‘Flames’ arena plans in the fiscal soup

Article posted by Coliseum, August 4^th, 2021

Image: City of Calgary

Taxpayers and the National Hockey League (NHL) team Calgary Flames’ (Canada) owners are each chipping in more money for Calgary’s new arena, and the City-owned Development Manager – the Calgary Municipal Land Corporation (CMLC) – will be replaced by a company hired by the Calgary Sports and Entertainment Corporation (CSEC) – owners of the ‘Flames’.

The ‘Calgary Herald’ stated that proposed agreements to push ahead the stalled plans for the Event Centre in East Victoria Park were publicly released recently, following months of behind the scenes talks centering on the budget issue.

Earlier this year, the multimillion dollar arena deal (new arena for the Calgary Flames) between the City of Calgary (Canada) and the owners of the professional ice hockey team Calgary Flames hit the pause button over “a difference in the current budget estimate and the program requirements for the facility”.

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The Calgary Flames are a professional ice hockey team based in Calgary (Canada). The Flames compete in the National Hockey League (NHL) as a member of the North Division. The club is the third major professional ice hockey team to represent the City of Calgary, following the Calgary Tigers and Calgary Cowboys. The 19,289-capacity Scotiabank Saddledome in Calgary is their home venue.

The Calgary Sports and Entertainment Corporation (CSEC) is a privately-owned professional sports and entertainment company based in Calgary, Alberta, Canada formed in 2012 and owned by N. Murray Edwards, Alvin Libin, Allan Markin, Jeffrey McCaig, Clay Riddell, and Byron Seaman.

The Calgary Municipal Land Corporation (CMLC) strengthens connections between people and the places they share, its passionate approach to elevating the urban experience infuses communities with new energy and the confidence to build, grow and believe.

The City Council greenlighted the deal for a $550-million Event Centre in 2019, just eight days after the proposal was made public. The Calgary Flames owners – Calgary Sports and Entertainment Corporation – and the City are set to split the capital costs equally, but the City is also responsible for the cost of pulling down the decades-old Saddledome.

The ‘Calgary Herald’ further stated that the documents reveal that early in 2021, the building’s total cost was projected as high as $620 million, up by almost 13 percent compared to the $550-million facility proposed two years ago. Further discussions trimmed that number down to $608.5 million, but the City Hall and CSEC have been trying to hammer out a solution on how to cover the extra cost.

Both have agreed to each chip in another $12.5 million. That’s the maximum the City can offer under the terms in the 2019 deal covering cost overruns, and it means $287.5 million of public money will go into building the arena, up from the $275 million promised two years ago. CSEC must bear any further cost overruns, potentially raising its contribution to $321 million.

Calgary Mayor Naheed Nenshi called CSEC’s responsibility for possible extra costs a move that significantly reduces risk for taxpayers – “That is a huge win for the ratepayer, and frankly, justifies everything else that’s being asked.”

Paying for up to half of a $25-million cost overrun is a provision of the existing arena deal, so it can go ahead right away.

The City is also on the hook for the extra cost of eventually pulling down the Saddledome, estimated at $12.4 million, plus $3 million in land transaction costs.

Finally, City officials are estimating $10 million or more in “additional costs” for flood mitigation, site remediation and other work. That brings the total estimated cash contribution for the Event Centre and other related work to $312.9 million.

It’s unclear for now how exactly the cost overruns add up, but costs for raw materials are ballooning as Cities across North America embark on infrastructure projects to stimulate the economy.

Another factor was shifting building plans from an inverted bowl design to a conventional bowl for the sake of accessibility and additional seating.

Construction on the arena was supposed to begin this year, and Mayor Nenshi informed that the plan for now is to start early in 2022. The City will also work on plans to manage the flow of people in and out of the area around the planned Event Centre, whether they’re on foot, taking transit or driving cars.

CMLC shown the door

The Calgary Municipal Land Corporation (CMLC) – a wholly-owned subsidiary of the City of Calgary – is being removed as Project Manager for the Event Centre.

City documents say a new Development Manager going by the name CSE Development Management Corporation will now handle that role.

The documents read, “Decisions on items such as project budget, schedule and construction will be made by CSEC, and joint decisions will be made on items such as material design changes, building structure and other elements important to the City vision and policy, and project fundamental principles.”

Mayor Nenshi said CSEC’s request for a larger role and say in project management is a legitimate request – “CMLC will continue to be helpful, but if the Flames are taking on the risk of all the cost overruns, they want the ability to appoint a Project Manager of their choosing.”

The CMLC is responsible for managing numerous other projects in the East Victoria Park to create a cultural and entertainment district. They include the BMO Centre expansion and redesign of the CTrain Station and entrance to Stampede Park at 17^th Avenue S.E. and Macleod Trail.

Kate Thompson, CMLC President-cum-CEO, said in a statement that the decision to “transition” project management came after several rounds of talks – “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.”

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

Councilor Jeromy Farkas said he’s pleased to see details on the arena talks finally emerge in public, but he isn’t happy with CMLC’s removal – “I think having CMLC as the Project Manager offers a little bit of an insurance policy to make sure the arena fits well with the entertainment district. If you’re only thinking about this as a rink on the inside, that sort of misses the point that this was supposed to be a catalyst. It was supposed to be something to encourage people to visit and stay and shop.”

The City agency will continue to manage the development of the area around the Event Centre, which the City wants to pursue as a gathering space for events.

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