City owes $230,000 to REAL for catalyst committee work
Year-end financial reports show the City of Regina owes an unbudgeted $232,259 to Regina Exhibition Association Limited (REAL) for work done to commission consultants for the city's catalyst committee.
Presented to the audit and finance committee on Tuesday, administration advised funds would need to be found in the 2024 general operating budget to cover the bill.
Broken down, the sum includes $213,000 for consulting services for urban planning and economic modelling, and the rest for travel, printing and other miscellaneous spends.
Administration notes that such expenses are “consistent with the committee's purpose” as outlined in its mandate when pitched in 2022.
The bill is a surprise, however, as the catalyst committee was meant to prepare and deliver a budget to city council for approval but did not.
“Administration requires council's approval to pay REAL for expenditures it incurred on behalf of the committee,” advised deputy city manager of finance planning Barry Lacey.
The money is not contentious, he added, as the consulting work REAL commissioned for the catalyst committee was done “on behalf of the city.”
The bill is not part of the preliminary 2023 year-end deficit of $2.7 million in the general operating fund, also noted in Tuesday's report. The deficit is attributed to higher-than-planned costs for winter road maintenance in light of several big snow events.
As cities are legislatively required to deliver balanced yearly budgets, administration's recommendation was to cover the deficit from the General Revenue Fund. To do so would bring the already-low reserve to a $15.8-million balance, far below the recommended minimum balance of $23 million.
Questions from committee members revealed there are other city reserves at a surplus due to routine transfers, prompting an amending motion.
An amended recommendation settled on directing administration to report back to the audit and finance committee in May, with a report on the implications of covering the combined $2.9 million in extra costs from surpluses in other reserves.
The vote was approved unanimously, and will be brought to city council on April 24 for a final vote.
These additional expenses come to light after a report recently made public showed the city may also be on the hook to cover a combined $9 million clawback of COVID-19 subsidies from REAL and Economic Development Regina (EDR) thanks to an audit by the Canadian Revenue Agency.
REAL owes a total $8 million including interest, while EDR owes $918,000 with interest. Both have indicated they may seek aid from the city to cover the bills, as both are municipal corporations solely owned by the city.
“The CRA determined that these funds need to be repaid because of the ownership structure of REAL and EDR,” said a City of Regina spokesperson in an email Monday. “Similar organizations across the country were also required to repay the funds.”
REAL and EDR have asked the CRA to waive the interest on those repayments, which would bring the total owed down to $7.25 million if granted.
“REAL followed a defined due diligence process before applying for and subsequently receiving this subsidy,” said a REAL spokesperson on Monday.
Respective repayment plans are being developed and are expected to come before city council for approval in May.
REAL and EDR both declined to offer further comment on such plans until such time.