Alberta Politics

understanding the katz arena district debate: community revitalization levy, opportunity costs, and the arena poll.

Edmonton City Council voted yesterday to enter formal negotiations with the Katz Group to develop a downtown arena though framework documents developed by the City Administration. These documents are problematic for many reasons, but mostly significantly because they present a $100 million gap in the funding framework.

Mayor Stephen Mandel remains a steadfast supporter of this mega-project and a few Councillors expressed their discomfort at entering this stage of the process with a surprising lack of important information available to them. Councillors passed a 12-part motion requesting reports on the community benefits, the potential to raise money from licensing or selling seats, the impact on businesses near the area, and the status of negotiations with Northlands. The lack of important information still unavailable makes yesterday’s motion very much a tentative move towards negotiations between City Council and the Katz Group.

After a heated day of questions and debate, Councillors Don Iveson and Linda Sloan were the only two Council members to vote against the motion to enter negotiations, which was voted upon separately from the rest of the 12-point motion. Councillor Iveson wrote a blog post last night expanding on why he did not support the motion and raised the important point that perhaps: “we should just call this a subsidy and be transparent about it.” This point raises another important question that I asked in a previous post: should municipal governments be responsible for subsidizing professional sports in Canada?

Public hearing on the Katz Group’s zoning proposal are scheduled for today and more public hearings are expected to be held in mid-March.

As City Council awaits a response to its motions, it is important that all Edmontonians understand the wider issues surrounding this development, so that they can fully participate in the debate and ensure that our elected officials are making the most responsible decisions for the future of our City. Here are three of those wider issues:

Understanding the Community Revitalization Levy
An important thing to remember when trying to understand the Community Revitalization Levy (CRL) is that despite its name, it is essentially a tax (in other jurisdictions it is known as Tax Increment Financing).

There is a good explanation of CRL on the WhyDowntown? blog. Mack Male has also written a helpful three part series explaining some of the basics about CRLs, how they are already being used in Calgary’s Rivers District, in Edmonton’s Fort Road, and is in the process of being implemented in Edmonton’s The Quarters District, and how a CRL could work in a Katz Arena District.

Understanding Opportunity Costs
The Charette’s Scott Lilwall has taken a look at some of the opportunity costs facing the City of Edmonton if public funds are used to subsidize the Katz Group Arena. Are the opportunity costs of subsidizing a new downtown arena good for Edmontonians?

Given that it’s never a sure thing, we need to ask ourselves – what is the opportunity cost? If downtown revitalization is our goal, is a new arena the best thing we could spend $250 million on? It seems to be a high price to pay for bringing people to the downtown for a few hours at time. Even if the new arena was booked every night, most people are going to be in and out: come downtown for the event and then go home. Some of them will stick around for a few hours beforehand. Do some shopping. Do some eating. Spend some time downtown.

That’s good. But it can’t be all that we aim for. What we need is to get more people living around downtown, people who will be eating and shopping and walking and doing what people int he neighborhoods they live in. And they’ll be doing it at all hours of the day. That should be our goal, and the arena is only one way of getting closer to it. But are there better things that we can do with that big pile of money?

Understanding the Arena District Poll
Last week’s news stories in the Edmonton Journal and Edmonton Sun were filled with praise for a poll showing that a majority of Edmontonians not only supported the construction of a downtown arena and public funding of the project.

Luckily for Edmontonians, the Journal’s Paula Simons took a more critical look at the poll results and the questions asked in the poll. Ms. Simons’ closer look confirms the old adage that you can always formulate polls to give you the results you are looking for.

In her column today, Ms. Simons reminds Edmontonians that many questions still need to be answered before this arena deal spins out of control. Hit the books and get learning, Edmontonians. The future of your City deserves a good debate.