Regina council committee hears call to take event planning from REAL

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A review to determine the future of the Regina Exhibition Association Ltd. (REAL) is suggesting city council alleviate the organization of yet another tourism responsibility, to cap off a tumultuous year for the city-owned corporation.

Consulting firm MNP delivered findings Wednesday to city council’s executive committee from an operational review commissioned in November to examine REAL’s short and long-term viability.

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MNP concluded the best path forward would be to keep REAL as a municipal corporation, but have the organization outsource event booking and management to a third-party contractor.

REAL’s structure fell under the microscope after a failed tourism campaign last spring snowballed into a deeper look at the organization’s finances. REAL already handed over responsibility for Tourism Regina to the city in November.

City manager Niki Anderson has been serving as REAL’s interim board chair. She said Wednesday that the organization’s situation “has created a lot of tension and angst amongst people,” while saying she was “proud of how administration and REAL were able to work through it.”

“I genuinely believe the success of REAL is the success of the city,”  Anderson added.

The hybrid model suggested in the report is used in other cities, including Saskatoon. Under this model, REAL would still manage day-to-day recreational activities, conferences, CFL and WHL games and large exhibitions like Agribition and the Farm Progress Show.

A private partner would take over management of Mosaic Stadium and Brandt Centre as venues, handling concert or tour booking and commercial development.

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Craig Gates, representing MNP, said the review team heard “a high level of interest” in the proposed partnership model from five organizations offering similar services.

“Part of what we anticipate is value in terms of engaging a private sector partner to undertake this aspect,” Gates said. “They can have very deep relationships in terms of being able to attract those different performers to the market.”

No figures were presented on how much it would cost to bring in an outside entity; this would be explored through a competitive tender should the new model be adopted.

The report found 74 per cent of REAL’s 3.5 million annual visitors use facilities for recreation, notably the only business line on REAL’s books showing positive earnings.

Gates said the review concluded recreational services was a strong a point for the municipal corporation, while the private sector could better handle  event attraction.

“A hybrid model reduces the level of financial risk for the city and for taxpayers,” he added.

MNP is also suggesting a refreshed mandate, a new board and a new financial plan for REAL. Language in the new suggested mandate focuses on providing more clarity and accountability.

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Interim REAL CEO Roberta Engel said the board is agreeable to engaging a third-party partner “when the time is right.”

“REAL welcomes the opportunity to further review outsourcing areas of our business (but) cautions a renewed business model must be strategically planned,” she said.

REAL’s preference would be to examine a new mandate and model once a new board and CEO are in place. New board appointments wouldn’t have to return until at least Sept. 30, though Engel said she thinks the current board could move faster than that as the process was already begun.

A short-term financial report would also be presented to city council by that time, offering cost savings solutions and an examination of restructuring REAL’s debt.

MNP has advised that REAL’s $16 million in debt must be moved to the city’s books if the organization is to become financially self-sustaining. The report further suggests the city handle asset maintenance and capital spending moving forward.

A 2019 report from Stantec said REAL faced a backlog of $44 million in capital maintenance; MNP called this figure “likely underestimated” given inflation since then.

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“The buildings and assets at REAL are the city’s responsibility, regardless of whose books they sit on,” Gates said.

He noted REAL has no real ability to address debts itself, having run deficits the last four years.

For the city to involve itself financially on this level would cost an annual $7.1 million to $11.1 million starting in 2025, equal to a 2 per cent increase to the mill rate for the city’s operating budget.

The city has already given REAL $13.7 million this year, between a $5.7 million budget grant and $9 million for an owed wage subsidy payment to Canada Revenue Agency. Since 2021, REAL has received $16.3 million just in operating grants from the city to cover deficits.

Operationally, MNP calls for plans to optimize revenue, including by maximizing facility use and undertaking an internal review to cut costs on labour and goods.

The report suggests that if all proposed changes are implemented, REAL could achieve a net earnings increase of between $4.4 million to $5.5 million per year.

“REAL is struggling financially now,” Engel acknowledged. “We really want to move forward and there’s a lot of things we want to get moving on, if we can get out of this holding pattern. I think everyone would be happy to hear we’re on a more permanent path.”

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City administration has endorsed this approach, affirmed by executive committee on Wednesday. City council will take a final vote on the directive on June 26.

lkurz@postmedia.com

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