Clarifying the proposed arena debate

[NoreneS]

Originally Posted by Lorna Rosen

****UPDATE****

Update –April 28

Discussion around the proposed downtown arena has quieted following the April 6 motion passed by Council. That motion provided clear direction on the terms and conditions that Council wants to see included in an agreement on the proposed facility.

Currently administration is looking at the legal and financial impacts of the motion. One key condition is that any negotiated agreement will have to be finalized by Council.

The April 6 motion touches on several aspects of a possible agreement including financial arrangements, a 30-year location agreement for the Oilers and community benefits. Council’s motion also clearly sets a maximum price for the project at $450 million, and the City’s contribution to construction of the building is capped at $125 million.

The City’s contribution of $125 million is to be generated through a combination of no more than $20 million through a CRL and another $105 million through other options such as direct tax revenues from the arena, parking revenue increases or savings.

The motion from Council also identifies a user fee (ticket surcharge) to fund $125 million of the capital costs.

The Katz Group has publicly committed $100 million to construction and sources for the remaining $100 million are being explored.

As well, the motion instructs administration to continue to work with Northlands to clearly understand their financial challenges and how these can best be addressed if a new arena is built downtown. An independent review of the sustainability of Northlands is currently underway.

There has been much chatter in recent days and weeks about the proposed downtown arena, just what it will cost and whether or not it is already a done deal.

First let me say that Council has not made a decision on the proposal. Both Council and City administration are giving the proposal its due diligence. Administration continues to gather and analyze information for Council so that they can assess the risks and benefits before deciding if the proposed arena and entertainment district is the right decision fro Edmonton.

Cost will be a major factor in that decision. Based on similar projects in other cities the City estimates the cost to design and build a new arena in downtown Edmonton at $450 million.

Of that, the City would contribute $125 million towards construction. This money would be generated through a Community Revitalization Levy (CRL), a measure that allows municipalities to dedicate the property tax revenue from new development in an area to cost of new infrastructure, in this case the proposed arena.

This $125 million would be the extent of the City’s contribution to construction of a new arena. We believe the CRL is a good approach for this project and could contribute to ongoing efforts to revitalize the downtown core. So why do we think this will work?

Right now the proposed site for the arena generates about $180,000 in tax revenue annually for the City. We believe that the arena and entertainment district, backed by the $100 million pledged by the Katz Group for development around the proposed site, will spark new development in that area resulting in increased property tax revenue coming into the City. It is that increased tax revenue that will be used to pay for the CRL. Taxes will not increase and Council passed a motion in 2010 saying that taxes couldn’t increase to support the proposed arena project.

It is also important to note that without the proposed arena we don’t think that this development will occur. As well, if Council approves the project and the use of a CRL then the province must also approve the CRL. Part of that approval process will be looking to see how the CRL will be paid off if development doesn’t occur at the rate anticipated.

The City has also proposed that a second $125 million could be raised through a ticket surcharge, a common method of raising funds for projects such as new facilities or facility improvements. This estimate is based on the current level of ticket tax that is already in place, paid by individuals attending events.

In addition to the $100 million they have publicly committed to kick start development in the area around the arena the Katz Group has also committed $100 million for design and construction of a new arena. This brings the total to $350 million, leaving a shortfall of $100 million. Work is underway to identify other potential revenue sources to address this shortfall.

We continue to negotiate with the Katz Group on a downtown arena framework and will bring more information to Council at the April 6 meeting.

I encourage Edmontonians to be informed on this issue. More information on this proposed project is available at www.edmonton.ca/downtownarena.

-- Lorna Rosen

[edmonton daily photo]

GOOD WORK COE... Keep getting REAL information out to the public!!

[andrew]

The link at the bottom of the story doesn't work on IE, Chrome or Firefox on my machine..... http://www.edmonton.ca/downtownarena

[howyadoin']

Something i've always wondered of.. since the Baccarat casino is being demolished, has heir ever been discussion of placing the new casino in the arena?

I would think these two would go hand in hand. My proposal would be to charge a surcharge on gambling, then use the proceeds to fund the shortfall.. once the shortfall has been collected, then the profits go to operations etc..

[GreenSPACE]

^The casino will be part of the hotel complex proposed for the east end (101 st) side of the site, generally where it sits now.

[howyadoin']

Thanks for the reply. Then my question becomes" why aren't we diverting a portion of the proceeds from the casino, to (at least partially) fund any shortfall(s) from the construction of the new arena?"..

Originally Posted by GreenSPACE

^The casino will be part of the hotel complex proposed for the east end (101 st) side of the site, generally where it sits now.

[East McCauley]

Originally Posted by GreenSPACE

^The casino will be part of the hotel complex proposed for the east end (101 st) side of the site, generally where it sits now.

Source?

[Medwards]

^ common knowledge...

[East McCauley]

^ I thought this thread was about clarifying the arena debate, not playing some silly insiders game. Care to clarify what you mean by common knowledge?

[Medwards]

http://tinyurl.com/62mdlue

[Hilman]

^ that site rocks, always good for a laugh!

[East McCauley]

^ ah, so GoogleSearch+rumor+idle speculation=common knowledge. Got it.

[Medwards]

If your looking for concrete details, those aren't available yet.

[knowitall]

EM is often difficult to convince....All is not always a conspiracy theory.

http://www.21onlinecasinos.com/gatew...-10162007.html

[Edmonton PRT]

It seemed inappropriate for Lorna Rosen, chief financial officer of the City of Edmonton, to advocate for the mayor’s and the Katz Group’s suggested funding of the proposed new arena.
Her job is to provide independent and objective advice to council.
Her “could contribute,” “could be dedicated,” “could be generated,” “could be raised,” and “suggested estimates,” report ends up with an exact shortfall of $100 million, which is exactly the mayor’s position and the Katz Group’s position.
Her report comes across as nothing short of a pie-in-the-sky sales job.

<SNIP>

Lorraine Vetsch, Edmonton
http://www.edmontonjournal.com/opini...303/story.html

..

[Medwards]

^ estimates for a new arena have been anywhere from 250 to 450 M dollars.

[edmonton daily photo]

Originally Posted by Medwards

If your looking for concrete details, those aren't available yet.

We we do know that there is an agreement that... in exchange for the baccarat Casino LAND, the casino group that owns and runs the operation has exclusive rights to own and run the proposed new one.

ASLO deesign sketches of what the area could look like do not include the existing casino.

[howyadoin']

We we do know that there is an agreement that... in exchange for the baccarat Casino LAND, the casino group that owns and runs the operation has exclusive rights to own and run the proposed new one.

>So in other words, their is no oppurtunity to divert funds back into the arena directly?

[GreenSPACE]

Originally Posted by East McCauley

Source?

It has been conmmon knowledge that the casino would have to be accommodated on the site as part of the new plan. This was part of the uses proposed in the new zoning, and had been a discussion item since the first time we met with the Katz Group. Since the land was purchased from the casino owners, I'm sure there would have been some arrangement made to ensure a new casino would be accommodated in some form in the new development.

We had expressed over a year ago that if the casino was built relatively close to where it is now we didn't feel it would adversely affect residents any greater than it does now. The Katz Group has indicated in many public meetings and in their open house that this would be the location of a hotel/casino complex, most-likely one of the first components of the private development to go ahead. We all understood it would have to be accommodated somehow on the site, as it is not a permitted use anywhere else in the downtown unless something was rezoned, and the new downtown plan significantly ammended. So yes, it has to be incorporated into the existing site, it has no where to go, and the Katz Group would like to build a hotel there.

Whether or not you can ask the casino, through the approvals of the provincial government, to come up with some new funding arrangement or profit sharing, would be an entirely new discussion between the province and the city, since in effect you would be asking the province for a share of the profit, not the casino itself (my best guess).

[East McCauley]

Originally Posted by knowitall

EM is often difficult to convince....All is not always a conspiracy theory.

http://www.21onlinecasinos.com/gatew...-10162007.html

I'm usually accused of being too rational, too logical and sometimes too skeptical. Conspiracy theorist I am not.

I'm not opposed to a downtown arena or even too some public dollars being invested in it if the right kind of deal can be struck. But what I don't like is writing blank cheques or placing blind faith in developers - in this case the Katz Group. In that regard, I'm taking the same position as the City's own consultants (Mark Rosentraub and Dan Mason).

Edmontonians need to see basic drawings of the arena and how it fits into the surrounding district. Edmontonians need to know who Katz's partners are with some level of assurance they will follow through on their commitments to provide the CRL tax lift. Finally, Edmontonians need to know if Rexall Place will be closed or continue operating in competition with a new arena downtown because this impacts the ticket tax portion of the financing.

In the absence of the above, I will be urging Council to not approve arena financing.

Oh, and thanks GreenSpace for clarifying your statement above.

[Admin]

Please see the update from Lorna in the OP. Thank you!

[IanO]

Great update, thanks.