Update on arena/events centre negotiations
Post Date: Friday, September 22, 2017
After the Calgary Sport and Entertainment Corporation publicly released its proposal for how a new events centre/arena would be paid for, Mayor Nenshi met with reporters to explain and respond to the proposal. Click here for further context on the status of negotiations and The City of Calgary funding proposal.
Below is a comparison of the two proposals on the table for negotiation:
The following is a series of questions and answers provided to Calgary media following the news conference:
Question: What is the total cost of the arena project?
Answer: The full cost of the arena is estimated at $555 million. This includes $30 million for land and $25 million for Saddledome demolition and interim maintenance. The Flames state the arena cost is $500 million.
Question: How much are The City and the Flames each proposing to contribute?
Answer: The City proposal includes the following contributions: $185 City, $185M Flames, $185M Users (ticket surcharge) for a total of $555M. The City portion is comprised of $130M cash, $30M land, and $25M Saddledome demolition and interim maintenance. The Flames portion is cash. The user fee portion is a ticket surcharge on all arena events over 35 years, financed by the Flames.
The Flames proposal includes the following contributions: $225M in City cash financed by CRL, $275M Flames for a total of $500M. The Flames portion consists of $100M cash from the Flames, $150M ticket surcharge (financed by The City) and an additional $25M, the source of which was not clarified. The Flames proposal does not include the cost of land.
Question: Can the CRL be used to fund $225M?
Answer: Projected CRL revenue is not sufficient to fund a new arena. The East Village/Victoria Park CRL has been in place for 10 years and is supporting the current redevelopment of East Village (e.g. 4th Street underpass, flood proofing, RiverWalk). Due to the downturn in the economy and with only 10 years remaining on the CRL (conclusion in 2027 as per provincial legislation) only $150 million of additional CRL remains. Earlier this year, CMLC determined the balance of the CRL would go toward infrastructure improvements in Victoria Park (e.g. 17th Avenue extension, street improvements, RiverWalk extension).
Question: How much incremental property tax (CRL revenue) will be generated and is this a Flames contribution?
Answer: The Flames indicate that there will be $243 million in incremental property tax (CRL revenue) and that this funding is provided by the Flames. CRL revenue comes from the property taxes paid by owners of new development in the area, not from the Flames. CMLC is projecting $150 million in CRL revenue for the remainder of the CRL timeframe (2017-2027). The Flames have not committed to any development that would pay property tax.
Question: Is this a public arena as indicated in the Flames September 21 advertisement in local newspapers?
Answer: As proposed by both The City and the Flames, the arena would not be managed or programmed by The City. The City would not receive any revenue (ticket revenue, sponsorship revenue, naming rights revenue, etc.) and Calgarians would not be able to freely access the arena like they do with other public buildings.
Question: Can you compare the Calgary proposals to the Edmonton arena deal?
Answer: According to the City of Edmonton website, Rogers Place cost $613.7M without financing costs. The Katz Group owned the downtown land beside the arena and committed to $100M of development that would contribute property taxes in the new CRL district that covers a large portion of downtown Edmonton. Calgary initiated a CRL 10 years ago and the successful redevelopment of East Village is the result. Redevelopment in Victoria Park benefits from that same CRL and future urban renewal is already on track. Unlike Edmonton, the Flames have made no development commitments.
Question: Would the Flames play The City back in either proposal?
Answer: In the Flames proposal, the Flames would not pay rent or property tax, and The City would not receive direct revenue from them. The Flames would also receive all revenues associated with the arena including hockey games, concerts, special events and concessions.
In The City’s proposal, the Flames would pay property tax (if they owned the arena) or rent (if The City owned the arena). We have never discussed final amounts, and The City has indicated we are open to discussing this with the Flames.
While some would see this as a partial pay back of The City’s contribution, it is intended, like all property taxes and City revenue to defray The City’s operating costs. This would include extra transit service on game nights, extra police within the surrounding area, street cleaning after the event, etc.