Convention centre gets another bailout

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This article was published 21/02/2019 (1888 days ago), so information in it may no longer be current.

City hall is once again bailing out the downtown convention centre.

Council is being asked to authorize almost $1.2 million from the downtown marketing reserve – also known as the hotel room tax – to cover the convention centre’s inability to make payment on a $17-million loan tied to the facilities’ expansion.

In a letter to council, Mike Ruta, the city’s chief financial officer, states the convention centre will be unable to make its annual payment for 2018, which is due March 31.

City hall had anticipated the convention centre’s financial difficulties back in 2015, when council authorized its CFO to dip into the downtown marketing reserve to make annual payments when the convention centre’s finances fall short.

It’s the second time this year council is using hotel tax revenue to pay off convention centre debt. Last month, council authorized $2.1 million from the marketing reserve account to pay off a portion of the cost of washroom renovations and building code upgrades in the original portion of the building.

Council also agreed to take $1 million annually out of the marketing reserve account to cover half of a second loan, for $16-million, tied to the expansion project.

The convention centre is owned by the city, which is responsible for its debt. The provincial government shared in the cost of the expansion through a tax-incremental-funding (TIF) grant.

The latest bail-out, which council will consider at its Feb. 28 meeting, includes $987,891 to cover the convention centre’s 2018 repayment for the $17-million loan; and, an additional $190,802 towards interest payments for 2018 on the $16-million loan.

Part of the convention centre expansion was financed with two loans totalling $33-million – payback on the $17-million loan was to be generated from new revenues following the expansion; and the $16-million loan was to be repaid equally by the province and city hall from new taxes from a hotel that was planned for 220 Carlton Street.

However, a delay in securing a hotel – originally set for 2016 but now planned to open in early 2022 – meant the convention centre had no additional revenue to cover the $17-million loan. The delay in the hotel construction, meant there is no tax revenue for either government to cover the $16-million loan. City council agreed in 2015 to use the downtown marketing reserve funds to make those payments until the hotel is built, which is expected to generate more bookings for the convention centre.

The convention centre is required to replenish the funds taken from the downtown marketing reserve account once its revenue situation improves.

The city’s share of the $16-million loan was to be paid out over a 25-year period but, with the accelerated plan – which involves an additional $1 million annually from the marketing reserve – it will be paid out over 11 years.

aldo.santin@freepress.mb.ca