Medicine Hat Exhibition and Stampede $22.3 Million Funding Request
Photo credit Kelly Allard
Grandstands - North is on the left, wooden, built in 1966. South is on the right, concrete, built in 1979.
Originally posted Nov 2 2023
The MHES Board is coming back to Council on Monday to present their case for tens of millions of dollars from the City. This is a reminder of what happened one year ago. I’m using red for obvious reasons.
Kelly Does the Math on the “Interest Free” Loan
I think we can all agree that the MHES has contributed a LOT to our city, the gate receipts shows tens of thousands pass through every year. We get plenty of people coming to town spending millions of dollars in the community. The City benefits from having the Stampede here, a tradition for over 100 years.
The plan for the grandstand replacement and expansion has been in the works since 2021, it was only a $20 million project back then. Of course costs have gone up, the estimate has risen to a total of $37.2 million (I’m told this is not unusual).
This is a Class 3 Estimate
Class 3 Estimates vary between (-)20 to (+)30%.
This means the price can vary anywhere from
$29,760,000 to $48,360,000
Since the original plan was presented in 2021, the MHES has added things to make the grandstands accessible to those who have mobility issues.
By the way, lack of accessibility was an issue back in 1977. Mayor Ted Grimm wrote a letter to ask that they build a ramp so people in wheelchairs did not have to sit in the dust.
Background
Oct 3 2023 Representatives from the Medicine Hat Exhibition and Stampede did a presentation to council, asking for a
$14.9 million grant (which the Province of Alberta will match) and a
$7.4 million interest free loan
for their project to replace both the North and the South Grandstands and to create a “Comprehensive Community Facility”.
The Grandstands
The grandstands are in very bad shape. The North Grandstand is wooden, built in 1966. The South Grandstand was built in 1979 and is made of concrete.
According to Ron Edwards, General Manager of the MHES, it “leaks like a sieve”.
Timestamps are from the Oct 2 2023 City Council Meeting Video
52:30 Edwards says the South Grandstand leaks so bad that they’re always having to repaint and put in new carpeting underneath in that multipurpose room; it needs to be re-skinned. He goes on to say the Calgary Stampede has a concrete grandstand and they re-skin every 25 yrs. “Our grandstand was built in 1979 and we haven't touched it.”
53:10 Edwards says he’s been in this position for a couple of years; they spent $15k in the first year crack filling just to try to prevent the moisture from coming in over the wintertime. He said:
“We need to to re-skin it. If we are going to re-skin it then they have to take all those benches off, then we might as well get back into the stadium seating and you know where it goes from there.”
(It seems that the 44 year old grandstand should have been re-skinned in 2004, almost 20 years ago but it was not done. At this point who knows if it is salvageable.)
The presentation had no public numbers on their finances, no numbers at all to show how they would pay back the $7.4 million loan.
31:35 Mr Edwards said We have never had a loan in the past, we’ve been self sufficient.
I found documents that might say otherwise.
This is a little complicated as there are two listings on the Alberta Non-Profit Listing
One is an Agricultural Society, the other is a Non-Profit Public Company
The names are nearly identical, the only difference being the word The. Both are listed as active.
May 8 1947 The Medicine Hat Exhibition and Stampede Co. Ltd. Non-Profit Public Company
July 1 1987 Medicine Hat Exhibition and Stampede Co Ltd. Agricultural Society
There are 294 Agricultural Societies in Alberta, only 2 are Limited Companies
The Medicine Hat Exhibition and Stampede Co Ltd, and
the Lloydminster Agricultural Exhibition Association Ltd
These Council Members Asked for Repayment Details
Clark – wanted a business plan, was concerned that repayment would be based on grants and not revenue.
Hirsch – wanted the costs broken down into Grandstand and Comprehensive Community Facility
1:05:40 Councillor McGrogan asked if they had thought of what it would cost them to service the 20% (the $7.4 million) themselves.
Mr Edwards said during the presentation that the shareholders did not want to put themselves in that situation, that putting them in debt might be to their “demise”.
MHES Reluctant to Share Financial Information
I asked Councillor McGrogan if he knew where I could find the following financial information. (McGrogan was appointed in November 2021 to represent the City on the MHES board.)
1 Statement of Operations
2 Statement of Financial Position
3 Statement of Change in Assets
McGrogan said he had not seen any financial paperwork and even if he had, it would be the decision of the MHES to release that info, not the City’s.
Fair enough.
I contacted the MHES multiple times asking for their financials. Here’s the answer I received from General Manager Ron Edwards.
“Since we are a limited company, with our official name being The Medicine Hat Exhibition & Stampede Company Ltd., we are not required to publicly present our audited financial statements other than to the Alberta Government, and the City of Medicine Hat in compliance with our lease agreement.”
I agree our grandstands need replacing.
I agree it is in the interests of the City to support the MHES.
However, I am hesitant when the MHES brings no financial forecast to the table, no plans for repayment especially when Mr Edwards says things like
1:15:45 “...maybe one year we could pay more back than the other year, it might be less...”
When asked about needed future repairs to the facilities, Edwards replied“The only thing I can tell you is our facilities are generally in pretty good shape, we just spent $1.2 million on the Pavilion for the roof and walls. I won't tell you that the field house isn’t 20 years old and it won't need a roof in the near maybe 5-10 years in the future, we apply for grants all the time. I have a grant applied for right now for a million dollars and that is for maintenance on facilities and that is how we have been able to operate over the years.”
I Did the Math - Yup I’m a Math Nerd, It’s My Thing
A No Interest $7,400,000 loan repaid over 25 years = monthly payments of $24,666.67
A No Interest $7,400,000 loan repaid over 50 years = monthly payments of $12,333.33
Councillor Hirsch, being a banker in his day job, suggested an interest rate of 6%.
Here’s the math for the interest. I’m not a banker so my calculations are likely slightly different.
Assumptions
Principal $7,400,000
There are no extra fees
The MHES will make the exact same monthly payment.
The interest will be calculated monthly on a declining balance.
(Normally loan payments are exactly the same and you pay far more interest than principal at the start. If I did the traditional loan repayment schedule, the interest charged would add up to at least an extra million. There are a number of loan calculators available online.)
Interest rate 6% calculated monthly (Principal/balance X 6% divided by 12)
Equal monthly payment by MHES
Each month - Principal X Interest – Equal Payment = Balance
The pages below show the payments over 25 years, 300 months
Interest paid by the city over 25 years on a 25 year amortization = $5,568,500
Interest paid by the city over 25 years on a 50 year amortization = $8,334,250*
*This does not include the next 25 years, at this point it is moot. The interest is more than the original balance, you might as well just give them the money.
More to come, oh so much more!
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