'Huge win for ratepayers': Flames agree to take on cost overruns, CMLC to be replaced as project manager

CALGARY -

The City of Calgary released confidential material related to the new arena project Monday afternoon, but the mayor says council has already approved changes to the budget and the project manager. 

In 2019, the city and Calgary Sports and Entertainment Corporation -- otherwise known as CSEC, the ownership group of the Flames -- agreed to split the cost of a $550 million arena 50/50.

Mayor Naheed Nenshi said they found that the budget would no longer work as they proceeded with detailed design work.

"It was built on an inverted bowl design which is very, very steep and it may not have worked in that particular piece of land and it would've been bad for accessibility. As we got into further design work, we realized there are some other things," the mayor told reporters Monday. 

"For example, there weren't enough women's bathrooms and, in fact much to my surprise, the thought was that there may be too many luxury boxes and not enough seats for regular people."

The contract agreed to by council in 2019 included a clause that could see both sides split cost overruns up to $25 million.

Council has agreed to increase the city's share of the costs of the building by a maximum of $12.5 million, the mayor said. CSEC will also put up its share to match that city funding, but will also now be on the hook for any additional costs above the $25 million.

"Calgary Sports and Entertainment Corporation -- the Flames -- have agreed to take on all cost overruns and risk of constriction cost overruns. That is a huge win for ratepayers," said Nenshi. 

In the just-released documents, the estimated cost for the arena is now $608.5 million. Of that, the city will pay $287.5 million (plus up to $10 million for prep work), while the Flames will pay $321 million.

CMLC OUT AS PROJECT MANAGER

The mayor also said the Calgary Municipal Land Corporation (CMLC) will no longer be the project manager of the new arena. 

"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 -- and I think that's a very legitimate request," Nenshi said. 

A clearer picture of additional city costs is also coming to light, he added.

Site preparation and transportation costs for the area will also be the city's responsibility. 

"There are the initial flood and site mediation costs that were already in there that we will be looking at capping at $10 million dollars. CMLC is also, as they would for any developer, doing some utility relocation and so on. That'll probably be about $4.5 million to $4.8 million," said Nenshi.

It's not clear what additional transportation costs will be, though the mayor said he believe them to be minor. 

Council also ordered city administration to release confidential material about the deal to the public. That information is supposed to be available Monday afternoon, before council starts its debate on the changes.