Councillors move forward with revised deal for downtown arena
Published Wednesday, January 23, 2013 10:49AM MST
Last Updated Wednesday, January 23, 2013 6:58PM MST
City councillors voted Wednesday to move forward with a revised deal for the downtown arena project, with construction slated to begin as early as August and completion set for 2016.
All councillors except Linda Sloan, Kerry Diotte and Don Iveson voted in favour of a revised design and negotiated framework, which is expected to cost $601 million in total.
“This has not been an easy road,” Mayor Stephen Mandel said after the vote was made.
He said the new arena is about “more than just a place to play hockey,” and that it is a big part of helping build Edmonton.
After the vote was made, Mandel had a brief phone conversation with Oilers owner Daryl Katz.
Mandel said Katz told him he was “pleased” the negotiations are now behind them and “we can move forward.”
Katz later issued a statement, saying the new agreement “will drive ongoing revitalization of downtown Edmonton.”
“It also helps to ensure the Oilers' long-term sustainability in Edmonton. This has been a challenging process for all concerned but we are confident we will all look back on the end result with pride and satisfaction at what we have achieved,” Katz said in the statement.
“This is a great day for Edmonton and we are excited to get to work on realizing this incredible opportunity."
A master agreement on the project is expected to go before council in March.
City administration presented three options for the downtown arena and a recommendation to move forward with one of those options, on Wednesday.
The option recommended and voted on by councillors – Option A - is similar to the design agreed upon in the October 2011 framework, which included the winter garden and underground parkade.
It is budgeted at a total cost of $601 million – with the arena itself costing $480-million.
The city would contribute $219 million to the overall cost, while the Katz Group would put in $143 million, a ticket surcharge would cover $125 million, and an additional $114 million would be provided by contributions from the provincial and federal governments.
Options B and C had lower overall costs and fewer amenities – but City Manager Simon Farbrother said the city would be contributing roughly the same amount for each of the options.
"When you look at the value added in terms of year-round access across 104 Avenue we believe Option A is the best design," Farbrother said.
All of the options had the arena featuring 18,559 seats.
Arena project costs broken down
The $480 million arena cost is $30 million higher than the previous agreed-upon price.
The city and the Katz Group would split the extra cost 50-50, with each group covering an extra $15 million.
The Katz Group’s portion would be added to the $100 million the Oilers owner already promised, which would be paid over the next 35 years, through a lease payment agreement.
Additional costs include a community rink ($21 million), winter garden ($53 million), LRT Connection ($7 million), and pedestrian link ($15M).
Farbrother said the LRT connection cost was decreased from $17 million to $7 million.
The city will also fund a $25 million portion of the winter garden, with the Katz Group covering the rest – the element was originally capped at $50 million.
At Wednesday's arena update, Farbrother presented the new negotiated framework for the arena project, which included price changes.
“In relation to the numbers we presented to you in New York, we believe the financial arrangement is reasonable,” Farbrother said.
“It realizes the city’s vision in bringing an arena to the downtown core.”
"The way we're getting there is not right."
During questioning, Coun. Tony Caterina wondered whether the city would be responsible for coming up with additional funding if other levels of government do not get involved.
Farbrother said the city will request $107 million from the province and $7 million from the federal government - to cover $100 million for the arena and $14 million for the community rink.
He says Mayor Mandel has been "actively" addressing that issue.
Mandel said he is very confident that the city will be able to get the additional funding from the province and federal government.
The missing money was a sticking point for Diotte, who voted against the new negotiated framework.
"This should not have even been proceeding until that money was firmed up," Diotte said.
While he supports the idea of a downtown arena, Diotte did not believe what was presented on Wednesday was the best approach.
“The way we’re getting there is not right,” he said, insisting the deal is not good for taxpayers and the financial details are still unclear.
"A lot of people run very successful businesses in this city but they don't get public money to build their factories."
Mandel reiterated that taxpayers shouldn’t worry.
“This is taking money we already have and finding uses to use it better,” he said.
Coun. Iveson expressed concerns that the arena framework as is works as a subsidy for the
"The entire deal is an indirect subsidy to NHL," Iveson said, adding that the deal is an "open wound" for Edmonton.
The city also said Wednesday that they require the province's approval before moving ahead with the Community Revitalization Levy (CRL).
The city's chief financial officer Lorna Rosen said administration has been in talks with the province to draft the CRL and the next meeting with the province on the CRL is expected in February.
Councillors on Wednesday also questioned the Katz Group on whether they could guarantee they would not return to the city requesting more money, if Wednesday's framework was approved.
"We think that we can live with this (deal) for 35 years," Karvellas said, adding Katz has approved of the new framework and summary.
"There is no intention to revisit the deal with the city."
The mayor reiterated that comment after the vote was made.
“This is 100 per cent. A deal is done,” Mandel said.
Oilers players talk new arena
Members of the Katz Group, and Edmonton Oilers President and CEO Patrick LaForge, along with a number of Oilers team members including Shawn Horcoff, Taylor Hall and Jordan Eberle, were also present at Wednesday's update.
Before the vote was made, Horcoff and Eberle told media how important the new arena deal was for players and fans.
"We feel it's an important part of our future as players. We all want to see a deal get down, we all want to see a new arena, I think it's exciting for the city, it's exciting for fans,” Horcoff said.
Negotiations for the proposed downtown arena project took a step backwards last fall, when councillors voted to cease negotiations.
In December, councillors voted to resume negotiations with the Katz Group, based on the framework the two parties had agreed upon in October 2011 - but this time a third-party mediator would also be involved and appointed by Jan. 23.
On Wednesday, Farbrother said administration decided not pursue a third-party mediator because it did not end up being needed in order for the two parties to come to an agreement on the new negotiated framework.
Farbrother noted NHL commissioner Gary Bettman's attendance to a meeting last Friday was not as mediator, but just to address and help the two parties resolve "two or three outstanding issues."
Construction for the new arena is expected to begin in the late summer or early fall of this year.
The arena is expected to be completed in 2016.