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Event Centre cost overruns split on CSEC scope of work: City of Calgary

The City and Calgary Sports and Entertainment Corporation (CSEC) will evenly split cost overruns on areas specific to the latter’s scope of work, according to information provided to LiveWire Calgary.

Questions arose on potential additional costs for the City of Calgary in the $1.223 billion Event Centre and Rivers District project after the Alberta NDP’s Rachel Notley talked about a “secret” agreement between the parties involved.

Notley had suggested that there’s a confidential financial agreement between the parties that identifies “additional financial contributions beyond the $870 million dollars outlined yesterday.”

Ownership of cost overruns, which weren’t included in the original material handed out this week, will be split 50/50, the city said.

“CSEC and The City, together, will share cost overruns 50:50, specific to the CSEC’s scope of work: Event Centre building, community rink and the parkade,” read a statement from the City of Calgary.

“Additional funds for The City’s share of potential cost overruns are proposed to be set aside from revenues from future land sales and future anticipated investment income from the Major Capital Projects Reserve.”

The breakdown of who is paying what in the agreement in principle for the new Calgary Event Centre project. CITY OF CALGARY DOCUMENT

The previous deal, which collapsed Dec. 31, 2021, saw the City and CSEC split the cost of the Event Centre 50/50 (up to $575 million), but then CSEC would be fully responsible for “eligible costs” in excess of that on the building.  The City would have shouldered full responsibility for the costs on city-related projects in the prior agreement.

In this current deal, if there are cost overruns on the infrastructure portion funded by the province, the City of Calgary would be fully on the hook for those. The City told LiveWire Calgary that those infrastructure projects would have to be done anyway for the build-out of the Rivers District, and would have come at the full city expense without provincial help.  

“More details of cost overruns will be considered part of the next phase of work that’s included in the definitive agreements,” read the city’s statement.

The City owns the full building and will cover the bulk of the upfront construction cost outside of the $40 million initially put in for the Event Centre and Community Rink (per above). The remaining CSEC share will be recovered over 35 years.

There is a further FAQ the City has posted on their website.

NDP in a bind: Bratt

On Thursday, at a health innovation announcement, Notley walked her initial comments back… at least a bit. While she thought, as a hockey fan, a new arena would be exciting, it was important for Calgarians to have a full picture on costs – before an election – especially when they’re carrying 70 per cent of the cost.

Notley said she accepts that there’s an agreement that outlines, in more detail, the level of exposure to Calgary taxpayers. That’s to be expected, she said.

“It’s an exciting project and we’re not saying it’s not by any means. But we’re in a situation where the cost has doubled over 18 months, and the public contribution to that cost has tripled,” Notley said.

“To try and turn it into an election issue and say you’re either with us or against us, while not really being transparent with the details. I mean, it’s kind of game-playing, and as I said before, I think it’s really not fair to voters.”

Notley said she’d like to know more about CSEC’s 17-year financing arrangement and the actual impact on property taxes. Ward 1 Coun. Sonya Sharp, chair of the Event Centre Committee did say Tuesday that there’s money already set aside from the last deal, and additional cash for the Event Centre would come from city reserves. (City reserves are replenished with operational surpluses, which are primarily funded through property taxation.)

Mount Royal University political scientist Duane Bratt said the NDP is in a tough spot for a variety of reasons.  He doesn’t think they would have negotiated this deal.

“We know just how important that the City of Calgary is, and do you want to be coming out strongly against this,” he said.

“And the irony of them being blasted for opposing the deal, because they are a bunch of socialists, because they don’t want money to go to Murray Edwards, I find remarkable. But that’s the environment we’re in.”