REGINA - Regina council has voted to have the City provide funds to Regina Exhibition Association Ltd. and Economic Development Regina to help cover CERB payments they are handing back to the federal government after a Canada Revenue Agency audit.
The decision came at Wednesday’s council meeting where council heard from representatives of both organizations. The decision is to provide a grant to REAL for the $6,516,644 they must pay back, plus $1,518,270 interest.
The grant to EDR is for $667,885 that they must pay back, but there was also an amendment from Ward 9 Councillor Jason Mancinelli that passed where EDR will not have to pay back to the city an interest amount of $162,891 should the CRA grant interest relief.
The votes for the main motions were unanimous in each case to provide funds to cover those amounts owed. These two grants from the City, totalling over $8.7 million. will be paid out of the city’s general reserve.
The actual amounts the two organizations owe is even higher, with REAL owing over $8.1 million and EDR upwards of $926,000. Both organizations also face compounding interest of 10 per cent on the amounts they owe.
In speaking to reporters following the meeting, Mayor Sandra Masters said there “isn’t much of a choice when it’s Canada Revenue Agency.”
“I don’t think the city of Regina has much leeway in terms of paying it off and making sure the interest isn’t accruing.”
Both organizations landed in trouble after applying for and accessing Canada Emergency Wage Subsidy funds during the COVID-19 pandemic. The two organizations were both municipal corporations and were found not eligible on that basis.
The real issue is that it wasn’t clear at the time they applied that they weren’t eligible, due to the structures of each of their organizations. While they received municipal funding, whether the two organizations could be defined as publicly owned was a major question mark.
Council heard from Economic Development Regina representatives including CEO Chris Lane, as well as Darren Howden and Tina Holtby, and later from the REAL representatives including acting CEO Roberta Engel and board chair Niki Anderson.
Lane said the first criteria to meet the CERB had been met: “the revenue drop was real and it was severe.” But on the question of whether they met the definition of whether they were not publicly owned, that was less clear.
EDR maintained they had done the appropriate due diligence and made the best decision with the information they had at the time, including research with tax experts and conversations with CRA itself. Lane said the decision to apply was made after that. "The research and work and collaboration with organizations like REAL -- we have records of that -- suggested that the likelihood of eligibility in receiving funding was high, so the decision was made to apply," Lane said.
Lane noted that EDR had maintained that because they were funded by multiple sources, not just the City, that they would be eligible. But the Canada Revenue Agency ruled otherwise, pointing to the UMA agreement between the City and EDR.
Engel also said they did their due diligence including consulting legal counsel before they applied in Oct. 2020, and had used to funds to retain staff on the payroll and keep people employed, and reduce REAL’s losses through operations.
Mayor Masters acknowledged the frustrations.
“It’s frustrating, but at the end of the day we’ll repay it, and we will continue to deal with the effects of Covid I suppose for probably another couple of years,” Mayor Masters said.
