The government giveth and the tax man taketh away, leaving the City of Regina to cover most of a $9 million bill for false wage benefit claims made during the pandemic.Regina council has voted to have the City provide funds to Regina Exhibition Association Ltd. (REAL) and Economic Development Regina (EDR) to help cover Canadian Emergency Response Benefit (CERB) payments they are handing back to the federal government after a Canada Revenue Agency audit.City council made the decision Wednesday after hearing from representatives of both organizations. The city will grant REAL $6,516,644 they must pay back, plus $1,518,270 interest. The grant to EDR is for $667,885 that must also be repaid. An amendment from Ward 9 Councillor Jason Mancinelli that passed means 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 organizations owe more than the grants offered, with REAL's tax bill being over $8.1 million and EDR's upwards of $926,000. Both organizations face compounding interest of 10% on what they owe. Both organizations applied for and received Canada Emergency Wage Subsidy funds during the COVID-19 pandemic. However, the two organizations were both municipal corporations and were later found ineligible.The organizations said their eligibility status was unclear to them. They received municipal funding, but it was less clear to them they were defined as publicly owned.Economic Development Regina representatives who spoke included CEO Chris Lane, Darren Howden, and Tina Holtby. 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 was less clear.CEO Roberta Engel and board chair Niki Anderson spoke for REAL.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.The EDR had maintained that because they were funded by multiple sources, not just the City, that they would be eligible, Lane said. But the Canada Revenue Agency ruled otherwise based on an agreement between the City and EDR.Engel also said they did due diligence and consulted legal counsel before they applied in Oct. 2020. Funds received kept staff on the payroll and employed and reduce REAL’s losses through operations.Mayor Sandra Masters told reporters 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.”Masters said the bill was yet another consequence of the pandemic.“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.
