City projected to face $5.1M operating deficit, Mosaic Stadium financial sustainability a concern
REGINA -- City staff say Regina is projected to face a general fund operating deficit of $5.1 million because of financial impacts caused by the COVID-19 pandemic.
In the mid-year financial report heading to the city’s finance and administration committee today, staff said the city will have to make up for the shortfall by re-directing the funds from dollars earmarked for capital projects.
In April, city council approved plans to defer $7.2 million for capital programs, essentially allowing Regina to use those funds should the city come up short.
Staff said about $5.1 million of the $7.2 million will need to be re-directed.
In the report, administration said the deficit is a result of a combination of factors, including fewer fees collected by transit and recreational centre users.
However, the city is expected to receive funds from the federal government to cover operational expenses, like transit.
It said these funding contributions aren’t part of the projection.
In the report, the city outlined a bleak picture for Mosaic Stadium.
Because of the pandemic, it said, financial impacts to the stadium are expected to be in the range of $4-5 million.
The cancellation of events and the CFL season have greatly affected its bottom line. There has been a substantial reduction in fees collected by ticket holders.
“While it is not possible to reliably estimate the length and severity of the pandemic and the impact on the future financial result of the stadium, it is reasonable to assume that, at a minimum, there will be a negative affect to the operating results of Mosaic Stadium in 2020 and possibly beyond,” the report said.
It's anticipated the city could have a hard time getting the Regina Revitalization Initiative Stadium Reserve to a net zero to positive balance in a 30-year time frame.
The report said staff are working with Regina Exhibition Association Limited (REAL) and the Saskatchewan Roughriders Football Club to identify opportunities to ensure long-term financial sustainability of the stadium.
REAL CASH FLOW IMPACTED
In the report, city staff said the pandemic is greatly affecting the cash flow of REAL.
City council has approved a $13 million loan guarantee for the organization to stabilize cash flow, but the situation has reached a critical point, staff said.
Administration will advance the loan so REAL can meet its payment obligation for the first quarter of 2021.