Thursday, January 14, 2010

10 Tough Questions with Tony Battaglia


Tony Battaglia has had a presence in the Hamilton business/entrepreneurial community for decades. His efforts and those of his consortium, to find a way to bring the Royal Connaught back to life, have recently thrown him into the media spotlight- which he is no stranger to.  I thought  Tony would make a very interesting guest. My instincts were right. Tony has been working on his answers for many weeks; partly due to the holiday season that came upon us and partly due to the fact that he told me that he had so much to say, that it was challenging culling his answers down. He managed to do so and I think you'll find his answers and the questions I put to him, captivating. I asked Tony some pretty tough questions. To his credit, he didn't back down and answered all 11. Here he is- 10+ Tough Questions with Tony Battaglia. (note: When I asked Tony these questions, the outcome of the funding request for the Connaught, was not yet known).

1. Being a businessperson and entrepreneur, can you talk about some of the challenges you’ve encountered when trying to succeed in your business ventures in Hamilton. What is Hamilton doing right, and what is Hamilton doing wrong to support entrepreneurs?

This is a very broad question so I will try to keep my answer related to a geo-political context. Over my 30 years as an entrepreneur I have been committed to doing business in this city. Over that time outlying areas have seen tremendous growth while Hamilton just kept trudging along. The reasons are many but three major ones stand out in my mind. They are: political climate, infrastructure and economic dependence on heavy industry.

The entire Hamilton to Toronto corridor including Burlington, Oakville and Mississauga have blossomed because of the highway access and infrastructure that these cities invested in well ahead of the growth. They were able to accommodate the growth and we were not. A perfect example is the lands surrounding Hamilton’s airport. I agree that 20 years ago, there was no demand for developable land in the area but how much has that changed now? By sitting idle, Hamilton is so far behind the eight ball on this one that it will take another decade before we can begin to see the fruits of the growing airport. The city should have been at least planning and approving the area for development so when the demand came, we would be ready to go. Instead many companies who have been here looking for a home have moved on to Brantford and other areas that were “shovel ready”. This has been a perpetual problem in the city and there are many more examples. We have been so focused on our heavy industry that we never prepared for a more diverse or changing economic base. We always seem to be playing come from behind.

What Hamilton is doing right is finally doing some strategic planning although it will take years to see those benefits. That is if the politicians actually implement the plan and not just shelve it like they have always done.

2. I know you and a consortium have been at it a long time to find a viable application for the Royal Connaught Hotel. The recent turn that this project has taken, has been met with criticism from many. Some maintaining that the call for public money is inappropriate, while others maintain that the prospect of mixed use affordable housing, is not an ideal fit for a building of such historical significance. How do you respond to that?

I know that varied opinions have been expressed on this issue and it is understandable. The Royal Connaught has such a grand history as Hamilton’s premiere hotel that nobody wants to see it change. The fact is, neither do we. We have spent the last 5 years of our time and hard earned money to bring the Grand Old Lady back to life. The sad reality is that the hotel market in Hamilton is absolutely un-financeable. The banks and other big money lenders do not see Hamilton as a viable market for obvious reasons. The truth is that all of Hamilton’s downtown hotels have always struggled to stay afloat. So much so, that they never had the capital to re-invest in improving the properties. This in turn led to a further erosion of the market and the vicious circle keeps going.

Many grand old buildings in every big city have seen the adaptive re-use of older properties so what makes anyone think that Hamilton is exempt. If every building could only be used for its original purpose then I cannot begin to list the number of buildings that would be empty. By adapting older buildings to other uses that make sense, is the only way in which we can preserve these beautiful historic buildings.

There is also a big misperception about our proposal for mixed use rentals. I believe that the problem lies with the name of the government program. Because it is called the “Affordable Housing Program” people think that this is geared to income housing. In fact, the rents offered will only be 20% below market value which would still be un-affordable for people on government assistance. If the name of the program were changed to reflect what the program really is, it would be called the “Rental Housing Stimulation Program.

Downtown needs more working residents to stimulate renewal. This project would have brought over 200 new such residents to downtown. It is indeed a shame that some politicians in this while they pontificate downtown renewal as their agenda, they worked behind the scenes to have the funding derailed by the province.

3. Reflect upon the present city council. What is your confidence level in their ability to transform the city of Hamilton.

My confidence level on this council generating a real transformation is quite low. Firstly, and in fairness, it is not the council that will cause any transformation. That has to come from private investors, business confidence, lenders and residents having a strong belief that Hamilton will be the place to be. Council’s role is to build the infrastructure and create the political environment for that to happen. I have heard far too many politicians espouse that if they are elected, Hamilton will be open for business. I think they believe it but they just don’t know how to do it. There have been some good stimulus programs put in place to do so but with all the in-fighting, grandstanding, stonewalling and passing the buck that goes on at council, nobody I have talked to is gaining any confidence.

Too often this and previous councils have scuttled good projects out of fear and parochialism. If a few of their constituents make a few phone calls against something, they react as though the whole city is against it. They need to have the independence and courage to do what is right for the city, not just what’s right for their political future.
I very strongly believe that the only way we get real change on council is by doing 2 things. The first is to impose term limits. Nobody should be on council for more than 2 terms especially since our terms now run 4 years. The second is to update the ward boundaries. By creating a boundary map that mixes neighborhoods, we will have wards made up of different demographics. This will go a long way towards changing council members voting patterns because each ward will have constituents of varying social, economic and cultural backgrounds to consider.

4. What is the most profound lesson you have learned as a business person. What advice might you have for those who think big and want to see significant change happen in our city?

I have certainly learned a lot in my 30 years in business. A significant lesson I have learned is that I actually learned more from my failures than from my successes. This only comes from taking risks. The most profound lesson I have learned is to not lose ambition when something goes wrong because it always will. I have found that by maintaining an open mind and positive attitude, when you get knocked down, you usually get back up stronger than before. A lost business deal often turns into an even better one. The bigger the deal, the more likely that it will fall apart, some times more than once. I have learned that each time the deal comes back to life it ends up being a better deal. As the old saying goes, ”seek and ye shall find”.

5. Why do you think the core continues to present such a challenge, in terms of turning to around. What do we need to do?

I think I have mostly answered this in previous questions. In my humble opinion, we need 3 things…people, people, people. New business won’t come if there aren’t more people. More people won’t come if there isn’t more business. This perpetual cycle must be broken so that we can replicate what happened on Locke St. By business people creating a destination that appealed to a niche market (antique shoppers), people started to come. Once they were there, it was nice to walk around and maybe have a coffee or something to eat. Because more people are walking around, it made it a place for entertainment, bars, festivals, sidewalk sales etc. That made it a more desirable place to live which in turn brought more people to the area. That in turn made it feel safer etc. The old cycle of decay has been replaced with a cycle of renewal. The same is starting to happen with James St. N. and the art district. I think you get the point. I think Downtown is pretty safe but it also needs to look and feel safe. This will happen when more people are around. Bring more entertainment first, things like festivals, music in the park, more outdoor caf├ęs. Once more people are around it will be a better place to live and the cycle will start and gain its own momentum.

6. What are your thoughts on the evolution and explosion of the artistic community in Hamilton. Do see this movement as a natural lever to propagate meaningful change in our city?

 Absolutely, as I alluded to in the previous question.

7. What advice do you have for Mayor Eisenbeger?

Hang in there baby. I always had respect for Fred back to when he was an Alderman. I can’t think of a mayor in recent memory that has been the problem. The problem has been and continues to be the fractured council. I do think that in his next term he will have to be stronger in out-voicing the constant critics and bullies on Council. Hopefully we will get plenty of new blood for him to work with. People with vision and courage who actually want to take the city forward rather than just fixing pot holes.

8. In a Hamiltonian interview, on the topic of corporate and union donations to municipal elections, the Mayor had this to say “I have no doubt that the majority of special interest campaign contributions are intended to influence. At the municipal level, the concentration of campaign contributions from a single set of interests is extraordinary and the imbalance is systemic. In the 2006 Municipal election nearly half of the money raised by Hamilton candidates came from corporations or trade unions. Of that 77% of the corporate donations and 62% of Union contributions, went to incumbents.”

How do you feel about the Mayor’s thoughts on this?

I have a high degree of respect for his opinion however I do not believe that corporate or unions should be stopped from contributing. Lowering the limits on donations effectively does the same thing. Candidates need the money to run an effective campaign in which they must expose their views on the issues. Without campaigns, most people will just vote for the incumbents even more because they won’t know anything about alternative candidates.

9. How do you fend off criticism that the Connaught was in tax arrears for so long?

I won’t go into a great explanation on this matter. Suffice it to say that Grand Connaught didn’t do anything that a large number of business’s do. We were putting our money towards getting the property re-developed which was more important than keeping the taxes up to date on an empty building with no income. One could argue that City and Province should offer relief in cases like the Connaught because of their significance to urban renewal.

Another overlooked true fact is that the City actually benefits when taxes fall in arrears because the interest they make on the arrears is much more than what they earn on their investment portfolio. As long as the taxes do get paid, which was pretty much a guarantee in our case, the City makes a good return on tax arrears.

10. I think it is only fair to hear directly from you as to how your efforts have had a positive effect on Hamilton. Can you speak to this?

This is a question that almost requires me to boast about my efforts or accomplishments. One might think that because I have been in the media frequently that I would enjoy this opportunity. The truth is that I much prefer to just do what I like to do without fanfare. This is true with business and charitable efforts. On that basis I will just say that I believe it is important for those who can, to give back and it is important for everyone in the community to do whatever they can to make it a better place to live for future generations.

11. What is the culture in Hamilton, in terms of encouraging innovativeness and new businesses?

There are a few big stars in this category. Thank God for Mcmaster, Mohawk, St. Joe’s, HHS and some great corporate citizens like Ron Foxcroft, David Braley and a host of other great citizens. Without their efforts and contributions, Hamilton would be a ghost town. We have probably chased away more business than we have attracted over the last 20 year, mostly over political mishandling. I wish some good journalist would take the challenge of digging up the companies that have moved out and took their good jobs with them. I’m willing to make a bet that a high percentage left because of the cities lack of support and innovativeness.

Thank-you Tony for your interest in Hamilton and your contribution to The Hamiltonian.

11 comments:

  1. Tom RobertsonJanuary 14, 2010

    Another non fan of this current Council.

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  2. Michelle HruschkaJanuary 15, 2010

    Welcome Mr Battaglia:

    Well your viewpoint the the city depended on heavy industry is probably correct, given the labour history of this city. With globalization, we have seen many of jobs disappear into the netherworld and nothing to replace them. I do not agree with globalization on many levels, as capital has moved to locations where labour and environmental standards are almost non existant. This is what happens when the business world controls all decisions, yet the masses have no input. Major mistake in my view, thus the poverty levels that we see that are growing globally.

    Affordable housing is an issue an this community, yet so many people do not want this in their backyard. Sometimes I am very appalled by the comments, the poor bashing that goes on.

    You are putting a lot of faith in the airport but with issues such as peak oil, food security, I wonder if it is prudent that we should covering up our farmland. Our group the CAWDB, sat with Mayor Fred and discussed some of his election platform. I am no expert but I was looking into brownfields and I saw some pretty good initiatives in the US, where those communities were reclaiming these areas, yet we seemed to be intent on ignoring these areas and destroying the fertile growing grounds for food.

    I agreed with the Mayor, no union or corporate donations, it has become a money fest, who has the most money gets in, it should not be about the money but what message that person is bringing. We need more diversity on council, meaning we should have people on council that represent that many who do struggle, immigrants, renters, low income. This is the sad part of peoples thinking or views that those that struggle do not have the ability to offer something worthwhile, and that stance is completely untrue.

    I abhor the charity mentality and this mentality has part of the problem with the growing poverty levels, social assistance is not sustainable, the many programs in place lead no where and the constant messaging that those who are low income do no deserve to have a place in our society.

    I was at a meeting yesterday, where some community members went to discuss with one of the party leaders about DO THE MATH. I guess to me, given the economic conditions, that it is not so easy, just to find work and that those who follow this ideology, that one should just pull up their boot straps are very blind sided in their thinking that those on social assistance can live on 585.00 per month. They never talk about the over 100 stupid rules, where a person can be cut off, left with nothing, thus the ever growing homelessness problem in our city and I think it is prudent to discuss that Burlington, Oakville areas like that send their problems to Hamilton and do not deal with their own issues, so to be praising these communities, at least in my view is very shortsighted.

    In a democratic society, all the voices should be given equal weight but in our current situation, those that struggle, seem to have no real voice and the money people are the problem, when corporations pay very little tax, the salaries are growing expotentially and are always calling for more cutbacks in services.

    It is time now for the people to rise, to fight back and win some of the things that made our society civil back.

    Creating the Poor.

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  3. I could not agree with Tony more about urban expansion and the need for smarter planning. The city needs to STOP urban expansion and spreading the problem wider. Focus and fix up the core of the city before it become a vacant black hole in the centre of Hamilton. Doesn't the Mayor and Councillors get why businesses and residents are packing up and leaving the core or Hamilton for that matter? There is no vision, terrible planning and no one enforcing property standard by-laws.

    I have to give Tony credit for hanging in. I too would love to see the Connaught restored to the once classy joint it use to be. Perhaps if we build it - they will come, people that is, classy people. I would hate to see the Connaught converted into low income housing. A mix of high-end condos, a boutique hotel and convention centre perhaps?

    Thank you for participating on The Hamilton's 10 tough question. I found the interview and answers interesting.

    Samantha

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  4. One could wish for "terrible planning" - since at least it would be planning, which would be an innovation in this city. What we have is people doing things in an ad hoc way, allowing buildings to collapse as an "investment" - while the system derails the rest. There is too much concentration on white elephants, like Condos. Every "condo" that has sprouted up downtown has turned into a fiasco, like the relic at King William and Catherine, or the old Federal Building; while others that are occupied have, for some reason, a tremendous turnover rate, like the old Undermount building.

    What is needed is to have a show of strength. If some multinational conglomerate wants to built a megalo-mart out in some wasteland - then they should have to build downtown as well. Downtown needs to have some shopping, real shopping, where people can buy stuff in order to live.

    We also need to have Council stop attacking those things that are successful. Like Locke Street. I guess it is too busy and popular, so now the City wants to put parking meters all over the place, so that no one will bother. Or it will be like Ottawa Street, were they have meters, but the City ends up having to make parking free in December so that at least some people will shop.

    The problem isn't in the money coming in - they got tons of money coming in; rather, it is that they dish it out at alarming rates. Sure, everyone picks on different arts festivals or whatever - that's all peanuts compared to the mountainous heap of waste. For instance, all of the cash paid out in "sick days", which amounts to an average of 84 hours per year per employee. I don't know about you, but anywhere I worked, if you were sick and didn't show up, you didn't get paid one thin dime. In fact, being sick near a holiday would see to the evaporation of stat holiday pay - because that is the way business does things.

    What we need to do is ban "condos" and end the waste. What we need is to have real places in which people can work, shop and live - not endless scams that dump cash into the pockets of the greedy developers, or in outrageous "maintenance fees". More concentration should be on making opportunities for co-ops, where those that live there have a vested interest. As for shovel ready land - we have it, pretty much all of Burlington Street is shovel-ready. If a piece of land isn't generating income for people, then it needs to be confiscated, and companies that will generate such employment brought in.

    Loads of companies have come to Hamilton, all discouraged by the same endless bunk, pap and weakness that has been a hallmark of this town.

    Mr. Battaglia has tried to go to bat for the City on so many occasions, but tilting against the whims of the vast NIMBY crowd, and the apparatus of the Provincial and Federal governments that have both worked hard to ruin this town, is just too big of a beast for even the most valiant of warriors...

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  5. "We have spent the last 5 years of our time and hard earned money to bring the Grand Old Lady back to life."

    As a City of Hamilton taxpayer, I'm insulted by the above. At no time does Mr. Battaglia mention, or even allude to the $230K of hard earned City of Hamilton taxpayer money (our money) that went into the Connaught for asbestos removal. This money was requested after the consortium was "surprised" by asbestos in the building (so much for completing ones due diligence).

    This money was paid on the promise of a 5 Diamond Hotel, and to my knowledge was never repaid when no hotel materialized.

    Your welcome,

    A City of Hamilton Taxpayer

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  6. 'Taxpayer' is dead on. The asbestos money, the empty promises, and the tax arrears are a slap in the face to the citizens of this city. The excuse that "other people do it too" doesn't cut it when you are a child, and it doesn't cut it when you are a supposedly responsible businessperson either.

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  7. Patrick MatozzoJanuary 17, 2010

    Mr. Battaglia, thank you for your insightful comments. You have poured millions of dollars into this community, created jobs and paid your fair share of taxes, not to mention all the charitable work and donations you have made in this community, for all the skeptics you should take note.

    It’s embarrassing to think how elected politicians, who work downtown, can be proud of the job they’ve done to date, when the core remains stagnant. This is what we get when many of the council members polarize themselves from what’s happening around them. How much more can we endure from a council that can't provide any impetus for the private sector to invest in the core and when there are good proposals put forward there always derailed.

    Condos in the downtown core will have their day; it’s only a matter of time. The cost of housing isn’t getting cheaper and as housing becomes more expensive, and demographics and lifestyles change over the next 20 years, you will see a shift. In Toronto, affordable housing is defined as Condo’s. For all those Nay Sayers on high density projects in the core, wake up, today it may not seem like they work but some day they will. Why is Dundas such a hot bed for condo’s because people can walk every they need to get to for grocery’s, doctors, post office, etc. I know that Loblaw has been looking for the ideal location in Hamilton for years and cannot find the adequate site. They are currently embarking on an innovative project with Ryerson University in the old Maple Leaf Gardens in Toronto. In Hamilton, we have not caught on to what urban intensification truly means to create a sustainable life style for our residents, but let’s keep approving those regional malls to create those $10 an hour jobs and residential sub divisions of the periphery of the city. Energy is getting cheaper its getting more expensive. Europeans have learned to do more with less and we’re kidding ourselves if we don’t start thinking along the same lines. Change is constant and we need to adapt as changes occur, I only wish Hamilton could react as quick.
    Mr. Battaglia you should take a run at the Mayorship this election, the city needs someone like you to put forward innovative ideas and someone who can hold their ground in tough situations.

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  8. Kimberley MontgomeryJanuary 18, 2010

    Glad to see Mr Batagglia who speaks of private investment and good business practice crawls to council and begs for subsidies. Also I like the touch of a family a lapdog Mr Mottozzo coming to his defence. lmao

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  9. Pat:

    Although "condos" may be looked at as affordable in places like Toronto - I think Hamilton should really get out there and support co-op buildings. Co-ops enable their shareholders to maintain property standards to their liking. Condos, on the other hand, are more about forking out large chunks of cash to property management folks, who score their riches on the outrageous maintenance fees, and where the people that live there have no inherent right or say in the operation of their building. And Hamilton already had many co-op buildings, especially downtown, and such ventures should be strongly encouraged, because co-ops are entirely affordable and make for a much more comfortable living environment than run down old condos that half the time, the unit owners don't even live there, and thus, is nothing more than slum living by other means.

    Just because Toronto does something doesn't mean it is a good idea. Our City should be gung-ho on co-ops. Too many places have been converted into condos, and too many of them are crime ridden slums, like all of the condo-dumps on Stone Church Road. What Hamilton needs is for owners to live downtown, not just condo-owners who live elsewhere and don't care as long as the rent is paid. We have too many buildings owned by out of town people who simply collect rent; and not only downtown, but in the rapidly degrading environment around the University, where hundreds of houses have fallen into decay and ruin all for a fast buck.

    Dundas is attractive because it is more habitable: less grow-ops, less crime, less drug abusers roaming the streets, less crack houses - all of those things that make large sections of Hamilton look bad.

    Being able to walk to places in Dundas... Sure, but outside of Metro, one has to jump in the car and drive to Ancaster for basic weekly shopping needs. Dundas also lacks practical public transit.

    Loblaws might be looking for a place for a store, but they aren't looking hard enough. There is tons of space downtown, including the two sites where Loblaws had already been located, at King and Ferguson (which is now a home health care store), and the basement of Terminal Towers. And it is not like Jackson Scare is filled to the rafters with hundreds of stores.

    I think they mention such things only as a sop, to try to make themselves look and feel good about their apathy; much like the City could care less about attracting business, especially if they can hand over employment lands, like that on Longwood, to pursuits that simply will never employ Hamiltonians, and will be of no benefit to Hamilton. Of course, they didn't want someone like Samsung come in and actually do things like hire people and make money.

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  10. To Mr. Battaglia:

    I enjoyed reading your answers on past dependence on heavy industry and your concept for reviving the Connaught. I have two questions:

    1. I'm sure you've either read or heard of Jeff Rubin's book Why Your World Is About To Get A Whole Lot Smaller. The thesis of the book is all about cheap oil and how Globalization over the past couple of decades is essentially about transportation costs. Those costs are going up with the end of cheap oil with makes luxury travel (by plane) and bulk cheap goods by cargo ships not that cheap anymore. The upside is that we can expect the re-industrialization of n.america but in a smaller, more efficient way. So, do you agree with Rubin's assessment? Is the airport's long term economic future in jeopardy and should Hamilton put in its strategic plans for development these kinds of factors?

    2. I'd be personally interested in learning more on how the Connaught is being re-developed. The long-standing challenge with condo/rental properties is of course the amount of space and how much it costs. This tends to push the development into compact 1-2 bedroom condos where space is limited and you compensate by having a decent swimming pool or gym or downtown location for communal use. It is always difficult to find high density housing for families (3-4 bedrooms). It is just a simple math problem. Will the Connaught be able to overcome this challenge? Will there be 3-4 bedroom units? Don't feel bad if you have to say no. That's just how the world works.

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    ReplyDelete

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