Arena costs could climb by millions
Jordan Press
Local News - Monday, February 12, 2007 Updated @ 12:21:54 AM
By Jordan Press
Whig-Standard Staff Writer
The downtown arena’s budget may need to be increased to pay for unexpected expenses.
In reports being released today, city staff will say costs for the sports and entertainment centre are expected to push the budget above the original $41.8 million approved last May.
Environmental cleanup, furniture and concession costs have all contributed to the overrun, which councillors have heard could be as high as $3 million. Construction began in October.
“No comment,” said Mayor Harvey Rosen. “You got that information from an unauthorized source. As far as I’m concerned, it doesn’t exist.”
Rosen said he hasn’t seen the numbers and wouldn’t comment about “anything that may or may not have been an in-camera matter.”
In November, when the new council met for an information session with staff, it was suggested costs may increase.
In a report to politicians, staff wrote that the city agreed to cover the cost of disposing contaminated soil and water from the North Block site.
“This may have a greater financial impact [than] anticipated,” staff wrote.
Design changes could also be required to accommodate the operator’s needs when it came to concessions, the report stated.
The environmental costs were confirmed in the December report. That month, the city had to rid the property of more-than-expected amounts of ground water, said commissioner of growth Cynthia Beach.
“The report that’s going to go to council will say there will be challenges in those areas,” Beach said.
Neither the contingency fund nor the extra revenues will cover the projected overruns, Beach said.
“We’re not over-spent at this point,” she said. “We’re simply projecting ... that we would probably have to spend more money than we currently have approved.”
Beach wouldn’t talk about the amount that may be needed, but said the contingency fund wouldn’t be enough. The city has used nearly half of the $1.5-million contingency fund to cover additional costs so far, she said.
“It wouldn’t be ideal at this point in the project to have the contingency fund drained,” she said.
The project and its costs were the focus of public debate during the recent municipal election, when some candidates suggested costs for the project would have to increase.
One councillor said that politicians shouldn’t necessarily have to sell the increases to the public.
“Maybe we cancel it,” said Councillor Bill Glover. “It’s a question of where do you draw the line.”
During the November information session, staff noted the cost to cancel the arena project at the time was estimated to be $16.6 million. Of that,
$13.3 million would come from taxes, staff said.
Glover and Councillor Rob Matheson penned a detailed motion last month that outlined a long list of items staff had to produce on the finances for the arena.
Council will have to look at all options for the project, including cancellation, said Matheson, who said he was “miffed” about the overruns.
“All along we’d been told everything’s rosy and all good to go,” he said. “I guess this validates our concerns.”
Councillor Lisa Osanic said she and other councillors expected for months to hear of overruns, but didn’t know if and when numbers would come out.
Councillor Ed Smith said if there is an overrun, the amount would be financed over 40 years like other debts on the arena. Smith said it’s not unusual for a large project to come across unanticipated costs.
“This thing is being built for the memories it will create,” Smith said. “We will just have to deal with it. The public will have to deal with it.”
On Wednesday night, council will reconvene for budget deliberations, delving into the city’s capital budget of $43.3 million and debating what to do about the arena.
jpress@thewhig.com