City, Calgary Flames to cough up more events centre cash

Calgary Municipal Land Corporation out as project manager for new city arena

The price tag on the new arena is about $550 million. LIVEWIRE CALGARY FILE PHOTO

More cash and a change in project management were confirmed as likely updates to Calgary’s events centre deal.

LiveWire Calgary was previously the first to report the changes in June after closed doors meetings from prior council meetings.

It was announced Monday that information from those previous closed council sessions would be released. The events centre update scheduled for the latest combined meeting of council is going to cover most of that information.

Mayor Naheed Nenshi gave a little preview saying that the City of Calgary is going to be adding $12.5 million towards the planned events centre. Overall, the project budget is now $608.5 million.

That will be in addition to another $12.5 million that the Calgary Sports and Entertainment Corporation (CSEC) will be using to bolster the project.

It’s part of a cost overrun clause in the Project Framework agreement. In that clause the city and CSEC would split cost overruns of $25 million.

Breakdown of additional costs for the Calgary arena project. CITY DOCUMENTS

There’s also a measure to have the Calgary Municipal Land Corporation removed as project manager. They will continue to do utility work in the area.

In 2019, the event centre was approved with a budget of $550 million. The events centre project was recently put on pause to sort out budget issues.

Mayor Nenshi revealed that in those closed meetings, unforeseen issues forced the planners to reconsider certain aspects of the design. Those issues ultimately drove up the costs.

In early July, Coun. Jeromy Farkas had teased out some of the information from city staff in public. At that time the $60 million overage was first reported.

Reasons for overruns

Mayor Nenshi gave the example of there being too many luxury boxes in the initial design. There weren’t enough seats for the rest of the fans. There was even a lack of women’s washrooms.

“Going through all of that led to a big increase in the cost. Adding to that was the material prices and construction that was drawn up. That led to a big increase in cost the city hadn’t contemplated. Frankly, I didn’t think the city should pay,” Mayor Nenshi said.

Mayor Nenshi said that this part of the deal was accepted when the original $550 million was allocated. There is a cap on city contributions, and it won’t be breached. Any further overruns will be handled by CSEC.

“CSEC and the Flames have agreed to take on all cost overruns and all the risk of construction cost overruns. That is a huge win for the ratepayer and justifies everything else being asked,” Mayor Nenshi said.

Mayor Nenshi said that people who were unhappy with the original deal aren’t going to like this latest development any better.

Mayor Nenshi said the project is expected to break ground in early 2022. The in-depth update during the combined meeting of council will happen late Tuesday or early Wednesday, July 27.

‘Transition in management’

In the Event Centre update in the city agenda, administration address the removal of CMLC as project manager.

“As CSEC has taken an increased financial responsibility share, coupled with being responsible for eligible cost over-runs, they will have more control of the project, through the appointment of a new development manager – CSE Development Management Corporation – and an amended project decision-making structure,” city documents read.

The CMLC provided a statement Monday, saying they wouldn’t give further details until after the council meeting.

“This decision to transition development management follows numerous open talks with our partners at the City and CSEC and careful consideration of the best role for each of us to play,” said Kate Thompson, CMLC President and CEO.

“We suggested many options and are supportive of where we landed with this new governance structure that provides a good solution for cost accountability and project delivery while ensuring the best possible facility for Calgarians. In our experience, this is the best approach for a project of this magnitude.

“Ultimately, our interest is in seeing a great Event Centre delivered for Calgary and successfully delivering on our larger role leading the overall master plan vision, which remains our focus moving forward.”

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