The cost of a new Calgary Flames arena is potentially $60 million over the original budget of $550 million, as the rising costs of construction materials is impacting the NHL venue project.
The Calgary City Council met behind closed doors last night to discuss the potential cost overruns, what could be eliminated from the project, and who would bear the increased construction costs. The topic has also been a topic of discussion between the city and Calgary Sports and Entertainment Corp. (CSEC), owner of the Flames. This is not a situation unique to Calgary, sports venues or this project; construction costs across the board for base materials like lumber have been rising rapidly as the economy loosens and many delayed projects are back online. For their part, Calgary officials say there is a specific procedure to address this very situation, per the Calgary Sun:
Under the existing deal, there’s a set process for dealing with possible cost overruns.
It’s a complex chain of events where the city and CSEC have to first consider using contingency funds, reducing the project’s cost and splitting the extra costs 50/50. If all that fails, either the city or CSEC can opt to contribute up to $25 million extra, and the other partner has to chip in half that amount.
[Calgary planning and development general manager Stuart] Dalgleish said the current budget estimate stems from requirements for the interior and exterior design, as well as the public realm around the facility. Under the terms of the event centre deal, the city and CSEC equally split the capital costs to build the arena, but a condition of the city agreement was a public return on investment — creating part of the planned “cultural and entertainment district” in the surrounding area for community use.
The discussions are still in the early phases: the city is not being asked to contribute more to the arena project, and no value-engineering plans have been prepared. The project was put on hold with the emergence of the COVID-19 pandemic, and the new cost estimates may reflect that delay as well.
Conceptual rendering courtesy City of Calgary.
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