The Western Exhibition Association (WEA) won't have to start paying back a $19-million loan from the City of Red Deer until April 1, 2027.
On Monday, Jan. 13, city council approved a bylaw to suspend interest and principal payments related to a loan that was initially approved in 2021 with the goal to further support WEA's financial sustainability.
"This decision today gives Westerner further opportunity to continue to get its footing underneath itself," said Mike Olesen, the city's general manager of growth and finance.
The loan bylaw was brought to council for first reading this past December to indefinitely suspend interest and principal payments on tranches 1 and 2. At a Monday, Jan. 13 meeting, council instead voted to suspend payments until April 1, 2027.
"This gives a time-certain period to show the public that there is a concrete timeline where this will be reviewed again. (April 1, 2027) also coincided with the (ending of) the Westerner's three-year business plan that they shared with us earlier in the year," said Olesen.
"It's important to clarify that (loan agreement) could be reviewed at any time, even right away if so desired by council."
Between September 2021 and today, council has continued to adjust and respond to the evolving needs related to the loan agreement.
Recently, the City of Red Deer, Red Deer County, the Westerner Park Foundation and the Donald family each contributed $500,000 to the sustainability of WEA. Normally, under the existing terms of the loan agreement and loan bylaw, this injection of cash would trigger a loan payment back to the city. However, the intention is to give WEA the time and funds to recover and reach sustainability and today’s decision to suspend interest and principal payments on the $19 million loan responds to this need.
With these adjustments to the conditions of the loan, WEA must still pay the loan in its entirety by the end of the loan's term. This decision has an impact on the City's financial position in the short term, but as WEA 's financial performance stabilizes, payments on the loan are anticipated to return. This is some of the additional information provided to council Monday.
“To reiterate, this does not mean that the $18.7 million remaining debt is forgiven, but rather that the city must temporarily report a change to our financial statements to better reflect the real value of the loan at a point in time,” said Olesen.
City manager Tara Lodewyk said the success of Westerner's three-year business plan is contingent on these changes made at council, as well as the involvement and contributions of partners, including the province.
'We still need to continue to recognize the realities and time it takes to recover being a major agriculture society and event centre in our province and region,” said Lodewyk.
“The Westerner is working hard to make positive changes that improve its financial situation and the experience for our community. We can all help. It is as easy as choosing to attend one of the many events at the park, and we encourage our citizens to do just that.”
The WEA will present annual financial updates to city council through to April 2027.