Calgary capital projects: Where do they stand?

It's likely that Calgary's $1.5 billion in capital cash for four projects will be doled out over the next 5 to 10 years

The city committed $1.5 billion for four major Calgary capital projects.

Only one of four major Calgary capital projects has received the bulk of cash provided it needs, while three others wait in the wings, surviving on small infusions to keep them moving forward.

With ongoing operating budget deliberations, the spectre of changes to the city’s capital budget also linger. City administration is reviewing the capital plan and are expected to provide an update to council by no later than Jan. 27, 2020.

Some councillors – and even the mayor – have suggested that recent city financial woes would prompt reconsideration of some capital projects.

“That is absolutely the case that we will end up having to defer, delay or cancel capital projects,” Mayor Naheed Nenshi told councillors at the end of October. It’s unclear at this point what projects are at risk, but Nenshi did say it was unlikely the big four would be affected.

Others, including Coun. Ward Sutherland, have said the city has plenty in capital reserve because the previous $1.5 billion committed to the big four projects would be doled out over the next decade. That’s roughly $150 million annually, not all at once, he said. Sutherland reiterated this in the same October council meeting as the mayor made his remarks.

City administration did indicate that $20.5 million would be cut from the upcoming year’s capital budget when they delivered the 2020 service plan and budget adjustments earlier this week. Those reductions primarily reduce the use of debt and other restricted funding sources.

Where does Calgary get its capital reserves?

Just like if you or I were to find a few extra bucks after our monthly household expenses were covered, we might put that spare cash into savings.

Simply put, if the city underspends in a given year, according to Coun. Druh Farrell, that money is directed to fiscal stability reserves. They have a goal of maintaining 15 per cent of the city’s operating budget in reserve, Farrell said, or roughly $550 million. 

It’s currently around $162 million, or the five per cent minimum amount allowed.

ADDITIONAL READ: The answer to Calgary’s budgeting woes is… better budgeting – CD Howe Institute

The above read provides more context to Calgary’s bottom line and where, perhaps, some of the potential reserve money comes from.

The city does have other reserves aside from the Fiscal Stability Reserve.

Status of big four Calgary capital projects

We wanted to get a better sense of when Calgary would have to fork over the cash for some of the major capital projects: The BMO Centre Expansion, the proposed Event Centre, the Arts Commons Expansion and the long-awaited multi-purpose fieldhouse.

Chris Jacyk, Manager Corporate Budget Office for the City of Calgary, provided information on their status and when cash from the city could be expected to flow.

BMO Centre expansion

BMO Centre (CALGARY STAMPEDE)

The $500 million BMO Centre Expansion is the only project that is already underway. Calgary city council approved a $333.3 million internal loan to the Calgary Municipal Land Corporation (CMLC) on March 18, 2019.

“That represents both the city’s cost and the provincial portion of the BMO contribution,” Jacyk said. This money is to be recovered through the Rivers District Community Revitalization Levy (CRL) over the next 20 years.

The city’s cash contribution to that project is roughly $166 million. The other thirds are covered by the Government of Canada and the Province of Alberta (via the CRL).

This money came from the council created major capital project reserve earlier this year.

Event Centre

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

This proposed $550 million project will be a 50/50 cost split between the City of Calgary and the Calgary Sports and Entertainment Corporation (CSEC). While on paper the cash funding for the facility sits at $275 million each, the city also expects to spend $15 million on acquisition costs and demolition and remediation costs for the Saddledome.

There’s also an in-kind contribution of between $45 million and $60 million in estimated land exchanges.

No money has been provided to date on this project.

“The agreement hasn’t been finalized, as of yet,” said Jacyk.

Should the agreement be signed at the end of November, Jacyk said there’s been no indication of when cash outlays would begin. Construction on the project is reportedly to begin in 2021, with potential completion by 2024.

Arts Commons Transformation (ACT)

The Arts Commons expansion is one of the four projects approved for funding in March 2019. DARREN KRAUSE / LIVEWIRE CALGARY

The estimated cost for this project is $239.7 million, according to the City. That amount isn’t a detailed cost.

A total of $25 million has already been set aside for Phase One, which includes the construction of the Road House. The city’s description said this will increase the number of venues and be home to theatre companies and community groups while Phase Two is completed.

Phase Two is $71 million in lifecycle upgrades to the existing 560,000 square foot Resident House.

During the recent federal election campaign, then-Calgary Centre Liberal MP Kent Hehr said his government would provide $80 million for the Arts Common project. That funding would come through as long as the city and province contribute the remaining $140 million (again, in combination through a CRL).

According to a statement from the city, the project is still in very early stages and “procurement hasn’t been completed,” so there’s no further timeline to share on construction.  

The city’s total cash outlay for that project, could be $70 million for Phase One, plus the $71 million for Phase Two (total of $141 million, with no specific timeline).

Multisport fieldhouse

Plans are actively underway on a Calgary fieldhouse as a part of the overall redevelopment of Foothills Athletic Park. (CITY OF CALGARY RECREATION)

The cost for this project is estimated at $285 million. Earlier this year, the city approved $19.6 million for planning and design for a revamped Foothills Athletic Park in the city’s northwest, which would include a new fieldhouse.

In a previous article, Coun. George Chahal, chair of the Foothills Athletic Park Redevelopment Advisory Committee, said without that money the project would be at a standstill.

“Well, without the initial funding, we wouldn’t be having this conversation. This project could not move forward without taking that first step. So, it was a big first step,” Chahal told LiveWire Calgary at the time.

Again, there’s no timeline for this project. Chahal’s hoping for fieldhouse plans in 2020, from there, funding will have to officially be allocated. According to the committee’s timeline, they would expect nearly five years to pass between the design development and opening.

While the City has made a commitment to provide funding for the fieldhouse, it’s not clear if there will be funds leveraged from the provincial and federal governments.

OK, so what does this all mean?

Tallied together, the city’s firm cash outlay to date is around $375 million, taking into consideration it fronted the province’s portion of the BMO expansion. That will be recouped via the CRL.  That makes $209 million of city cash committed.

No other capital cash has been spent, nor is there a specific timeline for it to be used.

Of the $1.5 billion in total project costs, the city might only bear the financial burden of up to $700 million, based on current agreement structures. In most cases, however, they’d front the costs and then recover them at a later date through the federal and provincial governments, or a CRL.

Both Mayor Nenshi and Coun. Sutherland appear to be right about the capital constraints, however.

The money isn’t being spent immediately, though the city has made a commitment to fund these projects. That could leave Calgary short of dollars for current capital projects or restrict the available capital dollars in the future.

The uncertainty around when – or if – these projects would begin construction (and therefore require cash) adds to the confusion.

A lot of blanks are yet to be filled, Jacyk said.

“There’s still a lot of questions about exactly what, when and how these projects are funded,” he said.

“Council’s decision indicates that these are priority projects for them. And we’re continuing to work on the funding strategy.”

About Darren Krause 342 Articles
Journalist, husband, father, golfer, writer, painter, video gamer, gardener, amateur botanist, dreamer, realist... never in that order.

1 Trackback / Pingback

  1. Cancel the Calgary arena funding, says Coun. Woolley - LiveWire Calgary

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.