Calgary’s arena project netted city council approval for a cost overrun package that would see the city contribute at least another $12.5 million.
It also means the Calgary Municipal Land Corporation (CMLC) is out as project manager.
Councillors debated the proposed Calgary arena revisions Wednesday after some of the details had been revealed over the past few weeks. Administration recommendations were all passed in seven separate votes with a variety of vote splits.
One of the votes was a reconsideration, requiring 2/3 majority. Also, an amendment to the deal, requiring stewardship through a proper planning process, was approved unanimously.
The revisions have pushed the proposed cost to $608.5 million, up from the original $550 million. The city will bear $12.5 million of the cost, as an overrun clause in the initial contract was triggered. There’s also a $10 million cost for an event management plan and transportation corridor study. Further capital cost overruns for the arena would be covered by Calgary Sport and Entertainment Corporation (CSEC).
The $10 million will be funded via the interest from the city’s capital projects reserve.
The design concept has been updated from an inverted bowl with a 15,000 seat count to 18,300 – although the design has not yet been finalized, said city manager, David Duckworth.
While the capacity has been increased, it has fewer seats than the Saddledome. City administration said it’s based on the needs of the current Calgary market.
“I am super glad that Calgarians got a first look at what the actual facility is going to look even though it’s still a fairly basic rendering. It gives us a good idea of what the vision is here going forward,” said Coun. Jeff Davison.
(Editor’s note: A correction has been made to an earlier version of the story that attributed the above quote to Mayor Nenshi. That has been corrected to reflect the proper attribution.)
In the debate, Mayor Naheed Nenshi said he believed this is a better deal for Calgary. He said it vastly reduces the risk to Calgarians.
“I’ve always operated on that piece that public investment must result in public benefit. And so I will actually say much to my surprise, we came up with a better deal than what we signed in 2019,” he said.
Even higher cost?
In exchange for removing the original development manager, the CMLC, CSEC will take on all additional cost overruns for the arena project. They will be seeking out a different sports development manager, councillors were told.
While the cost overruns are presently unknown, the inflationary pressures from the market are being taken into account. If further costs come up, the public will be protected from funding the gap between $575 million to $608 million, Duckworth said.
Councillors quizzed administration on various areas, including additional costs, sustainability, transportation, bike access and parking, risk of flood damage, financial security, the development permit and management plan.
“It’s really important that we protect the vibrancy of of the district and really protect what we’re trying to create here,” Coun. Druh Farrell said.
Coun. Jeromy Farkas, who is running for Calgary mayor, said he believed Calgarians are getting a weaker deal. He said he’d vote against it. He also thinks Calgarians deserve to know the true cost and that it’s been kept behind closed doors.
“It’s clear that this is really is not the deal that it’s being made out to be and in many ways, by adopting this I think that we make a bad deal even worse,” said Farkas.
Coun. Gian-Carlo Carra said this is a more financially sound deal than the original one. He’s worried about the removal of CMLC as project manager, but believes they’d still have an influence on the project.
Ward 1 Coun. Ward Sutherland agreed.
“This adjusted deal is actually a better deal for Calgarians, it removes the risk for Calgarians and transfers the risk mitigation to the Flames,” he said.
“The Event Center has been made a political issue. Unfortunately, in my view an elected official would vote yes on the event center, a politician would vote no. Which one are you?”
Mayoral candidates spar on arena prior to debate
This should be done with reconsideration motions, both the public and council are being misled, Gondek said.
“This is bad politics and an even worse process,” Gondek said in a statement prior to Wednesday’s debate.
According to Gondek, Coun. Jeff Davison – another mayoral candidate – suggests this deal ensures Calgary taxpayers are off the hook for additional costs because CSEC will take on any overruns.
“If this is the case, if this is all coming from the existing 2019 deal, then why vote on this package at all,” Gondek said.
“If this was the deal the Coun. Davison and Mayor Nenshi say it is, you had my support in 2019 and you would have it today. It is not.”
The reason being that council has to pass the deal today with hidden costs the Flames management knows about, but taxpayers don’t or we risk this whole deal, Gondek said.
In contrast, Davison believes in the arena deal.
“Over the past four years, it has been my push to get this project done. But you rely on the council to make good decisions and council has supported this project going forward,” Davison said, early Wednesday.
“(Coun.) Gondek doesn’t seem to get that there’s never actually been more time in our history, where it’s been important to build partnerships that attract and accelerate new investments in our city. It’s clear she doesn’t have what it takes to expand our economy, or new investments or emerging industries.”
In debate, Davison said this was a project he didn’t want to turn his back on.
“We have begun one of the greatest comeback stories in our city’s history and I for one intend to stay committed to that path,” he said.
Changes to the project over time
In 2019, city council approved a budget of $550 million for the event centre. In April of this year, the arena project was suspended to work out budget issues.
The $60 million overage was first reported earlier this month, after Coun. Jeromy Farkas questioned city administration about the deal after a closed session of council. LiveWire Calgary initially reported potential cost overruns and a project management change back in June.
On Monday, Mayor Naheed Nenshi gave Calgarians a peek into the closed council sessions saying the City will be adding $12.5 million towards the events centre – bringing the budget to $608.5 million.
Overruns came from unforeseen issues forcing the planners to reconsider aspects of the arena design, although a set cap has been placed on the City’s contributions, Nenshi said.
Initial construction was set for August 2021, which was updated at Monday’s combined council meeting to begin early 2022.
Councillors heard that the development permit application will go before the Calgary Planning Commission and new city councillors in November.