Regina city councillors urged the Regina Exhibition Association (REAL) to find further costs savings before their final budget is approved next month.
REAL presented their preliminary budget request to city executive committee Wednesday of $12.7 million.
“We acknowledge this budget is significant in value,” Board Chair Jaime Boldt told committee. “However, this amount is necessary to allow REAL to continue operating and providing our community all of the services and events that they have come to expect.”
The hefty ask is a $7 million increase from what REAL’s council-approved budget was in 2024, which had multiple councillors asking the organization to look into further cuts to lower their operating costs.
“There is a level of frustration with taxes and REAL was called out specifically,” Ward 10 Coun. Clark Bezo said relaying concerns from residents. “I’m not prepared to say yes to this budget at all due to the ask.”
“I remember the warnings we had pre-pandemic about REAL being one concert away from being at a loss,” Ward 9 Coun. Jason Macninelli said. “Every year I was in this chair. There was no surprise when things hit the fan.”
“But at what point do we put a little bit of responsibility back at real to maintain that commercial viability,” he added.
Despite asking REAL to save costs, there were also concerns those cuts could result in unforeseen consequences.
“What would happen if you do not get the budget you have asked for?” Ward 6 Coun. Victoria Flores asked.
“[We] have to make your principal and interest payments,” acting REAL President and CEO Roberta Engel responded. “The city has guaranteed that debt. If [we] are unable to meet those debt requirements, it will automatically come to the City of Regina for repayment of it.”
Engel added other areas would also be impacted. All resulting in the possibility of further funding requests down the road.
“There’s a lot of buildings that are actually very close to failure,” she warned. “If we don’t have a level of [capital] funding, we could be back in front of council asking for emergency capital funding.”
Failing Infrastructure
Of the $12.7 million dollar funding request, there is $4.2 million earmarked for operating, with $1 million related to capital funding.
An additional $2.7 million is slated for debt. The remaining $4.7 is set to fund working capital.
According to REAL’s report, multiple capital investments must be made on the site.
In total, REAL has identified over $10 million in “areas of concern” which must be addressed over the next four years at the Brandt Centre, Queensbury Convention Centre and Co-Operators Centre.
“They have mechanical systems that are beyond their use for life,” Engel said. “Should any of these mechanical systems fail during an event, there is significant revenue and reputational risk not only to real but to the city.”
“Has the City of Regina ever funded the capital required to adequately maintain the assets, which, of course, are owned by the people of Regina, and the city?” Ward 3 Coun. David Froh asked.
“To the best of my knowledge, the city has not funded capital maintenance requirements,” Engel responded. “In 2019 … $44 million in capital maintenance that was either deferred, meaning it should have already been done, or also highlighting the future liability.”
Mayor Chad Bachynski said REAL’s financial issues are a result of decades of previous underfunding in an effort to keep taxes low. But just as several other areas of the city, those deferrals have become costly today.
“[Council] chips away a half a percent here and there over the course of a decade – that adds up,” he told reporters following the meeting. “That’s what we’re seeing right now. We’re in a tough spot and we have to figure out what is that priority.”
‘Too costly’
City administration blamed REAL’s budget increase as a large contributor for a projected 8.5 per cent mill rate increase in its preliminary budget released last month.
“I’ve heard clearly from my residents they cannot afford the overall tax increase that is being requested,” Ward 8 Coun. Shanon Zachidniak told REAL brass. “I need you folks to reduce your budget ask.”
“While highlighting the opportunities and the risks around that, we would definitely be willing to do that,” Engel responded. “We recognize this is a significant ask and we recognize our community needs us to go back and potentially do something different.”
A part of those highlights is the potential of increasing some service fees or adding new ones.
Something some councillors welcomed.
“I’d like to put it back towards REAL itself to earn through this,” Mancinelli said. “[But] if it’s not obtainable, I’m not interested in trying to prove we can bankrupt an entity. [I] want to be cooperative.”
“At the same time, I’m also not interested in collecting taxes off people ahead of time when there’s potential to earn the money instead,” he added.
REAL’s budget is not final and will be council approved at full budget deliberations in March.
The city has set aside five days for budget debate between March 17 and 21.
