City-owned CMLC may be removed from overseeing construction of Calgary arena

Earlier this week, city council approved a change to its arena deal with the Flames, releasing no details as to what that change might be.

The $550-million arena deal between the City of Calgary and the owners of the Flames was paused in April over "a difference in the current budget estimate and the program requirements for the facility."

"The costs have gone up, and ultimately, we've got to figure out what we want to build here," Calgary Mayor Naheed Nenshi said Tuesday, adding that the change doesn't involve money.

Though no details were released after Tuesday's council meeting, multiple sources tell CBC News that the city-owned Calgary Municipal Land Corporation (CMLC) may be removed as the project manager overseeing the construction.

The CMLC said last week it was not involved in the arena talks between the city and the Calgary Sports and Entertainment Corporation (CSEC), which owns the NHL hockey team.

Concerns about additional funding

Both parties will pay the CMLC an ongoing fee over five years, totalling $8 million.

Coun. Jeromy Farkas said he would be concerned if the CMLC were removed, given its track record of delivering projects in the East Village.

But in addition to that, Farkas said he was worried that council may soon be tapped for more funds, adding that the reasons for that need to be made public.

"So I think why the budget has gone up is really relevant here for Calgarians, in terms of whether or not they're willing to accept putting more money in," he said.

Coun. Jeff Davison said even if additional funds need to be allocated to the project, the city would recover its additional costs over the 35 years of the agreement.

"The project is not in jeopardy. This is simply about taking care of business," Davison said. "There will be no property tax increases to Calgarians because of the outcome of this deal."

Earlier this week, Nenshi said the start of construction of the arena is likely to be delayed. Construction starting by Aug. 1 is a term of the agreement, but both sides can waive that date.

Documents released by the City of Calgary in January 2020 include a clause that obligates the two parties to split the bill of a cost overrun, up to a maximum of $25 million.

Given that, the city could contribute up to an additional $12.5 million to match whatever CSEC may add to cover the cost of the arena.

Should the city add more to the deal, sources tell CBC News that there may be a discussion forthcoming with CSEC on increasing the "facility fee" charged on every ticket in the new building, which would allow the city to recover its funds.

Council is expected to discuss the deal again on July 5.