Update on the downtown sports and entertainment district
08
2011
I supported this week’s motion at Council directing Administration to negotiate a financial framework with the Katz Group for a sports and entertainment facility downtown. I had a number of reservations heading into Wednesday’s discussion, but overall my concerns have been sufficiently addressed, at this point, to give me confidence that public interest will be protected.
Based on feedback from constituents, my major concerns thus far have been that any proposal not draw money from current property taxes; that undue risk (capital cost overruns and debt servicing) not fall to the public; that community benefits and current downtown development be integrated with the vision for this project; and that user-pay and private funding be major components in this facility, which the Katz Group wishes to operate (though the City will own the arena and the land for any new facility). Despite the excitement around this project’s potential to energize the downtown area, I would not have supported action that didn’t provide thorough and explicit safeguards around these key issues. The 17-part motion passed at Council provides Administration direction to proceed, but within firm limits.
The City's contribution to the project is to be 28% ($125M), with this money coming partly from a community revitalization levy ($20M) and partly from tax revenues from the new arena, redirecting current subsidies to Rexall Place, and/or increased parking revenues. Property taxes will not be increased to pay for an arena. The City will also negotiate the possibility of revenue sharing with the Katz Group, and look further into options around naming rights for the facility. And the Oilers must commit to play in the arena for a minimum of 30 more years.
This will not be Council's final word on the matter. As negotiations proceed, Council will discuss and ratify the proposal before it comes to fruition.
The motion passed on April 6:
That Administration negotiate a financial framework for a downtown City-owned sports and entertainment facility with the Katz Group based on the following terms and conditions:
1. Maximum Price – $450,000,000 to be set prior to any approval by Council of adequate price guarantees
2. Confirmation of Katz Group commitment of $100M.
3. User fee (Ticket Surcharge) to fund capital costs of $125M
4. Evaluate options for a CRL(s): That administration revise and reframe projected CRL project(s) to support the City’s overall downtown plan with $20 million from the CRL to be directed to arena and the balance of proceeds used to support other priority downtown projects (Quarters, Jasper Avenue, Warehouse District) in conjunction with the overall downtown plan.
5. a) Evaluation options for further support (potentially $105 million) to be paid for by either direct tax revenues from the arena, or savings from not having to pay current subsidy and parking revenue increase to the City
b) That the total of 4 and 5 in terms of the City’s direct contribution to the arena building would not exceed $125million
6. City owns the arena and the land for any new facility.
7. Agreement on fair market value of the arena property.
8. An agreement is entered into with the Katz Group, with the Katz Group responsible for operating costs and generating necessary revenues for 30 years.
9. Project cannot proceed until the balance of funds are confirmed.
10. That Administration continues to work with Northlands to ensure the City understands their financial challenges and how these can be addressed.
11. Location agreement whereby the necessary agreements are signed to ensure that the Edmonton Oilers operate out of the facility for 30 years.
12. That the City retain the right to access to facility 4 weeks per year – uses to be determined by the City but may include allocation of uses to Northlands or other bodies, for example, the Canadian Finals Rodeo, Capital EX and other events the City deems of civic importance.
13. City to negotiate options for potential revenue sharing.
14. Investigate the opportunities for lottery through establishment of foundation, with proceeds directed towards community benefits in the new facility.
15. That Administration provide a report on options for the naming rights.
16. That Administration negotiate the requirement for a Community Benefits Agreement associated with the above framework as part of any negotiated agreement.
17. That the final negotiated agreement be brought back to Council for ratification.
13 commentsComments about "Update on the downtown sports and entertainment district"
