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City council approves $2.5M in additional funding for waterfront art gallery

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Thunder Bay is allocating additional money to support the establishment of Thunder Bay Art Gallery’s waterfront location.

City council has approved delivering an additional $2.5 million towards the project.

The money will be delivered in two installments of $1.25 million each.

The money is being delivered from the Municipal Accommodation Tax Reserve and the Renew Thunder Bay Reserve Fund.

The release of the first round of additional funding is conditional on the confirmation that the gallery has received all other sources of funding required to achieve partial opening of the new facility.

The second phase of additional funding is conditional upon a partial opening happening and confirmation of all other funding sources required to achieve full opening.

This funding amount ensures the city’s contribution to the project remains consistent at 10 per cent when considering the increased project cost.

The vote to increase funding passed eight to five.

The Councillors who opposed the funds were:

  • Michael Zussino (Red River Ward )
  • Dominic Pasqualino (Northwood Ward )
  • Greg Johnsen (Neebing Ward)
  • Trevor Giertuga (At-Large)
  • Albert Aiello (McIntyre Ward)

“I think it’s a critical point right now that the city via city council show that we are in, I like the number, let alone the number side, that we’re 10 per cent in on the project,” said McKellar Ward Councillor Brian Hamilton.

“I think that’s going to speak well to investors, certainly to the province or the feds when we go asking for more money, this is a really critical time council.”

The decision to provide more funding has been on city council’s radar for a few months.

At the August 25 Committee of the Whole Meeting, the Thunder Bay Art Gallery delivered a presentation providing a progress update on their project, identifying the successes and financial challenges the project is facing and a potential path forward.

During the meeting, the gallery requested that the city consider providing additional funding.

The Art Gallery is exploring a phased approach that would allow the facility to partially open while continuing fundraising for a complete opening.

According to the city, the estimated cost to achieve this partial opening is $64.2 million, which left the Art Gallery looking for an additional $12.1 million beyond funds already committed heading into Tuesday night’s council meeting.

City council referred the request for additional funding to Administration, asking for a report back with information on timelines, financial impacts, recommended funding sources, and how the funds could be released if approved.

The report was heard by Finance and Administration Standing Committee on October 14.

The committee received a recommendation from administration that was not supported.

“There was a general support from a slight majority of the members for providing some level of addition of financial contribution, with the main question being the appropriate amount,” explained Commissioner of Corporate Services and City Treasurer, Keri Greaves.

“Based on discussion and feedback at Standing Committee administration has refined its recommendation to propose 2 separate contributions of $1.25 million each.”

In 2015, city council formally approved a $5 million contribution to the new Thunder Bay Art Gallery project.

The funding amount was equal to 10 per cent of the project’s total cost.

Since the city’s original commitment was approved, the estimated capital cost of the new Thunder Bay Waterfront Art Gallery has increased to a final estimated maximum cost of $75 million.

According to the art gallery, the increase in cost, while significant, is not inconsistent with industry-wide construction trends over the past decade, particularly during and following the COVID-19 pandemic.

Costs associated with required environmental cleanup have also additionally contributed to the increasing cost of the project.

The cost of the remediation work is estimated to have cost the project an additional $10.2 million as of the last assessment by the gallery.

The city has made significant contributions to the project outside of direct financial contributions.

The city has provided land it owns to host the gallery, as well as a municipal property tax exemption.

Any additional business operating at the gallery, like a coffee shop, would also be exempt from property taxes.

“I do not want to be bailing out a project for $20 million down the road,” added Hamilton.

“I think now is the pivotal moment, I think waiting for future endeavors or any kind of failures, I think is only going to further financially challenge the city and taxpayers could be looking at a more substantial bailout downstream. I think it’s important to get on board now, put shoulder to wheel and get this project across the finish line.”

Thunder Bay Art Gallery (under construction)

Standing committee recommends against more city funding for Thunder Bay Art Gallery

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City Council’s Finance and Administration Standing Committee meeting on Tuesday included a request by the still-under-construction Thunder Bay Art Gallery for an additional $2.5 million of city funding.

The city initially pledged $5 million to the project back in 2017. At the time, that $5 million was meant to represent 10% of the total cost of building the gallery. The rest of the cost is meant to be funded through a combination of federal and provincial funding, grants, and private fundraising.

Earlier this year, the gallery came to the city with a request for more funding, explaining that the estimated cost of the facility had increased from $50 million to $75 million.

On Tuesday, city councillors on the standing committee weighed the request.

City government presented councillors with a plan to spend $1.25 million from the city’s Municipal Accommodation Tax reserve fund, split between the 2025 and 2026 budgets, and an additional $1.25 million from the Renew Thunder Bay reserve fund, which is meant to go towards projects to help the city grow economically.

City Manager John Collin explained to councillors on the committee that increasing the city’s funding of the project would allow it to maintain the 10% contribution to the project.

“But the project now is closer to $80 million instead of $60 million,” the City Manager said.

In a previous meeting with City Council, the art gallery proposed a way to partially open the building to visitors before construction is fully completed, allowing the building to develop a proof-of-concept and begin earning revenues, offering it an opportunity to complete its fundraising down the line.

At present, the gallery has raised approximately two-thirds of what it requires to be completed.

Councillors on the standing committee were not interested in the proposal.

Councillor Albert Aiello of the McIntyre Ward seemed opposed to the entire concept of the art gallery. “I don’t think there’s an appetite out in the community for this,” Aiello argued. He pointed out that funding for the art gallery was agreed upon in 2017, before the current city council was elected.

“We have got to stop the precedent of bailing people out. How you can start a building and not have the money to finish it… It’s very difficult to understand that,” Aiello said.

City Manager John Collin suggested that inflation likely contributed to the increased cost of the building.

Though likely not the sole reason, goods and services in Canada have seen prices rise by more than a quarter in the last few years, with the COVID-19 pandemic years producing particularly high inflation rates. Any cost estimate made by the art gallery would have happened long before the pandemic.

Councillor Aiello was not alone in his unwillingness to support the venture. The standing committee held two votes on the matter, first voting down the $2.5 million funding proposal, and then voting down a modified proposal just offering the $1.25 million from the Renew Thunder Bay reserve fund.

The standing committee’s votes are not binding: the committee’s decision will be presented at a future City Council meeting, where the entire council will debate and ultimately decide on whether to offer the additional funds to the gallery.