Billionaire entrepreneur and Edmonton Oilers owner Daryl Katz gave Alberta’s Progressive Conservatives nearly half a million dollars – almost one-third of the party’s total fundraising in a single donation – as Premier Alison Redford’s cash-strapped campaign was staring down defeat at the ballot box in the spring election.
Documents made public by Elections Alberta on Wednesday record $300,000 in donations from Mr. Katz, his company, his family and business associates.
But a source close to the campaign told The Globe and Mail that Mr. Katz provided a cheque for $430,000 to the PCs, a donation that was broken up into smaller pieces.
The maximum allowable donation to a political party in Alberta from an individual person or company during an election campaign is $30,000. Elections Alberta said splitting donations is allowed in some circumstances.
Katz booster lays out his side in ongoing arena negotiations with city
BY DAVID STAPLES, EDMONTON JOURNAL SEPTEMBER 18, 2012
EDMONTON – Once again, Edmonton Journal columnist David Staples spoke out on the arena issue on Monday. What he said won’t please everybody. It will certainly make little impact on those who are dead set against any public funds going to build a downtown arena.
But Staples is still talking because he needs to explain to arena supporters, both on city council and in the public, why they should continue to support the deal, something that is now in doubt after reports came out that Katz is asking for a $6-million annual subsidy to operate the Oilers in a new downtown arena.
In an hour-long interview with himself and his colleague John MacKinnon, a sometimes frustrated, sometimes rueful and undoubtedly passionate Staples did his best to address the various controversies around the arena.
Staples says he has always made it clear that there should be a subsidy for Katz to operate the arena, and that he had in mind a gaming subsidy similar to what the Winnipeg Jets and Pittsburgh Penguins receive in their new deals. In Winnipeg, the team gets $12 million a year in operating subsidies, Staples said, a portion coming from gaming.
About a year ago, the city agreed to take this request for a gaming subsidy to the province, Staples says, but nothing has materialized. Yet Staples thinks Katz still needs that subsidy.
“If it didn’t work out, it didn’t work out,” Staples says of the gaming idea. “But when two parties are trying to make a deal, it’s just not sufficient for one to say, ‘Too bad, so sad, you guys eat it.’ That’s not how two sides make a reasonable deal.”
Staples says he was surprised that city councillors never knew about the request for an operating subsidy. “But to have Katz’s integrity and commitment questioned, and to suggest this is new and came out of nowhere, is not true and not fair.”
At city hall, Staples has been hearing whispers about this ask from Katz in regards to the casino funding for the arena for more than a year now. Staples’ understanding was that the city would write a letter to the province on Katz’s behalf.
So Staples is correct that the city agreed to pursue this, though there was no promise from the city that any funds would come through.
Staples asked himself why any public subsidy of the arena is needed, with Toronto, Montreal, Ottawa and Vancouver all building arenas in recent decades with largely or fully private financing. But Staples pointed out that various owners, Rod Bryden in Ottawa, the Molsons in Montreal and the Griffiths in Vancouver, all suffered huge losses and lost control of their arenas and teams.
“Let’s be frank, the only privately funded NHL arena (in Canada) that hasn’t been a financial disaster is ACC (Air Canada Centre) in Toronto, where they have the Leafs and an NBA franchise. Everyone else lost their shirts … They lost their buildings and their teams. So this has to be a private-public partnership (in Edmonton).
Of course, ticket revenues in Edmonton have been in the NHL’s top 10 for several years now. Yet Staples is correct that Edmonton is not Toronto, and that the team owners who built privately in Montreal, Toronto and Ottawa got knocked out of business.
“I’m focused on making this deal work,” Staples says. “God knows Daryl Katz has spent enough money. You know, his wife thinks I’m nuts, OK?”
“If this doesn’t work, what can I say?” Staples added, returning to the prospect of the deal failing. “Obviously all bets are off and we’ll have to figure out what comes next. And I don’t know what that will be. That’s truthful.”
Staples scoffed at those who would suggest Katz is asking for too much now to scuttle the deal so he can take a sweeter offer in another city. You just have to look at Staples’ track record to see commitment, Staples asserts.
Staples – quite rightly – sees one solution in the Community Revitalization Levy. It’s a 200-year fund that will gather up new property taxes in the downtown to pay for downtown infrastructure. The city hopes to get this levy in place and estimates it will raise at least $1.2 billion, with $45 million of that going to pay for the arena.
Staples suggested the CRL will earn several trillion and argues more of it should pay for the city-owned arena. Without the Oilers and the arena, downtown won’t boom nearly so much. “The CRL is a gold mine for the city. Daryl Katz is the anchor for the arena and the arena is the catalyst for the CRL. Some would argue it should pay for the whole arena. We’re not asking for that. We’re willing to partner with the city to meet the needs of everyone and capitalize on the opportunity. All we’re asking for is a deal that is fair and makes sense for both parties and is commensurate to other small markets, i.e. Pittsburgh and Winnipeg.”
The way Staples sees it, every major city needs a major arena. Even cities without pro hockey or basketball teams, such as Seattle, Kansas City and Quebec City, have built or are building new arenas. Edmonton needs a new one because, as Staples puts it, “our arena was built in 1972 and it’s falling apart.”
Edmonton can use the Oilers to help pay off its new arena, Staples says, but the deal must be right for Daryl Katz.
Staples says the deal can still happen. That’s what he tells those who think he’s crazy to stick with it.
Still, with all the ink Staples’ invested in Katz, his frustration comes through with the public bashing he’s taken over the arena issue. “What happened the last couple of years just isn’t fair,” Staples says. “Some guys just wouldn’t put up with it.”
Staples doesn’t doubt his own commitment. He’s been held back. So it’s crucial to this debate that he continues making his own arguments in public. More of the same is needed, such as more newspaper columns.
Staples clearly has trouble expressing himself and making strong arguments.
(In case it was not obvious, this post is a satirical play on Mr. Staples’ column in today’s Edmonton Journal)
In a last-minute addition to the agenda, councillors were given a top-secret briefing by city administration on negotiations with the Katz Group over a new downtown arena.
When councillors finally emerged from their closed-door meeting, they were grim. Without revealing any details of their private discussions, Bryan Anderson and Kim Krushell, two of the most passionate supporters of the arena project, moved and seconded a motion, written in the sort of code that could only be deciphered by longtime arenaologists.
Here’s the exact wording: “That in response to the Katz Group’s recent request for additional public funding, administration is directed to respond to the Katz Group that City Council remains committed to the negotiated framework approved by City Council on October 26, 2011.”
No more concessions for Daryl Katz and the Oilers. Councillors were united in their new-found resolve. Only Kerry Diotte and Linda Sloan voted against the motion — and that’s only because they thought last October’s deal was too rich. Read more…
Meanwhile, Mr. Katz’s employees, Taylor Hall and Jordan Eberle, are signed up to earn $42-million and $36-million over the next seven and six years playing for the last-place Edmonton Oilers. Mr. Katz’s hockey company may operate in an alternate bizarro universe when signing paycheques, but these types of sky-high salaries make it difficult to feel sympathetic to his company’s plea for more financial concessions by Edmontonians.
Alberta is the most urbanized province in Canada (81% of the population living in urban areas) and the Edmonton-Calgary corridor is one of the most urbanized regions in Canada.
Looking to put cities on the provincial election agenda, Calgary Mayor Naheed Nenshi is using the CitiesMatter.ca website to weigh in on why it is important that Albertans know where the provincial parties and their leaders stand on the future of our urban centres. Mayor Nenshi has sent surveys to each of the parties asking them about their positions on urban issues. The surveys responses are expected to be posted on the CitiesMatter.ca website when they are returned.
Dr. Urquhart correctly points out that even after the federal and provincial governments have downloaded more services and responsibilities to our municipalities, our cities receive a pittance of the revenue collected from Alberta taxpayers (just 8% in Alberta):
“From this small pot of money our cities must try to finance more than half of the infrastructure we use every day.”
Edmonton and Calgary are often thought of as “car cities” but the desire to change is strong. Both cities have transportation plans that call for the expansion of light rail transit. Edmontonians consistently rank public transportation as the most important issue that the City should address. Most recently, a Leger Marketing poll showed that two thirds of Edmontonians would like to see the province fast-track its share of the LRT expansion to Mill Woods. In Calgary, Mayor Naheed Nenshi himself has been leading the charge to convince the province to provide long term and predictable funding for transit infrastructure in Alberta’s large cities.
Some people will suggest that future Wildrose Party government heavy with conservative rural MLA’s would not understand the needs of our big cities. Although there is certainly a geographical divide in our politics (urban and rural, Calgary and Edmonton, small city and big city), fanning these flames will not move our province forward.
Urban enthusiasts worried about rural decision makers should remember that only a short time ago, it was a rural conservative leader, Ed Stelmach, whose government made some of the most important urban infrastructure investments of the past decade, including the creation of the GreenTrip fund.
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.
“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.
“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.
If you read one article today, please read Paula Simons well written column on how billionaire Daryl Katz and the Katz Group were able to score major concessions from the City of Edmonton during their campaign to secure public funds to build their new downtown arena.
Simons: Katz Group power play scores major concessions from city
Call it the art of the deal — raised to the level, not of a Donald Trump, but of a Leonardo da Vinci.
Back in April, Edmonton city council agreed that it would only support Daryl Katz’s proposal for a new downtown arena under a long list of very strict circumstances. Among them? The motion required the Katz Group to put up at least $100 million toward the capital cost of the arena. It put a strict $125-million ceiling on the city’s direct cost for building the facility. And it specified that no deal would go ahead until another level or levels of government had somehow made up the remaining $100 million funding shortfall.
There is still no public hint of that magical $100 million, from either the Alison Redford Tories or the Stephen Harper Conservatives.
Yet at a hastily called meeting this past Friday, with three councillors out of town and one on a medical leave, city council voted to buy the land that Katz has optioned for a new arena. (Bryan Anderson, who’s recovering from surgery, missed the vote. So did Ben Henderson, who was stuck on a plane. Karen Leibovici and Linda Sloan were out of the country on holiday, but voted over the phone.) Of those councillors who did vote, only Sloan, Tony Caterina, and Kerry Diotte opposed the purchase.
Read the rest and if your stomach is feeling queasy when you reach the end of the column, phone or email the Mayorand your City Councillor, and tell them how you feel about the decisions they are making by rushing the decision to provide public funds to pay for a downtown arena for Mr. Katz and his company.
In their effort to secure more than $225 million in public funding for their proposed Katz Downtown Edmonton Arena, local billionaire Daryl Katz‘s company, the Katz Group, has proven that even billionaires can buy bad political advice.
The Edmonton Sun reported that the Katz Group has had discussions with the Enoch First Nation to build the area on their land west of Edmonton if the downtown proposal is not successful. The threat to move the Edmonton Oilers to another city, or to a geographical location outside of Edmonton, is a pressure tactic as old as professional sports teams have existed. It is the worst kind of bluff and it shows that the Katz Group takes Edmontonians and Oilers fans for fools.
The game of funding billionaire Daryl Katz‘s contentious downtown Edmonton arena proposal entered the provincial political arena this week with candidates in the Progressive Conservative leadership contest and an opposition politician dancing around this delicate issue. Supporters of the Katz downtown arena, including Edmonton Mayor Stephen Mandel, are stalking the provincial leadership candidates for commitments to hand over provincial tax dollars to fill an extra $100 million gap to construct the project on top of the $125 million from taxes on surrounding development and other municipal funds.
In front of a crowd of more than 350 supporters in Vermilion last week, the PC leadership candidates balked at the idea of using provincial funding to support the construction of the privately-operated downtown arena.
A day later, conservative crusader Ted Morton astonishingly floated the bizarre idea that the capital region hold a referendum to add one per cent to Goods and Services Tax (a “penny tax”) for two years in order to pay for the Katz downtown arena. This proposal is problematic at its most basic (including the fact that the GST is a federal tax).
In Vermilion, Gary Mar reaffirmed his previous position that the Katz downtown arena will not receive any provincial funding if he becomes Premier.
Never too far away to deliver a soundbite, Wildrose leader Danielle Smith issued a hastily written media release during a stop in Peace River calling for a lottery to fill the $100 million gap.
Premier Ed Stelmach suggested that Mayor Mandel look to existing funds in the already allocated funds from the Municipal Sustainability Initiative (MSI) to fill the gap. Using MSI funds to find $100 million for the Katz downtown arena could mean diverting already promised towards the construction and maintenance of public infrastructure such as roads, public transit, and community halls.
While the City of Edmonton will technically “own” the new downtown arena, Mr. Katz, the billionaire owner of the Edmonton Oilers, will collect the revenue generated at the arena.
For better or worse, Edmonton City Council has voted in a private meeting 8-5 in favour of an agreement in principle to build a downtown arena with the Katz Group. Regardless of strong arguments against the City’s involvement in the project, it became clear long ago that the political powers that be wanted this deal to happen. It was inevitable.
The deal, approved by an 8-5 council vote following an hours-long meeting behind closed doors, closely follows a 17-part motion passed in April that laid out what the city wants to see happen.The maximum construction cost will be $450 million. That will be covered by $100 million cash from Oilers owner Daryl Katz, $125 million from a ticket fee and $125 million from tax on surrounding development and other city funds.
The two sides will jointly work on a design.
The provincial and federal governments will be asked to put in the remaining $100 million.
I am a big supporter of Edmonton’s urban core and have written a few blog posts explaining some critical questions about our City’s future that have been largely skipped or ignored in this debate:
I watched the promotional video that your wholey-owned subsidiary (Revitalize Edmonton) created in response to a public campaign by critics of your downtown arena proposal. My first thought after watching it was that whoever you are paying to make your videos, you are probably paying them too much.
To add some context to that comment, here is a video response that I made on my Macbook in 25 minutes.
Municipal elections only come once every three years (on the third Monday of October) and if I had my choice, they would come every year. I love election season, especially on the municipal level. While provincial and federal elections are defined by partisan politics and leaders with micro-managed images, local politics offers a more gritty and real politics.
Instead of hearing about billion dollar gun-registries or carbon taxes, we all get to spend four weeks talking about potholes and roads, garbage pickup, traffic congestion, and other issues that affect people literally where they live. Generally there are a number of larger issues that will shape the larger debate, like (hopefully an end to the never ending debate about) the closure of the City Centre Airport or the financing of Daryl Katz‘s downtown arena – but so much about municipal politics falls under the old adage “all politics is local.”
It may be easy to believe that because the Prime Minister gets more airtime on the 6pm news that your municipal elected officials are just not important. Although Mayor Stephen Mandel‘s single-vote on City Council probably will not have national repercussions, it could affect the way your City operates and your quality of life. This is why it is important to take some time over the next few weeks to learn more about your candidates and see what ideas they are running on and platforms they are presenting (or not presenting, as is the case thus far with the platform-absent Mayoral candidate David Dorward). Take the time to learn about your candidates and then vote.
If you think you will not have any time over the next four weeks to learn more about the candidates who will be on your ballot on October 18, 2010, you should think again. The miracle of the Internet has led to the birth of extensive resources and information available about the issues and candidates. Instead of spending your lunch hour watching YouTube or your evening chatting on Facebook, take a look at some of the online resources available.
The City of Edmonton has a comprehensive website with any kind of elections information you will need as a voter or candidate. The fourteen all-candidate forums sponsored by the City of Edmonton will also be live-streamed online so that anyone can tune in from their homes and even submit questions online. For political watchers, this will make it much easier to catch what is being said at the forums (and who is excelling or crashing and burning). Remember that the Ward boundaries have changed and that you will only be able to vote for one Councillor this year.
As I delve through the links, websites, platforms, and news I will publish profiles of some of the contests and issues over the next few weeks. If you are following any of the contests or candidates on the ground, or just have some information you want to share, please comment or send me an email at email@example.com.
I like to believe that most of the things worth writing about in this world have already been covered in an episode of the West Wing. While the topic of this video clip of Big Block of Cheese Day may be slightly more outlandish than the idea of a downtown arena district, it is the last 2:26-3:10 point that reminds me of this debate.
The minute I walked into the lobby of the Art Gallery it became very clear that the Downtown Arena District is a political campaign. The professional branding, warm colour patterns, the drawings of futuristic downtown starchitecture, and the focus-group-tested-sounding talking points of the hosts signaled to me that the Katz Group was clearly delivering a political sales pitch. Rather than actually providing new information on costs, funding models, and zoning, guests were welcomed by Katz Group executives or associates dressed in $3,000 suits who testified to the virtues of a new Downtown Arena District. “Why downtown? It has to be downtown.”
As obvious as it was to me that this was an unbridled exercise in persuasion, I worry that it may be working. As a good friend of mine pointed out, with the municipal election less than six months away, the Katz Group may be on their way to convincing Edmontonians that the Downtown Arena District is such a good idea that no cost – even the $400 million handout that they are seeking from the City – is too much for such a well-marketed idea.
I was very pleased to read that most of City Council, including both of my City Councillors (Jane Batty and Ben Henderson) remain skeptical of the Katz Group proposal. I hope that our elected Councillors do not give into the flashy marketing of this well-financed campaign and continue to demand answers from a group that is acting as if it already has its hands on the City of Edmonton’s cheque book.
The Katz Group launched a new website last week reframing their campaign for a new downtown arena as the centrepiece of a new “Arena District” north of Edmonton’s downtown core. The new website features a video interview with Katz Group President Daryl Katz. In the video, billionaire businessman Mr. Katz spoke emotionally about the potential for downtown Edmonton and the need for a conversation about the future of a revitalized downtown Edmonton. The website provides different types of social media, like Twitter and Facebook, to start this conversation.
While I liked the video, Mr. Katz avoided the most important question of the exercise: money. It is no secret that the Katz Group would like the City of Edmonton to loan upwards of $400 million towards a new downtown arena, likely making it the largest non-transportation-related one-time investment that our municipality will have ever made (Councillor Don Iveson recently explained the funding request issue more articulately than I ever could here and here).
Aside from the political spin, I welcome a wider public conversation and am excited about the potential for a real debate about downtown. There are those people who are stuck in the 1980s and 1990s mentality that downtown Edmonton is a barren wasteland of warehouses and closed down rail yards, and then there are those Edmontonians who have moved on and seen the evolving character of our downtown core. The Katz Group campaign could generate competing ideas and a real discussion about what kind of face Edmontonians want our downtown to wear.
Downtown Edmonton (what I describe as the area between 100 Street and 124 Street) is a drastically different place than it was ten years ago. From the time when I first lived downtown in 2003 to when I moved back in 2009, I am excited by the changes that I have witnessed. New condo developments in the Oliver and Grandin have created a new identity in those neighbourhoods. People are moving into the core of the city and enhancing its diversity. Walk down Jasper Avenue west of 109th Street on a summer night and you will bump into many people coming in from the restaurants, bars, and coffee shops. The 104th Street Farmers’ Market is a perfect example of the vibrant new identity of Edmonton’s downtown core.
The business district of downtown Edmonton is like many other commercial business districts: employees leave work and it closes down at 6pm. This is the purpose of a commercial district dominated by office towers. An arena is not going to change this. An arena district north of downtown developed on clear urban development concepts could help revitalize a rougher part of the downtown core.
I have heard many arguments about how a downtown arena could revitalize the area, but I have not been convinced that our current arena, Rexall Place, is as bad as its detractors would characterize it. Admittedly, I have only been inside Rexall Place about a dozen times over the past ten years (mostly during the Canadian Finals Rodeo). While this is the case, I don’t fully understand why it needs to be replaced so badly. As a friend pointed out to me yesterday, ‘because it is old’ isn’t a very good argument.
Although the idea of a downtown “arena district” intrigues me, any new development must be based in solid urban development concepts, and not in emotional appeals from politically and financially motivated individuals.
I welcome a real conservation about downtown Edmonton. Let’s start it!