Lethbridge & District Exhibition

Members of City Council received the first of monthly reports from Lethbridge & District Exhibition (LDE) today which highlighted the success of the recent Ag Expo and looked ahead to the summer Farmers’ Markets and Whoop-Up Days celebration. The report was presented at the Economic Standing Policy Committee (SPC), providing a transparent overview of the organization’s finances and operations.

Acting CEO Kim Gallucci, shared with the committee that while the November to February deficit of $341,194 is slightly better than projected, this reporting period does include Ag Expo, a major revenue generator for LDE. The initial budget projections estimated a $6.5 million shortfall in 2024 but work is ongoing to make every effort to reduce that.

“We are encouraged to see the strong fiscal practices and leadership now in place at LDE,” says Mayor Blaine Hyggen. “This gives a very clear, open and transparent picture of the finances and operations. City taxpayers deserve that information and need to be able to see the work happening to reduce the funding gap to make the Agri-food Hub & Trade Centre more sustainable into the future.”

Following the Memorandum of Understanding (MOU) signed between LDE and the City of Lethbridge earlier this year, City Council requested monthly financial updates on the operations of the Agri-food Hub & Trade Centre. This ongoing fiscal reporting will show a continuous cumulative update by month, giving a clear snapshot of where the organization is, at that point in time.

“We have made some positive changes that are definitely helping,” says Gallucci. “But we also know we will have some expenses over the next quarter related to Whoop-Up Days that will impact that bottom line. We want to manage expectations on what our monthly reporting will look like as there will always be a spike in expenses before revenues from those events come in.”

LDE staff continue to do everything they can to find efficiencies and secure new business to reduce the operating deficit. LDE has booked 25 new events in the last two months and is continuing to aggressively expand its reach and bookings into the future. There are currently 120 events in the 2024 fiscal year with the goal of reaching 200.

“We have restructured our team to best meet the immediate need of bringing in new business and expanding our reach,” says Gallucci. “We had amazing feedback from vendors at Ag Expo who are committed to coming back and we are seeing interest building in the community, across Alberta and throughout Western Canada for hosting events at the Agri-Food Hub & Trade Centre.”

On the operations side of the business, electrical deficiencies in the south parking lot have been identified which require immediate attention as LDE prepares for the outdoor events season. The work is estimated at $100,000 which will be funded through the lifecycle fee for service budget set aside by Council. LDE will provide an update on this work at the May Economic SPC meeting.

As part of the MOU, a third-party review of LDE operations was also initiated. City administration is currently working on this project which is in the procurement process. To date, no funds have been spent on this review.

A new governance structure is now in place at LDE including a new board comprised of administration from the City of Lethbridge and Lethbridge County.

In addition to LDE’s internally-produced events, the Agri-food Hub & Trade Centre has recently hosted successful high-profile rental events such as the Southern Alberta Home, Garden and Leisure show in March and the Southern Alberta Outdoors Show this past weekend. Upcoming events include the Lethbridge Handmade Market this Saturday, the High Level Innovation Conference and the 2024 Alberta E-Sports Championship, which both take place on May 3 and 4. For a full list of upcoming events visit: https://www.agrifoodhub.ca/agri-food.

Today, Lethbridge City Council voted 7-2 in favour of entering into a Memorandum of Understanding (MOU) with Lethbridge & District Exhibition (LDE). Subject to the Government of Alberta approving the proposed MOU, the agreement will create an interim governance structure comprised of City of Lethbridge and Lethbridge County administration. This group will focus on building a viable business model and governance structure for the organization and ensuring the Agri-food Hub & Trade Centre is best serving the region.

“Council’s job is to make decisions that are in the best interest of the entire community and that’s what we did today,” says Mayor Blaine Hyggen. “We have painstakingly weighed all of the risks and benefits of every conceivable scenario and at the end of the day, the approved MOU is the best option for Lethbridge and southern Alberta. We recognize that this is a fantastic facility with great potential, and it is vital that we make the most of this opportunity.”

In December 2023, LDE came to City Council with a letter of intent requesting operational, governance and financial support. Council directed LDE and City administration to develop an MOU for consideration at today’s Council meeting. The approved MOU sets in motion the asks in the letter of intent including:

• Redemption of shares from current LDE shareholders to the City of Lethbridge
• Appointment of an interim governance body made up of City of Lethbridge and Lethbridge County administration
• Third-party review of LDE operations

“While this is not a position we ever wanted to be in, the City is committed to making sure we do everything we can to minimize the impact on our community,” says City Manager, Lloyd Brierley. “The new LDE governance body will ensure the interests of residents are at the centre of all decisions moving forward.”

In early January, two full-time City staff were seconded to the Agri-food Hub & Trade Centre to provide interim leadership support to LDE. With additional financial planning support from the City, LDE has developed a revised 2024 operating budget, with an estimated current shortfall of $6.5 million per year. Considering reserves remaining within LDE and previously allocated funding, City Council approved $3.8 million in additional funds required for 2024.

Future decisions will need to be made on the decommissioning of the old pavilions and parking lot refurbishing.

“The reality is, we would have to pay this much, or more, if we didn’t sign the MOU and we would be in jeopardy of losing all of the benefits LDE and the Agri-food Hub bring to the quality of life in our community,” says Deputy Mayor, Mark Campbell. “From AgExpo and Whoop Up Days to our weekly Farmers Markets, the events and activities at the Exhibition create a vibrant and connected community. LDE creates jobs, both within the organization and all those contracted or associated with the events hosted there. The Agri-food Hub also attracts visitors and investors to Lethbridge. These are just a snippet of the many things that have a far-reaching positive impact on our city.”

Working together with the knowledgeable and dedicated LDE staff, the City has quickly gained better insight into the operations, limitations and opportunities at the facility.

“There has been a lot of information sharing and discovery over the last few weeks,” says Kim Gallucci, Interim Transition Leader at LDE. “The staff are working hard to successfully execute the many events happening at the Agri-food Hub, while at the same time, exploring new ideas to find efficiencies and additional revenue opportunities that will improve operations going forward.”

One of those discoveries is the understanding that the building is unsuitable to hold livestock, limiting some agricultural uses it was expected to be to be able to support. The interim leadership team will be working to explore other possibilities onsite to accommodate these types of activities.

“Despite the setbacks, the reason this facility was built, still exists today,” says Mayor Hyggen. “It is a world class amenity right here in our community. We’re committed to protecting the investments made by the City, the Alberta government and other funding partners while amplifying the benefits LDE brings to our residents. This is the best community solution moving forward.”

The Agri-food Hub & Trade Centre continues to be busy, hosting four major events in the last week alone. The Irrigated Crop Production Update, Alberta Food & Beverage Expo, Malanka – Ukrainian New Year’s Celebration, and the Provincial Agricultural Service Boards conference have combined to bring thousands of visitors to the venue. The facility will also host one of its signature events, a sold-out AgExpo, in February 27-29.

Today, Lethbridge City Council approved initial steps that would pave a new path forward for Lethbridge & District Exhibition and the Agri-food Hub & Trade Centre. In response to a letter of intent received from the Lethbridge & District Exhibition, City Council passed a resolution that will provide emergency interim resourcing to create stability and business continuity and explore a vision for the future.

“This is not a position we ever wanted to be in,” says Mayor Blaine Hyggen. “But the reality is, this organization is in financial trouble and change is needed. I am extremely proud of how City Council and administration have come together to take a leadership role in this change and work with the Lethbridge & District Exhibition to make that happen. We want to reassure the community, and those who have invested in this facility, that the Agri-food Hub & Trade Centre remains open for business.”

Today, Council put in motion some important transformations that will ensure the clarity and information needed is available to inform good decision making. It will also provide transparency to the community regarding how public dollars are being spent.

The approved Council resolution established the following directions:

• Emergency operating grant to the Lethbridge & District Exhibition of $250,000 allocated immediately.
  • The City will also set aside up to $950,000 in contingency, held under City control, for verified emergent needs.
  • This one-time funding is from the Municipal Revenue Stabilization Reserve (MRSR)
• Independent third-party review of the Lethbridge & District Exhibition
  • Regular reporting to Economic & Finance Standing Policy Committee (SPC)
  • Phase 1 report to be presented at the November 14, 2024 Economic & Finance SPC.
  • Administration to provide regular reports on any critical findings to Economic & Finance SPC as they occur.
  • Funding of up to $300,000 from the existing 2023-2026 Operating Budget
  • Funding of $850,000 for contract or term positions to support backfill of key City resources. This will be one-time MRSR funding.
• Interim governance body implemented, excluding any previous board members, to ensure a clean slate. The new governance body will be comprised of:
  • Administrative staff from the City of Lethbridge
  • Administrative staff from Lethbridge County (pending acceptance from Lethbridge County Council)
• Memorandum of Understanding to be developed between the City and Lethbridge & District Exhibition based on the recommendations contained within the letter of intent, no later than January 19, 2024 subject City Council approval at the January 23 Council meeting.

The City of Lethbridge and Lethbridge & District Exhibition have a long-standing relationship dating back to the early 1900s.

“There have been several points in our history where the City has provided support to the Exhibition,” says Councillor Belinda Crowson. “We have always found a way to work through it, for the benefit of our community, and I am confident this time will be no different.”

Lethbridge & District Exhibition appeared before City Council on November 28, asking for $6.7 million in emergency funding and the immediate takeover of the old pavilions (excluding the West Pavilion). The organization cited the impact of inflation, interest rates, supply chain issues and other lingering COVID-19 impacts as causes of the budget shortfalls. Additional capital costs, as well as the expense of maintaining the old pavilions, has depleted the Exhibition’s reserves which means they would be unable to move forward without additional financial support.

The City owns the land that the Agri-food Hub & Trade Centre is located on and contributed $25 million toward the construction of the facility which began in March 2021.

City Council today received an update on the repurposing review of the Main, North, South and West pavilions as well as Heritage Hall and Safety City buildings located on the Exhibition grounds.

Although a detailed analysis of the study is not fully complete, the initial information indicates the building structures and foundations are generally sound. However, approximately $1.6 million would be required to replace essential components in the next five years to address maintenance deficits and age-related needs. Examples include HVAC systems, roofs, windows, siding, electrical distribution systems and emergency systems.

An additional $6.4 million investment would be required for less critical needs including parking lot resurfacing and lighting as well as replacement of flooring and plumbing fixtures. Over the next six to 25 years, the buildings would require further investment in upkeep and renewal estimated at $30 million. This does not include any costs to repurpose these old facilities.

In light of the new facility with ample space on the same site, and based on the medium and long-term investment required, council heard that it may not be viable to retain the old buildings.

“We will continue to do our due diligence with the investigation of these facilities,” says Councillor Ryan Parker who brought forward the resolution to do the repurposing review. “Having a clear understanding and detailed analysis of these buildings will help Council in their decision-making process.”

In March of 2023, the Lethbridge & District Exhibition presented to the City’s Economic Standing Policy Committee seeking funding for the demolition of the old pavilions. In May, Council brought forward a motion to investigate the repurposing of the pavilions and a consultant was engaged to complete that work.

City administration received the extensive report on December 7 and will be fully reviewing it in the coming weeks to consider the findings in greater detail.

“There has been an immense amount of work undertaken over the last several months,” says Jason Elliott, Director of Corporate Services for the City of Lethbridge. “We now need time to go through that in more detail and evaluate what that would mean for the City.”

As per Council’s direction, the City’s Recreation and Culture team has also initiated a functional review of the buildings to evaluate potential recreational uses for the space and further exploring the needs of the community.

City Council voted today to provide emergency capital funding and a one-year deferral of loan payments to the Lethbridge & District Exhibition, contingent on the Provincial Government providing matching capital support.

Exhibition representatives were before City Council requesting $6.7 million which is required for the Lethbridge & District Exhibition to continue operating the new Agri-food Hub and Trade Centre.

Council approved a one-year deferral of loan payments owed to the City at a cost of $1.16 million if the Province of Alberta agrees to fund the second half of the $2.08 million capital grant request, before December 11, 2023. Council also approved up to $500,000 in interim operating funding to the Lethbridge & District Exhibition to maintain the old pavilions and to move forward with a third-party review of the Agri-food Hub & Trade Centre’s operations.

“The City of Lethbridge is fully supportive of the Agri-food Hub & Trade Centre and its success,” says Councillor Rajko Dodic, who brought forward the approved motion. “But we also have to be good stewards of the limited funds we have to support our community. All of the funding partners made decisions to support this project based on the information they had at the time and now we all need to work together to find a successful path forward.”

Lethbridge & District Exhibition cited the impact of inflation, interest rates, supply chain issues and other lingering COVID-19 impacts as causes of the budget shortfalls. Additional capital costs, as well as the expense of maintaining the old pavilions, has depleted the Exhibition’s reserves which means they would be unable to move forward without additional financial support.

The City of Lethbridge has already contributed $25 million toward the overall cost of the Agri-food Hub and Trade Centre and provided further support by securing a loan of $17.824 million on behalf of the Exhibition for their portion of the project. This loan was to be paid back to the City of Lethbridge in semi-annual instalments, which began in December 2022.

In a presentation from City administration, Council also heard of many underlying costs that may further impact the financial commitment required from the City for this project - estimated to grow to more than $22 million if council had approved the full request. To further investigate this, City Council also approved a third-party review of the Agri-food Hub and Trade Centre’s finances and operations.

“This is a community asset, and we are accountable to our residents to protect that investment as well as the investments by the Province of Alberta and other funders,” says Mayor Blaine Hyggen. “This review will help all parties fully understand the big picture so sound decisions can be made on how to make the facility sustainable moving forward.”

The City of Lethbridge owns the land the Agri-food Hub & Trade Centre is built on and provides the Lethbridge & District Exhibition $256,000 annually in fee-for-service funding, specifically designated for capital life-cycling.

Recognizing the impact of this decision on the community, Council also approved adding the Lethbridge & District Exhibition to the December 7, 2023 Asset and Infrastructure Standing Policy Committee to allow community members to provide their feedback.

In March of 2023, the Lethbridge & District Exhibition presented to the City’s Economic Standing Policy Committee seeking funding for the demolition of the old Main, North and South pavilions still standing on the site. In May, Council brought forward a motion to investigate the repurposing of the pavilions rather than demolition. A feasibility study is still underway to explore this option.

Construction on the Agri-food Hub & Trade Centre began in March 2021, and cost $77.3 million to complete. The facility features a state-of-the-art audio-visual system, 104,000 square feet of trade floor space, four banquet salons, four meeting rooms, and outdoor patio areas, which doubles Lethbridge & District Exhibition’s previous hosting capacity.