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City sunk $5.2M into the Kingsway Entertainment District

Next week’s city council meeting will include a report directing the final steps to wind down the city’s involvement in the Kingsway Entertainment District project, which council voted to effectively kill on July 12
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A billboard near the site of the now defunct Kingsway Entertainment District project.

When all is said and done, the city will have sunk approximately $5.2 million into the Kingsway Entertainment District – a proposed municipal arena/events centre which never came to be.

This, according to a report by city engineering services director David Shelsted outlining the project’s wind-down, which city council is poised to discuss during their Aug. 9 meeting. 

The proposed municipal arena on The Kingsway, which would have been accompanied by a private casino and hotel alongside a shared space called Festival Square, was killed by city council on July 12 after its cost ballooned from its original $100 million to $215 million.

The $5.2-million figure includes the $3.76 million previously identified as having been spent on the project, plus $1.44 million required to close out the project. The total is the city’s latest estimate, and a final figure will be reported by the end of the year.

All of these costs will be funded from the Event Centre Project capital account, which was fuelled by $90 million in debt the city secured in 2020 at an interest rate of 2.416 per cent.

Of this fund, $84.8 million remains available to be redeployed to other council-approved projects with a useful life equal to or exceeding the debt’s 30-year term. Until then, the funds will continue to be invested in short-term investment vehicles yielding returns which currently yield returns greater than the cost of borrowing, according to Shelsted’s report.

Sunken costs include a $1.3-million settlement to Bot Engineering & Construction Ltd. awarded after the city backed out of proceeding with site preparation work at the last minute last year after Gateway Casinos decided to put their investment on hold. Sudbury.com last reported this settlement at $1.1 million, but that was the cost to date according to the municipal report of the day, which has since been updated. The city’s share of the $1.3-million settlement is $787,800.

The city has also incurred approximately $770,000 in legal costs in relation to legal challenges against the project the city has consistently been successful in defending. The Minnow Lake Restoration Group owes the city a $37,000 partial indemnity after their case was dismissed as “entirely without merit.” They are appealing this decision in hopes of not paying this fee.

Other sunken costs include, but are not limited to, stormwater management and intersection improvement design work by J.L Richards & Associates Ltd., compliance team work by Ian McKan Architect Inc., and PricewaterhouseCoopers LLP advisory work.

As for the land designated for the municipal share of the project on The Kingsway, it was given to the city for a nominal fee under an agreement the city would transfer it back to the developer in the event they failed to proceed with the project within five years. This will automatically take place on July 31, 2023.

In Shelsted’s latest report, it’s noted the $84.8 million remaining in the city’s KED fund should be considered for use toward a future marquee spectator venue in the city.

“The process which led to the current project at the KED began with a discussion of the limitations of the Sudbury Community Arena, including concerns about the condition of the building, the fan experience, and the potential to renovate to meet current standards and business models for CHL facilities,” he wrote.

“Over the past several weeks, public discussion has continued to put forward the same options that were identified previously, namely a newly built facility either downtown or in some other location, or some form of renovation of the current arena. The windup of the current project does not suggest the idea of an improved/replacement facility is being abandoned.”

Although the city is in the process of winding down the KED, he clarified some doors are still open and initial legwork has already been done in the event city council opts to proceed with a similar project in the future.

City council’s Aug. 9 meeting will begin at 2 p.m. and can be viewed in-person at Tom Davies Square. A livestream will also be available by clicking here

Tyler Clarke covers city hall and political affairs for Sudbury.com.