Friday, 16 April 2021

Time To Pony Up

I had visions of starting a new project in my backyard this spring. I had the plans all drawn up, the area was all marked off, and I went to a local hardware store to get an estimate on the pricing. I expected an amount based on preliminary estimates I had done on my own, so I was a little gobsmacked when the price came in at nearly 50% higher than I had estimated. I will say that, unlike Calgary, I was not building a brand-new NHL arena, so you can imagine how much their costs would have increased since last year in comparsion to my small project. As a result, the new downtown Calgary is officially on hold until further notice.

I've written on this blog before about how the use of public money to fund billionaires' wants is a bad idea, how the city of Calgary negotiated a pile of money to be given to said billionaires after cutting a pile of services from the city budget, and how John Oliver outlined all the ways that public money is never returned to the public coffers despite the promises made by those billionaires. And now, with costs escalating thanks to shortages and slowdowns for lumber and construction materials due to the pandemic, it seems that the Calgary Municipal Land Corporation has screeched progress to a halt as they try and resolve the budget shortages presented by the increased costs of the required building materials.

As written by Madeline Smith in the Calgary Herald,
"CMLC president Kate Thompson said in a statement Wednesday that due to a 'difference in the current budget estimate and the program requirements for the facility,' there's a joint agreement to put the project team on hold to resolve the issues.
With shovels scheduled to break ground on the new arena in August, there's no telling how this "pause" will affect the overall timeline in terms of having a new arena ready by spring of 2024 as originally planned. It seems extremely unlikely prices for building materials will return to their pre-pandemic prices, so it looks like there will ultimately have to be another investment of money to make this project a reality.

Smith spoke to Concordia University economist Moshe Lander about this new development, and he stated that "he isn't surprised to hear about questions around the cost of Calgary's new arena."
"'The pause is probably more pandemic than anything because the city is in dire financial straits, but this is the problem when you use public money to finance stadiums and arenas,' he said.

'This is not a problem that's going to go away six months from now when we reach critical vaccination levels, that things can start to return to normal. The city budget is going to be broken for a long time. Now the issue starts becoming, 'who's going to come up with that money?' '"
That's the multi-million dollar question that the Calgary City Council will face when it comes to this project. With Mayor Naheed Nenshi not seeking re-election, there's little pressure on him when it comes to throwing more money at this problem, but the cuts to services while funding an arena for an NHL team whose owners are billionaires have been the tarnish on his mayoral tenure.

City councillors who look to remain in power will need to re-evaluate their stances after the 9-5 vote total approved the city's original investment of $275 million through tax dollars to make up half of the $550 million needed. How much more are they willing to put up without sacrificing their political careers?

Councillor Jeromy Farkas, who is running for mayor and was one of the five who voted against the deal when it was before council, didn't mince words.

"I didn't support the arena projects because of the unrealistic budgets and the very real chance of taxpayers being on the hook for cost overruns," he told CBC's Drew Anderson on Wednesday afternoon. "And it looks like the budget's already been blown through."

Farkas added that if the project is over budget, "council has to come clean with Calgarians and that 'not one penny more' should be invested in the arena." And he's absolutely right in this author's view.

As I pointed out in the John Oliver article, "the Flames' ownership group has two billionaires sitting on it: Murray Edwards and Clayton Riddell who are worth a combined $4.8 billion". That was back in 2015 - today, Edwards and his three co-owners are estimated to be worth approximately $4 billion which means they have enough money to fund the building of the new Calgary arena with ease. Every single penny that is required above and beyond the original estimate should be paid for by those tenants who are demanding a new arena, namely the Calgary Flames.

As I preach the above to the choir again and again, the only solution that the Calgary Municipal Land Corporation has in this mess is to put the project on hold until the difference between the actual costs and the project's budget can be bridged. After cutting $60 million in services in the same year they approved the spending of that $275 million needed for an arena, there should be zero additional investment from taxpayers on this project.

"There's been no ask of council for additional public dollars to go into this project," Councillor Jeff Davison assured the CBC. "Council is committed to the deal we have signed. We are committed to the four major capital projects that we have going on in the city and we put a very specific model forward, a very specific model to go and do that."

It's been two days since the news broke of the halting of the project, so I'm not surprised that City Council hasn't been asked yet. It's what will come in the next weeks and months that will determine the fate of this arena and, possibly, the fates of some Calgary politicians based on what is asked and what is given.

Personally, the city has given more than enough already in this deal. If the main tenants aren't interested in paying a little more for all the bells and whistles that now cost more, the tough reality is that there are no bells and whistles. Being that the building materials are the foundation of the rink itself, it would be wise for the Flames' brass to pony up some dough and get it built as the architects and engineers have specified without needing to stick out their hands and hold the city hostage for money.

There are always unplanned costs when tackling a project of any size, and there should have been some sort of contingency allowance made long before any money was pledged to the project. Now that we know there wasn't a contingency allowance, the people who demanded the project are normally who is responsible for covering the unplanned costs. Break out the chequebooks, Calgary Flames, and pony up like you're all wearing flaming horse's heads because, at the end of day, this bill is your responsibility.

Until next time, keep your sticks on the ice!

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