Westerner Park’s financial future was put into limbo after Red Deer city council put off approving a recommended $3 million grant and a $19 million loan to provide for short and long-term stability.
A visibly frustrated city manager Allan Seabrooke said time was of the essence, as now the city will likely miss the next window of opportunity to apply for a provincial loan.
He maintained that council had all the information necessary to make a decision on Thursday. A detailed report, with a rationale for administrative recommendations, as well as alternative options, had been presented to councillors last week.
“It is disappointing for I felt the report was comprehensive, and that the data was solid, and there was background data… it was disappointing that council chose to (put off making a decision for up to a month) because I believe we had all the answers needed for them to make a decision,” said Seabrooke.
Coun. Vesna Higham introduced the tabling motion during a special council meeting that was set Thursday to discuss how to help stabilize the fiscally struggling Westerner Park.
City’s chief financial officer Dean Krejci later said that pushing a decision back by up to four weeks will make the city miss the next opportunity to apply for a loan from the provincial government.
After the July window is lost, the next available time to make the provincial application won’t be until December, said Krejci, who is unsure what will happen to Westerner Park’s finances in the interim.
The exhibition grounds were hard hit by event cancellations during the pandemic as well as some questionable decision made prior about building a new exhibition hall during a prolonged recession and over-stated revenue projections.
Higham suggested more questions needed to be answered before council makes such a large financial commitment to the exhibition association. She wanted to hear back from administration about six questions — including whether a proposed $3 million grant to the Westerner could be turned into a loan instead.
She also wanted administration to explore with CIBC, the bank that loaned Westerner Park $19 million to build the new exhibition hall, whether it would accept only interest payments until April 1 next year.
The monthly repayment plan that had been worked out between Westerner Park and the CIBC was found to be unsustainable — Westerner Park’s couldn’t make the payments.
Higham’s tabling motion was supported by Mayor Tara Veer and all but two councillors. Only Coun. Dianne Wyntjes and Coun. Michael Dawe voted against it.
The money that city council had previously approved to help the Westerner survive during the first quarter of 2021 will run out by the end of May, said Krejci.
He and Seabrooke agreed that council will likely have to deal with this financial situation in the short-term, by giving Westerner Park a grant because a provincial loan can’t be obtained in time.
City administration had originally recommended that council approve a $3 million grant to help get the Westerner Park to the end of 2021 — when the pandemic will hopefully wane with enough people vaccinated, allowing events and conventions to start up again in 2022.
Another recommendation was for the City if Red Deer to pay off Westerner Park’s unsustainable $19 million loan with CIBC and work out a repayment plan.
Based on historic data that shows Westerner Park makes about $1 million in revenues annually after expenses, the best repayment plan that could be worked out, according to Krejci were repayments of $500,000 a year (or half of whatever surplus it made).
This would mean $10 million of the $19 million loan would be paid back to the city over 30 years. Krejci said this would allow Westerner Park to still put half of its annual surplus into savings to cover unexpected expenses and maintenance costs.
The remaining $9 million of the loan would be repaid to the city as it becomes possible, based on how much additional money Westerner Park makes over that initial $1 million in revenue that is expected annually.
For instance, if the exhibition grounds makes $2 million a year, 75 per cent of the second million dollars Westerner Park brings in would go towards loan repayment to the city. If $3 million comes in annually, the city would take 100 per cent of the additional $2 million as loan repayment.
Higham had asked whether the $3 million could be rolled into a loan instead and Krejci told her it was possible to do this by adding the $3 million to the $9 million that would be paid back whenever possible.
The secured repayment plan for Westerner Park would still have to be the $10 million returned over 30 years, because adding the $3 million to this amount would push the monthly payments higher than Westerner Park could manage, he explained.
Council also discussed other recommendations, including directing the city manager to help develop a relationship framework to give the city more oversight of Westerner Park operations, and for the city to help hire a consultant (at a cost of $250,000) who would develop a plan for maintaining Westerner Park’s $52 million in assets.
As to what happens now, Seabrooke said it might be necessary to have another special council meeting.