At a Special Council meeting on September 29, City Council will receive and review a report outlining the results of a forensic audit of Westerner Park.
The report comes after The City of Red Deer assumed financial oversight of Westerner Park earlier this year following financial challenges at Westerner Park. The City of Red Deer assumed this oversight with the goal of assessing and ensuring the short, medium and long-term sustainability of the organization.
As part of The City of Red Deer’s financial oversight responsibilities, a third party was contracted to undertake a forensic audit and financial sustainability project regarding Westerner Park’s financial situation. The intent of the forensic audit was to determine if any misappropriation took place in relation to the construction and financing of Exhibition Hall, and to review business decisions such as hosting of the Canadian Finals Rodeo, as well as during the 2018-2019 fiscal year.
The forensic audit is now complete, and the financial sustainability project will be discussed by Council this fall, providing an overall assessment of the current and future financial capabilities of Westerner Park. The financial sustainability project report will also include recommendations for the future state of Westerner Park.
“This forensic audit, along with the financial sustainability report, are critical components as Council and administration consider a long-term, sustainable future for Westerner Park,” said City Manager Allan Seabrooke. “While the report is very detailed and requires a thorough review and analysis, we have concluded there was no fraudulent activity or misappropriation on behalf of Westerner Park.”
The forensic audit identified key areas that contributed to the financial difficulties at Westerner Park. Broadly, these findings are related to the financial and business decisions surrounding the expansion of the exhibition hall; inaccurate revenue projections for CFR; deficiencies in financial controls and processes; lack of qualified finance staff; and a failure to market the new exhibition hall appropriately.
In addition to these key areas, several other key factors were identified as impacting the financial success of the organization: changes to Board governance; multiple projects occurring concurrently; lack of clarity regarding Board communication; and Westerner Park’s use of the Major Maintenance Fund.
“While this forensic audit does not necessarily provide recommendations, it is the first step towards developing a more sustainable future for Westerner Park,” said Seabrooke. “We look forward to reviewing the results of the financial sustainability report, and working to secure a plan to ensure Westerner Park can continue serving as a community hub for our city and Central Alberta.”
The full report, Investigation of activities within Westerner Exhibition Association (WEA) and related matters, can be found in the Council agenda. On Tuesday, City Council will review a more detailed report in-camera, followed by a review at open Council. Citizens are invited to watch the meeting via live stream.
In December 2019, the Westerner informed the City of its fiscal challenges and reached out to the City for assistance. Several factors ultimately led to the financial instability at Westerner Park, including the decision to expand the facility, major event contract negotiations and the current economic reality, to name a few. The additional impacts of COVID-19 are placing greater financial pressures on Westerner Park with no ability to host events or generate revenue throughout the COVID-19 pandemic.
In addition to providing assistance, the City assumed temporary financial oversight for Westerner Park to help navigate the current challenges. The City does own the land at Westerner Park, which it rents to Westerner Park under a 50-year lease. The shared goal is financial and operating stability with Westerner Park continuing to serve as our community hub for events that are pivotal to our community life and economic development in Central Alberta.
In July 2020, Council approved a $2 million operating grant for Westerner Park, to ensure they remained viable in the short term. Without this operating grant, Westerner Park could not have continued to operate beyond mid-August.
As a hub for central Albertans to gather and celebrate community events, Westerner Park is a non-profit organization and agriculture society that serves the community in a number of ways. From concerts and trades shows, weddings and banquets, hockey games and agricultural events, Westerner Park drives over $150 million of regional economic activity. At this time, the organization is further impacted by the restrictions of events, including sporting events, festivals and mass gatherings related to COVID-19.
Between December 2019 and July 2020, the following major activities occurred:
- In December 2019, Westerner Park informed The City of its fiscal challenges and reached out to The City for assistance.
- In January 2020, Westerner Park laid off 14 full-time equivalent and 24 part-time and casual Westerner Park staff. A number of other staff saw a reduction in hours and benefits.
- In January 2020, The City assumed temporary financial oversight of Westerner Park.
- In response to COVID 19 and the financial impact to operations, in March 2020 Westerner Park temporarily laid off approximately 90 per cent of the remaining Westerner Park staff. Currently, 16 employees, many with reduced hours, are working at Westerner Park.
- In February 2020, The City approved one-time emergency operating grant of $1 million to support the continued short-term operations of Westerner Park. This was dealt with in camera, at that time, due to legal considerations. The City applied terms and conditions for the use of this grant, including financial oversight for when Westerner Park utilized any of the funds.
- In April 2020, following the guidelines set out by Alberta’s Chief Medical Officer of Health, Westerner Park cancelled Westerner Days for 2020.
- In June 2020, Westerner Park, along with the Canadian Professional Rodeo Association, announced the cancellation of the 2020 Canadian Finals Rodeo in Red Deer.
- In July 2020, City Council approved a $2 million operating grant to Westerner Park for continued operations into the fall of 2020. The funding will only be accessed by Westerner Park, if required, based on continued oversight of cash flow and is expected to allow operations to continue into 2021.
- In September 2020, the International Ice Hockey Federation, along with Hockey Canada and the Red Deer Rebels, announced that the 2020/2021 World Junior Hockey Championship would not be held in Red Deer, due to COVID-19. It is anticipated it will be held partially in Red Deer in 2021/2022.
For more, please see the attached Q&A Backgrounder (pdf)
For more information, contact:
Communications & Strategic Planning
The City of Red Deer