On the $400 Million Arena Loan Request:
My answer is no.
I am not saying no because the request was announced to a room full of people other than City Councilors (at a building owners and managers industry luncheon).
I am not saying no because our municipal borrowing power is limited by law, nor because what’s left within our ‘credit limit’ will be needed for the most part to fund our portion of the next phases of LRT, should the province in turn come forward to fund the NAIT, West and Millwoods LRT lines.
I am not saying no because the Coliseum (as I knew it growing up) has a generation of functional life left in it as far as I can tell, nor am I saying no because Northlands needs a better seat for any new scheme than the spot in the nose-bleeds they currently occupy.
I am not saying no because the deal seems to be changing and Katz’s $100M seems to be off the table for the arena and is now proposed to go toward the surrounding development.
I am not saying no because the province just cut the Municipal Sustainability Initiative (MSI) grants for infrastructure from $260M to $160M for 2010.
All of these are related issues, but the two reasons I am saying no are:
Firstly, because it’s not our City’s place to give private industry access to government borrowing power. We are fortunate enough as municipalities in Alberta to borrow through something called Alberta Capital Finance, which – thanks to the fiscal discipline of both local governments and the province – enjoys among the best credit ratings you’ll find (and thus lowest interest rates) anywhere. The public sector has earned this. The private sector has not. Which raises another question about who else would we do this for, or alternately why for an arena and not, say, for a hotel/spa?
The second reason I am saying no is that I knocked on thousands of doors in 2007 and this issue was raised by at least a thousand people. Only one told me the city should help finance a new arena. So I have my marching orders.
This is a relief. I was waiting for something concrete I could react to. So there you have it.
(Update: this has provoked some vigorous follow up debate in the blogosphere and on Twitter. Some fair critiques of style and rhetoric. Guess I shouldn’t write these while taking a redeye flight. One clarification I should have added: I am not against a planning application to develop something like what’s been proposed. It could be compatible and positive for downtown. However, I’ve always seen the financing question as separate.)
25 thoughts on “On the $400 Million Arena Loan Request:”
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Hi Don,
I too thought Mr. Katz was more than a little underhanded – all of this discussion seemed to take place completely without city council. Who does he think needs to approve his big plans? It all seemed strange to me.
Thanks for addressing this issue in your blog.
Well said, and agreed Don, although I am in favour of the tax dollars going towards a new arena ONLY if we get an equitable and commiserate share of revenues generated. Say, going 50/50 with Katz on the investment AND ownership of the rink itself? All other aspects of this billion dollar development, need to be privately financed.
I don’t think the “marching orders” that you have really count for much. Every one of the thousands of people you spoke to were asked about this before a specific proposal was put forward.
That’s like asking someone about thier opinion on having soup for supper – that opinion may change once they know the ingredients.
As a tax paying citizen of the City of Edmonton I have to object to your comments that the current arena, located at Northlands, will be acceptable for another generation.
I am uncertain when the last time was that you visited this location, or even had a chance to visit other arenas in other cities, but Rexall Place has reached its “end of the line” and it reached it almost 20 years ago. It has only been barely kept up to bare minimum standards through numerous costly enhancements to the facility that have reduced seating while not increasing the user experiance. To sum it up, the problem with the arena are two-fold: size and location.
Regardless of what reports you think you are reading, Rexall Place is far too small and was designed for another time, two generations long past (almost three). Users of the arena are packed in like sardines in a small confine of narrow congested hallways, small bathrooms, tiny underserving food and beverage stalls and seats that are bunched together so tightly that you have no choice but to become good friends with your neighbors to either side (because you are going to be sharing a lot of body surface with them). It takes nearly an entire 20 minute hockey intermission to make it to and from the bathroom the arena is so small, good luck getting food or drink during that time. Compare this to more modern arenas you will see a significant change in design of these facilities to making the user experiance a top priority by alieviating all these problems and providing a richer experiance in the seat.
Also due to the arena’s smaller size and limited seating, Edmontonians are missing out on concert events that bypass our city because our only major arena for these events is too small (Commonwealth does not count as it is outdoor and has a mandated limited use to protect the natural turf and playing field).
Location of the current Rexall Place arean is also a problem. Its an arena out in one of the most dumpy areas of the city. Complete with limited parking, limited and congested roadways and worst of all, no other ameneties to speak of. It is literally a location people drive to for their event and then quickly drive away from when done. There is no desire for anyone attending events at Rexall to stay or even care if the area gets cleaned up and beautified. It is quite literally the epitomy of Edmontonian design… “drive in and then drive out back to your suburb, make certain you take little to no pride in the city itself, its just a service”.
With that said, these two items: size and location, greatly impact the city of Edmonton by limiting the tax dollars that it can generate. One could attempt to throw more money trying to patch up these problems with the current arena but to be brutally honest that would be throwing good money after bad. The Northlands region has served its nees for a 1970s arena district design, its time to move ahead and look to the “Made for Edmonton ” future and not at our poorly designed “Made in Edmonton” past.
Good commentary Don. I agree with many of your points. I guess time will tell which direction the downtown arena / entertainment district will go.
Any of the reasons you listed are good ones for not supporting the loan request, but the two main ones you give are excellent. Good work, Don. I’m going to contact my Ward 4 councillors and point to this.
First, I think the “marching orders” totally count. If he talked to thousands and only one even brought up the issue then it’s not at all a priority, never mind the ingredients.
Second, how can Rexall not have life left in it? It’s a big concrete structure that houses concerts and hockey. I’ve been to three concerts at Rexall in the past year and I can’t see how they would have been improved in a new building. In fact I saw Slayer at the Saddledome and would have preferred to have been at Rexall. The bottom line is, no one cares about a new arena downtown. Maybe we should look at reinvigorating the north end to draw more people to different areas of the city. That’s one area where the city could improve – creating different diverse and interesting neighbourhoods that people want to visit. Places like Calgary and Vancouver have two or three neighbourhoods that house art buildings, local shops, local theaters and the like, we only have one. Maybe Katz should invest his money in the area around the north end. M
Don,
Your take is level-headed and reasonable. I agree with you that the vision behind the development is generally positive for downtown and that the question of financing is the major issue. I am really pleased to have your voice and opinion on city council. The city needs someone like you to defend its credit and dollars from private interests. Pulling the $100 million from the arena and putting it into real estate development is the epitome of bait-and-switch on the part of Katz. I hope there are enough people on council that think like you to make sure the right decisions get made.
With such a wide spectrum of opinion, priority to critical issues for this City and our sustainability should be considered first and foremost. “Marching Orders” qualify much beyond any opinion of the individual and I commend you Don for purporting to who you are.
It seems foolish for private industry to request dollars from a municipality for the frivolity associated with an arena. As enticing as private enterprise is in pumping new life to our downtown is, we seem to have a fairly active and emerging culture growing and enriching this City daily. Both Civic groups and private stakeholders are already invested in Edmonton’s growth both culturally and fiscally.
My personal opinion? New arena, not so much. Changing the way we move as a City, great idea.
Don,
Any level headed businessman can see that Katz’s money is needed more to help encorage the development around than reduce the mortgage on the arena. It is the development that will pay for the arena. What he is doing is not underhanded it is smart. Without the development than all of our worst fears of having to pay out of property taxes will come true. What is underhanded is the way city hall forced a new art gallery down taxpayers throats! I wish the same vision was used with that decision. Pride and downtown redevelopment we can all look at this project with pride and take visitors to this new entertainment area. O did I forget to mention new jobs! over 1billion in wages just in the construction predicted by EDC! Not to mention the many jobs after construction. You no maybe you should use your vote to keep status quo and let the city invest another million in backing Northlands and their car race! Guess what you borrowed from my taxes to back that! Be visionary,Don be a leader what is best for our city tomorrow its time we had leadership like that.
Don,
You had me at No!
Some wonderful analysis about our arena issue and TIFs:
http://www.fieldofschemes.com/news/archives/nhl/edmonton_oilers/
I recommend you step down as a city councillor. You have no vision and want to keep this city in the 80’s.
Edmontonians who have defended this city your entire life, its time to unite. Our past council and mayors have kept this in the past long enough. Its time for us to create a city that we all can be proud of. This goes beyond a sports arena; it’s a entertainment district to compliment our arts district. This part of downtown has been an embarrassment since the 80’s…the glory of the CN tower is long gone! It’s time to improve this area and our downtown.
I’m grew up in the NE and am a Eastglen graduate but to be quite honest the Coliseum is by far the ugliest entertainment area that I have ever seen! When people want to attend an event and ask where to stay I start to laugh and caution them….the Forum (Coliseum Inn), the Sands, the Eastglen Inn, the Crest, the Transit, the Londonderry (or whatever its called)….it is absolutely embarrassing…what a city :)
Despite the fact 4 arenas have been built in Canada with not a cent of public funding, I don’t necessarily oppose the city funding a new arena. However, I agree, priorities must be weighed.
If the City of Edmonton looks at this, where does this leave Northlands? Should Northlands, which, theoretically, represents the region, be involved? Why should Edmonton taxpayers yet again subsidize the region? The arena is, in fact, is a benefit to the entire region. So, why aren’t provincial dollars kicked in?
If the City of Edmonton funds this 100%, how will revenue be split? I certainly would oppose funding the arena if all the revenue is for the benefit of the Katz Group, even to the extent it is now.
RE: Dean
Hey Dean. Just thought I’d point out a few logical flaws in your argument. Also, let it be known that I’m not against a new arena, I’m just against public money being spent on it. But let’s go back to your argument:
“Any level headed businessman can see that Katz’s money is needed more to help encorage the development around than reduce the mortgage on the arena.”
-Correct me if I’m wrong, but if the city is paying for the arena so that Katz can instead put his money into developments around the arena, isn’t the city essentially subsidizing Katz’s development vision? Unless you’re a businessman with connections to Katz and his proposed development, I don’t see how it would be an advantage to any businessman but Katz to see Katz’s development subsidized. This simply gives the first businessman (Katz) an unfair edge over competing developers, and what’s he done to deserve such an advantage? If the area is truly good for development, other developers and businessmen will set themselves up there, sans subsidy. As it turns out, some already have: the Aurora development project is one that comes to mind (http://www.liveaurora.ca/)
“It is the development that will pay for the arena. What he is doing is not underhanded it is smart.”
-How will the development pay for the arena? Please explain. Furthermore, if the development is such a cash cow, wouldn’t it make more sense for the city to invest in the surrounding development then and hold Katz to his promise of funding the arena? Or does it only make sense that the city should naturally pour their money into the poor investment and suffer while Katzs reaps the rewards of pouring his money into the good investment?
“Without the development than all of our worst fears of having to pay out of property taxes will come true.”
-Please explain. I truly don’t follow.
“What is underhanded is the way city hall forced a new art gallery down taxpayers throats! I wish the same vision was used with that decision. Pride and downtown redevelopment we can all look at this project with pride and take visitors to this new entertainment area.”
-Besides the point. Try to stay on topic instead of whining that the artists in the city got a new venue while the Oiler fans haven’t yet. This is just childish.
“O did I forget to mention new jobs! over 1billion in wages just in the construction predicted by EDC! Not to mention the many jobs after construction.”
-This is a logical fallacy. These jobs aren’t “new,” per se. Most of the jobs already exist at Rexall Place, they’ll just be displaced to Downtown. You could just as easily frame this as thousands of jobs lost in the city’s northeast. Spending this money doesn’t create new construction jobs either, as you argue, it simply changes one theoretical construction job (the LRT, most likely) to a new theoretical construction job (building the arena).
“You no maybe you should use your vote to keep status quo and let the city invest another million in backing Northlands and their car race! Guess what you borrowed from my taxes to back that! Be visionary,Don be a leader what is best for our city tomorrow its time we had leadership like that.”
-You’re absolutely right, the Indy is a horrendous waste of money. But once again, besides the point.
RE: Dean
p.s. If you’re against the public funding of the AGA, you should–in principle–be against the public funding of a new arena as well, Dean. You can’t have it both ways.
I am glad to hear Don that you are listening to the wishes of your constituents. $400 million dollars is a lot of money in my opinion. If this is the stance that council will take on all issues I have no problem with it. My problem is that you guys pick and choose projects to support and rarely listen to the public. I made it quite clear to any politician who came to my door that I think the money that is wasted on the LRT is for the benefit of a minority of people in Edmonton. We could build a lot of arenas for what has been wasted on that project. Now you and your fellow councilors want to run this money pit to St. Albert. How much money is St. Albert contributing to this project? I admire your stance on the arena project, however you and the other elected officials should take the same stance and listen to the people on the money wasting train wreck that is the LRT.
Don, thank you for taking this stance and for clarifying the reasons you have done so.
The Canadian Taxpayers Federation opposes public dollars going towards NHL arenas such as this one, so this is one issue on which you and the CTF agree.
The CTF campaign (with a link to a petition) is here: http://taxpayer.com/node/10979
P.S., I like your quip at the bottom of the screen.
I get terribly nervous when developers start exchaning “promises” for tax concessions from City Council. We have an unfortunate history in this city of providing concessions, only to have the developer back out or greatly modify the plan. And there’s never any legal recourse should they do so.
Do people not remember the fiasco surrounding the development of Eaton Centre (now City Centre West)? Triple Five Corp promised office towers, residential towers, and a hotel. Well, I guess we got the hotel,but it’s a lot smaller than was proposed.
What about the old Bay development? There have been 3 or 4 proposals before the UofA finally moved in to “Enterprise Square”. In the meantime, the place stayed empty for a looooonnng time.
I’m not sold on the need for a downtown arena, and unless there are considerable PUBLIC facilities included (e.g. rec centre, pool, a decent concert venue-like an ampitheatre- seperate from the arena) I’m opposed to public money funding this.
I just hope our city councillors don’t get stars in their eyes and get suckered again. I’m all for downtown revitalization, but a better approach might be to tax all those ground level parking lots out of existance, and quit granting greenfield development permits for areas so far away that providing services is uneconomical!
RE: Tax payers to pay $400 Million for new downtown arena
I am deeply opposed to the idea. There are truly more important items demanding our tax dollars and attention including; crumbling infrasture; homelessness; social programs; healthcare, transit, crime, etc. If the Katz Group wishes for a new building, they should flip the bill. Especially since reports have it they will be reaping the rewards including all revenue. Most Edmontonians cannot even afford to park at Oilers games. And this is what is all about, rich NHL owners getting even more rich off the backs of working class people. No way – I vote No to using tax payers dollars for a new downtown Arena!!
p.s keep up the good work !
G.Smith
Don, congrats, you have seen through some of the smoke screen. this is all about money. Katz is trying to get a new building where he gets all the revenues from concerts, and someone else pays for it, while he picks up the increase in value from his surrounding developments. If someone were doing the analysis they would find that the oilers are 7th most profitable team in NHL with the current deal. This isn’t about building the downtown, its about money. Money in the teams pocket, guised as revitalization. They had an option to renovate the building take it up to the newest standards everyone speaks to. Only problem, they wouldn’t get the concert revenue and they wouldn’t get the new suites they want. So they turned to the oldest gimmick in the books. There are lots of arenas they cite as examples where arenas have redeveloped a downtown. But they forget to mention is the countless others where they sit idle for the majority of the year and haven’t done a thing to revitalize a citys core. Keep up the great work and ask the tough questions, that why we elected you.
Hi Don,
I agree that no tax dollars should be used in the development in the arena project but I wish for something to be done for this arena to take place. I’ve been life long Oilers and the one complaint I had about our downtown is that there is very little to do. Most people that leave downtown by 5pm and it becomes barren with very little life. But with a new arena downtown, it will generate some revenue in the retail side as more and more people will have place to go to after the game for a place to eat. Currently, Rexall place does not have many venues near by that are appealing to even go to. West of Rexall is barren and suspect at best.
I agree with you on not using Tax payers dollars by force by it should be optional and it should be the citizens choice.
I have come up some ideas:
-hotel tax levy where if anyone stays at our hotels they would have to pay an extra 1 or 2 percent or;
-some sort of investment fund that would allow public citizens like myself to invest in the new arena no matter how small or how large the investment is
Whether these are even feasible or not is to be determined there has to another way for funding of a downtown arena.