A report before Regina’s Executive Committee says that Regina Exhibition Association Limited (REAL) needs a cash injection to make its “obligated payments.”
According to the report, REAL has faced significant challenges in having sufficient cash flow to meet its operating and capital needs. This summer, it will need an injection of funds to meet its payment obligations.
The report states that REAL’s cash flow continues to be impacted by the aftereffects of the COVID-19 pandemic, as the recovery has been slower than initially anticipated.
During the pandemic, REAL depleted the organization’s limited cash reserves and now has seen lower attendance than expected and has struggled to attract events as it faces aggressive competition using financial incentives and other measures.
REAL is projected to have a negative cash flow of $6.9 million by September 2023.
City administration is recommending that REAL be approved to acquire $3.4 million of debt within the $21 million debt guarantee already approved for REAL, allowing it to manage its cash flows through to the end of 2023.
Three other options are on the table.
REAL prefers to take on $4.1 million in new debt rather than $3.4 million, and the organization says that would provide the most flexibility.
Another option is for the city to grant REAL up to $3.4 million. The money would come from the city’s general reserve fund, which currently has a balance of $23.2 million. If city council opted to go that route, it would move the reserve’s balance below the guideline recommendation of $23 million.
The last option is for council to request that REAL reduce its operating and capital budgets.
City administration that REAL informed them it has already taken action to reduce its budget but that reducing its spending could risk jeopardizing its revenue and services, negatively affecting events in the city.
No matter the options, city administration says in the long term, the current REAL funding model needs to be reviewed. The administration says they will work with REAL to develop a strategy to address REAL’s long-term financial sustainability and present it to the council as part of council’s 2024 Budget deliberations.
