LDE will continue to operate Agri-food Hub and Trade Centre, property tax increase deferred

LDE to continue operating Agri-food Hub and Trade Centre

The Lethbridge and District Exhibition (LDE) will continue to operate the Agri-food Hub and Trade Centre for at least for the next two years.

Lethbridge city council voted 6-2 on Tuesday night to continue with operation of the $70.7 million facility, with no additional tax increases next year.

Council approved a resolution to defer a 1.4 per cent property tax increase to 2027.

In order to cover the $4.1 million in annual operating costs, the city will use $2.6 million of one-time funding for future needs and $1.5 million of corporate contingency.

"It's a situation we didn't want to be in, but we're here now, what do we do? We need that building to stay open," said Mayor Blaine Hyggen following the 12-hour meeting.

By deferring the tax increase and using existing contingencies, council will be able to have balanced budget in 2025 and 2026.

"When you raise the tax immediately you have all those other safeguards," said Darrell Mathews, chief financial officer with the City of Lethbridge.

"Right now, we're using those, which maintains it for the community, but it brings in those other risk pieces inside of there that if something else comes along we've used those dollars."

With the current budget set to come up for renewal in 2027, having the tax increase deferred to 2027 will allow the future city council to deliberate and factor in the 1.4 per cent increase into the 2027-31 budget, with a hope that the increase could be eliminated if revenue at the centre continues to grow.

"Having the tax increase right now, there was no options," said Hyggen. "Putting it off, we can realize some savings over the years."

"I wanted to have the chance to look for those efficiencies, cost-savings or reductions in different departments and it give us the opportunity over the next few years to look into that."

However, with inflation continuing to rise, Mathews says deferring any tax increase comes with high risk that the 1.4 per cent figure could grow over time, meaning residents could face an even higher amount.

He said depleting available contingencies from the current budget means council will no longer have available funds for one-time expenses that may arise before 2028, such as the Memorial Cup bid or other organizations and programs in need of funding.

During Tuesday’s meeting, council also passed a motion to refinance the outstanding loan of $17 million related to the construction of the Agri-food Hub and Trade Centre.

The city will refinance the loan from a 30-year to 10-year term, and move from external to internal borrowing to save about $15 million in interest rates.

The decision made by council follows a third-party review done by Deloitte Canada to find what went wrong in the financial fallout of the LDE.  

The review revealed significant issues across five key areas: strategy and planning, project execution, governance, use of funds and council communication by LDE throughout this project process. 

The report, which was shared at a standing policy committee meeting in November, suggests unclaimed management expenses, unsupported strategic plan targets and inconsistent project budgets to be leading factors behind the LDE's financial troubles.

In 2023, it was discovered that despite the project being completed, the LDE was experiencing significant financial challenges and was on the verge of having to shut down operations.

The LDE approached the city and province for additional funding for construction but was declined.

As a result, the LDE board was dissolved last December, and the city and Lethbridge County took over operation.

This review was a part of the Memorandum of Understanding (MOU) signed between the City of Lethbridge and LDE earlier this year, which also included the city agreeing to fund the 2024 operations and assume governance of LDE. 

"I think about things like Whoop-Up Days, Ag Expo, Home and Garden Trade Show and the Farmers' Market, these are events that the community absolutely loves, and we wouldn't know if this building was closed down, where would those take place? Would they take place? That's hard on the community," Hyggen said.

Because of the agreement with the Government of Alberta for funding, the LDE must maintain the facility until 2027 before it could be put up for sale.

The Deloitte report has been turned over to the economic crimes unit of the Lethbridge Police Service (LPS) to investigate this matter.

The decision from council does not affect the approved 5.1 per cent tax increase for the next two years that was approved in 2022.