Work paused on new Calgary arena over estimate, program requirements concerns

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Work on new Calgary arena paused amid concerns over cost estimate, program requirements
The developer in charge of the Calgary Events Centre has put the project on hold due to concerns with the budget and the scope of the project. Adam MacVicar reports – Apr 14, 2021

Work on Calgary’s Event Centre — the intended future home of the Calgary Flames — has been paused amid cost and facility concerns.

In a statement to Global News, Calgary Municipal Land Corporation (CMLC) president and CEO Kate Thompson said there is a “difference in the current budget estimate and the program requirements for the facility.”

Sources told Global News the cost difference is $70 million. Global News has also learned Calgary Sports and Entertainment Corporation has requested more land for the project, the removal of CMLC as project manager and traffic changes around the new arena.

On Tuesday afternoon, CMLC and city officials provided an update to council about the progress of the new arena. That closed-door meeting lasted more than five hours.

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“Given the significance and importance of the project, the parties have jointly agreed to pause the project team to allow time to resolve these challenges,” Thompson said in an emailed statement on Wednesday.

“The decision to take this pause is the responsible and prudent approach to ensure we find the best solutions to move the project forward successfully, without incurring any additional costs on the project while these discussions progress.”

Work is continuing “collaboratively,” Thompson said.

A spokesperson for the Calgary Sports and Entertainment Corporation (CSEC) — the Flames’ ownership group — referred to the CMLC statement when asked by Global News.

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In an emailed statement, Mayor Naheed Nenshi confirmed the pause in work.

“It’s not uncommon for major capital projects to be at this stage,” Nenshi said. “Far better to have these issues sorted out at this stage than to have unexpected cost overruns after construction has begun.”

The deal for the event centre is still in place between the Flames owners and the city. If a new deal needed to be negotiated, it would need a supermajority vote of 10 for approval from city council.

Matters confidential

Following Tuesday’s presentation, Ward 11 Coun. Jeromy Farkas tried a motion to make the confidential information public.

“My hands are a bit tied here, but I would say that is by far the most stunning thing that I’ve seen in my entire time as a councillor,” Farkas said, claiming Calgarians would be “furious” at the contents of the presentation.

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Ward 13 Coun. Diane Colley-Urquhart issued a rare procedural challenge to the chair.

When asked by Colley-Urquhart, city solicitor and general counsel Jill Floen said the effects of making the confidential information public depend on the situation.

“In this particular situation, it could compromise the commercial interests of the city,” Floen said.

Farkas’ motion was defeated, leaving the presentation confidential.

Construction on the event centre was due to being in August with completion slated for May 2024.

In 2019, the City of Calgary and CSEC agreed to split the $550 million cost to build the arena on lands to the north of the existing site of the Scotiabank Saddledome.

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Transparency on any cost overruns is paramount for Farkas, given the tough economic times the city finds itself in.

“Calgarians deserve an explanation, an explanation of how we got to this point,” Farkas told Global News Wednesday. “There needs to be a pause and complete investigation and how we got here.

“Every dollar needs to be accounted for, particularly in public.”

Pandemic exposing flaws

Moshe Lander, an economics professor at Concordia University, told Global News he wasn’t surprised to hear there was a budget difference, something that is “typical” with other stadium and arena deals.

Lander said the COVID-19 pandemic has exposed flawed deals.

“(The event centre) is a project where it was flawed from the beginning and the pandemic is merely exploiting or exposing those flaws,” Lander said.

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“Calgary Sports and Entertainment now is in the weird situation that, while it was a bad business model for the City of Calgary, the fact is that it’s now going to be much more problematic for Calgary Sports and Entertainment to get this project done without putting up more of their own cash.”

Lander said there’s no doubt the event centre will be built, saying cost overruns are “inevitable.”

“It’s almost impossible to do a kitchen renovation without incurring cost overruns, you’re going to be able to build a half-billion-dollar arena, without seeing the cost go up to some extent?” Lander said.

Having attended games at the Saddledome in recent years, Lander knows the Flames are in need of a new home because of the state of their current one. But the economics professor said the city could use that to some advantage.

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“The city has a real opportunity here to rethink how much they want to be on the hook for this. And I think that they maybe need to go back and revisit the mistakes they made a couple of years ago and see the pandemic as an opportunity here.”

–with files from the Canadian Press

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