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Decision on Oilers arena delayed yet again, mayor apologizes

The Canadian Press

5/8/2013 1:15:20 PM

EDMONTON -- A spokesman for Edmonton Oilers owner Daryl Katz refused to say Wednesday if the pharmacy magnate will put up more money to rescue a new arena project for his NHL team.

John Karvellas also poured cold water on a suggestion for a higher ticket tax on games and other events to close a $55-million gap in funding for the rink.

"That's tantamount to us putting up more money," Karvellas told reporters after city councillors voted to again delay a final decision on the funding. "Whatever the ticket tax is, the more it goes up, it will impact the underlying ticket price for the event."

"Would you put forward more money?" a reporter asked Karvellas.

"I'm not going to answer that," he replied.

"Are you considering it?" the reporter persisted.

"As I say, I'm not going to answer that question."

Karvellas said he's still confident the project will go ahead. The plan would see the rink completed by 2016. It's hoped it will be a catalyst for downtown revitalization, leading to new restaurants, shops, and office buildings.

"We've been at this for five years, and I think we would very much like to bring this to a conclusion as soon as possible to maintain some momentum with the project. It can't drag on forever," said Karvellas.

"What's at risk here is one of the most transformative projects this city has likely ever seen. It's not just the arena, it's all the development around it."

After years of debate that has already seen the cost-shared arena deal fall apart once before, city council voted in January to proceed anew. However the deal was contingent on councillors getting $100 million of the funding from Premier Alison Redford's provincial government.

Redford, and her predecessor Ed Stelmach, have been adamant for years that no direct funding will go to a private enterprise like an NHL hockey rink.

However, Redford has said the city can redirect the millions of dollars it gets every year from the province for infrastructure projects.

Last month, councillors voted to use some of that infrastructure grant money to account for $45 million of that $100 million.

They were to decide Wednesday how to pay off the rest.

However, councillors instead voted unanimously to ask bureaucrats to come back as soon as possible with other ways to make up the $55 million, including a higher ticket tax.

Coun. Don Iveson said a reconfigured ticket tax is a fair way to ensure those who enjoy the rink pay for it.

"I think that's a good proxy for provincial money if provincial money isn't going to materialize in the next two weeks," said Iveson.

Mayor Stephen Mandel, a strong supporter of the arena project and the deal, told council one way or another, there needs to be resolution.

"I don't think anybody wants to delay any longer," said Mandel.

Coun. Kerry Diotte said the Katz Group needs to step up.

"We've hit a wall," Diotte told his fellow councillors. "The public I'm hearing from in large majority is saying that the Katz Group must come up with more money to make this deal a go."

As Diotte said those words, a group in the council chamber loudly voiced their approval.

"Absolutely. Hear hear," they said, speaking over a row of Katz executives sitting directly in front of them.

Mandel stepped in.

"You know, part of being here today is showing respect for both parties," he told the hecklers.

An older man hollered back.

"Please show some respect for the citizens of this city Mr. Mandel, and put this (issue) on a plebiscite," he said.

"Quiet!" demanded Mandel.

"Put in on a plebiscite!" the heckler shouted back.

Edmonton taxpayers will pay $219 million toward the 18,559-seat facility, which has a futuristic design of metal and glass. The Oilers' share will be $143 million. Another $125 million will come from a ticket tax that wouldn't exceed seven per cent of the total cost of a ducat.

The deal would see the city build and own the arena and pay for all major repairs and renovations. The Oilers would, in turn, hand over $6 million a year in lease payments and pay for the day-to-day arena upkeep.

Katz would keep all the profits from tickets, concessions and parking for all events -- Oilers or otherwise. Katz would also receive $2 million a year from the city in return for advertising for 10 years and would keep naming rights for the building, estimated at $1 million to $3 million a year.

The Oilers would promise to stay in Edmonton for 35 years.

Katz is currently a tenant of an arm's-length city board at Rexall and says the Oilers need revenue streams from areas like concessions to be viable. He has said he is losing millions of dollars a year, but city council has not been able to see the numbers to test that assertion.

The Oilers are ranked in the middle or higher among revenue-producing teams in the NHL.

Katz threatened last year to move the team to Seattle without a new arena, but later publicly apologized after fans vilified him in social media.

Councillors and Katz first struck a deal in the fall of 2011, but it fell apart a year later when Katz demanded an extra $210 million from taxpayers and refused to meet with councillors in public to explain why.