Calgary’s event centre could be an estimated $50-$60 million over budget.
But those numbers could still come down as city officials and the Calgary Sports and Entertainment Corporation (CSEC) work together to adjust the project to better fit the originally estimated $550 million.
The city’s general manager of planning and development said this is par for the course of this project.
“We’re dealing with something that happens in capital projects: there is an estimate for what a capital project like this might be, and once we get to the place where we’re at with a schematic design and the budget around that, if that varies from the estimate that we have, then there’s a process to what to reconcile and that’s what we’re going through between the parties right now,” Stuart Dalgliesh told city council late Monday.
The answer came in a line of questioning from Ward 11 Coun. Jeromy Farkas, who also asked why councillors aren’t part of the negotiating team and only get occasional updates on talks since concerns about possible cost overruns came to light earlier this year.
Terms of the original agreement excluded councillors and instead opted for subject experts from within city administration.
Farkas said his line of questioning was all in a push for transparency.
“Calgarians were promised a certain vision of the event centre, how it would fit in the neighbourhood, what type of events would be allowed to go on,” Farkas told Global News.
“And if council is making significant changes, potentially cutting corners or firing the project manager, that is material information for our shareholders.”
Ward 3 Coun. Jyoti Gondek said there aren’t any updates for Calgarians, and any decisions that change the funding, agreement or scope of the project would have to be done in broad daylight, per city council policy.
“(Any changes) will require a two-thirds vote of council. It’ll be a ‘reconsideration,’ is what we call it,” Gondek said Tuesday.
“It will be discussed publicly on July 26. When we get the details of what this looks like, we will share it with the public. But right now, there’s nothing in front of us to make a decision on.”
A clause in the project framework agreement addressing the budget limit and cost overruns lays out how inflationary pressures on construction costs should be addressed, including looking at possible contingencies and cost mitigation strategies. Any cost overruns would be shared evenly between the city and CSEC.
On July 29, 2019, when the event centre decision went to council for a vote, Farkas joined councillors George Chahal, Druh Farrell and Evan Woolley to vote in opposition.
In a June 25, 2021 interview on The Drive on Global News Radio 770 CHQR, Farkas said the city would be on the hook if the costs balloon.
“You can stay within the signed agreement and spend twice or even three times the original amount, you still would be within the original agreement,” Farkas said at the time.
Ward 1 Coun. Ward Sutherland asked Dalgliesh about that scenario Monday night.
“Is there a possibility that (in) this project Calgary would be responsible for a 200 to 300 per cent increase in costs?”
“No,” was Dalgliesh’s answer.
Ward 6 Coun. Jeff Davison, who chaired the city’s event centre committee, said a multimillion-dollar project like this required a degree of certainty and security for all involved.
“Fortunately, we have very sophisticated partners that understand the political dynamics of what we’re going through and are committed to moving this project forward, as is council,” Davison said Tuesday. “Where we have problems is on that commitment side of council.
“When we bring forward questions, when we bring forward facts that aren’t true, it erodes not just the process in that project, it erodes people’s faith to want to do business in Calgary.”
The Ward 6 councillor added nothing has been finalized in the latest talks.
“Right now, we have a lot of experts working through a lot of different challenges from inflation and design to contingency,” Davison told Global News. “We’re working through those in good faith with our partners and with a respectful and productive tone — the same as it was in 2019.”
In mid-June, Calgary Municipal Land Corporation president and CEO Kate Thompson told city council it had withdrawn from the negotiating table at the request of the two parties but is supporting the city and CSEC “with any ask.”
Gondek said she shares Calgarians’ frustration with the delays.
“I’m as frustrated as you are; I would like to see this project come to life,” Gondek said. “We had a great deal — not sure what’s wrong with it now.”
Farkas echoed Gondek’s desire to see the original vision come to life.
Davison is confident that the folks still at the table will be able to reduce the preliminary estimate of $50-$60 million in overages to be closer in line with the original agreement, calling it a “big, complex file.”
“There are lots of challenges that we’re trying to work through right now in order to ensure we are within the agreement we made in 2019,” Davison said.
“It is our hope that we will be able to present those at the next meeting of council but understand that there are still ongoing discussions around many items that need to be solved for.
“So that’s why we’ve had this moved a few times: council has received updates — not requests for decision.”
Another update and possible request for a decision will go to council on July 26.
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