There are three camps on this question. There are those who believe the Oilers are priceless, and would pay anything. There are those who believe pro sports are worthless to Edmonton and/or who really don’t want to see any investment downtown; and consequently don’t want to see any city dollars whatsoever going into a new arena (and might or might not support putting money into the existing arena, which will need some work eventually).
Then there’s the rest of us: open to the idea of a new arena downtown, aware that it could spark new investment, but not too happy about how the negotiations have played out and concerned that the City is being asked to put a lot on the line to make it happen.
I’m not ready to climb on board yet. I’m still holding out for a better deal. And I think we need to get there very quickly.
I think we can get a better deal with a reconfiguration of the ticket tax, which I pushed hard for today.
In the current deal, the City would collect a flat payment from the Katz Group to service $125 million in debt, based on a surcharge. Depending on the final interest rates it’s fixed at about $6 million per year. There is also a $1.5 million annual contribution for major maintenance that they will recover with the surcharge. My calculations show we could fill the last $55 million for about $2.6 more a year collected on the ticket tax (yes, that would require still more borrowing). On average that’s $1.50 a ticket give or take.
Part of the way to make it worth the partner’s while to get the $2.6 million would be to shift from a fixed payment to a floating payment – so if the ticket sales were higher one year the City would collect more to pay the debt, but in lean years the city would collect less (fair – and absorbable in the overall budget in the odd year). It’s a risk transfer, but it’s also sharing in the upside. Sharing in the upside is important because citizens have said to me over and over they expect as a return on the investment of so much public money. Sharing in the upside would also make us benefiting partners in the success of the operation.
A ticket tax is a good substitute for provincial money because it reflects the fact that a third or more of the current arena users come from outside the City, and so it would be users from the region and the North chipping in. Plus, we could refocus our efforts on getting support from the province for other needed investment they have been more willing to support, like roads, rec centres and LRT.
There’s no perfect way to do this, but I think there is strong public support for taking a user pay approach rather than putting more city money on the line.
Meanwhile, in related news, I again supported moving ahead with the Community Revitalization Levy. I moved it in fact. I did because, used judiciously, it’s a reasonable tool for paying for civic infrastructure, including a portion of the Arena. I don’t think it would be wise to pay for more of the Arena using it, but LRT connections, land, parks, sewer upgrades, are all important for Downtown’s success.
So next time someone tells you I don’t support downtown, you’ll know better.