Exhibition named 2024’s Newsmaker of the Year
By Al Beeber - Lethbridge Herald on January 2, 2025.
Herald file photo -
The Lethbridge and District Exhibition has been named the Lethbridge Herald's Newsmaker of the Year for the second straight year.LETHBRIDGE HERALDabeeber@lethbridgeherald.com
For the second straight year, the Lethbridge Herald’s Newsmaker of the Year is. . .drum roll, please. . .
The Lethbridge and District Exhibition.
Unfortunately, again this year’s award is a dubious one given the issues plaguing the LDE, issues which have been on the minds of taxpayers since 2023 when the LDE’s then management approached city council late in the year asking for financial support in the form of a capital grant of $6,742,315.72 or a capital grant in the amount of $2,081,093 to cover the unfunded capital of construction and a four-year debt deferral to be repaid on the back of the loan, totalling $4,671,309.72.
An independent third party review along with a the establishment of a new governance body were ordered in December of 2023.
On November 27, that third party review of the LDE’s operation was presented to the Economic and Finance Standing Policy Committee which consists of the mayor and all council members.
That report, which was handed over to the Economic Crimes Unit of the Lethbridge Police Service, painted what could be described as a sordid picture of expenses by former Chief Executive Officer Mike Warkentin and the board that were non-compliant with policy, additional costs and strategic planning that weren’t sufficient to support the major investment in the LDE and the total absence of a project charter.
The review was a key element in a Memorandum of Understanding signed by the City of Lethbridge and LDE earlier this year. That MOU included the City agreeing to fund the LDE’s operations in 2024 and taking over governance of the organization.
The modern, bright and massive Agri-Food Hub and Trade Centre, which opened in summer of 2023, cost $70 million with funding from the provincial and federal governments, the City of Lethbridge and Lethbridge County. Within a short time of it opening, financial problems were being experienced and by late fall of 2023 it was on the verge of shutting its doors.
Deloitte’s team spent five months reviewing background documentation during its review.
The report stated that prior to council approving $25 million of City funding for the Agri-Food Hub and Trade Centre project there were “gaps and inconsistencies in the communication of key information to council” throughout the process, with LDE management on numerous occasions referencing the work of a third party without providing critical context on the scope, assumptions and restrictions on use of that work.
The LDE started planning the Hub in 2013.
Deloitte 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.”
Earlier this month, faced with the prospect of raising taxes to pay for continued operating costs of the Hub, council after a marathon session voted to find other ways of paying for the LDE’s continued operations.
Residents could have been facing another 2.24 per cent property tax increase on top of the already scheduled 5.1 per cent hike scheduled for 2025. But council voted by a 6-2 margin to keep the Exhibition operational without a tax increase.
The recommended option of Chief Financial Officer Darrell Mathews was to approve that hike which he said would have the least financial impact on the City.
But council instead went with an option that will delay additional tax hikes until 2027 when residents will be facing another 1.4 per cent increase.
This option requires the allocation of $2.6 million of one-time funding which limits future budgets and allocates $1.5 million of contingency funding – which reduces financial flexibility and also contravenes City fiscal practices by using one-time revenues for ongoing costs. Due to the tax deferral, there is also a lack of budget certainty and this option may also require future service level reductions for that deferral.
Council also passed a motion to refinance the debt related to the construction of the Agri-food Hub & Trade Centre to save $15 million in interest during the next 10 years. This was recommended by Mathews to council acting as Economic and Finance SPC after it heard the results of the third-party review conducted by Deloitte Canada LLP recently.
The refinancing will change the loan from a 30-year term to 10 years and move external borrowing to internal.
The LDE’s financial problems came to the attention of council in March of 2023 when the LDE’s then-CEO Mike Warkentin came to an SPC requesting more than $4.6 million to demolish the three old pavilions on site.
Warkentin told the SPC that the original cost of the new trade centre had escalated millions of dollars over its projected budget.
At that meeting, Warkentin said the LDE was forecasting a loss for 2023 and was working to mitigate it. In November of 2023, when he returned to council asking for the City to immediately take possession of the pavilions and give it emergency financial assistance, he said the Exhibition expected to lose money for three to four years.
The hub was built in part with $27.8 million from the province of Alberta and $25 million from the City of Lethbridge. The City also backstopped a loan to the Exhibition of nearly $18 million while Lethbridge County contributed $2 million to the project.
In any other year the resignation of Lethbridge West MLA Shannon Phillips and the election of fellow NDPer Rob Miyashiro just days ago would have merited the top newsmaker honour. The potential water restrictions that were on the minds of southern Albertans until much-needed rains came could have been in the running as well.
But due to the past, present and the future impact of the LDE, it stood head and shoulders above all contenders.
28-27
Exhibition is loser of the year.
Usually a plaque with founders’ names adorns a Lethbridge monument. Please post a picture if there is such a plaque.
A naming of names for those responsible would help in keeping them out of Council positions.
Despite the report detailing all the mismanagement of the LDE and lack of oversight by our elected officials no one has taken responsibility, said I’m sorry or been charged. Looks like all we can hope for is lessons have been learned to avoid the reoccurrence of similar disasters. Then again, these are politicians.