Penticton's SOEC funding deals

by Rachael Kimola Castanet

The City of Penticton hasn’t told residents the truth about funding for a new multi-million dollar facility being built - in the opinion of one man. Michael Brydon, a member of the Okanagan Skaha Residents Association, recently uncovered some information about the South Okanagan Events Centre that he doesn’t think has been properly passed on to residents. Brydon, a professor at Simon Fraser University, says he received documents regarding the SOEC through a Freedom of Information Act request he made to the city earlier this summer.

“The documents show the City has entered into two agreements with the Province of B.C. and the B.C. Lottery Corporation. The upshot of theses agreements is that we got $40 million in so-called Development Assistance Compensation(DAC) funding to help build our new events centre. Since it was approved, the costs have gone up and it is now about an $80 million dollar project but we’ve always been sort of comforted by the fact that, according to the City’s press releases, 75% of the funding for this project has come from outside sources. But what the two agreements say is that we didn’t actually get $40 million in new money. We got $40 million, but we actually have to pay a big chunk of that back from the City’s share of revenue sharing from Lake City Casino,” says Brydon.

He says under the Standard Casino Destination Agreement the City made back in 1999, the City is supposed to get back one sixth or 16.7% of the net revenue coming from the casino. “That’s basically free money that can be used for whatever we want. Roads, facilities, upgrades, more policing, anything. But since the new deal, which took effect January 1 2007, we have dropped from 16.7% to 10%. Now, as far as I can tell, that hasn’t been disclosed.” Brydon says this decrease has lost the City about $1.5 million in revenue since the deal went into effect.

“We gave up the 6.7% funding that was coming into the City and that has been added onto the DAC funding. Normally the casino owner is entitled to this DAC funding, but in a separate deal the Casino has agreed to sign it back to the City, up to $40 million so they can finish the events centre. We are missing out on money we have been getting for a number of years now.” He says he got a business plan on the SOEC from former Penticton mayor Dave Perry during his time in office. “I’ve sort of been looking at this business plan since back when it was just a $30 million project and I thought the numbers just didn’t add up. It never smelled right, so I followed up with messages to City Hall and they sent me these agreements under the Freedom of Information Act. No one I know in Penticton has ever heard of these agreements.”
Brydon says he’d like to see a full independent audit done to find out just how much money the city has left for other infrastructure projects. “We’ve invested a lot of money into the SOEC, it’s costing way more than originally thought and this could impact the City’s ability to take on other big projects.” However, Director of Corporate Services for the City of Penticton, Jack Kler, says the information was never hidden. "The information about the agreements was presented in an open council meeting back in February 2007. It has always been available to the public. In fact, there was a previous request made for that information about a year ago," says Kler. *

He says Brydon is also missing some of the facts. "The finances in a project like this are very complex, very hard to understand and Mr. Brydon has interpreted some of them incorrectly. He's making speculation and conjecture and unfortunately it's wrong." Kler says Brydon's claim that the City is losing about $1.5 million a year due to the agreements is incorrect. He also says audits have already been performed on the SOEC finances
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Don Quixote Note: * This was probably a reference to my request that was partially completed in summer 2007. At that time I also made a request to the City of Penticton for the separate agreement between Laker City and the City referred to in the main redacted agreement in Aug of 2007.