I’ve been following the news about the financial woes of the Westerner and the bailout by the City of Red Deer and wonder if the Westerner is a money pit.
How is it that a $57 million facility on land leased from the city for $1 per year and pays no property taxes got into financial difficulty? Is it incompetence by Westerner administration or Westerner board? Apparently the Westerner over extended themselves when Exhibition Hall was built; a bad decision.
The Westerner pays no rent on the land which I estimate is a benefit of $300,000 per year and the property taxes is a gift (grant) of $1.698 million in 2021 and $1.745 million in 2020.
With those benefits, how is it that the Westerner was not able to service the CIBC loan of $19 million with a $57 million asset?
Now the City of Red Deer has given a grant of $4 million plus the recent $3 million for a total of $7 million all within the past 16 months.
In addition the city is borrowing $19 million from the province and loaning it to the Westerner under a sweet heart deal made up of $10 million amortized over 30 years and $9 million when and if the Westerner is able. Does this show that there is some doubt about the Westerner’s ability to fully repay the loan from the city?
In addition to the funding, the city’s representative cannot disclose any information to city council from Westerner’s closed door meetings. Where is the openness and transparency to the taxpayers of Red Deer?
Several articles have stated that the Westerner contributed a $150 million economic impact to the City of Red Deer. If so, who is benefiting from the $150 million economic infusion? From my perspective it is the commercial establishments like the hotels and restaurants. Why did city council not commit funding the Westerner come from the non-residential property tax base? This is the group that benefits from the economic benefit of the Westerner. Why should the residential taxpayers of the City of Red Deer subsidize the Westerner?
The Westerner is a money pit. I say let the CIBC put the Westerner into bankruptcy. The purchaser under bankruptcy is not going to move the facility away from the City of Red Deer. The facility would continue to serve Red Deer and area, the purchaser would pay rent for the land, and the city would collect property taxes.
However, now that city council has committed to bail out the Westerner, Red Deer taxpayers are on the hook to support an additional organization.
Myron Chilibeck, Red Deer
Notes from the City of Red Deer: The CIBC loan has shown to be unsustainable and with the lack of revenue being generated, Westerner Park is unable to make the payments as part of their monthly operational costs.
The city provided $2.55 million in operating grants in 2020 and another $1.45 million in 2021. There was no direct impact to tax payers stemming from these grants as they were funded from reserves through one-time funding.
City council approved a grant for up to $3M on May 11, 2021 to cover operational costs to ensure Westerner Park is able to survive through the pandemic until events can once again be safely hosted to generate revenue. This does not mean that all $3 million will be paid, but it is approved in the event that it is needed to sustain the Westerner through the end of 2021 if they are unable to host major events due to COVID.
The grants provided are coming from reserves, which is not being paid by property tax revenues.