City of Regina one step away from financing REAL's debts to keep it afloat
Regina's executive committee is endorsing keeping Regina Exhibition Association Limited (REAL) as an entity with a modified mandate — and possibly approving a bailout in the range of $7.1 million to $11.1 million in next year's city budget.
The motion passed on Wednesday also recommends REAL outsource some of its events to third-party private companies to reduce financial risk.
The proposed mandate to keep REAL afloat will now move to city council's June 26 meeting, where members are expected to discuss and decide on the recommendations put forward by the executive committee. If passed next week, that would mean an approximate mill rate increase of two per cent.
REAL is an arm's-length municipal corporation that operates Mosaic Stadium and the Brandt Centre. The city administration said the ultimate responsibility for REAL's financial position falls on the City of Regina because of the city's position as the sole shareholder in REAL.
"The situation has created, I would say, a lot of tension and angst among people, and I am super proud of how administration and REAL were able to work together through it," said Regina city manager Niki Anderson, who also serves as the chair of the board of directors for REAL.
The executive committee was presented with other options: dissolving REAL and contracting a private third-party organization to oversee REAL's operations; or the city assuming all of REAL's responsibility. The committee voted 7-1 in favour of giving REAL a financial boost.
A report prepared by MNP for council last year indicated that as of Sept. 30, REAL carries $17 million in debt.
REAL is required to pay $8 million, or $6.5 million plus taxes, to the CRA for accessing the Canada Emergency Wage Subsidy — a federal program offered during the COVID-19 pandemic for which REAL was later assessed to be ineligible.
In addition to that payout, REAL requires an injection of money to help offset its operating losses in the last two years: $5.1 million in 2022 and $2.9 million in 2023.
A provincial casino grant to REAL expires in 2026, exacerbating its financial woes. Beyond 2026, MNP said, REAL will have to scale up significantly in order to stay afloat. In relation to the financial performance of hosting the 2022 Grey Cup, the report said, REAL would "need to host an equivalent of more than four to seven Grey Cups per year."
Craig Kutarna Gates, a representative for MNP, was present at the Wednesday meeting to present the report and suggest ways forward. He said he doesn't see REAL being able to service that debt, with REAL also requiring more money for future projects.
"For REAL to be sustainable, their capital program needs to be funded by the city," he said.
The city administration's report to the executive committee said there's no option that improves REAL's immediate financial requirements.
Gates proposed a change to REAL's mandate. He said it wasn't possible to quantify some statements from the previous mandate.
"Without providing a specific granularity to them, it leaves a lot of space for the board and the management in terms of being accountable for what is required," he said.
City council will also have to make a decision on the process to appoint a new board of directors. REAL is being operated by an interim board after the council had voted to remove the organization's previous board in November.
REAL said it would first have to appoint a permanent board and CEO before looking at making any changes to its business model or outsourcing any of its requirements.
Ward 7 Coun. Terina Nelson said she's looking forward to REAL's work in the community.
"We're moving forward. This isn't about 'gotcha' and what happened in the past. It's about making it the best it can be for the city," she said.
