City council approves emergency funding for struggling Lethbridge event centre
Four months after its grand opening, the city of Lethbridge says it has to step in to make sure the Agri-food Hub and Trade Centre stays afloat.
"This is not where we want to be, but we're trying to make the best of a bad situation," said Coun. Belinda Crowson.
The construction of the new event centre southeast of the city's core next to Henderson Lake went $7 million over its $70.6 million budget.
This left the Lethbridge and District Exhibition (LDE), the organization that runs the facility, in "dire financial shape" going into the new year, according to former CEO Mike Warkentin.
After seven hours of discussion behind closed doors on Monday, city council approved up to $1.2 million in funding and a new interim governance board for the LDE.
Council also voted to have city administration conduct a third party review of the organization's structure and finances.
"It gives us that opportunity now to get a better look at the financials [and] to have our administration dig deep in to find the answers to the questions that we've had for quite some time," said Mayor Blaine Hyggen.
The city will also develop and sign a memorandum of understanding with the LDE.
Pandemic, high interest rates at fault for budget overage
In November, Warkentin asked city council for $7 million in emergency funding and loan deferrals for the LDE.
Warkentin — who parted ways with the organization Monday — cited increased interest rates, higher construction costs and the tourism industry's slow rebound from the pandemic as reasons for going over budget.
The city then requested the province split the cost of a $2-million cash injection, which it declined, citing concerns about the viability of the facility's business plan.
"They had concerns with the business plan, that was the same red flags that we had to be very honest, at a community level," said Hyggen.
The province has put $27.8 million toward making the project a reality, but the bulk of its capital came from the city. The LDE received $25 million and a $17.8 million loan it is expected to pay back over 30 years.
Third party review necessary, says mayor
Hyggen says the city does not directly run the LDE, but it has a duty to protect its investment.
He says a third party review will give council the information it needs to understand how the situation came to be, and how best to turn the facility into a successful business.
"We didn't have the true documents that we thought we needed to move forward. And being stewards of the taxpayers dollar we didn't want to give dollars on behalf of taxation without having all of the information."
Hyggen was on council when the budget was approved in 2020. He says, based on available information at the time, the business plan looked sustainable.
While the review process itself could reach up to $1.1 million in funding and staff costs, the mayor believes it's necessary to stop further spending down the line.
The interim governance board will be made up of members of city administration and members of the Lethbridge County administration, if that council approves.
Former members of the LDE board will be excluded from joining, making this a "clean slate," according to Hyggen.
Crowson says she understands community frustration with the project.
"I don't know a single member of council who isn't as angry as and frustrated as many members of the community are," she said.
But the review is a chance to understand what the facility could be.
"They will look at this very broadly. They will think of it not just as the exhibition, that entire Henderson area, the entire community of Lethbridge, and they will bring us back some very smart ideas for how we can move ahead on this," said Crowson.
She believes a back-to-basics approach is what's needed going forward.
"Let's use this site and let's have an amazing future for agriculture based on the decisions that are coming forward from a catastrophe right now to an amazing future to come."
