With annual repayments of $17 million, plus interest, a Calgary councillor is hoping to explore how “investment income” from a future Calgary Event Centre could find its way back into the community.
Ward 11 Coun. Kourtney Penner put forward a motion arising as an item on the Event Centre came up during Tuesday’s regular meeting of council. The motion called for an admin recommendation for future budget contributions, over and above already budgeted amounts, for parks, recreation and community grants arising from investment income earned from the City of Calgary’s deal with Calgary Sports and Entertainment Corporation (CSEC) for a new Event Centre.
On Oct. 5, the City of Calgary and CSEC signed the final agreements for a new Calgary Event Centre. The City is fronting the cash for the arena, with the CSEC being a leaseholder and paying an all-in $17 million (plus one per cent compounded annually) over the next 35 years.
Coun. Penner wants to explore if and how that annual city return could be used to fund other community projects throughout the city.
“The hope is that we can clearly define for Calgarians where the benefit can be realized and set that trajectory so Calgarians have confidence on what they can expect into the future,” Penner said.
She hopes to get a sense of whether the money would be best suited to go back into general revenue, or if it should be dedicated to certain projects.
Ward 1 Coun. Sonya Sharp, who also chairs the Event Centre Committee, generally supported the motion. She was cautious about earmarking dollars for certain expenses as priorities change over time.
“It’s not always easy to predict what the top priorities of the day will be in the future,” Sharp said.
“There’s an advantage in being able to spend money where it’s needed most and what the public wants the money to be spent when issues arise.”
Money is already spent: Coun. Chabot
Ward 10 Coun. Andre Chabot said the motion amounted to bad optics.
“It reminds me of a song (from a) former songwriter that says we spend a lot of money spending money we don’t got, and essentially looking at using money that’s already spent for future expenditures. It just seems bad,” he said.
“I’m not sure what the objective is other than encumbering future councils on expenditures, on potential savings. I don’t see the rationale.”
Again, the City of Calgary is fronting the cash for the $900 million Event Centre from its Major Capital Projects Reserve, the Fiscal Stability Reserve and the Budget Savings Account Merged Reserved. While CSEC’s portion is $356 million in today’s dollars, they’re putting in $40 million to start. The rest is financed by the city with an annual CSEC payment of $17 million plus interest. The City said the final amount repaid after 35 years is $748.3 million.
Revenue streams including ticket surcharges and naming rights are consolidated into that one lease payment.
Typical annual inflation is targeted around two per cent but has been much higher in recent years. The one per cent interest likely wouldn’t match inflation in most of those years.
Though it’s unclear where the city intends to park the lease payments, presumably much of it would go back to replenishing reserves over time. Still, Penner said it’s worth exploring how it could be used.
“What this gives is for us to take a look a little bit closer at that and understand is all of that going to be used to fill that fiscal hole or is there is there going to be monies leftover,” she said.