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Edmonton city council approves funding for new Oilers arena

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The Canadian Press
10/26/2011 7:26:22 PM
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EDMONTON -- One hurdle remains for the National Hockey League Oilers to get a new downtown rink -- but it's a big one.

Edmonton city councillors voted 10-3 Wednesday to sign on to a cost-shared deal with team owner Daryl Katz for a new $450-million arena.

But when everything is added up, the deal is still $100 million short. Both Katz and the city have been asking for that money from either the provincial or federal governments. Both have already said publicly that they will not use tax dollars to fund private enterprises.

However, Alberta Premier Alison Redford has said the city can use provincial infrastructure dollars already allocated to it.

Mayor Stephen Mandel said that fight is for another day.

"We cannot start without that money," Mandel told council. "But that's not about today. Today is about making a decision to change our downtown.

"This particular project will build a better city."

Mandel said it was about more than dollars and cents with a team that has brought the city five Stanley Cups.

"People love the Oilers. It's part of our fabric in this life, part of the fabric of this city."

He dismissed critics who wanted him to stare down Katz and strike a better deal for the city.

"I'm not willing to take that risk (of losing the team to another city). I think we've made a good deal," he said.

The Katz Group issued a statement late Wednesday saying it appreciates council's "strong vote of support" for the arena.

"We also want to take this opportunity to thank everyone who participated in the public hearing and to say once again that we believe the Edmonton Arena District is a great opportunity that will benefit our entire city and region."

NHL Commissioner Gary Bettman said in a statement that he is "thrilled" for Edmonton.

"The future of the Oilers couldn't be brighter," Bettman said.

Time had been ticking down for the deal to get done.

Katz had said he wanted a deal by Monday so the rink would be ready for the 2015-16 season. He has also said the team is losing money under its current lease at Rexall Place.

The proposal is for Katz to contribute $100 million. Another $125 million would come from a ticket tax. The city would pay $125 million up front and recoup more than a third of it from higher property taxes expected to come from that revitalized area of downtown.

The city would also pay Katz $20 million over 10 years to advertise Edmonton through his team. It's not clear what form that advertising would take.

Katz would retain the naming rights for the building.

The Oilers would pay $100 million in instalments: $5.5 million in annual rent for 35 years, plus interest, for a total of $186 million. The ticket tax would be $5 to $6 per ducat.

The Oilers have also promised to keep the team in the Alberta capital for the next 35 years.

The city would spend additional millions to buy the downtown land, put up a pedway and build rapid transit to the rink. It would own the facility, but Katz would run it, pay for its maintenance and keep all the profits 11 months out of the year.

The rink would be built on a "design model" to cap the cost at $450 million and avoid overruns.

Coun. Kerry Diotte voted against the deal.

Diotte said he is for a new arena, but not with a deal where the costs to taxpayers keeps escalating. Earlier Wednesday, city officials confirmed that once interest costs and infrastructure are added in, the original $125 million cost to the city will balloon to $305 million.

"We absolutely owe it to taxpayers to get this deal right. It's not right. Its offside and I can't support it," said Diotte.

Coun. Don Iveson also voted against it. He said compared with other cost-shared rinks, Edmontonians are paying too much.

He said emotion worked against the politicians in a city where the Oilers sell out their games regularly, and where even minor developments concerning the team are front-page news.

"This deal flows from our weak negotiating position," said Iveson. "Weakened by the fear of losing the team. A fear, I think, is irrational and a bluff I might call.

"But it is a fear that nonetheless powerfully grips many Edmontonians."

The debate caps four years of divisive wrangling among residents and councillors.

Proponents say the money given to Katz would rebound many-fold for the city in spinoffs from a revitalized core.

Coun. Kim Krushell says it will also heal the psyche of a city wounded by star players like Chris Pronger who demanded trades because they didn't want to live in the Alberta capital.

"It's time to tell the Prongers of this world that Edmonton isn't just a city with great people," said Krushell.

Opponents say no public money should fund the private business of a billionaire. Katz is a pharmacy magnate.

A third group says it is OK with public money for the Oilers, but would like better profit on the back end for taxpayers.

The new rink would have 18,000 or more seats, close to 80 luxury, bunker and party suites, food courts and wide concourses.

It would be the centrepiece of a new commercial-residential complex with a new office tower, hotels, bars, shops, restaurants and hundreds of housing units.

There is no definitive plan yet for those surrounding amenities.

The Oilers' current home was built in 1974 and is now the second-oldest rink in the NHL. Only the New York Islanders play in an older facility.

The arena is run by Northlands, a non-profit board that operates under the aegis of the city. Northlands also hosts rock concerts, rodeos and other shows, worth an estimated $6 million a year in profit, at the 16,839-seat facility.

The Oilers are the only NHL team that doesn't get non-hockey-related revenue from its building.

Katz's new facility would compete with Northlands for those same rock concerts and shows. The city has said it would impose a similar ticket tax on Northlands to create a level playing field.

Daryl Katz  (Photo: Longview Communications)

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(Photo: Longview Communications)
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