Calgary’s Mayor counters criticism of failed Flames arena deal

Mayor Jyoti Gondek has hit back at criticism of the City of Calgary’s role, including from the Premier of Alberta Jason Kenney, in the collapse of the project to deliver a new arena for NHL ice hockey team the Calgary Flames.

The Flames have begun planning for their immediate future at the Scotiabank Saddledome after confirming earlier this week that a deal for a new arena had been officially terminated.

Calgary Sports and Entertainment Corporation (CSEC), parent company of the Flames, last month exited the C$634m (£368.5m/€441.2m/$498.7m) project, citing growing concern over the rising costs of its side of the venture.

CSEC confirmed the news in a statement on December 22 after Gondek (pictured) earlier said that the Flames’ ownership group intended to exit the Event Centre Project, which has had its share of contentious moments since being first unveiled in 2019.

When the agreements were first executed back in December 2019 the parties agreed to a 50/50 cost sharing arrangement with respect to the design and construction of the new Event Centre. In July 2021, with these costs increasing to C$608.5m, the City informed CSEC they were not able to fund their 50% share which, under the terms of the Project Framework Agreement, would have resulted in termination at that time.

Instead, CSEC agreed to fund a disproportionate share (C$321m to City’s C$287.5m) and agreed to accept the risk of reasonable future design and construction cost increases related to the Event Centre. The project was suspended in April due to a “difference” in the budget estimate and the program requirements for the facility.

CSEC last month said the most recent cost estimates placed the total cost of the Event Centre at C$634m which meant CSEC would be responsible for an additional C$25.5m of cost. The resulting cost sharing would have been C$346.5m for CSEC and C$287.5m for the City and, CSEC would continue to be responsible for further cost increases related to the construction of the Event Centre.

The collapse of the deal has caused much debate, with Kenney weighing in this week, stating his disappointment that the City “decided to change the deal at the last minute,” adding that they responded to worries about inflation by adding “even more costs and more delays.”

The mounting criticism has led to a response from Gondek, who told the Calgary Herald newspaper that it’s been “abundantly clear” since the summer, when the Council agreed to change certain aspects of the original C$550m deal, that CSEC would need to take on additional overruns.

Gondek outlined that CSEC was asked to pay an additional C$9.7m related to infrastructure and climate change mitigation as a part of approving the arena’s development permit. She continued: “As a Mayor, I have no ability to negotiate something on my own. And let’s not forget we are not in a negotiation on this project. We were coming to the final stage.

“If the Premier is unaware of the process of how a land development project gets to the development permit process, I’d be happy to discuss it with him. There were no surprises.”

In relation to CSEC’s role, Gondek said: “In my opinion, in 2021 we tried to fix a deal that was struck pre-pandemic and make it something that can be managed during the pandemic… and I think we have reached the stage where CSEC understands that there’s too much uncertainty for this particular deal to move forward. And I can respect that decision.”

Gondek also disavowed comments from her Chief of Staff, Stephen Carter, who suggested Naheed Nenshi, who Gondek succeeded as Mayor in October, must share blame for the end result. She added: “We need to move forward. And I am incredibly disappointed that my chief of staff would make a comment that this is the old Mayor’s fault. It is not. A council decision was made in 2021 that was not made by the mayor alone. And it’s unfortunate that deal did not work for both parties.”

The arena deal is due to be discussed by Calgary City Council at its first meeting of the year on Tuesday.

Image: Bittabola/CC BY-SA 4.0/Edited for size