Cascades Casino Penticton

It’s not a sure bet Gateway Casinos and Entertainment can use part of a $200-million federal loan to make good on $150,000 in deferred lease payments it owes to the City of Penticton.

The company leases the land under Cascades Casino Penticton from the City of Penticton for $25,000 per month, payable on the first of each month. But as of April, the company has been deferring payments without penalty.

“Shortly after the casino was forced to close in March 2020 due to provincial health orders related to COVID-19, city staff met with casino staff and accepted to defer lease payments while the casino remains closed,” city finance manager Jim Bauer explained in an email.

It was a staff decision to allow Gateway to defer its lease payments, and council has been “briefed,” according to Bauer, who noted the city has allowed one other commercial tenant to defer some lease payments and make them up over the next year.

The company, which boasts 8,000 workers across Canada, was announced Friday as the first loan recipient from the federal government’s Large Employer Emergency Financing Facility.

“COVID-19 closed businesses across Canada, with the hospitality and entertainment sectors severely affected. It hit our employees and their families and communities hard. The LEEFF financing will support restarting our operations and returning people to work when it is safe and viable to do so,” Gateway CEO Tony Santo said in a press release.

The intent of the LEEFF program “is to provide bridge financing to large Canadian employers to help these enterprises to preserve their employment, operations and investment activities until they can access more traditional market financing,” according to a fact sheet published by the federal government in July.

It remains to be seen if the money, which is attached to commercial-type terms and conditions, can be used to cover deferred lease payments for casinos that have already laid off employees and closed their doors.

“We do not know the specifics of the announced program,” said Bauer.

“City staff are meeting with casino staff this week to discuss the current situation, understand more about the recently announced program and determine next steps.”

Gateway spokesperson Tanya Gabara declined Monday to speculate on how the loan will be used. She said in an email only that company is simply “continuing to work with (the city) on a plan to address re-payment.”

But it’s not just regular lease payments the city, which has projected a $3.9-million revenue shortfall for 2020, is missing out on as a result of the casino closing.

As a host local government, it’s entitled to a cut of the action from the casino, which was worth $2 million in 2017-18, the only fiscal year during which the facility was in full operation. (The casino opened in April 2017 and employees were on strike for nearly five months in 2019.)

The grant for this fiscal year will be calculated to March 16, when B.C. casinos, gaming centres and bingo halls were ordered closed by provincial health officer Dr. Bonnie Henry.

She has said previously that gaming facilities are last on her list of places to reopen, even though some other provinces have already done so.

"Because we know that that type of environment – one, it's an enclosed environment – and we know that many of the people who frequent that environment are older people, or people with underlying illnesses… who are more vulnerable to having severe illness from COVID-19,” Henry said during her regular update May 25.

“So, you know, I would have to be convinced that there's a valid reason and a safe way to do it, and I think that's something that is for further down the line.”