Sask. city borrowing millions to cover missing donor cash for massive new arena

The new Aquatic and Arenas Recreation Centre - View of the wave pool and water slides area. (Source: City of Prince Albert)

Saskatchewan’s third-largest city plans to borrow an additional $18 million to cover funding gaps for a major arena and aquatic centre.

Prince Albert’s city council approved the loan on Monday, adding to the $46 million in debt already incurred on the project, which has faced cost overruns.

The city said this new loan wasn’t due to an increase in the project budget.

In a statement released before the meeting, city manager Sherry Person said administration failed to consider that fundraising commitments would be paid over several years, rather than in a lump sum.

Mayor Greg Dionne told councillors he’s confident the $18 million loan would be covered by donation money already committed to the project, but not yet paid.

“These are business leaders or community leaders that are stepping forward and going to donate to us millions of dollars towards this project,” he said.

“But they've asked us, ‘We're gonna give you a million dollars, but can we pay you over the next five years?”

Dionne said these pre-existing commitments are the reason the new loan has a five-year repayment schedule, rather to the 30-year timeline on the $46 million in debt.

In January, the city said the project was over halfway complete. The new aquatic centre and arenas will house two NHL-sized rinks with seating for nearly 800 people. The 51,500 square-foot aquatics area will feature a 9-lane competitive pool, a wave pool, lazy river, whirlpool and two water slides.

The city expects the recreation centre to act as the cornerstone of a new commercial district, with plans already in place for an event centre at the site and a new hotel already built.

Councillor Terra Lennox-Zepp was the main opponent of the motion on Monday evening.

She pointed out the city was paying $1.8 million per year in interest on the $46 million in debt already incurred for the project.

“That's not a piece of lumber in the ground. That's not an hour of labor. That's just the interest we're currently paying for that for one year only. It would be financially irresponsible of us as a city to incur a further $18 million loan on this project,” she said.

“It would absolutely be financially irresponsible of us to incur more millions onto this, this debt, and we have no capacity to pay for it.”

Lennox-Zepp also expressed concern over a $700,000 contract to a company to secure sponsors for the massive facility, and a $4 million commitment for architecture work for the as-yet unfunded 4,500-seat event centre.

“That's just the architectural work. And we have absolutely no financial capacity, no plan to pay for and to build that 4,500 seat event center. So a major concern here.”

She advised council to put the project on hold until the city was in a better position to pay for it.

Ward 5 councillor Dennis Ogrodnick said it would be “totally irresponsible” to stop the project now.

“You can’t stop a project; it’s a year away from opening and you want to stop and give up on it? No. This is the responsible thing to do — we need to follow through on this,” he said.

(Source: City of Prince Albert)

Councillor Blake Edwards scoffed at the idea of pausing the project.

“We’ve got buildings being built in progress, but let’s halt it and let the work sit still? … That’s the most ridiculous thing I’ve ever heard.”

He said many Prince Albert families are driving an hour to Melfort to use that community’s wave pool because the city doesn’t have comparable facilities.

Tony Head supported the motion to borrow the money, but he did express concerns that city administration had earlier told council it expected $20 million from donors this year, and only recently revealed it would just receive $6 million of that in 2024.

“That’s a huge oversight in my opinion,” he said.

“I’m just going by what the report had said. So there was some misreporting from possibly the company, possibly administration … because that’s not what we were told.”

The motion carried. It will bring the city’s total debt to $115.6 million, just $4.4 million short of its borrowing limit.

In 2022, the city applied to the provincial municipal board to raise its debt limit to $120 million up from $75 million due to the rising costs of the project.