The troubled Kananaskis Country Golf Course continues to drive up costs for Alberta’s taxpayers, as the office of the province’s auditor general confirmed that the government will have to cough up an additional $2.5 million to cover the 36-hole course’s lost profits to Kan-Alta Golf Management Ltd.
The auditor general also revealed that the government would have to extend its lease of the flood-ravaged course by another year since it was not reopening as initially planned, reported
CBC News.
"They're going to get a fully rebuilt course when it's done, but until then or at least for the next year they will be compensated for any lost revenue," said assistant auditor general Brad Ireland.
The auditor general released a report Tuesday that revealed that the then Progressive Conservative regime signed no-bid contracts with Kan-Alta in 2014 to pay the latter $18 million to rebuild the course and possibly another $13.9 million for lost profits while the mountain facility remained closed.
"The agreements made financial sense given the existing contractual arrangements the department had with Kan-Alta at the time of the flood," remarked Auditor General Merwan Saher in the report.
Despite this revelation, taxpayers will still have to cover for the additional costs.
Saher’s report was based on a review conducted last year by Deloitte LLP, which found that by putting the reconstruction and operation of the publicly-owned links out to tender, Alberta taxpayers would have to shell out an additional $16.9 million to cancel the existing agreement.
It was revealed in Deloitte’s review that Kan-Alta was awarded the contract to operate the golf course in 1983 despite government documents showing that the firm was not the lowest bidder. The review also found that the terms related to liability for damage in the event of a disaster like a flood were "unfavourable to the Crown,” however the firm and the succeeding Conservative governments "negotiated in good faith" to maintain a seeming “perpetual” contract that lasted until just two years ago.
The 1983 deal required Kan-Alta to secure business interruption insurance, but the Deloitte report noted that the course’s location on a floodplain prevented the firm to obtain coverage—a fact the government knew when it signed the agreement.
In 2013, floods destroyed all but four of the course’s holes. A clause in the contract required taxpayers to recompense Kan-Alta for all of its losses beyond a $100,000 deductible.
Terms for a new deal were negotiated in 2014 to rebuild the course at public expense; the government agreed to reimburse for operating costs and lost profits while the course remained closed.
"If we don't dig into the history of this deal, we are condemned to make the same mistakes," commented Wildrose critic Todd Loewen, who criticised the auditor general for failing to review the government’s agreements before the 2014 revisions.
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