Next steps on Galleria

There are very few projects that have conflicted City Council as much as the Galleria. Our hesitancy has sent mixed signals about whether Council believed this project was a good idea or not. But there were good reasons for hesitation.

When the Galleria was first proposed several years ago, we were concerned with the level of risk the City was being asked to assume, concerned about some gaps we perceived in the business case, and Council was not comfortable with the scale of the $91 million contribution that was then asked from the City to bring it all to life. As an ‘all or nothing’ proposal, it was a difficult idea to unconditionally support.

The Galleria concept and deal structure we discussed yesterday is significantly different than the first model proposed in 2013; this is why City Council’s Executive Committee agreed unanimously to work out an MOU with the Galleria project proponents to further clarify thresholds around land acquisition, transfer of funds and the role of the downtown CRL.

Part one: the Galleria deal

As it stands today, the City’s contribution to the Galleria would be $58.3 million, much of which would go towards purchasing land for cultural facilities, with the city continuing to hold ownership of those lands just as we have historically for the Winspear and other cultural facilities.

Further, through the ‘gated’ phases of the project, the City’s incremental funding toward the project is only triggered as other important pieces fall into place. For example, we won’t need to acquire the Public School Board lands (where the larger theatre would be located) until the second phase’s mixed-use commercial development is a go. And rather than committing our CRL money up front, we’re ensuring the mixed-use development from Phase 2 is actually in place in order to essentially guarantee we cover our investment. Put plainly, this is not a ‘wing and a prayer’ CRL play on the City’s behalf.

Another key point for Committee is that, through this MOU, we can ensure (as we’ve been promised) that the City is not responsible for any cost overruns, delays, or ongoing operating or maintenance costs associated with the project, and its operational funding will be the sole responsibility of the proponents, based on the proceeds of development. It’s actually a very appealing model of social enterprise, seeded by significant philanthropy from many prominent Edmontonians committed to building up the arts in our City.

In fact, lost in this discussion for some time has been the $50 million philanthropic contribution of the Edmonton Downtown Academic and Cultural Centre Foundation to our city’s core. This model that’s been proposed is a first for Edmonton (at least on this scale) and it is an example of ‘giving back’ in the grandest sense.

This ‘new deal’ allows us to more fully acknowledge and celebrate the benefits the Galleria could provide, which include:

• Bringing the University of Alberta’s Fine Arts and Music Departments downtown, a positive for strengthening the Arts District in downtown, and for synergies with MacEwan University
• A philanthropic cultural trust that could support the ongoing operations of downtown arts organizations; a positive for both new and existing flagship institutions
• A billion dollars of investment – half of which could generate tax revenue (first to pay back the CRL contribution and then to the city)

There are still significant milestones ahead for the Galleria proponents, including securing tenants for the mixed-use commercial development on the corner of 101 St and 103 Ave – the lynchpin for the Cultural Trust and the success of the project as a whole. The group, along with the University of Alberta’s Board of Governors will also have to re-engage the provincial government on why moving more of the University of Alberta downtown is a good thing for the project, for the university and for downtown.

Part two: the pedway connection

A smaller but significant part of Committee’s discussions was about ensuring we left our options open to a proper pedway connection to the Royal Alberta Museum, and the lands attached to it. There is urgency to this decision given the advanced state of RAM construction, and we didn’t want the opportunity to pass us by to build a connection shell to this key cultural project. Should the Galleria project move forward, we will draft a new agreement with benefitting landowners further north (including Qualico’s Station Lands and the Galleria) about extending the pedway and giving instrument-carrying students climate-controlled access to future University facilities.

As for next steps, in September, City Council will evaluate the list of Stage 2 Downtown Community Revitalization Levy (CRL) projects that are currently unfunded; a list that includes the funds already earmarked for the Galleria, as per previous Council direction. This will give us an opportunity to transparently evaluate the forthcoming MOU in the context of some of the other priorities we’ve identified for downtown.

Our job as a City Council is to ensure we make good city-building decisions without exposing the City to unnecessary risk. Yesterday’s Committee motion to flesh out an MOU agreement with the Galleria proponents while advancing work on the pedway ensures our commitment is measured, while also keeping our minds open to a project that could make a significant contribution to our downtown’s vibrancy.