Lethbridge and District Exhibition financial fallout: potential property tax increases, millions in loans

LETHBRIDGE -

Lethbridge residents could see a property tax increase as the City of Lethbridge continues to deal with the financial fallout of the Lethbridge and District Exhibition (LDE).

In a presentation made to the city's economic and finance standing policy committee Wednesday, chief financial officer Darrell Mathews said in order to operate the new Agri-Food Hub and Trade Centre, it would cost $4.1 million per year—roughly $11,000 a day.

To deal with the increase in cost, city council is now considering increasing property taxes by 2.2 per cent in 2025 on top of the already approved 5.1 per cent.

Broken down, the tax increase would be about $60 per year for a single-family residence.

Mathews' presentation showed there is an outstanding bank loan of $17.3 million with a set 5.1 per cent interest rate, with a total cost of $30 million still needing to be paid.

"We've looked at all these different scenarios and understand it's never a great thing to have to raise taxes, especially recently with inflation and so forth; it's not an ideal situation," Mathews said.

"Unfortunately, this is one of those times where this is before us and council has to make a decision."

The increase would help cover the shortfall and the current operating costs of the new facility.

According to Mathews, if council chooses to close the facility, it will still cost $4.1 million up front, along with roughly $2 million per year going forward to cover debt and security and maintenance of the centre.

Administration is recommending council continue to support the LDE.

The city looked into repurposing the existing north pavilion with turf for recreational use, but capital costs to complete that would be $14.5 million.

A second study looked at reusing the north pavilion to accommodate livestock, but that came with a cost of $12.5 million.

If the city is to keep only the west pavilion, which is currently being used for storage by the LDE, the estimated capital cost is $6.6 million.

Mathews says if the pavilions were demolished, the parking lot would be reconstructed, but that project has a price tag of $25.5 million.

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

Lethbridge residents could see a property tax increase as the City of Lethbridge continues to deal with the financial fallout of the Lethbridge and District Exhibition.

The presentation comes following a Deloitte Canada third-party review that revealed significant issues across five key areas:

• Strategy and planning;
• Project execution;
• Governance;
• Use of funds; and
• Council communication by the LDE throughout this project process.

The report, which was shared at Tuesday's committee meeting, 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.

Last December, the LDE board was dissolved and the city and Lethbridge County took over operations.

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

The report suggests changes be made to ensure council enhances policies and procedures regarding financial risk.

"We will be working toward making sure there's adequate safeguards in place and so forth, so that this doesn't happen again," Mathews said.

Earlier this month, the LDE reported a total deficit of $2.2 million.

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

LPS says to protect the integrity of the ongoing investigation, no further information will be released.

The presentation and report will go before city council for deliberations and final approval.