Council facing tough choices on LDE
By Lethbridge Herald on December 6, 2024.
LEAVE IT TO BEEBER
Al Beeber – Managing Editor
City council on Tuesday in what is its final meeting of 2024 unless an emergency arises will be faced with making some hard and potentially expensive choices about the Lethbridge & District Exhibition.
And thanks to the financial situation of the LDE which was detailed in what accurately is a damning third party independent review, council is in a no-win situation.
City administration is in a no-win situation. Lethbridge taxpayers, who ultimately will be on the financial hook for this fiasco, are in a no-win situation.
Words used by city manager Lloyd Brierley, Chief Financial Officer Darrell Mathews and mayor Blaine Hyggen during discussions about the Deloitte report made clear how serious this situation is for the city.
What are their options? Close the Taj Mahal of agriculture society buildings and find $2.5 million annually to pay the costs of mothballing it not to mention what other costs may arise given conditions of the provincial government grants?
Put the burden on taxpayers with another 2.24 per cent increase in property taxes for 2025 on top of the 5.1 per cent annual hike that residents are already facing?
Try to sell it? And to whom for what price? And at what future cost to the City in terms of lost opportunity and events.
As council acting as Economic and Finance Standing Policy Committee unfortunately heard, raising taxes is the most palatable option for City finances – which means taxpayer finances.
An immediate tax increase, Mathews told the SPC, aligns with a long-standing fiscal policy of council of such action which maintains the corporate budget contingency for the current budget cycle and the integrity of the multi-year budget process as well as MRSR surplus allocation for council’s ability for one-time allocations for the 2028-31 budget deliberations.
To bluntly put it as one politician off the record told me when the Exhibition situation came to light late last year, council and administration are being essentially served by the LDE an excrement sandwich with the choice of mustard or ketchup as condiments.
But here’s a thought that came up in an email by a reader: is it possible to implement a surcharge at the facility to help pay down the deficit? Is this potentially an option the City could explore? Or would such a tax go against any funding agreements with the Alberta government?
Is corporate sponsorship an option for the facility? It’s worth a thought given the mouthful of a name the Hub is, a name which in itself has generated public criticism. Can the money the City committed for the failed Memorial Cup bid be put towards paying next year’s $4.1 million operating expense?
All eyes are going to be on council Tuesday when they meet. And I’m sure taxpayers are ready to pounce if council votes to approve an additional property tax increase.
It should be obvious that such an action could be political suicide for any council member who has any intention of seeking re-election in 2025, regardless of the fact this council is not itself to blame for the LDE situation. But all nine will be blamed by residents who don’t fully follow the situation and who just see “tax increase.” But are there really any other viable options? We’ll find out when Mathews presents his own report.
This is a brutal situation for all of us and how did it come to pass? That question is on the minds of many in this community who are justifiably livid.
As the Deloitte report said, the team analyzing the LDE operations can’t verify if city council and administration received supporting analysis requested prior to making a decision to approve funding.
“While not included in the scope of the original CIP submissions, LDE did not proactively communicate more than $27 million in additional costs ($11.3 million for demolition and $15.7 million for parking refurbishment) that were uncovered by the City despite the significant impact these unanticipated costs would have on LDE’s financial sustainability,” said the report adding “there are indications that initial project budgets significantly underestimated the costs of pavilion demolition and parking lot refurbishment due to a lack of diligence.”
The report also says there were a lack of procurement processes surrounding the architect/designer and project manager which were procured through sole-source contracts dating back to as early 2013. It notes project budgets and forecasts were inconsistent and lacking in detail and initial estimates for parking lot refurbishment and pavilion demolition costs weren’t supported by third-party quotes or appropriate diligence.
There was also a lack of documented approval of functional design changes.
I know for fact there was no representative of city council on the LDE board before any building plans or scope of project were brought forward to that board. Yes, this is fact.
Why wasn’t there representation? And would it have mattered? These are unanswered questions, both of which from taxpayers’ perspectives are valid.
Should previous councils and administrations have ensured there were some form of checks and balances in place to provide the City with a bit of assurance? Or were they sufficiently convinced by “experts” who ever they may be, the Hub was good value for the city?
But was there good value? Why was there no consideration for livestock in the building since the LDE is, after all, an agriculture society?
During a media tour we heard how wonderful and innovative the concrete flooring in the grand exhibition spaces was. But with no floor drainage, exhibitors at the home and garden show couldn’t have water features and nor could a wildlife expo. And water obviously is needed to clean off cow poop.
I also heard from vendors at the farmers market who needed plugs for freezers there were limited choices. And I also know there were problems with the angle of the back entrances for vendors’ trailers and trucks which limited their access.
And what about the much-ballyhooed custom-built furniture and fixtures that were created by recycling trees cut down on the site?
That cost $331,568 and as I understand from a media tour it was to bring part of the Exhibition’s past to its future. Wood from the old bleachers was also repurposed in the new building.
Taxpayers would surely have loved these tokens of the past but they would love it more if they weren’t on the hook for millions of dollars in operating costs and a loan that could cost them up to $35 million if council doesn’t approve Administration’s plan to refinance the loan.
Residents would even be more happy if they weren’t facing yet another property tax increase to be reminded of the past.
The recommendation by administration is to use a lump sum grant of $7.3 million in City grant funding to reduce the principal borrowing, allocate up to $10 million from the Municipal Revenue Sustainability Reserve and approve a 10-year internal loan of $10 million from the MRSR with funding from the Pay-As-You-Go plan based on the prevailing provincial lending rate at time of borrowing, bringing the total cost to $20 million – which would mean a savings of $15 million and a shorter loan term.
And as one person brought up to the SPC what about that gargantuan green space out front which I recall hearing was to create some sort of visual continuity with Henderson Lake. Are people actually going to picnic there? Uh, maybe if there had been some trees. But we know where the trees are.
And what about another incredible lack of judgement – right after the formal opening of the Hub in the summer of 2023 even though millions of dollars were owed on the building, management decided to open the doors to Whoop-Up Days for free to crowds. They also allowed free parking.
Why? That was an opportunity to generate revenue, an opportunity for which there was no excuse to miss. And how could the Exhibition boast Whoop-Up Days had record crowds, which would be a given since admission was free, when there were no crowd counters at the door. And there weren’t.
I was in that building multiple times covering events and nobody – not a soul – was counting heads. Instead we had to deal with over-zealous rent-a-cops searching people which I recall delaying the start of the powwow and which was a real pain for those of us in media with clearly marked passes hanging around our necks who were there to cover events.
But management boasted about record crowds? Keep the sandwich to yourselves because I know what’s in it. And so does everyone else including council and administration.
And what about all the booze, televisions, rodeo tickets and other unjustified expenses claimed by the CEO and board? What was the point of those? We deserve an answer for that question.
And why is the Economic Crimes Unit of LPS involved? That’s another giant red flag about this situation.
This is a mess and one way or another, we taxpayers are on the hook for it. And our present council, especially those weren’t on council when the project was approved, are going to take the heat for the mess. But even those were on council, given the contents of the report, apparently didn’t get the information they needed to make an informed decision.
Could they have done better? Could previous administration have done better? Perhaps but ultimately the responsibility for this falls upon the process and the communications made to those in charge of city finances.
And ultimately, one way or another residents of Lethbridge are going to pay – for a very long time.
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And during the time of construction of over two years not one, not one curious council member thought to maybe do a little digging to see what was going on inside the board and construction? Hmmm, lack of oversight, no question. This place was touted as a “build it and they will come” Field of Dreams hysteria. Only this time a different bunch of ghost showed up with an over priced non functional building with no money. As taxpayers we must surely be disappointed in the integrity of those in the designing, architectural drawings, constructors, sub trades etc., as none as it appears had even the slightest inkling that this was out of control and if they did chose not to publicize it. Nope.
Consider that Lethbridge immediately stop trying to sell itself to the world as a destination with no flights to an airport, i.e., memorial cup bid issue and cater to the 250000 in the current trading zone. However, there will be no miracle due to the fact the Agri Food Centre has no agriculture and no food.
pretty sure it was another of the too many and too usual pocket liner white elephants that city hall has endorsed for too long.
but, never an audit with city hall.
wonder how many drive their cars to that fashionable white elephant bus depot downtown, park, and then wait to take a bus to their destination, which would likely add about an hour to their trip relative to driving straight to wherever. lol
Maybe Middleton-Hope can put a fence around it. Problem solved!
haha! but, might you mean a wall?
Council rejected having solar panels on the new building, which would have lowered operating costs. Now there is a massive amount of unused space behind the new building, where the city is being forced to consider expensive options to reclaim the old Exhibition space. One of those options could be a municipal solar power installation, something that would generate funds for the city and for residents. It worked well in Stirling, it can work here.