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Regina’s troubled REAL could be dissolved

Regina City Hall Update: Executive Committee votes in favor of looking into whether to possibly dissolve Regina Exhibition Association Ltd. and have the City take over.
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Tim Reid, CEO of REAL, speaks to reporters after presenting to city council on May 24. Reid and REAL were back at City Hall Nov. 15 where an MNP report on the organization was presented.

REGINA - The overall woes of Regina Exhibition Association Ltd. have reached the point where City Council might proceed with dissolving the whole organization.

That was the outcome of a dramatic Executive Committee meeting on Wednesday at City Hall. There, council members voted 5-4 in favor of a motion calling for City Adminstration to report back by the second quarter with the steps and impacts where REAL is dissolved and the City of Regina assumes full control of the portfolio of assets.

The end result could see REAL being wound up into the operations of the City of Regina, although there is still a long way to go in the process.

That motion on Wednesday brings to a head the evolving situation at REAL, which has been in the news for suffering heavy financial losses in recent years. 

REAL is currently structured as a registered non-profit governed by a volunteer board, with the City of Regina as the lone shareholder. It operates a number of facilities on the exhibition grounds including Brandt Centre, Mosaic Stadium, Queensbury Convention Centre, the Viterra International Trade Centre, Co-operators Centre, AffinityPlex and Avana Centre.

But the organization has suffered heavy losses and has incurred a massive debt, in part due to the COVID-19 pandemic shutdowns and event cancellations. Earlier this year, the organization had been approved to acquire an additional $3.4 million of debt after exhausting its line of credit.

More recently, REAL was enswirled in controversy after it assumed control of Tourism Regina. That led to a botched rebrand attempt in 2023 as Experience Regina which was slammed by critics over the use of controversial slogans such as “the city that rhymes with fun.” Last week, on recommendation by the REAL board, city council agreed to have Tourism Regina transfer back to the city's control.

The latest saga involving REAL erupted even before the Executive Committee meeting started. News broke that the organization was requesting a massive budget increase in funding from the city to $5.8 million, an amount five times what they received last year, to address its financial situation.

At the beginning of Wednesday’s meeting, council heard an overview of a report from MNP on how to develop a strategy for the long term sustainability of REAL. In introducing that report, City Manager Niki Anderson painted a grim picture.

“If there is one central theme to MNP’s conclusion, it’s that for REAL to become financially self-sufficient one must seriously consider significant changes to the business model,” Anderson said.

“When it comes to REAL we need to talk about reality. As you’re about to hear, it’s not fair to continue to expect REAL to financially sustain itself under its current mandate and its current business model. I know that what I’m saying about REAL is not the typical optimistic ambitious narrative we’ve become used to hearing, but as the MNP report will show the numbers simply don’t lie.”

According to the presentation from MNP’s Craig Kutarna Gates, an overall negative financial trajectory was observed at REAL. Operating losses in the next three years are forecast as ranging from $4 to $5 million, and the losses at REAL could potentially grow to $7 to $9 million starting in 2027, once a gaming agreement with the provincial government expires. 

MNP’s conclusions are that REAL as it exists today is overbuilt and costs are too high, that the current business model is not sustainable, and the asset portfolio is expected to require higher levels of subsidization in the future no matter what model the city may proceed with.

Another issue is that REAL is also being audited by the federal government for over $7.5 million of payments from the Canada Employment Wage Subsidy (CEWS). That means REAL could have to pay back some or all that amount, adding to its financial pressures.

The MNP report, which also outlined a number of options available about the future for REAL, was originally set to be a routine receive-and-file by Executive Committee. Instead, Councillor Lori Bresciani made the motion that city administration prepare a report to look into whether to dissolve REAL and have the City assume control.

“This is one scenario that I think really needs to be considered, both for the risks that we’ve taken on but maybe there are some cost savings,” said Bresciani at the meeting.

That motion drew a divided reaction from members of council, with some in favor while others expressed a far more cautious view. Coun. Jason Mancinelli was on the latter side, expressing concerns after the city already agreed to take over Tourism Regina. 

“To absorb this entity as well, with everything to be worked through, in light of what we have coming at us for budget, to me is unimaginable,” Mancinelli said.

“I believe this motion is premature,” was the reaction from Councillor Bob Hawkins. “Maybe this motion is warranted in due course after we’ve figured out the budget for 2024 for REAL, and after we understand better its plans. And maybe, maybe when we get to that stage, maybe we do want to look at other options for governance.” 

In the end, Councillors Mancinelli, Hawkins, John Findura and Mayor Sandra Masters voted against. But Councillors Andrew Stevens, Cheryl Stadnichuk, Dan LeBlanc and Terina Nelson, who chaired the meeting, all joining Bresciani in favor, and the motion carried 5-4.

The next step now is for that report to be prepared and come back next year. As for REAL's requests for funding, Executive Committee has directed REAL work with city administration to prepare its budget submission which will come back at deliberations on Dec. 13.

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