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Calgary councillor says funding four mega projects ‘smart financially’

Councillor Ward Sutherland described it as a long-term financial plan that any smart corporation would undertake – with a hitch.

When Calgary city councillors voted 11-4 to approve the $1.5 billion in funding for four city infrastructure projects on March 4, Sutherland said it’s money spread out over the next decade – or roughly $150 million annually.

“But what we haven’t discussed publicly is, that’s actually not the number because there will be partnership dollars in it,” Sutherland said.  

“The (overall) number will be less.”

He pointed immediately to the BMO Centre Expansion, an estimated $500 million project – but he said the city’s share is roughly $160 million, with the rest of the cost split by the federal and provincial governments.

Sutherland also pointed out that it’s highly unlikely that the city’s going to foot the entire cost of an estimated $600 million Events Centre / Arena. Past city deals had Calgary’s portion as roughly one third.

The other projects included are the first phase of the Arts Commons expansion and the long-awaited fieldhouse.

“On the accounting, we have to take the total number because there’s no deal. But that’s not going to be the numbers. All the numbers will be less,” Sutherland said.

The Ward 1 councillor added that none of these projects are happening overnight, but are probably “five, six, or seven years out.”

Still, it’s left two councillors worried the city is biting off more than it can chew. Both Couns. Peter Demong and Evan Woolley were dissenting votes when the approval passed, along with Couns. Druh Farrell and Jeromy Farkas.

“First and foremost, there’s one thing that comes to the very top of the mind. And that is – my financial officer, the person who is in charge of all of our money, told us she is comfortable with one project,” Demong said.

“That should have been enough for everybody to stop and pause.”

During council debate, city chief financial officer Carla Male indicated her reluctance to move forward with all four, given economic uncertainty and potential changes in provincial infrastructure money available with a spring election coming.

“When our general manager of finance says one project is all she’s comfortable with, why the hell are we going forward with four?” Demong asked.

Demong also pointed to the upcoming provincial election – and the federal election – as reasons why councillors should have delayed this discussion.

“If you have this conversation in 9 months, after those three incredibly important things have gone forward, I may have changed my vote,” Demong said.

With no clarity on how the city plans to deal with the migration of property tax dollars out of the downtown core Demong was also worried about what kind of city capital it’s going to take to continually offset that drop as they grapple with a long term plan to shift the property tax burden.

Sutherland refuted Demong’s claim about the impact of the upcoming elections, saying that the two larger projects – the event centre and the BMO expansion – aren’t tied to future infrastructure spends from higher orders of government. He said a deal is already in place on the BMO expansion, with federal and provincial dollars attached, and there’s no government money expected to be part of the event centre deal.

Artist’s conceptual drawing of potential new Calgary Flames arena, shown at Calgary Events Centre Assessment Committee. SCREENSHOT

Coun. Woolley was equally perturbed at the way this deal transpired.

“I love all of these projects. I think these are all valid projects,” he said.

“Us trying to fund them from one revenue source and utilizing all of our financial capacity and liquidity is reckless and fiscally irresponsible.

“We’re trying to have our cake and eat it, too.”

He commended councillors for coming up with a plan to fund the entire slate of projects, ceding to each other’s infrastructure priorities.

“This is a really creative way. Does that mean it’s the smart thing to do? No,” he said.

Woolley said a private sector move like this would be unheard of, moving money from several different buckets into one big bucket for a massive spend.  But Sutherland said, as a long-time businessman, he thinks it’s the prudent thing to do.

He said the Community Revitalization Levy (CRL) for the Rivers District plan doesn’t kick in until 2027, so if the city didn’t front the money and borrowed it all, they’d be paying interest.

“We’re better off as a city to move buckets around, alleviate interest, do self-loans, and have the CRL pay it back. It’s the smart thing to do rather than pay that money to the bank,” he said.  

“It’s just smart financially to keep all the interest and get the best value and use leveraging. That’s really what all these deals are about.”

All four of the projects will be separated projects even though they are funded from the same council approval. Sutherland, Demong and Woolley all said that each project would be vetted individually, going through a rigorous financial due diligence before council gives the green light.

Each project is at a varying stage in their development, with the BMO expansion and arena likely the closest to being shovel ready.

With $1.5 billion on the line, Woolley and Demong are worried it leaves an already cash-strapped city in a precarious situation. Using all the city’s financial liquidity while still maintaining the provincially mandated five per cent reserve leaves little room for the unforeseen, they said.

“Of course I want all four (projects). There’s not a single person that doesn’t want all four projects,” Demong said.

“At the same time, we have to be willing to stage our desires in a manner that is fiscally responsible.

“There’s so much hair on this that I couldn’t vote in favour of it.”

Sutherland said opposing councillors were “campaigning on fear.”

“It’s basically like the Olympics thing. I don’t want it, so I give misinformation or I’ll give my view that makes it scary,” he said.

He said the fiscal reserve would still sit at $160 million, and added that the city still holds $75 million of the $100 million doled out in 2014 to help with flood preparedness.

“Either we have the money to do it as a city, or we don’t have the money to do it,” he said.

“Either we agree to move forward on an overall strategy long term, or we constantly go in circles and make no decision and no projects go forward.”