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Agreement reached over Calgary arena cost overruns

Work on Calgary’s Event Centre, the proposed future home of NHL ice hockey franchise the Calgary Flames, is set to get back on track after an agreement was reached to cover cost overruns.

The project was suspended in April due to a “difference” in the budget estimate and the program requirements for the facility. The announcement was made by Calgary Municipal Land Corporation (CMLC), a wholly-owned subsidiary of the City of Calgary which is managing the arena’s development.

Under the new agreement, CMLC will be replaced in its current role by a company appointed by Calgary Sports and Entertainment Corporation (CSEC), the Flames’ ownership group. According to the Calgary Herald, newly released documents detail that the project’s total cost had been projected at C$620m (£355.5m/€417.7m/$493.3m) at the beginning of the year, compared to the C$550m initially proposed two years ago.

Further talks reduced this to C$608.5m, but the City and CSEC still needed to resolve who would cover these funds. They have now agreed to each contribute C$12.5m, with this meaning that the maximum C$287.5m of public money pledged under the initial 2019 deal will now be invested. The Herald said CSEC will bear responsibility for any further cost overruns, potentially raising its contribution to C$321m.

Commenting on CSEC’s responsibility, Calgary’s Mayor, Naheed Nenshi, said: “That is a huge win for the ratepayer, and frankly, justifies everything else that’s being asked.”

The Flames have played at the Scotiabank Saddledome since it opened in 1983, but have long been seeking a new arena. The City will also have to pay the estimated C$12.4m needed to demolish the Saddledome, plus C$3m in land transaction costs and an estimated C$10m or more in “additional costs” for flood mitigation, site remediation and other work. This brings its total estimated contribution for the entire project up to C$312.9m.

In June 2020, CMLC announced the team that will develop the arena, with DIALOG and HOK chosen to lead the venue’s design. In January 2020, the City of Calgary revealed further details concerning its contentious agreement with CSEC to develop a new arena for the Flames, with Nenshi maintaining that the deal was a fair one for Calgary.

Plans for the new NHL arena were formalised in December 2019 after an agreement was signed between the Flames’ owners and city authorities. The 35-year agreement between CSEC, the City of Calgary and Calgary Stampede will keep the NHL team in the city for that time at the new arena.

December’s agreement came on the back of the City voting in favour of the project in July, just eight days after it was first unveiled. The scheme represented the third attempt to broker such an agreement in the previous four years.

CMLC was expected to reveal the final arena design this spring, with construction of the Event Centre set to commence in August and completion slated for May 2024. Nenshi has now said construction is expected to begin in early 2022.

Meanwhile, CMLC will be replaced as project manager by a new entity entitled CSE Development Management Corp. Nenshi said: “CMLC will continue to be helpful, but if the Flames are taking on the risk of all the cost overruns, they want the ability to appoint a project manager of their choosing.”

Kate Thompson, CMLC president and CEO, added: “We suggested many options and are supportive of where we landed with this new governance structure that provides a good solution for cost accountability and project delivery while ensuring the best possible facility for Calgarians.

“Ultimately, our interest is in seeing a great Event Centre delivered for Calgary and successfully delivering on our larger role leading the overall master plan vision, which remains our focus moving forward.”

Image: CMLC