Events centre funding called into question

By JOE FRIES Thursday, September 11, 2008 Penticton Herald

Duelling press conferences Wednesday examined the intimate details of financing for the South Okanagan Events Centre, with each side accusing the other of misleading the public. Michael Brydon appeared with two of the founders of the Okanagan Skaha Residents Association to outline perceived accounting irregularities involving casino revenue funding for the events centre and also called for a full independent audit of the facility’’s financing. Although not a member of the ratepayers’’ group or even a resident of the city, Brydon cast himself as a concerned citizen and alleged the city is understating the true cost of the events centre project -- currently pegged at $78 million -- by at least $13 million. This, he said, was made possible by a "shell game of budgetary transfers" involving the city’’s cut of gaming revenues from Lake City Casinos.

Brydon said the city has a "secret deal" with the local casino that essentially amounts to an "off-balance-sheet" loan used to hide the true cost of the arena. However, Mayor Jake Kimberley bristled at Brydon’’s assertions, which he termed as "extremely offensive" during a hastily scheduled press conference at City Hall two hours later. "The process that this funding went through was very open, very public, well-documented and well-presented to this community at large," Kimberley said. Not only that, the funding was confirmed by the provincial government as an appropriate way to fund" the events centre.

Two initial agreements with the province governed the local portion of the casino revenues. One sent roughly 16 per cent of net revenues to city coffers, while another set aside 16 per cent for the casino operator to be used for economic development projects in and around the casino. However, having run out of projects, the Lake City Casino’’s parent company agreed to forgo any future claims to those funds, which allowed the city to gain access to the cash, which should amount to a total of $40 million. All told, the city’’s share of net revenues from the gaming facility -- covered by two agreements -- is now about 33 per cent, as opposed to 16 per cent previously, according to Jack Kler, the city’’s director of corporate services. He said Brydon was merely "confused" by the complexity of the various arrangements, "which the city claims has resulted in his interpretations and conclusions to be in error."

Kler acknowledged there is a deal in the works with the casino, essentially to compensate the operator for giving up its claim to some of the money that had been tagged for economic development. Reached by telephone late Wednesday afternoon, Dave Gadhia, CEO of Gateway Entertainment, the parent company of Lake City Casinos, confirmed as much. Kler said he expects the agreement to be finalized prior to the events centre opening later this month, but would not discuss specifics of the deal. Gadhia, however, allowed that the arrangement would likely hinge on "cross-promotional opportunities that would be beneficial to both parties." Brydon said what the issues surrounding the gaming money really amount to for the average taxpayer is a lack of disclosure and transparency on the city’’s part.

Tom Siddon, a former MP and co-founder of the Okanagan Skaha Residents Association, said people did not authorize the casino money spending in the 2006 events centre referendum. Further, he said, the casino bucks are now "a loan from the people of Penticton against a lot of other things we could have used that lottery funding for." But Kimberley chalked up the renewed hostility to the failed court battle to save the Pen-Hi gym and auditorium from the wrecking ball, and particularly from the city’’s refusal to foot the $3 million renovation bill. "They lost that battle," Kimberley said of the residents association’’s leaders who were associated with the Penticton League of Sensible Electors. "Their attempt now to discredit the city’’s funding of the events centre is obviously a spin-off from that loss."

Brydon’’s presentation and other documents pertaining to his allegations are available on the Okanagan Skaha Residents Association website at www.actlocalnow.ca.