City explores LDE funding considerations

As part of City Council’s annual budget review, members of the Economic & Finance Standing Policy Committee (SPC) had an in-depth exploration today of the financial implications related to Lethbridge & District Exhibition (LDE). The discussions looked at managing debt, ongoing operations and future capital costs for the Agri-Food Hub & Trade Centre as well as future operating models for LDE.

Today’s financial presentation from City administration came on the heels of yesterday’s presentation of findings from the third-party review of LDE by Deloitte Canada, which outlined several recommendations and future operating models to help the organization move forward.

“In order to determine where we are going, we need to have a good understanding of how we got here,” says Lethbridge Mayor Blaine Hyggen. “The third-party review gave us that foundation. The reality is, there is no easy way out of this. We don’t like it, and we don’t want to be here, but now Council has to consider what the best option is for the betterment of the entire community.”

Today, the committee put forward two recommendations for City Council to consider at their next meeting, December 10, 2024.

  1. Future Capital Costs
    Two significant capital costs still required by LDE are the demolition of the old Exhibition pavilions and the reconstruction of the parking lot. After a thorough review of the old pavilions, it has been determined that it is not economically feasible to repurpose them. The SPC recommended that Council consider the demolition of the old buildings except for the west pavilion which would be maintained for storage. The Economic SPC approved a recommendation to refer both the demolition and the parking lot reconstruction to the 2027-2030 Capital Improvement Program (CIP) deliberations.

  1. Future operating models
    In alignment with the options provided in the Deloitte report, the Economic SPC recommended that work proceed on exploring a new operating model for LDE. This includes the development of a recommended business plan, implementation plan and budget for a municipally-controlled corporation to consolidate event attraction across Lethbridge.

“Since approving the MOU with LDE earlier this year, City Council has been focused on bringing the most value to our community,” says Mayor Hyggen. “We asked LDE to look for efficiencies and increase revenue over the last year and they’ve done that. Now we need to start exploring more options that help us move forward and funding options are the next big thing we need to tackle.”

The committee explored funding options for both managing debt and the ongoing operations of LDE. These items were deferred to the December 10, 2024, City Council meeting and administration was directed to come back with additional options.

  1. Managing Debt
    The City's finance department presented options to reduce the $17-million loan LDE is currently paying the City for their portion of the Agri-food Hub project. By having the City assume this debt, refinancing options can be considered. Unused grant funding has been identified to potentially pay down the loan by more than $7 million. This, along with refinancing from a 30-year to a 10-year term and moving from external to internal borrowing would save City taxpayers $15 million in interest costs (see attached graphic).

  1. Ongoing Operations
    In evaluating the ongoing operating costs of the Agri-food Hub & Trade Centre, SPC reviewed the option of shutting down the building versus continuing the operations. The closure of the facility in 2025 would cost approximately $4.1 million with no community benefit. This is compared to $4.1 million to fund continued operations with many entertainment, cultural and economic benefits to Lethbridge.

SPC members also learned that if this cost were to be covered with an increase in property taxes, that would mean an additional 2.24 per cent 2025 on top of the already approved 5.1 per cent for a total increase of 7.34 per cent. This additional increase equates to approximately $60/year on the average single-family home in Lethbridge valued at $327,000.

“To align with our financial principles of not funding an ongoing cost with one-time money, a tax increase in 2025 would provide the least amount of financial risk,” says Chief Financial Officer & Treasurer, Darrell Mathews. “As we experienced when we had zero-per-cent tax increases over several years, if we don’t address these pressures now, it could have even bigger impacts down the road including higher tax increases or service cuts.”

Categories: EDL, Exhibition, Agri-food Hub
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