Calgarians are getting a clearer picture of why the agreement between the City of Calgary and the Calgary Sports and Entertainment Corporation (CSEC) for the new Events Center project failed.
Grounding was expected to begin in January 2022 at the new event center. However, on Tuesday night, Calgary Mayor Jyoti Gondek broke the news on Twitter: The two sides have stalled.
At a press conference that night, Mayor Gondek explained a phone call with Flames co-owner Murray Edwards, in which he expressed concern about the excessive costs.
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ESCNNA issued a statement later Tuesday night, they included their concerns with what the organization called the introduction of new infrastructure and climate costs, “which were introduced by the City after our July agreement.”
Both Gondek and CSEC President and CEO John Bean held back-to-back press conferences Wednesday to address those costs.
Bean said the two sides are in “mutual alignment” when it comes to wanting to build an event center, but “where the rubber hits the road is who’s going to pay for what.”
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The CSEC cited inflation and supply chain issues as contributing factors to rising project costs and said the price had skyrocketed to $ 634 million and does not include infrastructure and climate mitigation costs, something that Bean believes that it should not be the responsibility of CSEC.
“We are not looking for a way out,” Bean told reporters.
“We really believe that the right-of-way and climate costs, even though they were on the table, really shouldn’t be paid by CSEC.”
In July, the cost of the event center was set at $ 608 million, an increase from the original cost estimates of $ 550 million.
In a second press conference Wednesday afternoon, Gondek began by addressing what he called “a lot of questions about costs and where they came from.”
The mayor noted that the city believes its expectations were “clearly outlined” and “extensively reviewed by various groups” and that the expectations for this project “were no different from any other project” in regards to energy efficiency, climate mitigation and infrastructure.
Gondek said that since Tuesday’s announcement, the city has been asked if they are “pushing for some of these improvements” that come with project costs.
Both infrastructure and weather mitigation costs were included as conditions as part of the development permit approval for the building in Calgary Planning Commission (CPC) last month.
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“Absolutely. We insist on things like sidewalks … because you need them for a good experience in the public realm.”
Those additional costs were expected to be $ 16.7 million, and the city requested that CSEC cover about $ 10 million.
The mayor was asked to break down the climate mitigation components and she explained that these costs include $ 3.8 million for photovoltaic (PV) layers, which according to her is essentially a film that is placed on the roof, so there is the option to add solar panels in the future.
Gondek refuted the argument that some of the weather expectations were recently introduced by his council.
“In December 2020 it was very clear that the feasibility study of renewable and low-carbon energy was a requirement.”
“So a year ago, the applicant knew that this was a requirement.”
Gondek said that over the course of the year since then, there have been similar conversations about the energy efficiencies and climate mitigation expectations of this project, including assessments and studies that were shared in mid-October.
“We were not elected as the new council until October 18. Therefore, the ESCNNA knew well what the climate mitigation expectations were in this project long before this council was formed ”.
Councilors say
District 7 Councilor Terry Wong and District 5 Councilor Raj Dhaliwal sit down as CCP members and were part of discussions in November leading up to the approval of the development permit, which included a list of more than 70 pre-approval conditions.
On Wednesday, Wong said the cost concerns that have arisen recently were items that had been discussed by all parties during the course of the negotiations.
“Nothing you hear today was new before the planning commission.”
The District 7 councilor said all parties were asked multiple times if they needed further clarification or if there were any concerns that needed to be addressed and nothing was mentioned.
District 5 Councilor Raj Dhaliwal echoed what Wong said and spoke specifically about PV layers.
“CSEC, as an applicant, was very supportive of that (PV layers) and they wanted to install PV layers on 60 percent of the roof,” explained Dhaliwal.
“They were bragging about it.”
Dhaliwal said that “the applicant” also submitted the 2035 carbon deadline to the CPC, telling the commission, “we will be ahead of the city of Calgary when it comes to net zero.”
Mayor Gondek said part of her conversations with CSEC included an offer for the city to help obtain funds from the province and the federal government for the future purchase of solar panels. And that at this moment the only cost for that part of the project would be $ 3.8 million so that the photovoltaic layers could be installed.
The latest dilemma between City of Calgary and Flames ownership comes months after the event center deal was restructured to help cover the higher costs.
It was revealed that the city would not be able to cover its half of the costs, and both parties agreed to contribute an additional $ 12.5 million.
As part of those negotiations, CSEC agreed to fund a disproportionate portion of the recently valued $ 321 million building with City of Calgary costs set at $ 307 million, which included the demolition of the Saddledome, flood mitigation and event management plans. .
Calgary Municipal Land Corporation was removed as development manager and CSEC agreed to cover any additional cost overruns.
What happens next?
According to the mayor, the agreement said that Thursday was the last day for both parties to withdraw from the deal; that CSEC chose to do.
Ultimately, Gondek said she is disappointed that the situation between the two sides has reached this point, but said she is open to further discussions to reach a solution.
“It’s a sense of unreal loss right now,” Gondek said. “So if there is a desire to present those funds on behalf of CSEC, we would be happy to hear.”
Bean said CSEC has had several conversations with Gondek in which he “expressed his desire to see the event center built.”
The collapse of the deal was also disappointing for Flames fans.
Standing outside the Saddledome, Noah Adler, a longtime Flames fan, told Global News that he would like both sides to resume talks.
“Both parties need to figure something out here because we’ve been through this many times,” Adler said.
“Hopefully both parties can come to an agreement and let’s make something happen here.”
For Ryan Gauthier, an associate professor at TRU Law in Kamloops BC, the failure of the arena deal at the last minute came as a surprise.
Gauthier studies sports law and said he wondered why both parties did not seek mediation or arbitration before abandoning the project.
“If there is a dispute over the definition of the terms or who pays for what, that sounds like mediation or arbitration to me, not a breach of the stadium agreement,” Gauthier said. “That sounds very, very strange.”
Meanwhile, the Calgary Flames plan to stay and play at the Saddledome “for many years.”
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