New North Rustico rink has cost twice original estimate and still isn't done

An independent consultant brought in by the P.E.I. government has found North Rustico'sstill-unfinished new rink has cost twice as much as expected, coming in at more than $22 million and some major suppliers have not been paid.

David Boyd of Resolve Advisory Services in Halifax was hired to examine the town's books with regardto building and operating theEliyahuWellness Centre at Canada Games Place.Hehas more than 25 years of experience working with businesses and governments when projects are in trouble financially.

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"I think the total construction project is going to come in around $22 million," Boyd said in an interview with CBC News.

The province reached out to Boyd after the townraised concerns about liens being placed against it earlier this year for unpaid work at the rink.

CBC News has confirmed millions of dollars in liens have been registered against the Town of North Rustico for unpaid bills, one for more than one million dollars.

Island Morning8:11North Rustico Rink

A new, $10 million dollar rink to replace the North Star Arena in Rustico, now there are some serious concerns about sizable cost overruns, and what that could mean for the town of 650 people. CBC's Wayne Thibodeau has been digging into the numbers.

Crunching the numbers

When the town first announced a new recreation centrewould be built,the cost was estimated at $10 million.Plans for thenew facility included a walking track, a fitness centre and an Olympic-size ice surface, as well asan elevator.

The arena was prominently used as Prince Edward Island hosted the 2023 Canada Winter Games, acting as the venue for figure skating and short track speed skating.

But when it did so, parts of the project were not completed and remain unfinished to this day.

"The province really wanted to understand... who might be owed monies on this project and how to resolve those issues. And then outside of that is'Was it done?'And'What else needed to be done on the rink in order for it to be fully completed?'" Boydsaid.

I feel really bad about the cost but there's nothing I can do about it. You can't go back. It leaves a lot a pressure on a person. North Rustico Mayor Heather McKenna

The consultant spent all summer meeting with the mayor, councillors, town and rink staff, and suppliers.

His firm is also looking at the operating model for the rink, to figure out how a town of 650 residents can afford to operate the facility.

Another part of his assignment is figuring out how to paywhatsuppliers are owed now about $2.5 million.

Boyd's firm discovered up to $400,000 in work that still needs to be completed, including:

• Installing ventilation systems and equipment in the restaurant and cafeteria.
• Completingthe commercial kitchen and the canteen, neither of which is operating.
• Addressing outside drainage concerns.
• Finishing the landscaping.

Who pays for all that is still to be determined.

'I feel really bad about the cost'

North Rustico Mayor Heather McKenna said she's confident the town can dig itself out of the situation.She acknowledged she's hearing concerns from residents everywhere she goes.

"I feel really bad about the cost but there's nothing I can do about it. You can't go back," McKenna told CBC News."It leaves a lot a pressure on a person I had a lot of sleepless nights."

The town has gone through a series of leadership changes over the four-year construction period, something the mayor blames on the pressures of getting the rink built. There havebeen five chief administrative officers, a new rink manager, and numerous changes on council.

But McKenna has been mayor for the past five years, so she's been overseeing the project since the beginning.

'We knew we were going to be over'

McKenna said the project went off the rails when the pandemic hit in2020.

"Once COVID came in we knew we were going to be over budget. And we went to the government and the project was in the works right then, so there was no way of going backwards, we had to go forwards," she said.

Asked whether the town's financial future is at stake, McKenna said:"That's a question I can't answer. I don't know."

Stephanie Moase, thecurrent CAO,said the town did build a bigger rink than originally plannedbecause it wanted to host Canada Games action. That included increasing the ice surface area to be Olympic-sized.

But Moase said that didn't substantially boost the overall costof the project.

The Canada Games connection

Wayne Carewchaired the 2023 Canada Games Host Society.

After they put a call out looking for a suitable venue to host competition, he saidonly North Rustico and Stratford expressed interest. In the end, North Rustico was further ahead on planning for a new rink so the host society went with that option.

Carew said his organization never put pressure on the town to make its arena bigger.But he admits that after COVID hit, he did have concerns the rink wouldn't be done on time.

In the end,he said the basics ofwhat the Canada Games needed the ice surface, stands and dressing rooms were ready by February 2023.

Plans for the rink grew in size again after the town signed a deal with a private sports academy to move its hockey school to the building. That increased the cost of the project, but it also provided the rink with a new source of revenue.

Not a $22M debt

Boyd said it's important to point out the town is not carrying a debt of $22 million, although that'swhat he expects the final cost will be.

Others paid for a good portion of the rink, with the project getting:

• $3.6 million from the Canada Games Host Society;
• $3.8 million from the federal government; and
• $3.1 million from the province.

The Town of North Rustico took out a bank loan to contribute$3.4 million.

The town and neighbouring communities also raised $1.8 million through successful fundraisers, including a Chase the Ace project and a Fill the Jar campaign.

Province awaiting 'results of the audit'

Still, Boyd said the town could be on the hook for $6 million, including repaying the$3.4 million loan, covering $2.6 million in outstanding bills, and coming up with about$400,000 to complete the rink.

Whether the province is prepared to put more money into the project is unknown. What is known, according to Boyd? The town can't afford to pay that $6 million on its own.

We have a population of about 648 people. We're not a huge city or town by any means... It'll impact the cost of living for us. Resident Andrea Greenan

"[The province] said they'd assist the town in addressing issues. What that means, I don't know. The initial stage was to gather information to understand the scope of the issue."

In a statement, the provincial governmentsaid it "will await the results of the audit before further discussions."

'I have grave concerns'

A number of residents told CBC News they worryabout how much the rink has cost already and will cost in the future.

Oneis Andrea Greenan, who has lived in North Rustico for nine years.

"I have grave concerns about those numbers," said Greenan, interviewedat a local coffee shop.

"We have a population of about 648 people. We're not a huge city or town by any means. That will impact the rest of the projects for this town and those of us as taxpayers. It'll impact the cost of living for us."

Boydsaid that until the operating model is "crystallized,"it's impossible to know whether a town the size of North Rustico can break even on runninga rink this large.

"That's a good question. The answer is still to be determined," he said."The business plan that was used by the town reflected that it should have a positive income every year. We're still working on that model."

In the meantime, the province is hiring a separate consultant to do a governance audit, totry to determine how the project doubled in cost.

"Obviously concerns were raised because the project cost has doubled," said Boyd. "I think the province and the town agreed that a governance review would be appropriate in this circumstance."