why would the government of alberta help fund the proposed Katz group arena?

This week Edmonton’s City Council is holding hearings and holding a vote to purchase the lands underneath the proposed Katz Group Arena on 104th Avenue north of downtown Edmonton. This vote will take place despite the $100 million which is still missing from the funding formula that has been negotiated by Mayor Stephen Mandel, the City Administration, and billionaire Daryl Katz‘s Katz Group. The current funding formula would have the City of Edmonton fund an approximate $450 million towards the mega-project.

Some advocates of the proposed Katz Group Arena will tell you not to pay too much attention to the details, because the proposed Katz Group Arena will cure all of Edmonton’s civic ills, but reasonable voices are pointing out the raw deal that the City of Edmonton has negotiated. Paula Simons wrote an excellent column about this last week, and Edmonton Journal business reporter Gary Lamphier waded in to the discussion today, highlighting the point that Mr. Katz is no longer willing to pay the $100 million he has previously committed towards the project:

“It’s a terrible deal,” says U of A sports economist Brad Humphreys. “They’re still short $100 million and I don’t see it going very far until they come up with the remainder of the funding.”

What’s more, by allowing Katz to forgo the $100 million upfront funding commitment in return for a 30-year lease at $5.5 million per annum, Humphreys says the city has further softened the financial burden on the Oilers owner.

“I notice in the reporting to date, people are saying Katz is paying $165 million, which is $5.5 million over 30 years. But that’s not right. That calculation ignores the time value of money, which believe me, is coming out of the taxpayers’ pockets.”

The federal government has given no indication that it is interested in entering this kind of financial venture, which has led some arena advocates to look to the provincial government to fill the gap. It is a risky venture for the provincial government to become involved with.

During the Progressive Conservative leadership campaign, now Premier Alison Redford said in a media release that she opposed any government funding for the Edmonton arena, direct or through a dedicated tax.

It has been speculated that provincial funding already allocated through the Municipal Sustainability Initiative could be allocated to the Katz Group Arena, but such a move could come at the cost of much needed public transit and community infrastructure.

Provincial involvement in the proposed Katz Group Arena could also create expectations by other municipalities that the provincial government should fund other professional arena mega-projects. This could be the case especially in the City of Calgary where the aging Scotiabank Saddledome could need be replaced or undergo major renovations in coming years.

Premier Redford has said that she wants the provincial government to deliver a balanced budget by 2013-2014. Diverting $100 million toward the proposed Katz Group Arena to fill a funding gap that was a result of poor negotiations on the part of the City of Edmonton does not exactly send a clear message of fiscal responsibility to Albertans. This would open the Progressive Conservatives to increased attacks by the NDP and Wildrose, who have already taken hardline positions against public dollars supporting the proposed Katz Group Arena.

In a September 29 media release, NDP leader Brian Mason (who was elected to City Council during the Peter Pockington-era of Edmonton Oilers ownership) said:

“I’d rather see that $100 million used to reverse this year’s education cuts, or used for publicly accessible infrastructure like LRT. I’ll put kids before a billionaire team owner any day.”

There is also the possibility that provincial funding for an expensive mega-project like the proposed Katz Group Arena could hurt Edmonton’s chances of securing future funding from the province for legitimate public works projects, such as future LRT expansions. The provincial government is already funding the construction of the Anthony Henday ringroad and is currently undertaking the restoration of the Federal Building, the creation of a new Centennial Plaza at 99 Avenue and 108 Street, and providing funding to expand the LRT.

With the provincial government already pouring funds into these large infrastructure projects in Edmonton, there is the very real possibility that the province will have no interest in becoming financially involved in a mega-project like the proposed Katz Group Arena. 

That no other level of government wants to become involved in funding the proposed Katz Group Arena should be a hint to Edmontonians and their City Councillors that they should take a closer look at the “deal” that their Mayor and Administration have negotiated.

14 thoughts on “why would the government of alberta help fund the proposed Katz group arena?

  1. Neal

    Agreed. This is a terrible deal for Edmonton. Dave, how will you feel if Don Iveson, who you previously supported, votes for this terrible arena package to proceed?

    Reply
  2. C'mon Seriously

    Dave, your argument is flawed. If you state that arena funding would take away from LRT funding then does it not logically follow that LRT funding takes away from health care funding? and health care funding takes away from funding for children. So anyone who supports LRT funding does not support health care or kids?

    People need to get past these silly arguments. The fact is that smarter people than us are involved in these discussions. We elect people to make decisions for us, we call this democracy. Yes, we do not always get what we want out of the deal, however that is also democracy.

    If the biggest issue facing us as Edmontonians is funding for an arena then we need to take a hard look at our spoiled nature.

    Let’s not muddy this issue with illogical emotional issues. We’re better than that, i hope.

    Reply
  3. Jeff

    C’mon – I think Dave is talking about infrastructure dollars, which would include buildings, roads, and LRT. So, to shift money to the arena would likely take away from roads and LRT. Health money would, in most budget years, be a separate discussion.

    Reply
  4. Bob

    We have seen too many too big to fail businesses leave the tax payer holding the bag. Why does Government insist it must spend more on “poor” billionaires to make us rich and important. The role of government is to look after the Common wealth and not just the wealthy. Convergys, Dell Computers, the Pacific Coast Baseball league all took millions out of Edmonton with the promise of prosperity and left for greener pastures.

    Some day they will build an LRT that no one can afford to ride to work, much less take to a very expensive professional hockey game. Peter Pocklington taught Alberta and Edmonton nothing as both Governments always run after the rich with tax dollars. It works well as the rich always get richer. We get the best government money can by!

    Reply
  5. Denny

    I’m thinking Katz changed from 100 million up front to 5 million per-year because he wants to be able to get out of paying the rest of it in a few years. He’ll try to threaten the city with losing the team and having an empty arena if they don’t let him out of the rest of the payments.

    Reply
  6. @Denny

    Edmonton’s municpal politics is corrupted and compromised. This was forced throug in an undemocratic manner. There is NO way this deal would have flew in many other cities. Now private enterprise gets to walk away with full revenue from the Arena with little to no commitment and full risk of construction onto the tax payers. The arena district is a great idea, but the funding arrangment is biased, one-sided and rest assured, a few years down the road, the arena lobby will weasel out of even the $5.5 million/year, claiming profits are suffering and like cattle at the slaughterhouse, taxpayers will again become the sacrificial lambs, giving away hundreds of millions of dollars for a pipe dream that this MAY generate jobs and MAY generate revenue. The Arena Lobby weaseled out of almo$t every commitment here. Taxpayers never asked for this. With civic government that rolls this easy, why do we even have a civic gov’t, why not just let the arena lobby take up the city offices and dictate directly to the taxpayers??!?!

    Reply
  7. Neal

    Go take a drive in St Albert, Sherwood Park or Beaumont. Those places have better roads, sidewalks, parks, and services than the City of Edmonton. There are a lot of reasons for that, but a big part of it is that they don’t piss away a huge chunk of their municipal tax base on these kinds of pork barrel politics. If the City would stick to a mandate of only using tax dollars to provide basic services, we’d have better and cleaner streets, stronger local policing, and all the other benefits.

    Oh and we’d still have the stupid Oilers. They make way too much money to ever consider moving somewhere else. What other city repeatedly sells out tickets for a perennial last place bunch of losers?

    Want the team to get better? Make Katz put a better product into the marketplace. You do that by not buying the shitty product currently on offer. That applies to the arena deal AND the team itself.

    Reply
  8. Kyle

    “It has been speculated that provincial funding already allocated through the Municipal Sustainability Initiative could be allocated to the Katz Group Arena, but such a move could come at the cost of much needed public transit and community infrastructure.”

    The Premier and the Municipal Affairs Minister confirmed today that MSI can be allocated for the Edmonton arena.

    Reply
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  10. Ian

    Dave, the province has committed to not providing the necessary $100M for the arena project, however I’d not be surprised if they quietly think the new arena would be an important asset. If (a big ‘if’ I realize), the provincial government thinks that way, do you think they might provide dollars to the Capital Region Board, which would then fund the arena as a regional project?

    This way, the province could fund the arena without actually ‘funding’ the arena. This tack would avoid direct MSI dollars going to the arena.

    The current mandate of the CRB is to look at land use, GIS, transit and affordable housing from a regional perspective under the Capital Region Growth Plan. That mandate was set by the province, and the province could alter the mandate to include encouraging infrastructure development that benefits the region as a whole if they wanted to – assuming that infrastructure can’t be shoehorned into one of the existing mandate areas.

    Reply
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