A new deal has been reached to build an events centre in downtown Calgary after the project was put on hold in April due to budget concerns.
This month, city council voted in favour of amending the terms of the project agreement, including cost contributions, increases, roles and risk allocation.
Calgary Sports and Entertainment Corporation (CSEC) will transition to the role of development manager for the project as Calgary Municipal Land Corporation (CMLC) exits. In taking on this role, CSEC also becomes accountable for any cost overruns above and beyond the new budget estimate. The city maintains a level of oversight to ensure adherence to project principles and framework throughout the project.
This includes ensuring the project vision is achieved and public interests are maintained. Due to the new cost accountability model, neither the city nor CSEC will have to provide financial securities upfront.
The city agreed to contribute an additional $12.5 million to the overall project budget.
According to officials, this amount was already committed to in the original agreement as a contingency fund, however, was not a part of the initial budget.
The new budget estimate is $608.5 million, an increase from the original estimate of $550 million. This change brings the city’s contribution to $287.5 million, which is within the agreed upon amount in the original framework agreement. CSEC will fund the additional $321 million.
Calgary Mayor Naheed Nenshi called the deal a major improvement on the original project agreement, noting significant concessions were made to avoid risking taxpayer money.
“They are now in for more than 50 per cent of the cash costs as well as undertaking the risk. It’s a big deal and it’s something I appreciate,” said Nenshi during city council discussion. “I am quite confident that these partners are going to do a good job. They are going to build something we can be proud of and ultimately that is the goal here.”
Councillor Jeff Davison of Ward 6 echoed the mayor’s support, explaining the project won’t just benefit hockey fans, but it will be a major part of revitalizing the city’s downtown area.
“This deal is a way better deal,” he said during a speech to council last month. “The Flames will pay more yet we will own 100 per cent of the building and the land it sits on. Cost overages are absorbed completely by the Flames which protects the taxpayer but also ensures the city has an NHL team for the next 35 years.”
CMLC explained its exit from the project after two years of work as a way to better align project management with cost accountability.
“Our decision to hand over management of the project follows numerous open talks with the partners and careful consideration of the best role for each of us to play,” said CMLC CEO Kate Thompson in a press release. “We suggested many options and are supportive of where we landed with this new governance structure. This transition will enable greater oversight by CSEC who, under the new structure, will be responsible for cost accountability as well as project delivery. In the coming weeks, our team will work with the partners to ensure a smooth transition and restart on the project work.”
The project team is now working to complete the detailed design stages of the project with construction anticipated to begin in early 2022.
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