Total losses for the Halifax Convention Centre for the current fiscal year will add up to $11,096,000, according to budget documents headed to regional council.
The new deficit is $5,493,000 higher than forecast pre-pandemic, and will put significant strain on the municipality’s already depleting convention centre reserve account.
The 2020-2021 Events East Business Plan is on council’s agenda Tuesday — a full eight months into the fiscal year. Events East is the Crown corporation that runs the convention centre, but also operates Ticket Atlantic and the municipally-owned arena formerly known as the Metro Centre.
According to the attached staff report, prepared by regional recreation services manager Maggie MacDonald, provincial Business Minister Geoff MacLellan and municipal chief administrative officer Jacques Dubé gave Events East permission in March to defer the tabling of its business plan.
“The request to defer was based on the uncertainty created by and exceptional circumstances associated with the COVID-19 pandemic and related public health restrictions particularly on large gatherings,” MacDonald wrote.
“At the time the deferral was requested to June 2020. Due to on-going uncertainty and changing public health guidelines, the business plan was submitted to the Minister and CAO by new board chair Nancy MacCready-Williams on October 8, 2020.”
The new plan is “focused on the safe resumption of event activity and supporting the community and economy through recovery from the pandemic and its impacts.”
The pandemic has had a predictably devastating impact on the convention centre’s ability to host events, and the business plan assumes it won’t be hosting any major events for the rest of this fiscal year — until April 2021.
“As uncertainty continues throughout the year, the revised budget reflects the loss of planned events and associated revenue and a limited volume of event activity that does not reflect our typical event mix,” reads the “Financial Context” section of the business plan.
As the Halifax Examiner reported in June, the convention centre’s losses were already on track to grow before the pandemic:
Events East, the Crown corporation that runs the Halifax Convention Centre, said it hasn’t finished adding up the toll of COVID-19. The city is budgeting for $2,804,000 in convention centre losses in fiscal 2020-2021 — $109,000 more than its share last year. Convention centre losses are split 50/50 by the provincial and municipal governments, meaning the total loss projected for 2020-2021 is $5,608,000 — $218,000 more than last year.
The new deficit means HRM’s share is $5,401,000 and the provincial government’s is $5,573,000 (the losses are split 50-50 with the difference attributed to each level of government’s budgeting practices).
These numbers do not include the usual $5,380,000 annual rent payment to Nova Centre developer Joe Ramia. With that added in, the municipality will spend $10,781,000 on the convention centre this year.
The money will come from the municipality’s convention centre reserve account. The plan for the convention centre was that it would pay for itself, with all taxes from entire Nova Centre — the convention centre, the attached commercial properties and hotel — funnelling into one bank account. That almost immediately proved not to be true, and the account’s balance is forecast to diminish.
In pre-pandemic budget documents, which are more detailed than those tabled after the recast COVID-19 budget, the municipality was forecasting a balance of $3,304,109 in the convention centre account at the end of fiscal 2020-2021. The balance at the end of 2021-2022 was projected to be $2,912,009. At the end of 2022-2023, $2,535,909. And at the end of 2023-2024, $2,176,209.
The municipality will now have to withdraw an extra $2,599,500 from the account, leaving a balance at the end of 2020-2021 of $704,609 — and that assumes no further losses.
Last year’s deficit has grown as well, from a budgeted amount of $5,390,000 in losses to $5,472,968 for fiscal 2019-2020. That means the municipality is on the hook for an additional $41,484. Take that from the reserve account too.
Since 2018, the municipality has known the reserve account would be in a deficit position at some point. These figures suggest it could be there as soon as next year.
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