.0 PlaNNING


4.0 Planning

Planning Goals

the goals for the planning of the site are equally important to the programming issues due to the site’s strategic, and somewhat complicated location.

• To create a significant Architectural and public space statement on the waterfront and establish a new benchmark for Architectural design in the city• to be the most sustainable urban project in northern ontario striving for a LEED Platinum certification

• to be a “Winter Cities” type of development that accepts it’s climatic conditions and celebrates them

• to be a development that residents understand as being through intelligent selections of materials, forms and technologies

• to be a project the residents will enjoy and be proud of a project they will insist all visitors must see


4.0 Planning

Planning Approach

• The planning will be based on a true diversified mixed use development that potentially appeals to all markets, in all seasons, and brings people (residents and tourists) to the site year round, night and day

• Create the framework for a phased project that encourages private sector investment that allows for incremental growth. this project will not be an all or nothing proposition• the plan must directly address it’s waterfront location- which is its primary asset

• the design accepts that most visitors will come by car and therefore will offer various parking options

• the attraction(s) must not be left to stand on their own- the experience must be supported in as many ways as possible- synergy is everything

• the concept creates synergies with existing attractions in this part of the city ( Casino, Agawa Canyon train, station Mall, essar Centre, Hub trail and Riverfront )

• Residences or accommodations are to be included on the site to “put feet on the ground” and increase the permanent on-site population

5.0 sITe aNalysIs


Site Analysis

Site Context

St. Mary’s River

Casino

Customs

Bridge

Whitefish Island

Mall

Gateway Site


5.0 Site Analysis

Development Plan

0 20m 50m 100m

GATEWAY SITE

BAY ST.

INTERNATIONAL BRIDGE

QUEEN ST. E

CENTRAL PARK AV.

QUEEN ST. E

HU

RO

N S

T.

JOH

N S

T.

AND

REW

ST.

.

ONTARIO TOURIST INFORMATION

CENTRE

CASINO

ST. MARY’S RIVER

ACR TRAIN

STATION

STATION MALL

ESSAR CENTRE

BUS TERMINAL

CAN

AL D

R.

QUEEN ST. E

BAY ST.

ALBERT ST. E.

WELLINGTON ST. E.

BRUCE ST.

TANCRED ST.

DENNYS ST.

ST. MARY’S DR.

GO

RE

ST.

LOT 1

LOT 4

LOT 3

LOT 2

LOT 5

AQUIFER CREEKR.O.W.

PROPOSED SETBACKS

PROJECT DATATotal Land Area AReA

Lot 1 36,884

Lot 2 3,904

Lot 3 21,369

Lot 4 9,004

Lot 5 186

Total Land Area 71,347 m2

Non-developable Land Area

setbacks 2,818

train RoW 9,008

open space – Creek 5,572

Water (approximate) 4,459

Total Non-developable Area 21,857 m2

Total Land Area 49,490 m2


5.0 Site Analysis

Site Strengths


0 20m 50m 100m

GATEWAY SITE

BAY ST.


QUEEN ST. E

CENTRAL PARK AV.

QUEEN ST. E

HU

RO

N S

T.

JOH

N S

T.

AND

REW

ST.

.


CENTRE

CASINO

ST. MARY’S RIVER

ACR TRAIN

STATION

STATION MALL

ESSAR CENTRE

BUS TERMINAL

CAN

AL D

R.

QUEEN ST. E

BAY ST.

ALBERT ST. E.

WELLINGTON ST. E.

BRUCE ST.

TANCRED ST.

DENNYS ST.

ST. MARY’S DR.

GO

RE

ST.

RAIL LINE SPLITS SITE FROM BAY ST.

DIFFICULT PEDESTRIAN CROSSING AT BAY ST. AT ST. MARY’S DR./ANDREW ST.

EXISTING CREEK LIMITS POSSIBLE LOCATION FOR DEVELOPMENT

SENIOR BUILDING BLOCKS VIEW TO MALL - UNATTRACTIVE

THE WATER ALONG THE SOUTH EDGE CANNOT SUPPORT BOATING OR WATER ACTIVITIES

THE INDUSTRIAL SITE TO THE WEST IS UNATTRACTIVE

THERE IS AN AQUIFER UNDER THE SITE

THE TRAFFIC ON BAY ST. IS ONE WAY AND MOVES QUICKLY

PREVAILING WINDS FROM INDUSTRIAL SITES

THE SITE IS ONE BLOCK FROM TOURIST INFORMATION CENTRE

OTHER ATTRACTIONS ARE TOO FAR FROM SITE FOR PEDESTRIANS

5.0 Site Analysis

Site Constraints


5.0 Site Analysis

Vehicle Circulation


5.0 Site Analysis

Pedestrian Circulation


5.0 Site Analysis

Public Transportation Circulation

0 20m 50m 100m

GATEWAY SITE

BAY ST.


QUEEN ST. E

CENTRAL PARK AV.

QUEEN ST. E

HU

RO

N S

T.

JOH

N S

T.

AND

REW

ST.

.


CENTRE

CASINO

ST. MARY’S RIVER

ACR TRAIN

STATION

STATION MALL

ESSAR CENTRE

BUS TERMINAL

CAN

AL D

R.

QUEEN ST. E

BAY ST.

ALBERT ST. E.

WELLINGTON ST. E.

BRUCE ST.

TANCRED ST.

DENNYS ST.

ST. MARY’S DR.

GO

RE

ST.

6.0 sITe DesIGN


6.0 Site Design

Planning Diagram


6.0 Site Design

Planning


6.0 Site Design

Concept Plan

BroadcastCentre

Fountain/ Ice Rink

Retail

RetailKiosk

Kiosk

Kiosk

PlazaRestaurants

Condominium

Tower

Parking 686 Spaces

Bay St.

St. Mary’s River

Farmer’s Market

Discovery Centre

Attraction

Park

ing

56

Spac

es

St. M

ary’

s Ri

ver

Dri

ve

Temporary Exhibit Space

Agawa Canyon Train Station/Gallery

Landscaped Atrium

Canal Drive

Casino

N

7.0 aRChITeCTURal DesIGN

7.0 Architectural Design

Site Aerial View



Goals

Goals:• the Architecture must be timeless. It is not to be too “fashionable” or “current” but must strive for a contemporary quality that could be easily expanded upon with each new development on site.

• the Architecture for the development had to be a style that is easy to phase. the designs for each building would be different from each other but using a similar language. the project can never look incomplete.

• the architecture must have the ability to be very exciting when required or create quiet, contemplative spaces when necessary

• the Architecture must be very accommodating to alternative energies.

• the Architecture must, above all, convey the personality and essence of sault ste. Marie



Goals

to achieve our goals we propose a style which is “Industrial contemporary”. We take our inspirations from the Bridge, the ships, the steel mill and structures of the first Nations. These forms are combined with the modern materials often seen in the design of alternative energy equipment to create a fascinating palette. Warms materials such as wood, brick and stone are combined with dark metals, shining glass and spectacular lighting to create environments the community will respond to upon first glance. It will be familiar and unusual all at once.

Hierarchy of buildings will be created on the site with certain buildings, such as the exploration Centre building with the atrium and the water front restaurant are exuberant and stand out, while others, such as the retail structures, farmer’s market and the condominiums are more subdued in design to create a perfect backdrop for casual day to day experiences.

the Gateway site is also an opportunity to create an icon for the City and we have done so with the spectacular Gateway tower. this single structure projects all of the most exciting aspects of the Architecture and public experience into one building. Dynamic forms and a daring use of materials and alternative energies are enhanced by dramatic lighting effects. It will be a beacon from the U.S. and the new postcard image for the City of Sault Ste. Marie.

8.0 PRImaRy aTTRaCTION


8.0 Primary Attraction

Preliminary Attraction Building

Main Floor

Spirit Court

Cafe

Ticketing

Ticketing

Landscaped Atrium

Gallery

Agawa Canyon Train Station

Loading


Back of House

Back of House

Discovery Centre

Zone 1: Introduction



Preliminary Attraction Building

second Floor

Spirit Court Below

Ticketing Below

Zone 1: Introduction

Below

Zone 2: The Great Lakes

Zone 3: Forest and

Canyons

Zone 4: First Nations

and First Missions

Zone 5: Modern Man

Agawa Canyon Train Station Below

Broadcast Facility

Landscaped Atrium Below


Below

Zone 6: Energy and

Conservation



Concept Outline

Concept

the 1,600m² (18,000) q.ft. sault exploration Centre is an active participation Cultural Attraction, telling the story of sault ste. Marie’s, past, present and future. It carries through on the theme of how the region is naturally gifted.

this story is told through various methods, both informative and always entertaining. this offers the visitor an in-depth presentation of how this vital area came to be and what the future holds. the goal is to create the most entertaining environment possible, with all kinds of hands-on and physically engaging activities and through all this fun, take the opportunity to educate.

the exhibit Area

the Centre is organized as six exhibit areas surrounding a central court. the court acts as the organizer for the experience and also a place for stories, lectures and events - a metaphor for sault ste. Marie as a gathering place. At various times throughout the day the spirit Court transforms into an engaging sound and light show.

the surrounding exhibits are grouped into four themes - Introduction, nature, Man and Reconciliation. the themes in turn also present the story in a chronological order which makes the experience very easy for the guest to understand.


entryArea 1- Introduction (activity: touch screen wall with integral video)

natureArea 2- Creation of the Great Lakes, the Rapids and Marine Life (activity: water play tables and models)

Area 3- Forests and Canyons (activity: climbing structures and interactive play)

ManArea 4- First Peoples and the First Missions (activity: theatre)

Area 5- Modern Man- Commerce, Industry and Recreation (activity: interactive models of ships, technologies and outdoor fun)

ReconciliationArea 6- The Sustainable Future (activity: interactive exhibits)

Central Area- Spirit Court (activity: interactive floor, sound and light show, story-telling)

temporary exhibit spaceDirectly adjacent to this space is an 8,000 sq.ft. flexible exhibit space that can expand on the themes of the exploration Centre or bring whole new ideas to the facility.


Concept Outline



Planning Diagram

Flexible exhibit Space


8.0 Primary AttractionInspiration



Special Effectsscene 1



Exploration CentreZone 1 - Introduction



Exploration CentreZone 2 - Creation of the Great

Lakes



Exploration CentreZone 3 - Forest & Canyons



Exploration CentreZone 4 - Firts Peoples

& First Missions



Exploration CentreZone 5 - Commerce, Industry

and Recreation



Exploration CentreZone 6 - the sustainable Future

9.0 Visitation Projections



Introduction

9.1 Introduction

the following section provides the projected visitation to the core attractions that form the ssM Gateway Attraction development – the sault exploration Centre and the Icon tower – as well as secondary attractors and the overall visitation estimates for the site.



Size of Available Target Markets

9.2 size of Available target Markets

the ssM Gateway Destination Attraction Development will draw from 3 primary markets:

• Local resident population;• Local and Regional school groups; and• same day and overnight visitors to ssM travelling for pleasure or to visit friends and relatives, including those travelling on the Algoma Canyon train excursion and visiting sports groups.

PKF estimates that the City of ssM hosted an estimated 740,000 visitors in 2009 (73% of the visitor market to Region 13B), of which 642,430 visitors were visiting the City for pleasure or to visit friends and relatives –both prime target markets for the subject Gateway attraction development.As shown in the following table, the combined available markets for the ssM Gateway attraction are projected to reach 825,300 by 2016.

TOTAL AVAILABLE MARKETS FOR SSM GATEWAY ATTRACTION BY 2016

All Markets Current 2016 Proj. % Chg

SSM Resident Market (2011) 75,400 77,900 3.3%

School Group Market (2011) 26,900 26,300 -2.2%

SD Visitors to SSM (Pleasure and VFR) (2009) 260,830 285,400 9.4%

OVN Visitors to SSM (Pleasure and VFR) (2009) 381,600 435,700 14.2%

TOTAL AVAILABLE MARKETS 744,730 825,300 11.0%

Pleasure and VFR Visitors Only to SSM by Origin Current 2016 Proj. % Chg

Ontario 374,100 399,600 6.8%

U.S. Visitors 239,930 288,800 20.4%

Rest of Canada 20,900 23,600 12.9%

Overseas 7,500 9,100 21.3%

TOTAL PLEASURE & VFR VISITOR MARKETS to SSM 642,430 721,100 12.2%

source: City of ssM, ontario travel 5-Year outlook, PKF Projections



Sault Exploration Centre Attendance Projections9.3 sault exploration Centre Attendance Projections

the sault exploration Centre will be a key demand generator for the ssM Gateway site, operating on a year round basis. In addition to its core attraction exhibits and programs, the adjacent exhibition space will host one major travelling exhibition per year during the May to october period.

the sault Exploration Centre has been projected to attract 95,000 visitors in its first year of operation increasing to 100,000 in Year 2, before reaching a stabilized attendance level of 101,200 visits by its 3rd year of operation, as summarized below. this represents a penetration level of approximately 12% of its total available market of 825,300 and is comparable to the penetration levels achieved by the science Centre at the science north attraction in sudbury.

SAULT Exploration Centre ATTENDANCE PROJECTIONS SSM Gateway Attraction Development

Stabilized Projected Attendance

Market Penetration Rate

SSM Resident Visits 10,700 13.7%

Algoma School Group Visits 5,400 20.4%

SSM Same Day Visits 28,500 10.0%

SSM Overnight Visits 56,600 13.0%

Total Projected Attendance 101,200 12.3%

source: PKF Consulting Inc.


the following table summarizes the projected stabilized visitation level for sault exploration Centre by geographic mar-ket. An estimated 85% of the projected visitation is expected to be tourists, largely from Ontario and the US, with 1-in-every-15 visitors being local residents and school groups.

SAULT Exploration Centre ATTENDANCE PROJECTIONS BY GEOGRAPHIC ORIGIN

Visitor Segments (in 000s) Stabilized Year

Total %

SSM Resident Market 10,700 11%

Algoma School Group Market 5,400 5%

Domestic Tourists 55,300 55%

US Tourists 28,900 29%

International Tourists 900 1%

Total Projected Attendance 101,200 100%



Sault Exploration Centre Attendance Projections


Approximately 36% of the visitor market to the sault exploration Centre is projected to be comprised of children un-der the age of 14, with the balance being youth and adults. the peak visitor months of June, July and August will attract the majority of attendance at just under 75,000 visitors by its stabilized year of operation.

SAULT Exploration Centre PROJECTED SEASONAL AND DEMOGRAPHIC ATTENDANCE

Total Market Days Children (Aged 0-14)

Adult Market (Age 15+)

PROJECTED ATTENDANCE

(Stabalized Year)

Summer (June - August)

Weekday 66 11,125 30% 22,760 35% 33,885 33%

Weekend 26 13,683 37% 27,017 42% 40,700 40%

Subtotal 92 24,808 68% 49,777 77% 74,585 74%

School Term (September - May)

Weekday 194 5,554 15% 4,841 7% 10,395 10%

Weekend 78 6,223 17% 9,997 15% 16,220 16%

Subtotal 272 11,777 32% 14,838 23% 26,615 26%

Total 364 36,585 100% 64,615 100% 101,200 100%



Sault Exploration Centre Attendance Projections



Icon Tower Attendance Projections

Icon tower Attendance Projections

the Icon tower will provide a key focal point for the ssM Gateway site, and will operate daily during the peak season months and on weekends only for the balance of the year. It will be a place where local residents will bring their visiting friends and relatives while they are in town, and for tourists to enjoy the local vista.

We have projected the SSM Icon Tower to attract 30,000 visitors in its first year of operation increasing to 35,000 in Year 2, before reaching a stabilized attendance level of 40,000 visits by its 3rd year of operation. this represents a penetration level of approximately 5% of its total available market of 825,300, slightly above the penetration levels achieved by the Agawa Canyon train excursion in 2011.

ICON TOWER ATTENDANCE PROJECTIONS SSM GATEWAY ATTRACTION DEVELOPMENT

Stabilized Projected Attendance Market Penetration Rate


Algoma School Group Visits 500 2.0%






over one-half of the visitors to the Icon tower will be domestic tourists, largely from ontario, with a further 36% being American tourists, while 1-in-every-9 visitors will be local residents.

ICON TOWER ATTENDANCE PROJECTIONS BY GEOGRAPHIC ORIGIN

Visitor Segments (in 000s) Stabilized Year

Total %

SSM Resident Market 3,400 9%

Algoma School Group Market 500 1%

Domestic Tourists 21,200 53%

US Tourists 14,400 36%

International Tourists 500 1%

Total Projected Attendance 40,000 100%





Approximately two-thirds of the visitor market to the Icon tower is projected to be comprised of adults and youth over 15 years of age and 84% of the visitation will occur during the peak season of mid May to mid october, with the balance of visitation occurring on weekends during the remainder of the year.

SAULT Exploration Centre PROJECTED SEASONAL AND DEMOGRAPHIC ATTENDANCE

Total Market Days Children (Aged 0-14)

Adult Market (Age 15+)

PROJECTED ATTENDANCE

(Stabalized Year)

Summer (mid May to mid Oct)

Weekday 110 4,141 32% 8,040 30% 12,180 30%

Weekend 44 7,039 54% 14,346 53% 21,385 53%

Subtotal 154 11,180 85% 22,385 83% 33,565 84%

Balance of the Year (weekends only)

Weekday 150 0 0% 0 0% 0 0%

Weekend 60 1,955 15% 4,480 17% 6,435 16%

Subtotal 210 1,955 15% 4,480 17% 6,435 16%

Total 364 13,135 100% 26,865 100% 40,000 100%






Additional On-Site Attraction Attendance Projections

9.4 Additional on-site Attraction Attendance Projections

In addition to the sault exploration Centre and Icon tower, the concept plan for the ssM Gate-way Attraction Development calls for two additional attractions to be re-located to the Gateway site. the Agawa Canyon train station will be re-located from its current terminus at the station Mall to the ssM Gateway site, while the Farmer’s Market is also seeking a permanent home for its operation.



Agawa Canyon Tour Train

Agawa Canyon tour train

the Agawa Canyon tour train Revitalization Management Plan, completed by Reitch + Petch Architects and tCI Management Consultants projected attendance levels for the refurbished Agawa Canyon train to reach 63,200 by its 5th year of operation. For the purposes of this analysis, the Year 3 attendance projections of 40,400 visitors have been utilized.

AGAWA CANYON TOUR TRAIN ATTENDANCE PROJECTIONS

Based on new rolling stock, plus additional improvements in on-board entertainment and Canyon Park

Year 1 29,300 Projected 25,159 Actual

Year 2 33,700 Projected

Year 3 40,400 P

Year 4 50,500 P

Year 5 63,200 P

source: the Agawa Canyon tour train Revitalization Management Plan, Reitch+Petch and tCI Management Consultants, April 2009



Algoma Farmer’s Market

Algoma Farmer’s Market

the current Algoma Farmers’ Market operates from the first Saturday in June to Thanksgiving on Saturday mornings and Wednesday afternoons in Roberta Bondar Park and for the remainder of the year, the market operates on saturdays at Wellington Square Mall. Urban Marketing Collaborative recently completed a Feasibility Study and Business Plan for the Downtown Sault Ste Marie Algoma’s Farmers Market (June 2011), which identified the need for a permanent farmer’s market in the downtown. the current Algoma Farmer’s Market has 26 vendors and attracts an average attendance of 957 visitors on saturdays and 747 visitors on Wednesdays, with inclement weather and competitive events at the pavilion reducing customer volumes. Based on the average attendance levels, the current Algoma Farmer’s Market operation attracts an estimated 32,500 patrons. With a permanent location in the downtown, and proposed plans to increase the number of vendors to 60, attendance levels to the new Algoma Farmer’s Market at the ssM Gateway site are projected to increase to 75,000 visitors.



Retail Market Potential

9.5 Retail Market Potential

the ssM Gateway Attraction Development program calls for approximately 32,300 square feet of destination retail space. the ssM resident population is projected to reach penetration levels of 500% (5 retail visits per capita per year) equating to 389,500 shopping visits per year, with the same-day and overnight visitor markets achieving market penetrations of 30 to 40%, for a total retail potential of close to 655,000 visits by the development’s stabilized year. this represents a penetration level of close to 80% of its total available market of 825,300. In comparison, the adjacent station Mall, with 500,000 square feet of retail space, attracts 5 to 6 Million visits annually, representing a market penetration of 600 to 700%.

RETAIL MARKET POTENTIAL SSM GATEWAY ATTRACTION DEVELOPMENT










Food Service Market Potential

9.6 Foodservice Market Potential

A destination restaurant of approximately 8,600 square feet and a Café of 2,370 square feet have also been proposed for the site. ssM residents are projected to patronize ssM Gateway’s foodservice establishments at a penetration level at 146% (1.5 visits per year per capita) equating to 113,900 foodservice visits per year, with the same-day and overnight visitor markets achieving market penetrations of 15 to 20%, for a total foodservice potential of 246,400 visits by the development’s stabilized year. this represents a penetration level of approximately close to 30% of its total available market of 825,300.

FOOD SERVICE MARKET POTENTIAL SSM GATEWAY ATTRACTION DEVELOPMENT










Office Commercial Market Potential

9.7 Office Commercial Market Potential

A small broadcast studio of approximately 650 square feet has been proposed as part of the overall development. At an estimated 110 square feet per person, the office commer-cial space could accommodate up to 6 persons, which equates to slightly over 2,100 site visits per year.



Residential Market Potential

9.8 Residential Market Potential

At an average of 1.5 persons per unit, the 64 condominium units proposed as part of the ssM Gateway development will accommodate an estimated 96 residents, or 35,000 annual site visits.



General On-Site Activity

9.9 General on-site Activity

It is projected that a further 335,000 visits will be attracted to the site on an annual basis, from pedestrian traffic for recreational purposes, special events, etc. General on-site visitation has been estimated at 20% to 25% of the site’s total public space capacity.



Overall Site Visitation Projections9.10 overall site Visitation Projections

By stabilized year, the site is expected to attract an estimated 1.5 Million gross site visits with 54% of the visitation coming from local residents and education groups and 46% from same day and overnight tourists. net visitation has been estimated assuming that 25% of visitors will have a single purpose for visiting site component, while 75% of people will participate in between 2.5 and 4 other activities at the site, equating to an estimated 924,000 person visits for the overall ssM Gateway development.

OVERALL SITE VISITATION - RECOMMENDED CONCEPT

Attractor/site Component Peak Season Off Season Gross Visits net Visitors

sault exploration Centre 74,600 26,600 101,200 55,600

Icon tower 33,100 6,900 40,000 22,000

Agawa Canyon train 40,400 - 40,400 22,200

Farmer’s Market 43,000 32,000 75,000 41,300

Retail 285,000 369,700 654,700 286,400

Food Service 115,800 130,600 246,400 135,500

Residential 12,000 23,000 35,000 24,500

Commercial offices 700 1,400 2,100 1,500

General on-site 255,000 80,000 335,000 335,000

Gross site Visitation 859,600 670,200 1,529,800 924,000

% Local/Regional 53%

% school Groups 1%

% same Day and overnight tourists 46%



the estimated 924,000 site visits per year, equates to an average of 4,570 visitors per day during the peak season and 1,510 during the off-season. As a point of comparison, station Mall attracts an average of 15,000 visitors per day.

During its busiest period – an average weekend in the summer, the site is expected to attract close to 9,600 visits on a daily basis, while weekdays during the balance of the year are expected to attract an average of 850 visits per day.

SSM GATEWAY - NET ON-SITE STABILIZED VISITATION BY SEASON AND PER DAY

Peak Season Off Season Annual Peak Season per Day

Off Season Per Day

Annual Per Day

Sault Exploration Cen-tre

41,000 14,600 55,600 340 60 150

Icon Tower 18,200 3,800 22,000 150 20 60

Agawa Canyon Train 22,200 0 22,200 180 - 60

Farmer’s Market 23,700 17,600 41,300 190 70 110

Retail 124,700 161,700 286,400 1,020 670 780

Food Service 63,700 71,800 135,500 520 300 370

Residential 8,400 16,100 24,500 70 66 70

Commercial Offices 500 1,00 1,500 4 4 4

General On-Site 255,000 80,000 335,000 2,100 330 920

Total 557,400 366,600 924,000 4,570 1,510 2,530

Weekend 9,580 3,055 6,318

Weekday 2,787 858 729

Days 122 243 365



Overall Site Visitation Projections

10.0 DeVelOPmeNT aND OPeRaTING

FRameWORk


10.0 Development and Operating Framework

Introduction

10.1 Introduction

In order to make the Gateway site the real heart of sault ste. Marie – a place that will attract locals and tourists throughout the year - it will require investment from both the PUBLIC and PRIVATE sectors.



Project Challenges10.2 Project Challenges

the ssM Gateway Destination Attraction Development is a mix of both public and private sector components including:

one of the project goals is to create a project that approaches sustainability in every way, both physically and economically. However, as demonstrated in the following Financial Analysis section, there are financial challenges for both the public and private sector components. From the public sector’s perspective, the site has significant infrastructure costs, which will need to be absorbed by the public sector (soil remediation, parking and public space). Similarly, the Core Attractors are not financially viable, and will require financial support from both an operating and capital perspective (on average, operating subsidies at comparable northern ontario attractions comprise 50 to 70% of operating budgets). From the private sector perspective, the residential and commercial components of the project can be economically viable, but only under the appropriate operating/development model. In addition to the financial challenges of the core public sector attractors, an operating structure will need to be established to manage the overall site, thereby requiring further operating and financial support.

SSM GATEWAY DESTINATION ATTRACTION PRIVATE - PUBLIC SECTOR DEVELOPMENT

Public sector Private sector

sault exploration Centre with temporary exhibition space Destination Retail (32,300 sq.ft.)

Icon tower Restaurant and Café (11,000 sq.ft.)

Relocated Agawa Canyon train station /Art Gallery small Broadcast studio (650 sq.ft.)

Relocated Algoma Farmer’s Market 64-unit Residential Condominium

Landscaped Interior Atrium Parking for approximately 380 vehicles

Large Outdoor Urban Plaza

Parking for approximately 825 vehicles



Development Framework

10.3 Development Framework

In order to develop the SSM Gateway site, the City will first be required to access capital for site infrastructure and soil remediation, in order to get the lands development-ready. the development framework then calls for the City to sell the 2 designated land parcels of the site to the private sector for the retail and residential components, while retaining ownership of the balance of the site. Costs of soil remediation and infrastructure can be off-set in whole or part by the sale of the land parcels. the capital for the balance of site infrastructure costs and the core public sector attractors will need to be provided through unencumbered public sector dollars. the private sector will undertake the development of the residential and commercial components, while the public sector, through an arms length entity, will develop the balance of the site.

the commercial space will be built by the private sector, and then leased by the developer to retail, office and food service tenants. similarly, the residential development will be built by a private sector developer and sold to individual property owners.



Operating Framework

10.3 operating Framework

A new arms length operating entity, ssM Gateway Corporation, should be established by the City, which will be charged with project implementation and the landlord / management company for the overall Gateway site. this new operating entity will first need to solicit support from the 2 key stakeholders - CN Rail and the Algoma Farmer’s Market. the Agawa Canyon train station will be relocated to the site and will continue to be operated by Cn Rail. Cn is open to re-location of its train station to the Gateway site, provided that they do not incur any additional costs. Currently, Cn pays approximately $100,000 per year to lease parking spaces, including all spaces west of the station at its current station Mall site. the Algoma Farmers’ Market is also currently seeking a permanent location in downtown ssM, which has been provided for in the Gateway development. the operating framework would see Cn Rail and the Algoma Farmer’s Market leasing space from the

the sault Exploration Centre and Icon Tower will be operated by a not-for-profit entity and/or the public sector.

Base lease rates for the commercial space will be collected by the private sector developer to provide an adequate return on their capital investment. supplementary lease rates will also be charged to the private sector commercial tenants and paid to the new operating entity, ssM Gateway Corporation to:

• Manage the Gateway development;• Cover common area maintenance costs for the site’s public space (Urban Plaza and Indoor Landscaped Atrium space);• Program the site with events and activities throughout the year; and• offset any potential operating deficits generated by the core public-sector attractors.



Governance Structure10.4 Governance structure

the following organizational chart depicts the relationship between ssM Gateway Corporation, and its public and private sector partners on the Gateway Site. Staffing for SSM Gateway Corporation would include a site manager, administrative and accounting support. the private sector developer would be responsible for collecting lease income from its commercial tenants, and distributing the supplementary lease income portion to ssM Gateway Corporation. the supplementary lease income will in turn be used to program the site throughout the year with various events and activities and to offset any operating deficits generated by the public sector core attractors.



Key Role of Public Sector Partners

10.5 Key Role of Public sector Partners

Public Sector Key Roles:

• Contributes the land to the project, at an estimated value of $2 Million (14 acres / 5 hectares) • Gets site development-ready.• sells lands for commercial and residential developments to the private sector, while maintaining ownership of the balance of the site.• Acts as a landlord for Agawa Canyon train station and Farmer’s Market.• operates sault exploration Centre and Icon tower (or through an arms length 3rd party management firm, i.e. SSM Gateway Corporation)

Public Sector Financial Commitment:

• Builds Core Attractions: • sault exploration Centre with temporary exhibition space • Icon tower • Farmer’s Market • Relocated Agawa Canyon train station

• Provides a development-ready site for the overall development, including capital investments in the following public space and infrastructure costs: • Landscaped atrium event space • Urban plaza • site infrastructure • soil remediation • Parking for core attractors and public space.

• Collects common area maintenance and event programming surcharges from commercial tenants to program the site with events and activities throughout the year and offset any potential operating deficits of the primary Core Attractors.

• Farmer’s Market will be operated by its own management group and the Agawa Canyon train station will continue to be operated by Cn Rail, with lease revenues paid to ssM Gateway Corporation.

TOTAL Public Sector Capital Cost Commitment = $36.5 Million (53% of Total Development costs).



Key Roles of Private Sector Partners

10.6 Key Roles of Private sector Partners

Private Sector Developer Key Roles:

• Purchases land for private sector development (estimated at $1 Million for retail development and $1 Million for residential development).• Develops/owns commercial space (44,000 sq.ft.) and leases to third party retail, foodservice and broadcast centre tenants.• Builds and sells residential condominiums and associated parking (64 units).

Private Sector Developer Financial Commitment:

• Builds base building for Commercial space (retail, foodservice and Broadcast Centre for 3rd party tenants) plus associated parking at an estimated Capital Cost of $8.1 Million plus $1 Million in land costs.• Base lease rates generated by the private sector commercial tenants will be sufficient to provide adequate returns to the private sector developer.• Commercial tenants will be expected to pay a surcharge to ssM Gateway Corporation to be part of the overall Gateway site. the supplementary lease revenues will in turn be used to contribute to common area maintenance charges for the site; offset any operating deficits generated by the Core public-sector Attractors and to manage and program the overall site with events and activities throughout the year.• Builds the 64-unit Residential Condominium development at a Capital Cost of $16 Million, inclusive of parking plus $1 Million in land costs.

TOTAL Private Sector Developer Capital Cost Commitment = $26 Million (38% of Total Development costs).

Private Sector Tenants Key Roles and Financial Commitment:

• Retail and foodservice tenants fit out leased Commercial Space at an estimated Capital Cost of $6.7 Million (43,300 square feet at an average fit out cost of $152 per sq.ft.).• Pays base lease rates to private sector retail developer plus a surcharge to ssM Gateway Corporation to be part of the overall Gateway site.

TOTAL Private Sector Tenant Capital Cost Commitment = $6.7 Million (10% of Total Development costs).



Public - Private Sector Development

RECOMMENDED DEVELOPMENT CONCEPT PUBLIC - PRIVATE SECTOR DEVELOPMENT

Capital CostsSQ. Ft. % Base Bldg Fitout Soft Costs Total %

Public SectorSault Exploration Centre 17,222 $3,200,000 $6,400,000 $768,000 $10,368,000

Temporary Exhibition Area 7,535 $1,050,000 $700,000 $140,000 $1,890,000

Icon Tower 5,382 $2,000,000 $250,000 $180,000 $2,430,000

Train Station / Gallery 6,458 $1,200,000 $600,000 $144,000 $1,944,000

Landscaped Atrium 17,222 $3,200,000 $2,400,000 $448,000 $6,048,000

Urban Plaza 53,820 $5,000,000 n/A $400,000 $5,400,000

Farmer’s Market 5,382 $750,000 $250,000 $80,000 $1,080,000I

Infrastructure $2,000,000 $2,000,000

Soil Remediation $900,000 $900,000

Parking $2,480,000 $2,480,000

113,021 46% $16,400,000 $10,600,000 $9,540,000 $36,540,000 53%

Private Sector CommercialBroadcast Studio 646 $120,000 $30,000 $12,000 $162,000

Destination Retail 32,292 $4,500,000 $4,036,000 $360,000 $8,896,000

Restaurant 8,611 $1,600,000 $2,153,000 $128,000 $3,881,000

Café 2,368 $440,000 $474,000 $35,000 $949,000

Parking $907,000 $907,000

Land Allocation $1,000,000 $1,000,000

43,917 18% $6,660,000 $6,693,000 $2,442,000 $15,795,000 23%

Private Sector Residential64 Seniors Active Lifestyle Residences

86,800 $11,290,000 $3,226,000 $1,161,000 $15,677,000

Parking $240,000 $240,000

Land Allocation $1,000,000 $1,000,000

86,800 36% $11,290,000 $3,226,000 $2,401,000 $16,917,000 24%

TOTAL 243,738 100% $34,350,000 $20,519,000 $14,383,000 $69,252,000 100%

source: Forrec Ltd. and PKF Consulting note: total Development Cost is $66 Million, however the Capital Funding Model double counts land as the funds that are transferred from the Private sector to the City.

11.0 FINaNCIal aNalysIs


11.0 Financial Analysis

Introduction

11.1 Introduction

the following section provides a financial analysis of the proposed public sector attractions, private sector commercial and residential components of the SSM Gateway site. Specifically, 5-year operating projections for the sault exploration Centre and Icon tower have been prepared. In addition, lease revenues derived from private sector commercial tenants and the Agawa Canyon tour train excursion and Algoma Farmer’s Market have been projected, with consideration given to the level of investment that could be supported by each development, based on projected performance levels, in order to generate an adequate return to a private sector developer. A development proforma for the residential component of the development has also been prepared, indicating the average sales price per unit required to generate an adequate return to a private sector developer.



Sault Discover Centre and Flexible Attraction Space

11.2.1 sault exploration Centre and Flexible Attraction space

exhibit 11-1 provides a 5-year proforma statement of Projected operating Results for the sault exploration Centre based on the following assumptions:

Revenues

• Annual attendance to the sault exploration Centre, and its 6 exhibit areas has been projected at 95,000 in Year 1, increasing to 101,200 by its stabilized year of operation in Year 3.• The Admissions Strategy for the Sault Exploration Centre reflects a pricing and discounting approach by market segment and period. the proposed pricing model for the sault exploration Centre results in an average admission price of $18.65 in Year 1, including the price of 1 special exhibition per year to be held over a 5-month period (May to september).

SAULT Exploration Centre PRICING STRATEGYYear 1 Rack Rates Avg Child Admission Average Admission

Resident/Leisure 2-4 5-14 Adults

Summer $2011 $2011 $2011

Weekday $10.50 $16.80 $21.00

Weekend $10.50 $16.80 $21.00

School Term

School Groups $9.45 $9.45 $18.90

Weekday $9.45 $9.45 $18.90

Weekend $9.45 $9.45 $18.90

Discount/Groups $8.03 $8.03 $17.85

TOTAL (Inflated to Year 1) $11.07 $14.16 $13.41 $21.62 $18.65



• Retail sales have been projected at $3.00 per capita in Year 1, and inflated thereafter.• The flexible exhibition space would also be used for rentals during the 7-month period when it is not being utilized to host a special exhibition, with annual rental income estimated at $75,000.

Departmental Expenses

• Guest services, including admissions staff payroll, has been estimated at 20% of admissions revenue, while programming and exhibits design has been estimated at 30% of ticket sales.• In order to drive attendance during the peak season and encourage repeat attendance by the resident population, one blockbuster traveling exhibition will be held per year, at a design and rental cost of $200,000 per show.• Retail cost of goods has been estimated at 30% of sales.• set up and take down costs related to facility rentals have been estimated at 15% of rental sales.

Undistributed Operating Expenses

• Administration & General expenses include General Manager salary ($100,000) plus 20% benefits, staff training ($15,000), credit card commissions at 1.5% of revenue; and general administration and office expenses ($190,000) in Year 1, and inflated at 2.5% per annum for the balance of the projection period.• Sales and Marketing expenses reflect payroll costs of a Sales Manager ($60,000) plus benefits (20%), and $255,000 in advertising and sales promotion costs, inflated.• Property Operations & Maintenance costs include a Facility Manager salary ($50,000) plus 20% benefits plus $210,000 in operations supplies and expenses, inflated.• Utility costs have been projected at $3.50 per square foot for the 25,000 square foot building footprint, inflated.

Fixed Operating Charges

• It has been assumed that as a public-sector attraction, the sault exploration Centre would not be subject to any property taxes. ¹• Insurance costs for the facility have been estimated at $25,000 in Year 1 and inflated each year thereafter.

Net Operating Income

• The annual operating deficit for the Sault Exploration Centre with temporary exhibition space is projected to be in the order of $105,100 in Year 1, before reaching a modest breakeven income of $9,000 by Year 3.


Sault Discover Centre and Flexible Attraction Space

¹ the deferral of property taxes for the public sector attractions, will be offset by property taxes generated by the private sector components of the development as discussed in section 13 Capital Funding Plan under 13.6 Municipal taxes Generated.



Public Sector Core Attraction Operating Projections

EXHIBIT 11-1 SAULT Exploration Centre WITH TEMPORARY EXHIBITION SPACE SSM GATEWAY DEVELOPMENTPROJECTED OPERATING RESULTS DRAFT FOR DISCUSSION PURPOSES ONLY

Year 1 Year 2 Year 3 Year 4 Year 5

Projected Attendance 95,000 100,000 101,200 101,200 101,200

total Building Area (sq.ft.) 24,757 24,757 24,757 24,757 24,757

Average Admission Fee $18.65 $19.12 $19.59 $20.08 $20.59

Per Cap Revenue $22.44 $22.96 $23.52 $24.11 $24.71

REVENUE

Admissions $1,771,700 83.1% $1,911,500 83.3% $1,982,800 83.3% $2,032,400 83.3% $2,083,200 83.3%

Retail $285,000 13.4% $307,500 13.4% $319,000 13.4% $326,900 13.4% $335,100 13.4%

Facility Rentals $75,000 3.5% $76,900 3.3% $78,800 3.3% $80,800 3.3% $82,800 3.3%

total Revenue $2,131,700 100.0% $2,295,900 100.0% $2,380,600 100.0% $2,440,100 100% $2,501,100 100.0%

DePARtMentAL eXPenses

Guest services $354,300 20.0% $363,200 19.0% $372,300 18.8% $381,600 18.8% $391,100 18.8%

Programming/exhibit Design $531,500 30.0% $544,800 28.5% $558,400 28.2% $572,400 28.2% $586,700 28.2%

travelling exhibitions $200,000 11.3% $205,000 10.7% $210,100 10.6% $215,400 10.6% $220,800 10.6%

Retail Cost of Goods $85,500 30.0% $92,300 30.0% $95,700 30.0% $98,100 30.0% $100,500 30.0%

Rentals $11,300 15.1% $11,500 15.0% $11,800 15.0% $12,100 15.0% $12,400 15.0%

total Departmental expenses $1,182,600 55.5% $1,216,800 53.0% $1,248,300 52.4% $1,279,600 52.4% $1,311,500 52.4%

totAL DePARtMentAL InCoMe $949,100 44.5% $1,079,100 47.0% $1,132,300 47.6% $1,160,500 47.6% $1,189,600 47.6%




EXHIBIT 11-1 SAULT Exploration Centre WITH TEMPORARY EXHIBITION SPACE SSM GATEWAY DEVELOPMENTPROJECTED OPERATING RESULTS DRAFT FOR DISCUSSION PURPOSES ONLY


UNDISTRIBUTED OPERATING eXPenses

Administration and General $342,000 16.0% $362,400 15.8% $374,400 15.7% $383,800 15.7% $393,400 15.7%

sales & Marketing $327,800 15.4% $336,000 14.6% $344,400 14.5% $353,000 14.5% $361,800 14.5%

Property operation and Maintenance

$273,200 12.8% $280,000 12.2% $287,000 12.1% $294,200 12.1% $301,500 12.1%

Utilities $86,600 4.1% $88,800 3.9% $91,000 3.8% $93,300 3.8% $95,600 3.8%

Total Undistributed Expenses $1,029,600 48.3% $1,067,200 46.5% $1,096,800 46.1% $1,124,300 46.1% $1,152,300 46.1%

InCoMe BeFoRe FIXeD CHARGes

($80,500) -3.8% $11,900 0.5% $35,500 1.5% $36,200 1.5% $37,300 1.5%

FIXeD CHARGes

Property taxes $0 0.0% $0 0.0% $0 0.0% $0 0.0% $0 0.0%

Insurance $25,000 1.2% $25,600 1.1% $26,300 1.1% $26,900 1.1% $27,600 1.1%

total Fixed Charges $25,000 1.2% $25,600 1.1% $26,300 1.1% $26,900 1.1% $27,600 1.1%

net oPeRAtInG InCoMe ($105,500) -4.9% ($13,700) -0.6% $9,200 0.4% $9,300 0.4% $9,700 0.4%




Icon TowerIcon tower

An Icon tower would be featured as the key focal point within the Gateway Plaza and would operate on a daily basis from mid May to mid october and during weekends only for the balance of the year. exhibit 11-2 provides a 5-year proforma statement of Projected operating Results for the Icon tower based on the following assumptions:

Revenues

• Annual attendance to the Icon tower has been projected at 30,000 in Year 1, 35,000 in Year 2 and to reach 40,000 by its stabilized year of operation in Year 3.• Similar to the Sault Exploration Centre, the Admissions Strategy for the Icon Tower reflects a pricing and dis counting approach by market segment and period. the proposed pricing model for the attraction results in an average admission price of $6.53 in Year 1.

11.2.2 ICON TOWER PRICING STRATEGYYear 1 Rack Rates Avg Child Admission Average Admission

Resident/Leisure 2-4 5-14 Adults

Summer $2011 $2011 $2011

Weekday $3.50 $5.60 $7.00

Weekend $3.50 $5.60 $7.00

School Term

School Groups $3.50 $3.50 $7.00

Weekday Other $3.50 $3.50 $7.00

Weekend $3.50 $3.50 $7.00

Discount/Groups $3.15 $3.15 $6.30

TOTAL (Inflated to Year 1) $3.77 $5.18 $4.78 $7.38 $6.53


• other net income derived from facility rentals for special events has been projected at $5,000 in Year 1, and inflated each year thereafter.


Departmental Expenses

• Guest services, including admissions staff payroll, has been estimated at $74,000 in wages plus 20% benefits for a total of $89,000 in payroll costs, based on the following operating hours and staffing schedule:


Icon Tower

ICON TOWER OPERATING AND STAFFING SCHEDULEoperating Hours

Weeks Days Per Week

Daily operating Hours

total Hours

Staffing Requirements

staffing Hours

Hourly Rate

total Payroll Costs

May to June 7 7 8 392 3 1,176 $10.50 $12,350

Jul to Aug 9 7 10 630 6 3,780 $10.50 $39,700

sep to oct 6 7 8 336 3 1,008 $10.50 $10,600

Rest of Y 30 2 6 360 3 1,008 $10.50 $11,350

totAL 52 214 1,218 7,044 $74,000


• Retail cost of goods has been estimated at 30% of sales.



• To achieve operating efficiencies, management and operational staffing, including the General Manager, Sales Manager and Facility Manager, will be shared between the 2 attractions, with the full payroll costs reflected in the sault exploration Centre operating statement.• Administration & general expenses include credit card commissions at 1.5% of revenue; and general administration and office expenses of $30,000, inflated.• Advertising and sales promotion costs and Property operations and Maintenance costs have each been estimated at 15% of revenues equating to just under $40,000 in Year 1, inflated.• Utility costs have been projected at $2.50 per square foot for the 5,400 square foot building footprint, inflated.

Fixed Operating Charges

• It has been assumed that as a public-sector attraction, the Icon tower would not be subject to any property t axes; and• Insurance costs for the facility have been estimated at $20,000 in Year 1 and inflated each year thereafter.

Net Operating Income• In its first year of operation, the Icon Tower is projected to operate close to a breakeven, before attaining a nominal profit of $40,000 by its 3rd year of operation.


Icon Tower


EXHIBIT 11-2 ICON TOWER SSM GATEWAY DEVELOPMENTPROJECTED OPERATING RESULTS DRAFT FOR DISCUSSION PURPOSES ONLY


Projected Attendance 30,000 35,000 40,000 40,000 40,000



Per Cap Revenue $8.70 $8.89 $9.10 $9.33 $9.56

REVENUE

Admissions $196,000 75.1% $234,400 75.3% $274,600 75.4% $281,500 75.4% $288,500 75.5%

Retail $60,000 23.0% $71,800 23.1% $84,100 23.1% $86,200 23.1% $88,300 23.1%

other Income (net) $5,000 1.9% $5,100 1.6% $5,300 1.5% $5,400 1.4% $5,500 1.4%

total Revenue $261,000 100.0% $311,300 100.0% $364,000 100.0% $373,100 100.0% $382,300 100.0%


Guest services $88,800 45.3% $91,000 38.8% $93,200 33.9% $95,600 34.0% $98,000 34.0%


total Departmental expenses $106,800 40.9% $112,500 36.1% $118,400 32.5% $121,500 32.6% $124,500 32.6%

total Departmental Income $154,200 59.1% $198,800 63.9% $245,600 67.5% $251,600 67.4% $257,800 67.4%




EXHIBIT 11-2 ICON TOWER SSM GATEWAY DEVELOPMENTPROJECTED OPERATING RESULTS DRAFT FOR DISCUSSION PURPOSES ONLY




Programming $10,000 3.8% $10,300 3.3% $10,500 2.9% $10,800 2.9% $11,000 2.9%

sales & Marketing $39,200 15.0% $46,700 15.0% $54,600 15.0% $56,000 15.0% $57,300 15.0%

Property operation and Maintenance $39,200 15.0% $46,700 15.0% $54,600 15.0% $56,000 15.0% $57,300 15.0%

Utilities $13,500 5.2% $13,800 4.4% $14,100 3.9% $14,500 3.9% $14,900 3.9%

Total Undistributed Expenses $135,800 52.0% $158,000 50.8% $181,300 49.8% $186,000 49.9% $190,400 49.8%


$18,400 7.0% $40,800 13.1% $64,300 17.7% $65,600 17.6% $67,400 17.6%

FIXeD CHARGes

Property taxes $0 0.0% $0 0.0% $0 0.0% $0 0.0% $0 0.0%

Insurance $20,000 7.7% $20,500 6.6% $21,000 5.8% $21,500 5.8% $22,100 5.8%


net oPeRAtInG InCoMe ($1,600) -0.6% $20,300 6.5% $43,300 11.9% $44,100 11.8% $45,300 11.8%






Consolidated Operating Statement for Public Sector Attractions

11.2.3 Consolidated operating statement for Public sector Attractions

exhibit 11-3 provides a consolidated operating statement for the sault exploration Centre and Icon tower. the annual operating deficit for both attractions is projected to be in the order of $107,000 in Year 1, before attaining a nominal profit in the order of $50,000 by its 3rd year of operation.

In addition to the typical general operating expenses required for the attraction (ie. payroll, sales and marketing, property operations and maintenance and utilities), attractions also require an infusion of capital approximately every 5 to 7 years, to update and refresh the attraction itself (ie. exhibits, programmed areas, public space, etc). It should be noted that while a capital reserve has been excluded from the Core Attraction operating statements, the Capital and operating Funding Plan for the project discusses the need for such a fund in section 13.3 ongoing Capital Funds.


EXHIBIT 11-3 PUBLIC-SECTOR ATTRACTIONS - SAULT Exploration Centre AND ICON TOWERSSM GATEWAY DEVELOPMENT PROJECTED CONSOLIDATED OPERATING RESULTS

DRAFT FOR DISCUSSION PURPOSES ONLYYear 1 Year 2 Year 3 Year 4 Year 5

Projected Attendance - sault exploration Centre

95,000 100,000 101,200 101,200 101,200

Projected Attendance - Icon tower

30,000 35,000 40,000 40,000 40,000



Per Cap Revenue $19.14 $19.31 $19.44 $19.92 $20.42

REVENUE

Admissions $1,967,700 82.2% $2,145,900 82.3% $2,257,400 82.2% $2,313,900 82.3% $2,371,700 82.3%

Retail $345,000 14.4% $379,300 14.5% $403,100 14.7% $413,100 14.7% $423,400 14.7%

Facility Rentals $80,000 3.3% $82,000 3.1% $84,100 3.1% $86,200 3.1% $88,300 3.1%

total Revenue $2,392,700 100.0% $2,607,200 100.0% $2,744,600 100.0% $2,813,200 100.0% $2,883,400 100.0%


Guest services $443,100 22.5% $454,200 21.2% $465,500 20.6% $477,200 20.6% $489,100 20.6%

Programming/exhibit Design $541,500 27.5% $555,100 25.9% $568,900 25.2% $583,200 25.2% $597,700 25.2%

travelling exhibitions $200,000 10.2% $205,000 9.6% $210,100 9.3% $215,400 9.3% $220,800 9.3%


Rentals $11,300 14.1% $11,500 14.0% $11,800 14.0% $12,100 14.0% $12,400 14.0%

total Departmental expenses $1,299,400 54.3% $1,339,600 51.4% $1,377,200 50.2% $1,411,900 50.2% $1,447,000 50.2%

totAL DePARtMentAL InCoMe $1,093,300 45.7% $1,267,600 48.6% $1,367,400 49.8% $1,401,300 49.8% $1,436,400 49.8%




EXHIBIT 11-3 PUBLIC-SECTOR ATTRACTIONS - SAULT Exploration Centre AND ICON TOWERSSM GATEWAY DEVELOPMENT PROJECTED CONSOLIDATED OPERATING RESULTS




sales & Marketing $367,000 15.3% $382,700 14.7% $399,000 14.5% $409,000 14.5% $419,100 14.5%


$312,400 13.1% $326,700 12.5% $341,600 12.4% $350,200 12.4% $358,800 12.4%

Utilities $100,100 4.2% $102,600 3.9% $105,100 3.8% $107,800 3.8% $110,500 3.8%

Total Undistributed Expenses $1,155,400 48.3% $1,214,900 46.6% $1,267,600 46.2% $1,299,500 46.2% $1,331,700 46.2%

GRoss oPeRAtInG PRoFIt ($62,100) -2.6% $52,700 2.0% $99,800 3.6% $101,800 3.6% $104,700 3.6%


($62,100) -2.6% $52,700 2.0% $99,800 3.6% $101,800 3.6% $104,700 3.6%

FIXeD CHARGes

Property taxes $0 0.0% $0 0.0% $0 0.0% $0 0.0% $0 0.0%

Insurance $45,000 1.9% $46,100 1.8% $47,300 1.7% $48,400 1.7% $49,700 1.7%


net oPeRAtInG InCoMe ($107,100) -4.5% $6,600 0.3% $52,500 1.9% $53,400 1.9% $55,000 1.9%






Private Sector Rentals and Lease Analysis

11.3 Private sector Rentals and Lease Analysis• the commercial component of the development is expected to be a private sector initiative. the objective is to create a synergy of commercial uses in the downtown core, which complement station Mall and act as a retail and foodservice destination for both locals and visitors.• the 44,000 square feet of private sector commercial space comprise of a 250-seat restaurant; a 69-seat café; approximately 24,000 square feet of tier 1 destination retail within 5 outlets; and a further 8,000 square feet of tier 2 retail within 7 smaller outlets; and a small Broadcast studio of approximately 650 square feet.• tier 1 retail tenant space has been projected at a base lease of $18.25 per square foot, with tier 2 space at $16.50 per square foot. tier 1 foodservice lease rates are slightly lower at $16.50 for the restaurant and $15.50 for the Café. these lease rates are net of common area, maintenance, utilities and property taxes and do not include the supplementary lease rates paid to ssM Gateway Corporation.• total private sector commercial lease revenue for the Gateway Centre site have been estimated at $764,000 in Year 1, increasing to $843,000 by Year 5.

OPROJECTED LEASE REVENUE PROPOSED PRIVATE SECTOR COMMERCIAL SPACE, SSM GATEWAY


total Food service $178,800 $183,200 $187,900 $192,500 $197,300

total Retail $575,200 $589,200 $604,300 $619,400 $634,900

total office $10,000 $10,300 $10,500 $10,800 $11,000

total net Lease Revenue $764,000 $783,000 $802,700 $822,700 $843,200





Indication of Supportable Value (IOV)

• An “Indication of Supportable Value off Cashflow” has been prepared for the proposed commercial uses utilizing the discounted cashflow approach to valuation and applying market driven capitalization and discount rates. this analysis indicates the level of investment that could be supported, based on projected performance, while still generating an adequate return to the developer.• The “Supportable Value off Cashflow” after applying a 7.0% terminal capitalization rate and an 8.5% discount rate is $11 Million or $259 per gross sq. ft. this “Indicated Value” should not be construed as “Market Value”.• The 7.0% terminal capitalization rate and the 8.5% discount rate have been applied as they are reflective of commercial real estate, specifically food service, retail and primary tenanted space investment parameters.• At an average lease rate of $17.40 per square foot in Year 1, a private sector developer could support $10 Million in development costs for the retail space, inclusive of land costs valued at $1 Million and parking requirements.• Assuming the development was financed with 65% debt, at a 6% interest rate, and 25-year amortization rate, annual principal and interest payments for the developer equate to $490,000. therefore the development has the potential to generate a Roe of 10.4% for the private sector developer by Year 5.




ESTIMATE OF VALUE CALCULATION (BEFORE TAX AND INTEREST) SSM GATEWAY RETAIL/COMMERCIAL SPACE

PER GROSS SQ.FT. 43,917

INFLATION 2.5%

DISCOUNT RATE 8.50%

CAPITALIZATION RATE

7.00%

NET PRESENT VALUE ANALYSISYear Cash Flow Discount Rate @

8.5%Net Present Value

1 $764,000 0.922 $704,147

2 $783,000 0.849 $665,123

3 $802,700 0.783 $628,440

4 $822,700 0.722 $593,639

5 $843,200 0.665 $560,766

Cashflow Value $4,015,600 Discounted $3,152,117

Residual Value $12,346,857 Discounted $8,211,221

estimate of Value $11,363,338

Per Gross sq.Ft $259


Private Sector Development Costs

Land $1,000,000

Destination Retail - Base Building

$4,500,000

Restaurant - Base Building

$2,040,000

Broadcast Centre - Base Building & Fit Out

$150,000

Parking $907,000

Soft Costs $535,000

$9,745,000

ROE Debt @ 65% 6% Int/25 yr Amt $6,334,250

P&I Payments $489,740

Equity @35% $3,410,750

Year Cashflow P&I Net Cashflow ROE

1 $764,000 $489,740 $274,260 8.0%

2 $783,000 $489,740 $293,260 8.6%

3 $802,700 $489,740 $312,960 9.2%

4 $822,700 $489,740 $332,960 9.8%

5 $843,200 $489,740 $353,460 10.4%






SSM Gateway Commercial Tenants

11.4 ssM Gateway Commercial tenants

• the Agawa Canyon train station and the Farmer’s Market building will be built through public sector dollars and leased by Cn Rail and the Algoma’s Farmer’s Market management team, with lease revenues paid to the ssM Gateway Corporation.• Lease rates for the 5,400 square foot Farmer’s Market have been estimated at $4.65 per square foot, or $25,000 per annum in Year 1, inflated at 2.5% for the balance of the projection period.• the Agawa Canyon train station lease to Cn Rail has been estimated at $100,000 in Year 1, which is the same as the operating lease costs for their current location at station Mall. the lease rate is equivalent to $15.50 per square foot for the 6,460 square foot building, and inflated at 2.5% per annum for the projection period.

OPROJECTED LEASE REVENUE PROPOSED TENANT SPACE, SSM GATEWAY CORP


Agawa Canyon Train Station $100,000 $102,500 $105,100 $107,700 $110,400

Farmer’s Market $25,000 $25,625 $26,300 $27,000 $27,700

Total Net Lease Revenue $125,000 $128,125 $131,400 $134,700 $138,100




SSM Gateway Commercial Tenants

Indication of Supportable Value (IOV)

• The “Supportable Value off Cashflow” after applying a 7.0% terminal capitalization rate and an 8.5% discount rate is $1.8 Million or $157 per square foot. this “Indicated Value” should not be construed as “Market Value”.• At a combined average lease rate of $10.56 per square foot for both the Agawa Canyon train station and the Farmer’s Market, the public sector tenanted space only supports approximately 50% of its base construction costs ($3.6 Million).

ESTIMATE OF VALUE CALCULATION (BEFORE TAX AND INTEREST) SSM GATEWAY PUBLIC SECTOR TENANTED SPACE

PER GROSS SQ.FT. 11,840

INFLATION 2.5%

DISCOUNT RATE 8.50%

CAPITALIZATION RATE 7.00%

NET PRESENT VALUE ANALYSISYear Cash Flow Discount Rate @ 8.5% Net Present Value

1 $125,000 0.922 $115,207

2 $128,125 0.849 $108,836

3 $131,328 0.783 $102,818

4 $134,611 0.722 $97,132

5 $137,977 0.665 $91,761

Cashflow Value $657,041 Discounted $515,754

Residual Value $2,020,372 Discounted $1,343,639

estimate of Value $1,859,393

Per Gross sq.Ft $157

Public Sector Commercial Development CostsLand $0

Agawa Canyon $1,944,000

Farmers Market $1,080,000

TOTAL $3,637,000


• In addition, the public sector tenant lease rates cannot support any of the associated parking costs required for the train station and Farmer’s Market (estimated at $1.3 Million).



Private Sector Residential Development Assumptions11.5 Private sector Residential Development Assumptions

• the recommended program also includes the development of 64 active lifestyle condominium residences on the Gateway site, at an average size of 1,360 square feet.• the base construction cost has been estimated at $183 per square foot for a total capital cost of $15.9 Million, inclusive of professional fees and parking, but exclusive of land costs.• A 5% marketing/sales cost has also been allocated bringing the development costs to $17 M or $195 per square foot (before land costs).• It has been assumed that the land would be sold to a residential developer, at a land value of $1 Million ($15,625 per unit), bringing the total development costs to $18 Million.

SSM GATEWAY DEVELOPMENT PROFORMA SUMMARY RESIDENTIAL

Item Lifestyle Condominiums

Number of Units 64

Average net Unit Size (Sq.Ft.) 1,356

Gross Residential Area (Sq.Ft.) 86,800

Index Revenue Per Sq.Ft. $240

End Price Per Unit $326,000

Revenues

Total Project Revenues $20,864,000

Development Costs

otal Development Costs $17,960,200

Total Development Costs (Sq.Ft.) $207

Profits

Total Development Profits $2,903,800

Total Development Profits (Sq.Ft.) $33


DEVELOPMENT COSTS

Per Sq. Ft. Per Unit

# Units 64

64 Sq.Ft. per unit 1,356

GFA (sq.ft) 86,800

Base Building Cost $11,290,000 $130 $176,406

Marketing/Sales Cost @ 5%

$1,043,200 $12 $16,300

Fit Out Costs $3,226,000 $37 $50,406

Soft Costs/Other $1,161,000 $13 $18,141

Parking $240,000 $3 $3,750

Land $1,000,000 $12 $15,625

$17,960,200 $207 $280,628

• The units would sell for an average sale price of $326,000, resulting in a development profit of approximately $3 Million or a 16% return on the private sector developer’s investment.



Private Sector Residential Development Assumptions



Financial Summary

11.6 Financial summary

Based on the financial analysis, the public sector Core Attractions will not be able to support any of their capital costs through operations. In addition, a capital reserve will need to be established to deal with capital replacement issues, and the need to upgrade and renovate the Core Attractions.

At the same time, by relocating the Agawa Canyon train station and Algoma’s Farmers Market to the site and applying comparable lease rates currently being paid in the marketplace, the lease rates will only be able to support approximately 50% of the base construction costs of these buildings and none of their associated parking requirements.

However, at an average lease rate of $17.40 per square foot inflated, a private sector developer could support the $10 Million in development costs required for the 44,000 square feet of commercial space, inclusive of land costs valued at $1 Million and the associated parking requirements, at an adequate Roe of 10.4% by Year 5.

Furthermore, at an asking price of $326,000, the development’s 64 condominium units would result in a development profit of approximately $3 Million or a 16% return on a private sector developer’s investment.

12.0 ssm GaTeWay CORPORaTION OPeRaTING

PROJeCTIONs


12.0 SSM Gateway Corporation Operating Plan

Introduction

12.1 Introduction

the following section describes the operating Plan for the management of the overall development through the operating entity of SSM Gateway Corporation. Specifically, 5-year operating projections for ssM Gateway Corporation have been prepared.



12.2 ssM Gateway Corporation operating Plan

Following development of the site, an operating entity, SSM Gateway Corporation, would be set up as the management company for the overall Gateway site. ssM Gateway Corporation would be responsible for programming the overall site, and acting as the landlord for the public sector attractions and space, including the sault exploration Cen-tre, Icon Tower, Agawa Canyon Train Station, the Algoma’s Farmers Market, the landscaped Atrium and Urban Plaza.

As outlined in the Governance structure, the ssM Gateway Corporation would be funded through lease revenues derived by public sector attraction tenants and supplementary event programming levies and Common Area Charges paid by the private sector commercial tenants. The lease income would be utilized for administrative and staffing costs of the organization, event programming, common area maintenance costs for the public space and to offset any operating deficits generated by the public sector core attractors.



SSM Gateway Corporation Operating Projections12.3 ssM Gateway Corporation operating Projections

exhibit 12-1 summarizes the 5-year proforma statement of operations for the ssM Gateway Corporation, based on the following assumptions:

Lease and Levy Revenue

• It has been reflected that the core public sector attractors would pay a nominal lease rate of $1 per year to the ssM Gateway Corporation.

• Agawa Canyon train station and the Farmer’s Market would be expected to contribute a combined $125,000 in annual lease rates to ssM Gateway Corporation.

• Common area charges for retail space in ssM (excluding realty taxes) typically range from $2.00 to $4.50 per square foot depending on location (ie. secondary suburban malls to prime downtown and newer Big Box retail locations), while utility costs typically run $2.50 per square foot.

• Common Area charges for the public sector space at the Gateway site has been based on a 13 acre developable site with a built facility program of approximately 189,900 square feet, of which approximately 44,000 square feet will be designated for private sector commercial tenants. It has been assumed that the commercial tenants will be responsible for their own CAM and utility charges within the retail development plus 50% of the site operation, maintenance and utility costs for the Urban Plaza and Landscaped Atrium.

• the CAM levy paid by the private sector commercial tenants to ssM Gateway Corporation has been estimated at $3.70 per square foot, generating $163,600 in Year 1, and inflated each year thereafter (represents 50% of site operation and maintenance costs for the Urban Plaza and Landscaped Atrium and 50% of utility costs for the interior Landscaped Atrium only).

• Private sector commercial tenants will also be expected to pay an event programming levy of $5.00 per square foot, which will in turn contribute approximately $219,600 in Year 1 towards the ssM Gateway Corporation entity.

• therefore gross lease rates for the private sector commercial tenants (exclusive of realty taxes) will average $32.65 per square foot (inclusive of base rates, CAM, and utilities plus supplementary levies for public sector space CAM charges and site event programming).


PROJECTED PRIVATE SECTOR COMMERCIAL LEASE RATES SSM GATEWAY DEVELOPMENT

total site 17.6 acres

Developable site 13.3 acres

ssM Gateway Facility Program 189,900 sq.ft.

Parking 1,209 spaces

Private sector Commercial space 44,000 sq.ft

Commercial Lease Rates Year 1

Base Lease $17.40

CAM – Retail Commercial tenants $4.00

CAM – Public sector Levy (paid to ssM Gateway Corp $3.70

Utilities $2.50

event Programming Levy (paid to ssM Gateway Corp) $5.00

total Lease Rate (before realty taxes) $32.65


SSM Gateway Corporation Operating Projections

source: PKF Consulting

• therefore, the total lease revenue to ssM Gateway Corporation has been estimated at $508,000 in Year 1, increasing to $561,000 by Year 5.





• the operating plan will require a full-time site Manager to be permanently retained by ssM Gateway Corporation, whose objective will be to facilitate and co-ordinate activities and entertainment within the development.• A payroll budget of $156,000 inclusive of benefits for a Site Manager ($65,000 salary plus 20% benefits); Administrative position ($30,000 plus 20% benefits); and $40,000 for accounting support has been allocated.• An event marketing budget of $200,000 has been allocated to program the Gateway site in Year 1; increased by inflation for the balance of the projection period.• Property operation and maintenance costs for the Gateway site have been estimated at $4.00 per square foot for the Atrium event space and Public Plaza (71,000 square feet), for a total cost of $284,000 in Year 1, inflated by 2.5% per annum.• Utility costs for the indoor Landscaped Atrium Space (17,200 square feet) have been estimated at $2.50 per square foot, for a total of $43,100 in Year 1; inflated at 2.5% per annum.

Fixed Charges

• It has been assumed that the public sector attractions and the public space which constitutes the Landscaped Atrium and Urban Plaza would not be subject to property taxes.

Net Operating Deficit

• the lease and levy revenues collected by the ssM Gateway Corporation will cover approximately 65% of the site’s operating costs, leaving an operating deficit of approximately $175,000 in Year 1, increasing to over $193,000 by Year 5.

Core Attractor Operating Deficits

• the 2 core attractors (sault exploration Centre and Icon tower) are projected to generate an annual operat-ing deficit in the order of $107,100 in Year 1, before achieving breakeven in Year 2 and a modest profit of approximately $50,000 per annum upon stabilization.

SSM Gateway Corporation Net Operating Deficit

• Therefore after allowing for site operating costs and the initial years of operating deficits from the 2 public sector attractions, ssM Gateway Corporation would require approximately $280,000 in additional operating funds in Year 1, decreasing to approximately $140,000 by its stabilization year and each year thereafter.


EXHIBIT 12-1 SSM GATEWAY CORPORATION SSM GATEWAY DEVELOPMENTPROJECTED OPERATING RESULTS


Projected Gross site Visits 1,530,000 1,530,000 1,530,000

Projected net site Visitors 924,000 924,000 924,000

total Public sector site Area (sq.ft.)

59,202 31% 59,202 31% 59,202 31% 59,202 31% 59,202 31%

total Private sector Building Area (sq.ft.)

130,717 69% 130,717 69% 130,717 69% 130,717 69% 130,717 69%

totAL ssM GAteWAY sIte AReA (sq.ft.)

189,918 100% 189,918 100% 189,918 100% 189,918 100% 189,918 100%

LEASE and LEVY REVENUE

Icon tower Lease $1 0.0% $1 0.0% $1 0.0% $1 0.0% $1 0.0%

nature-Based Attraction Lease $1 0.0% $1 0.0% $1 0.0% $1 0.0% $1 0.0%

Agawa Canyon train station Lease

$100,000 19.7% $102,500 19.7% $105,063 19.7% $107,689 19.7% $110,381 19.7%

Farmer’s Market Lease $25,000 4.9% $25,625 4.9% $26,266 4.9% $26,922 4.9% $27,595 4.9%

Commercial CAM Levy $163,600 32.2% $167,700 32.2% $171,900 32.2% $176,200 32.2% $180,600 32.2%

Commercial event Programming Levy

$219,600 43.2% $225,100 43.2% $230,700 43.2% $236,500 43.2% $242,400 43.2%

other $0 0.0% $0 0.0% $0 0.0% $0 0.0% $0 0.0%

total Revenue $508,202 100.0% $520,927 100.0% $533,930 100.0% $547,313 100.0% $560,979 100.0%




EXHIBIT 12-1 SSM GATEWAY CORPORATION SSM GATEWAY DEVELOPMENTPROJECTED OPERATING RESULTS




event Marketing $200,000 39.4% $205,000 39.4% $210,100 39.3% $215,400 39.4% $220,800 39.4%


$284,200 55.9% $291,300 55.9% $298,600 55.9% $306,000 55.9% $313,700 55.9%

Utilities $43,100 8.5% $44,100 8.5% $45,200 8.5% $46,400 8.5% $47,500 8.5%

Total Undistributed Expenses $683,300 134.5% $700,300 134.4% $717,800 134.4% $735,800 134.4% $754,200 134.4%


($175,100) -34.5% ($179,400) -34.4% ($183,900) -34.4% ($188,500) -34.4% ($193,200) -34.4%

FIXeD CHARGes

Property taxes $0 0.0% $0 0.0% $0 0.0% $0 0.0% $0 0.0%

total Fixed Charges $0 0.0% $0 0.0% $0 0.0% $0 0.0% $0 0.0%

net oPeRAtInG InCoMe ($175,100) -34.5% ($179,400) -34.4% ($183,900) -34.4% ($188,500) -34.4% ($193,200) -34.4%

CoRe AttRACtIons oPeRAtInG DeFICIt/InCoMe

Public sector Attractions ($107,100) -21.1% $6,600 1.3% $52,500 9.8% $53,400 9.8% $55,000 9.8%

ADJUSTED NET OPERATING InCoMe

($282,200) -55.5% ($172,800) -33.2% ($131,400) -24.6% ($135,100) -24.7% ($138,200) -24.6%






Summary and Implications

12.3 summary and Implications

Ideally, the mixed use development should be able to balance the operating deficiencies of the core attractions and contribute dollars to programming the site with events and activities throughout the year through lease revenues from private sector tenants. In order to achieve the ideal goal of generating $700,000 in annual operating funds to cover the operating deficits of the Sault Exploration Centre and Icon Tower attractions, site programming and a manage-ment structure, and 100% of the common area and utility costs for the public space, the Gateway site’s retail com-mercial tenants would be required to contribute approximately $9 in supplementary levies, over and above their own base lease, CAM and utility expenses, which would bring the total gross retail rates to $42 per square foot (before realty taxes). Given the fact that gross commercial lease rates in ssM currently range from a low of $14 per square foot to a high of $40 per square foot inclusive of realty taxes, these rates would be too high to achieve in the marketplace.

For these reasons, 50% of the common area and utility costs for the public space have been allocated to the retail commercial tenants, in addition to a $5.00 event programming levy, for a supplementary levy of $8.70 per square foot paid to ssM Gateway Corporation. Inclusive of base lease costs, CAM, utility and supplementary levies, the retail tenants have been projected to pay a gross commercial rate of $33 per square foot, before realty taxes.

In addition, the Farmer’s Market and Agawa Canyon train station leases will generate an estimated $125,000 per year for ssM Gateway Corporation. Assuming that the public sector components of the development will not be subject to property taxes, and any operating profits achieved by the Core Attractions by stabilization, SSM Gateway Corporation will still require approximately $140,000 per year in annual operating costs.

13.0 CaPITal FUNDING PlaN


13.0 Capital Funding Plan

Introduction

13.1 Introduction

the ssM Gateway Destination Attraction Development will require a capital funding plan to build the overall development as well as the ability to accrue funds to deal with capital replacement and ongoing upgrades to the attraction and operating funds to cover any operating deficits on the arms length agency, ssM Gateway Corporation.



Capital Developmnt Budget and Funding Sources

13.2 Capital Development Budget and Funding sources

the recommended development concept for the ssM Gateway site calls for a public-private partnership, whereby the public sector would be expected to invest an estimated $33 Million or 54% of the total $68 Million in project costs using encumbered capital dollars.

It has been assumed that the City of ssM would contribute the land at an estimated cost of $2 Million, provide a development-ready site at an investment cost of $2.9 Million for infrastructure and soil remediation costs; and contribute two-thirds of the costs associated with public parking on the site for a total investment of $7.4 Million. After selling parcels of the land to the private sector for retail and residential development for $2 Million, the City of ssM’s investment will be reduced to $5.4 Million or 8% of the project’s total costs.

It has been assumed that the provincial and federal governments would invest in the new Core Attractions, providing the space for the Agawa Canyon Train Station and Algoma Farmer’s Market, as well as the Urban Plaza and Landscaped Atrium through the Heritage Fund with a capital investment of $29.2 Million or 42% of the total project costs.

After purchasing the land for $1 Million, the majority of the commercial space (44,000 square feet) will be developed and owned by a private sector developer at a total investment of $9.1 Million, with the space leased out to third party tenants. the net lease revenue will support the base cost of development (including land and associated parking costs) and provide a marginal rate of return going forward. In addition, the retail tenants are estimated to invest a further $6.7 Million in fit up of the restaurant and retail space (average of $152 per sq.ft.).

Furthermore, a private sector residential developer is expected to invest approximately $17 Million in the overall development to build 64 condominium units.

In total the private sector is expected to invest $3.3 Million in the ssM Gateway or 47% of the project costs, with $36.5 Million or 54% of the capital invested by the public sector ($5.4 Million by the City of ssM after sale of 2 parcels of land to private sector developers, and $29.2 Million through provincial/federal and other forms of available funding). Consideration should be given to partnering with Batchewana First nations and White Fish Island and Parks Canada, as both have identified potential developments adjacent to the Gateway Site.


SSM GATEWAY DEVLOPMENT CAPITAL FUNDING MODELCity SSM Other Provincial/

Federal FundingPUBLIC

SECTORPrivate Sector

DeveloperPrivate Sector

TenantsPRIVATE SECTOR

TOTAL

Public sector

sault exploration Centre $10,368,000 $10,368,000 $10,368,000

temporary exhibition Area $1,890,000 $1,890,000 $1,890,000

Icon tower $2,430,000 $2,430,000 $2,430,000

train station / Gallery $1,944,000 $1,944,000 $1,944,000

Landscaped Atrium $6,048,000 $6,048,000 $6,048,000

Urban Plaza $5,400,000 $5,400,000 $5,400,000

Farmer’s Market $1,080,000 $1,080,000 $1,080,000

Infrastructure $2,000,000 $2,000,000 $2,000,000

soil Remediation $900,000 $900,000 $900,000

Parking $2,480,000 $2,480,000 $2,480,000

Land Cost $2,000,000 $2,000,000 $2,000,000


Capital Developmnt Budget and Funding Sources


Private Sector Commercial

City SSM Other Provincial/Federal Funding

PUBLIC SECTOR

Private Sector Developer

Private Sector Tenants

PRIVATE SECTOR

TOTAL

Broadcast Studio $162,000 $162,000 $162,000

Destination Retail $4,860,000 $4,036,000 $8,896,000 $8,896,000

Restaurant $1,728,000 $2,153,000 $3,881,000 $3,881,000

Café $475,000 $474,000 $949,000 $949,000

Parking $907,000 $907,000 $907,000

Land Allocation $1,000,000 $1,000,000$ 1,000,000

Private Sector Residential

64 Seniors Active Lifestyle Residences

$15,677,000 $15,677,000 $15,677,000

Parking $240,000 $240,000 $240,000

Land Allocation $1,000,000 $1,000,000 $1,000,000

TOTAL $7,380,000 $29,160,000 $36,540,000 $26,049,000 $6,663,000 $32,712,000 $69,252,000

11% 42% 53% 38% 10% 47% 100%


Capital Development Budget and Funding Sources

note: total Development Cost is $66 Million, however the Capital Funding Model double counts land as the funds that are transferred from the Private sector to the City.source: PKF Consulting Inc. Assumptions



Ongoing Capital Funds13.3 ongoing Capital FundsA capital reserve fund should also be established in order to re-invest back into the site’s Core anchor attractions (Sault Exploration Centre and Icon Tower), as well as the public space associated with the Urban Plaza and Atrium at the end of every 5 years. By applying 4% of revenues from the Core Attractions and ssM Gateway Corporation to a capital reserve, approximately $640,000 would be required to upgrade and renovate the public areas by the end of Year 5; with a further $730,000 required by the end of Year 10.

SSM GATEWAY DEVELOPMENT ONGOING CAPITAL FUNDING PLAN for ATTRACTIONS and PUBLIC SPACE

DRAFT FOR DISCUSSION PURPOSES ONLY

Year 1 Year 2 Year 3 Year 4 Year 5 5 Yr Total 10 Yr Total

totalProjected net site Visitors

924,000 924,000 924,000

total Public sector site Area (sq.ft.)

59,202 31% 59,202 31% 59,202 31% 59,202 31% 59,202 31%

total Private sector Building Area

130,717 69% 130,717 69% 130,717 69% 130,717 69% 130,717 69%

totAL ssM GAteWAY sIte AReA

189,918 100% 189,918 100% 189,918 100% 189,918 100% 189,918 100%

CAPItAL ReseRVe

Icon tower $10,000 4.0% $12,000 4.0% $15,000 4.0% $15,000 4.0% $15,000 4.0%

sault exploration Cen-tre

$85,000 4.0% $92,000 4.0% $95,000 4.0% $98,000 4.0% $100,000 4.0%

Atrium & Urban Plaza $20,000 4.0% $21,000 4.0% $21,000 4.0% $22,000 4.0% $22,000 4.0%

total Capital Reserve Al-locations

$115,000 $125,000 $131,000 $135,000 $137,000 $643,000 $727,000




Ongoing Operating Fund Requirements

13.4 ongoing operating Fund Requirementsthe arms length agency, ssM Gateway Corporation, will also require annual operating funds in the order of $860,000 over its first five years of operation, increasing to an estimated $970,000 for Years 6 to 10.

SSM GATEWAY CORPORATION OPERATING FUND REQUIREMENTS

Year 1 $282,000

Year 2 $173,000

Year 3 $131,000

Year 4 $135,000

Year 5 $138,000

5 Year total $859,000

10 Year total $972,000




Total Ongoing Funding Requirements

13.5 total ongoing Funding Requirements

By the end of Year 5, ssM Gateway Development will require an additional $1.5 Million in capital funds to freshen up the public sector attractions and public space, and fund the operating deficits generated by the Core Attractions and SSM Gateway Corporation. At an inflationary factor of 2.5% per annum, ongoing funding requirements for the development are projected to increase to $1.7 Million at the end of Year 10, and $2.2 Million by the end of Year 20.

SSM GATEWAY DEVELOPMENT TOTAL ONGOING FUNDING REQUIREMENTS

Capital Reserve operating Reserve totAL

Year 5 $643,000 $859,000 $1,502,000

Year 10 $727,000 $972,000 $1,699,000

Year 15 $823,000 $1,100,000 $1,923,000

Year 20 $931,000 $1,245,000 $2,176,000




Municipal Taxes Generated

13.6 Municipal taxes Generated

Based on 2012 ssM municipal tax rates (excluding the education portion), and the capital costs associated with the overall development, it has been estimated that the various components of the ssM Gateway Development would generated close to $550,000 in new municipal taxes.

SSM GATEWAY DEVELOPMENT ESTIMATED MUNICIPAL TAX REVENUE GENERATED

MUNICIPAL TAX INCOME

sault exploration Centre $0

Icon tower $0

Urban Plaza and Landscaped Atrium $0

Agawa Canyon train station $95,000

Algoma Farmers’ Market $29,900

Broadcast Centre $8,400

Retail/Commercial $143,300

Foodservice $65,000

Residential $204,800

totAL $546,400

source: PKF Consulting Inc. and ssM tax 2012 tax Rates




During the 1st 5 years of operation, the SSM Gateway Development is forecast to generate $2.9 Million in new property taxes for the City.

MUNICIPAL PROPERTY TAXES GENERATED

Year 1 $546,000

Year 2 $560,000

Year 3 $574,000

Year 4 $588,000

Year 5 $603,000

5 Year total $2,871,000

10 Year total $3,248,000


At the same time, the City will be required to expend $1.5 Million in additional capital and operating dollars towards the development. therefore by re-investing $0.52 of every $1.00 in new property taxes back into the development, the City will create a self-supporting model for the ssM Gateway Development.


SSM GATEWAY DEVELOPMENT SELF SUPPORTING FUNDING MODEL

ongoing Funding Requirements

total new Muncipal Property taxes Generated

% of Property taxes re-invested back to ssM Gateway Development

Year 5 $1,502,000 $2,871,000 52%

Year 10 $1,699,000 $3,248,000 52%

Year 15 $1,923,000 $3,675,000 52%

Year 20 $2,176,000 $4,158,000 52%






Other Potential Funding Partners

13.7 other Potential Funding Partners

In addition to government funding sources, there may also be a number of corporate, educational and First nation partners with an interest in providing capital and/or ongoing funding towards the development of ssM Gateway Development through naming rights, sponsorship, programming, etc.

MUNICIPAL PROPERTY TAXES GENERATED

Algoma Central Properties 25 Corporate Drivest. Catharines, on L2s 3W2

Algoma University 1520 Queen st. e.ssM, on

Batchawana First nation 236 Frontenac st.ssM, on

Brookfield Renewable Power 243 Industrial Park CrsssM, on P6B 5P3

Cn Rail systems Director Passenger operations935 de La Gauchetière st. W Montreal, PQ H3B 2M9

essar Algoma steel 105 West st.ssM, on

Garden River First nation 7 shingwauk street,Garden River, on

sault College 443 northern Ave.ssM, on

starwood energy Corporation 2737 Arbuckle st, ste LHouston, tX, 77005

source: ssMeDC

14.0 eCONOmIC ImPaCTs


14.0 Economic Impacts

Introduction

14.1 Introductionthe economic impacts of the ssM Gateway Attraction Development have been measured at 3 levels:

• one-time impacts due to the construction of the overall development;• Annual impacts generated by the on-site operations of the public-sector Core Attractions – sault Discovery Centre and Icon tower, together with the ssM Gateway Corporation; and• Annual impacts generated by the additional off-site spending by incremental new visitors to the area, due to the development.



Capital Development Impacts

14.2 Capital Development Impacts

Capital cost estimates for the ssM Gateway Attraction development have been estimated at $65 Million, including construction and finishing costs, but excluding land costs.

the following table provides a breakdown of the $65 Million in total capital investment by category, based on statistics Canada’s ontario Input-output table utilized by the Ministry of tourism & Culture’s tourism Regional economic Impact Model (tReIM).

SSM Gateway Development Total Investment by Category (Excluding Land)

Buildings $29,289,000

Machinery and equipment $16,763,000

Furniture and Fixtures $5,334,000

transportation and equipment $5,146,000

other supplies $3,497,000

other services $5,224,000

total $65,253,000

source: PKF Consulting Assumptions and statisticCanada’s Input-output tables


Development Impacts

the DeVeLoPMent IMPACts generated by the $65 Million in capital costs have been calculated at three levels:

• Value Added• employment• Government Revenue

Value Added Impacts

the total value added (or Gross Domestic Product) associated with the development has been estimated at $24 Million on a direct and indirect basis, with a further $6 Million in induced impacts, resulting from the re-spending of labour income and/or profits earned in the direct and indirect industries. Of this $30 Million in value-added impacts, $27 Million will benefit Algoma District (91%), with the remaining $3 Million benefiting the rest of the Province (9%).

of the $30 Million of Provincial GDP, $21 Million can be expected to trickle down into wages and salaries within the province. A total of $20 Million of wages and salaries will be retained within Algoma District (91%).

these wages will support 202 direct jobs in ontario, 198 of which will be in Algoma District. Indirect labour income will support a further 53 indirect jobs, while the induced labour income will support a further 66 induced jobs for a total of 321 jobs. of the total indirect and induced jobs created within the Province, 9-in-every-10 will be in Algoma District.

Revenues to Government

Development of the ssM Gateway Attraction Development can be expected to generate total direct taxes of close to $11 Million ($4.6 Million in Federal taxes, $4.8 Million in Provincial taxes and $1.5 Million in Municipal taxes). the municipal tax revenues to Algoma District show the percent of the total business and property taxes collected by the District that can be attributed to tourism because of ssM Gateway’s contribution to the municipality’s economic activity and hence its tax base.




SSM Gateway Development Economic Impact ofTOTAL CAPITAL COSTS

Algoma District and Rest of OntarioAlgoma District Rest of ontario total %

Total Investment $65,222,000 $65,222,000 100%

Gross Domestic Product (GDP)

Direct $19,183,000 $526,500 $19,709,500 65%

Indirect $3,433,000 $1,188,000 $4,621,000 15%

Induced $4,904,000 $1,091,000 $5,995,000 20%

total $27,520,000 $2,805,500 $30,325,500 100%

Labour Income

Direct $13,587,500 $349,000 $13,936,500 65%

Indirect $2,546,000 $832,000 $3,378,000 16%

Induced $3,525,000 $694,000 $4,219,000 20%

total $19,658,500 $1,875,000 $21,533,500 100%

Employment (Jobs)

Direct 198 4 202 63%

Indirect 41 12 53 17%

Induced 54 12 66 21%

total 293 28 321 100%

Direct Taxes

Federal $4,520,500 $106,000 $4,626,500 43%

Provincial $4,706,500 $78,500 $4,785,000 44%

Municipal $1,447,000 $1,000 $1,448,000 13%

total $10,674,000 $185,500 $10,859,500 100%

Total Taxes

Federal $6,839,000 $572,000 $7,411,000 47%

Provincial $6,263,000 $442,000 $6,705,000 43%

Municipal $1,515,000 $128,000 $1,643,000 10%

total $14,617,000 $1,142,000 $15,759,000 100%



sources: PKF Consulting and ontario Ministry of tourism’s tReIM Model



Operational Impacts

14.3 operational Impacts

the oPeRAtIonAL IMPACts derived from the operation of the development’s core attractions, sault explora-tion Centre and the Icon tower and the formation of ssM Gateway Corporation have been based on revenues from all sources ($3.3 Million in on-site expenditures) together with operating expenditures for such costs as payroll and employee benefits, administration, supplies of goods and services, marketing, repairs and maintenance, and insur-ance. the analysis has been based on stabilized operations.

Value Added Impacts

these supply-side business expenditures are estimated to translate specifically into an estimated $1.5 Million share of the Gross Domestic Product (GDP or total value added) for Algoma District, on a direct and indirect basis, with a further $30,000 benefiting the balance of Ontario. A further $428,000 will be seen in induced impacts through the re-spending of labour income and the profits generated by the direct and indirect businesses benefiting from these tourist sales, of which 89% is expected to be generated in Algoma District ($382,000).

Employment Impacts

of the $1.5 Million in direct and indirect GDP for the Province, an estimated 4-in-every-5 dollars or $1.3 Million will be filtered down into wages and salaries within the province. A total of $1.2 Million in wages and salaries is expected to be retained within Algoma District (98%) due to direct and indirect tourist spending at the development’s Core Attractions and ssM Gateway Corporation. the tourist-related induced spending is expected to contribute to a further $258,000 in wages and salaries within Ontario, of which $229,000 will benefit Algoma District (89%).

the sault exploration Centre, Icon tower and ssM Gateway Corporation have been projected to support 18 direct jobs in Algoma District. Additionally 7 indirect and 5 induced jobs will be created for the Province, of which approximately 92% will be in Algoma District (11 of the 12 indirect and induced jobs).


the total direct taxes generated for all levels of government are projected at $436,000 ($252,000 in Federal taxes, $182,000 in Provincial taxes and $2,000 in Municipal taxes). tourist-related expenditures at the Core Attractions are expected to contribute $792,000 in total taxes ($468,000 in Federal taxes, $312,000 in Provincial taxes and $11,000 in Municipal taxes) to Algoma District.


SSM Gateway Development Economic Impact ofSSM CORE ATTRACTIONS & CORP. OPERATIONS


total Revenue $3,331,000 $3,331,000 100%


Direct $1,087,000 $4,600 $1,091,600 56%

Indirect $411,000 $25,000 $436,000 22%

Induced $382,000 $46,000 $428,000 22%

total $1,880,000 $75,600 $1,955,600 100%

Labour Income

Direct $961,000 $2,800 $963,800 63%

Indirect $281,000 $17,000 $298,000 20%

Induced $229,000 $29,000 $258,000 17%

total $1,471,000 $48,800 $1,519,800 100%

Employment (Jobs)

Direct 18 0 18 60%

Indirect 7 0 7 23%

Induced 4 1 5 17%

total 29 1 30 100%

Direct Taxes

Federal $251,000 $870 $251,870 58%

Provincial $181,000 $610 $181,610 42%

Municipal $2,100 $10 $2,110 0%

total $434,100 $1,490 $435,590 100%

Total Taxes

Federal $453,000 $15,000 $468,000 59%

Provincial $302,000 $10,400 $312,400 39%

Municipal $8,000 $2,700 $10,700 1%

total $763,000 $28,100 $791,100 100%


Operational Impacts




Incremental Off-Site Visitor Spending Impacts

14.4 Incremental off-site Visitor spending Impacts

While the on-site spending impacts of the 121,000 visitors to the sault exploration Centre and Icon tower have al-ready been accounted in the operational Impacts, we have undertaken an analysis of the economic impacts of the remaining off-site visitor spending to Algoma District. For this analysis, we have assumed that 25% of the visitors will be new to Algoma District.

Value Added Impacts

the $4.5 Million in off-site visitor expenditures by incremental new tourists to ssM can be expected to contribute $2.8 Million in GDP production for the Province, on a direct and indirect basis, of which $2.7 Million (96%) will benefit Algoma District’s economy. An additional $683,000 will be generated in induced impacts through the re-spending of labour income and the profits generated by the direct and indirect businesses benefiting from incremental new visitors to ssM Gateway of which 87% will be generated in Algoma District ($592,000).

Employment Impacts

An estimated $2.2 Million in wages and salaries for the Province will be generated by the direct and indirect value-added goods and services, of which Algoma District will be the major benefactor with 97% of the labour income ($2.1 Million). this labour income will generate 66 direct and indirect jobs within the Province, of which Algoma District will support 64 jobs. In addition, induced impacts generated by the incremental off-site visitor spending, can be expected to generate a further 7 jobs, of which 6 will be in Algoma District.


ontario’s share of the total taxes generated will be $707,000, with Federal taxes expected to exceed $1.1 Million, and municipalities throughout ontario receiving $21,000.


SSM Gateway Development Economic Impact ofOFF-SITE VISITOR SPENDING BY INCREMENTAL VISITORS


total Revenue $4,534,000 $4,534,000 100%


Direct $2,216,000 $0 $2,216,000 63%

Indirect $508,000 $109,000 $617,000 18%

Induced $592,000 $91,000 $683,000 19%

total $3,316,000 $200,000 $3,516,000 100%

Labour Income

Direct $1,790,000 $0 $1,790,000 69%

Indirect $336,000 $73,000 $409,000 16%

Induced $353,000 $54,000 $407,000 16%

total $2,479,000 $127,000 $2,606,000 100%

Employment (Jobs)

Direct 58 0 58 79%

Indirect 6 2 8 11%

Induced 6 1 7 10%

total 70 3 73 100%

Direct Taxes

Federal $611,000 $0 $611,000 54%

Provincial $508,000 $0 $508,000 45%

Municipal $4,000 $0 $4,000 0%

total $1,123,000 $0 $1,123,000 100%

Total Taxes

Federal $1,049,000 $40,000 $1,089,000 60%

Provincial $679,000 $28,000 $707,000 39%

Municipal $12,000 $9,000 $21,000 1%

total $1,740,000 $77,000 $1,817,000 100%


Incremental Off-Site Visitor Spending Impacts




Summary

14.5 summary

In summary, Construction of the $65 Million ssM Gateway development will generate:

• $22 Million in GDP output for Algoma District;• 239 jobs and $16 Million in labour income for Algoma District; and• $11 Million in direct Federal, Provincial and Municipal taxes.

Following the development of the ssM Gateway Attraction development, the operation of the Sault Exploration Centre, Icon Tower and on-site management by SSM Gateway Corporation will generate on-site revenues, as well as off-site spending by incremental new visitors to Sault Ste. Marie on an annual basis, including:

• Close to $8 Million in revenue for the area, of which $3.3 Million will be generated on-site by visitors to the sault exploration Centre, Icon tower and Gateway Plaza;• $4.2 Million in GDP output for Algoma District; • 89 jobs, with labour income of $3.4 Million for Algoma District; and• $1.6 Million in direct Federal, Provincial and Municipal taxes.

Furthermore, the development will include 64 residential condominium units and provide commercial tenanted space for:• the Agawa Canyon train station; • Algoma Farmer’s Market; • 250-seat restaurant;• 69-seat Café;• 32,000 square feet of destination retail space; and• A small broadcast studio.

the private sector is expected to invest $9.7 Million in commercial space, and generate a 10% return on equity by the 5th year of operation, under a traditional 65% debt to 45% equity ratio, 6% interest rate and 25-year amortization period.

In terms of residential development, the private sector is expected to invest $18 Million to develop 64 condominium units, and generate $2.9 Million in development profits at full sell-out.


The City of SSM will be asked to contribute towards the annual operating deficit of the site’s Core anchor attractions and the public space associated with the Urban Plaza and Atrium ($860,000 over first 5 years or $140,000 per annum stabilized) as well as contribute to a capital reserve to refresh the attraction on a regular basis (4% of revenues which equates to $643,000 over first 5 years). As such, the City would be required to contribute $1.5 Million in ongoing capital and operational funding requirements over the first 5 years.

At the same time, the commercial and residential components of the development would be expected to generate close to $550,000 in new municipal taxes per year (excluding the education portion) for the City of ssM or $2.9 Million over the project’s first 5 years.

therefore, by re-investing $0.52 of every $1.00 in new property taxes back into the development, the City will create a self-supporting model for the ssM Gateway Development.


Summary

15.0 NeXT sTePs


15.0 Next Steps

next steps

the key next steps required to move the ssM Gateway Attraction development forward to implementation are as follows:

1. Establish Project Buy-In by City• submit Report to City Council to establish the willingness of the City of ssM to proceed further.

2. Set Up Implementation Entity• the project will require one or more champions to move it to the next stages.• An Implementation entity should be established by the City to carry the project forward – perhaps through an extension of the subject study’s steering Committee members.

3. Establish Partner-Buy In• Informally discuss with key stakeholders – ie. Cn Rail, Algoma Central Properties and Algoma Farmers Market to establish interest in partnership buy-in.• If partner interest is secured, draw up a Letter of Intent between the Implementation entity and the partners, including mutually-agreed terms and conditions to be part of the overall ssM Gateway Attraction development.• Informally discuss with private sector retail and residential developers.• Informally discuss with potential corporate sponsors for the overall development.• Informally discuss with MP and MPP to establish the willingness to move the funding submission forward.

4. Solicit Funds from Public Sector• Implementation entity to submit application(s) for public-sector funding (estimated at $30 Million), including Letters of Intent with partners and potential retail and residential developers, together with City support.• the commitment to public sector dollars should be contingent on securing private sector investment for the balance of the development.• Go / no Go Decision based on securing public-sector Capital funding and stakeholder buy-in.

5. Retain Specialty Design Team for Public Sector Components of the Development• Implementation entity to retain the services of a specialty Design team to prepare detailed facilities and program planning for the Core Attractions, Urban Plaza, Landscaped Atrium.

6. Complete next level of research and planning.• Facility and Program Planning• site planning• Corporate sponsorship and Fundraising


7. Site Preparation• City to prepare development-ready site – ie. complete soil remediation and site infrastructure requirements.

8. Issue RFP for Private Sector Developers• Implementation entity to issue an RFP for private sector developers to bid on one or more components of the development – Commercial and Residential.• City to sell land to undertake private-sector commercial and residential development.

9. Launch the Project Implementation Process

15.0 Next Steps

GATEWAY SITE Sault Ste. Marie, Ontario, Canada | February 13th 2012 | Final Draft Report

Management Plan & Destination | Attraction Development Business Plan

Management Plan & Destination | Attraction Development Business

Documents

Transcript of Management Plan & Destination | Attraction Development Business