Arena: The Morning After

February 11th, 2010 in 2007-2010 Term, A fiscally responsible city, Arena

I took a bit of flack for the rhetorical device I employed in my previous post on this topic. If you go back and look, you’ll see that the reasons I said are motivating me to say no are principles: 1) limits on public borrowing authority and the application of those borrowed funds; and 2) public consensus among my constituents.

The other issues I noted were more practical challenges I have with the proposal and overall situation. I simply judged the principles more important to my decision making that the practicalities.

I accept that the well orchestrated public relations effort will, if nothing else, cause this to be an election issue again which will give anyone who goes door knocking a chance to take a fresh sample. I look forward to that. I think there are probably now more than one in a thousand who would support this type of proposal, but my read from questions I get asked at Community League events and in correspondence with the public is that there remains an overwhelming degree of skepticism among the people I represent about the financing. I think public opinion is more mixed about whether it’s compatible with Downtown. I’m open in principle to such a development downtown, and would evaluate an application for rezoning coming forward to Council with an open mind.

Meanwhile, Paula Simons at the Journal has addressed some of the factors in play with the Community Revitalization Levy (CRL) model in today’s paper. She notes that $1 billion in development (if and when completed) would yield on the order of $14 Million in annual property tax revenue (quoting a city official). At today’s interest rates this might leverage up to $150 million in borrowing. Presumably it will take other revenue streams (casino bucks, ticket surcharges, expanding the levy area into Downtown North Edge, and maybe others) to cover $400M borrowed.

There is another issue she didn’t cover which I call the zero sum problem. No doubt the hypothetical new hotel next to the hypothetical arena is induced by the arena. However, the demand for at least some of those new hotel rooms already exists for people coming to events at the current Rexall Place. Same with pubs and restaurants, etc. This is about moving demand around, and creating some new demand in the process, which is fine. But a new arena can’t be given credit for all the demand for new property development nearby. A related consideration: if new capital is invested in an arena complex hotel instead of a hotel in the Quarters, we’ve lost the tax revenue elsewhere. It’s just false to argue that all the tax lift in the hypothtical CRL can and should be linked to a new arena.

I anticipate a retort to this: why use a CRL in the Quarters and not for an arena? Simple: the $160M we plan to spend in the Quarters is for sidewalks, streets, parks, and so on – in other words, municipal infrastructure. Yes it’s designed to attract capital to develop the area that might go elsewhere, but the success of turning around Downtown East hinges on that. While I have said that a new arena complex could be positive for Downtown, I don’t think that the success of Downtown Edmonton hinges on it. Indeed, Hyperbolic suggestions that the future of our city depend on this development have added little to the debate.

I think the sport and entertainment industry and development business together need to build a business case and a project scope they can afford, then what we’d be talking about is something sustainable in its own right, and therefore not requiring government involvement.

But If this is really about small market NHL hockey not being sustainable without government involvement, let’s debate that and let’s talk about which orders of government should be involved in solving that issue, bearing in mind that municipal government has five cents from the average Edmontonian’s tax dollar, while the province has 26 cents and the Feds have 69 cents.

Here’s one of the most important questions about the future: If the new arena were built, in 20 years will it then be too small and dated and whathaveyou? I just want to be mindful of getting onto a treadmill of having to do this over and over again. I think that if we go for this once it will never stop.

11 thoughts on “Arena: The Morning After”

  1. “Here’s one of the most important questions about the future: If the new arena were built, in 20 years will it then be too small and dated and whathaveyou?”
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    Well, according to some of the more vocal members of the “teh city needs to pay for it or we wonts be worlllllddd claaaaaassssssss” crowd, Rexall became obsolete while still in it’s teens. I’d say there’s a good chance we’re already on that treadmill, and the millionaires are just turning up the speed.

  3. I don’t want to see a pro sports team get a free ride.
    However , it would be nice to see Edmonton break its
    reputation as a boring, second class city ,that no one travels to visit.
    How about we start acting like a major league city that will attract people ,and investment.
    We should build a world class facillity with a P3 model that will attract high density housing in the city core ,and a real entertainment hub.
    Would’nt it be nice if educated career people stayed in Edmonton with their wealth and investment power ,
    instead of moving to St Albert ,or Sherwood Park ,
    to get out of Deadmonton as my expat friends call this former home of theirs.
    The Muttart conservatory is the last world class creation to be built here (how long ago?)
    And it seems to me that we own Commonwealth stadium…
    So why the hypocrisy now?

  4. if you want edmonton to be a world class city and less urban sprawl, support the lrt…. simple as that. if people have the ability to get around and if downtown is the central hub of that transportation network, downtown will thrive.

    no arena (lets face it…. it’s primarily an arena for overpriced tickets so wealthy people can watch a hockey game in person that most would watch at a bar. it’s not an “entertainment centre”)…. no arena will attract the kinda long lived development of a community where people seek out to live and work in.

    who here wants to live on 118ave? not I…… even though it’s got an arena. please don’t buy into the hype.

    if the city pays to build an arena “entertainment centre”, I want the city to also pay for a new “biggest mall in the world”…. that is outdated too….

    while we are at it, lets build a vegas scale strip club “entertainment centre”, and a full size replica of the death star “entertainment centre”.

    lets, face it. the city already has ageing infrastructure which is there responsibility. roads, sidewalks, sewers, ect…. the city also has large projects planned which is under the city’s scope of responsibility (lrt, infill development). lets not expand the governments scope of responsibility to include bailing out the ageing infrastructure of the private sector.

    while we are on this topic. who here would pay for a new arena out of there own pocket? if you say yes, please pay for the arena yourself with a donation…. I guarantee you, most edmontonians would not want to pay for this arena out of pocket, so why would they support paying for it with public funds (which means paying for it with your taxes, out of pocket)

    if the city has any money left over at the end of the year, or wishes to increase there debt load, it should go to city services like the lrt, and not to an arena that bennefits a select few who attend the games at that facility, at the expense of us all.

    ets moves 280 000 people a day.
    rexall place houses less than 17 000 per game. not every game sells out. capacity has been reduced to allow for more luxury suits….

    we can spend the money to benefit 280 000 people on a daily basis, or to benefit a wealthy minority, every week or so….. lets be realistic here and put the money where it matters. build the lrt and tell kats to find investors and build it with NO tax dollars or government loans. he’s trying to bully the city into giving away millions. we need to stand up to him, and tell him we are simply not at all interested.

  6. I’m not in favour of using taxpayer dollars for any initiative that DOES NOT include public facilities, such as a public sports and recreation space (as in Commonwealth Stadium), and some sort of public ampitheatre for performances, as well as something, anything, to replace the loss of The Sidetrack as a privately run music and entertainment venue.

    I’m very concerned that City Council will get stars in their eyes over vague promises of development that never actually materialize. We gave a lot of concessions to Triple Five Corp. in the eighties in return of similar promises regarding the development of office and residential towers associated with the (then) Eaton Centre project, and all we got was an underutilized shopping mall and a smallish Delta Hotel…a far cry from what was “promised”. We can’t FORCE development if the economics just aren’t sustainable! We also got sold a bill of goods with respect to the “old” Bay Building, and it took forever before the University of Alberta developed “Enterprise Square”. Remember the “Port Edmonton” project that went nowhere in that space?

    I would say to Mr. Katz, “By all means develop your office towere, and surrounding facilities(“Wintergarden”, etc), we can give you a tax holiday on land committed to arena development, and once those things are in place, we can take a serious look at building an arena, even with some sort of public participation”. If there IS actually demand for office and residential towers, he can and will build it. Personally, I don’t think the demand or need is there.

    I’m NOT convinced that an arena, in and of itself, used for what, at most 60 nights a year as a professional sports facility, is an adequate generator for “revitalization”. Certainly Rexall hasn’t generated much growth around it, and to those who argue that the surrounding area of Rexall is “undesirable”, well, isn’t the surrounding area of the proposed arena also currently considered “undesirable”? So there is no certainty that an arena downtown will do anything to change that, is there?

    I think “in-fill” development of all our ground level parking lots downtown is desirable, but the economic case for such development has to be sustainable.

    Unless we limit further horizontal development into “green-field” areas, and perhaps tax ground level parking lots on the basis of what that space “could” be used for, the provision of public services such as fire, police, sewars, public transit, schools, etc., will become less and less efficient and more and more expensive to taxpayers, and there will be NO incentive to businesses to favour development in the “core” as opposed to building one or two story offices and “crackerbox palaces” further and further afield.

    Cities have to grow UP, not OUT, but there is currently no reason to believe that there is sufficient demand or incentive for intensive development in the downtown core. If Mr. Katz wants to risk his own money in developing a more robust economic and residential “core”, he should be encouraged to do so, but Edmonton’s citizens shouldn’t be expected to subsidize it.

  7. Let me say first I think the info on your site is great
    I have always thought that building an arena downtown
    would revitalize it was folly
    Is our current arena in that bad shape I read all the emails
    and the worst I heard is that the roof leaks ,are there more
    serious problems I was there not long ago and I was still impressed
    It seems to me the people against it have made sense and the ones for it sound like political ads . Please don’t let the stars in the mayors eyes let katz win
    have more to say but I am not a very good at typing

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