A City of Red Deer review of its agreement with the Westerner Exposition Association recommends a $1 million emergency contingency be approved.
The first annual review of the association going to city council on Monday also recommends the city relax repayment conditions for a $19 million loan approved by council along with a $3 million grant in 2021.
Another recommendation calls on the city to pick up half of the $100,000 cost of a Westerner Park 15-year master plan and change a Relationship Framework Agreement so that city manager approval would be required for any expenditures from a maintenance reserve designed to ensure there is money available for facility upkeep and unexpected expenses.
“The Westerner is a key piece of our community and regional fabric,” said city manager Tara Lodewyk in a statement on Thursday.
“They experienced hard times over the past four years, but in 2022, their revenues showed evident signs of recovery. While they are managing to maintain a steady revenue stream since the world opened from the pandemic, their cashflow health is still recovering,” she said.
The city estimates the Westerner has an annual economic impact of $150 million.
The $1 million loan would come in the form of a line of credit and is meant to cover expenses incurred before revenue from events flows in.
“This contingency loan is seen as emergency funds, with an expectation for it to be paid back once revenue is realized and only used after their current line of credit.”
The changes to the Relationship Framework Agreement would give Westerner a five-year reprieve from paying back the city’s $19 million loan. An existing agreement involves a complicated repayment formula based on Westerner profits.
However, that has proven to be a financial burden. Westerner paid back about $421,000 last year as required by the agreement, but only by pulling the money from the $3 million city grant, which has now been fully spent.
Last September, Westerner CEO Mike Olesen warned the city that the facility’s financial recovery had been slower than expected and it struggled to have enough money on hand to pay short-term obligations or to build up a maintenance reserve fund.
Olesen worked with the city’s chief financial officer to come up with the various financial options that will be presented to council.
The review says that Westerner has been making financial progress and its 2022 revenues were among its highest ever. It continues to implement recommendations from a 2020 financial sustainability report and has boosted its revenue per square foot 57 per cent since 2018-19.
However, the Canadian Finals Rodeo has not been the hoped-for money maker. In 2022, Westerner lost $161,656 on the event, not counting about $300,000 worth of staff time planning and co-ordinating it.
While not profitable for Westerner, “it is important to consider the community benefit this event brings to central Alberta,” says the city report.
The Westerner estimated the event would have a $35 million economic development impact in the area although an economic impact analysis has not been done.