City, Flames ownership each to pay millions more for new arena

The City of Calgary and the Flames ownership will each pay an additional $12.5 million for a new arena, and the city-owned developer behind the Rivers District will no longer oversee the project.

The Calgary Sports and Entertainment Corporation has agreed to cover any more cost overruns.

The current agreement includes a provision for the additional spending.

Earlier this year, it was revealed the controversial $550 million deal between the city and the Calgary Sport and Entertainment Corporation (CSEC) was as much as $60 million over budget. The arena is now projected to cost $608.5 million.

Calgary Mayor Naheed Nenshi said more detailed design work showed that budget was unrealistic and the rising cost of materials didn't help either.

"Frankly, I didn't think the city should pay, because I've always said public money should go for public benefit," Nenshi said on Monday.

"So the sides have been working really hard to both reduce that budget cost of the thing while still making a facility we can be proud of, but also figuring out how to fund and finance the gap."

Those design issues included an inverted bowl plan that wouldn't work for the site, and too many luxury boxes at the expense of other seats.

In addition to the $12.5 million increase, the city will still have to pay for other items that it agreed to when inking the deal in 2019, including flood mitigation.

The dollar figures for those other elements of the deal will go before council this week.

Nenshi said the city has also been asked to develop a transportation management plan for cyclists, pedestrians, transit users and vehicles.

CMLC out

The Calgary Municipal Land Corporation (CMLC) was overseeing construction and design of the event centre, but was not involved in discussions between the Flames ownership and the city after the project was halted over escalating costs. It is now out as project manager.

"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 and I think that's a very legitimate request," said Nenshi.

Coun. Jeromy Farkas said while he's glad the Flames will be on the hook for any additional costs, he would prefer to see the CMLC remain involved.

"Although it's good … there's a limit to the amount of money the taxpayers will be expected to contribute, I believe that by negotiating out our control over the project management, it allows for potentially some significant cut corners," he said.

"I think there's still a number of uncertainties around this project, particularly around flood risk."

The city-owned developer will still oversee infrastructure work and master planning in the area around the arena.

Kate Thompson, CMLC's president and CEO, said in an emailed statement that the corporation's focus remains on leading that master plan.

"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. In our experience, this is the best approach for a project of this magnitude," she said.

Coun. Jeff Davison said in a post to his website that he continues to see the arena deal as offering many benefits to the public.

"This deal is among the best ever negotiated in Canada," wrote the Ward 6 councillor, who is running for mayor.

The costs for the new arena were to be split 50/50 between CSEC and the city and the venue is intended to act as a linchpin in a new entertainment district on the northern edge of the Stampede Grounds.

City administration told council that the design plan will be finalized for the development permit submission this week. Construction is set to start in December this year, with expected completion by August 2024.