City-owned CMLC may be removed from supervision of Calgary arena construction
Earlier this week, city council approved a change to its arena deal with the Flames, revealing no details of what the change might be.
City of Calgary’s $ 550 million arena deal with Flames owners was suspended in April due to “a difference between the current budget estimate and program requirements for the facility.” .
“The costs have increased and, at the end of the day, we have to figure out what we want to build here,” Calgary Mayor Naheed Nenshi said Tuesday, adding that the change did not involve money.
While no details were released after Tuesday’s board meeting, multiple sources told CBC News that the city-owned Calgary Municipal Land Corporation (CMLC) could be removed from its role as project manager overseeing the construction.
CMLC said last week it was not involved in talks between the city and Calgary Sports and Entertainment Corporation (CSEC), owners of the NHL hockey team.
Concerns about additional funding
Both parties will pay CMLC an ongoing fee over five years, totaling $ 8 million.
Com. Jeromy Farkas said he would be concerned if the CMLC was terminated, given his track record of delivering projects in the East Village.
But on top of that, Farkas said he feared the council would soon be asked for more funds, adding that the reasons for this had to be made public.
“So I think the reason the budget increased is really relevant here for Calgarians, in terms of whether or not they’re willing to agree to invest more money,” he said.
Com. Jeff Davison said that even if additional funds were to be allocated to the project, the city would recover its additional costs over the 35 years of the agreement.
“The project is not in danger. It’s just about doing business,” Davison said. “There will be no increase in property taxes for Calgarians as a result of the outcome of this deal.”
Earlier this week, Nenshi said the start of construction on the arena would likely be delayed. Construction starting August 1 is a condition of the agreement, but either party can waive that date.
Documents released by the City of Calgary in January 2020 include a clause that requires both parties to share the bill for a cost overrun, up to a maximum of $ 25 million.
Given that, the city could contribute up to an additional $ 12.5 million to match whatever CSEC could add to cover the cost of the arena.
If the city adds more to the deal, sources told CBC News there could be an upcoming discussion with CSEC about increasing the “installation fee” charged on each ticket in the new building, which would allow the city to recover its funds.
The Council is expected to discuss the deal again on July 5.