New NHL Arenas

[ninjandrew]

From www.taxpayer.com:

The owners of the Edmonton Oilers and Calgary Flames both want to build new NHL arenas for their teams. Unfortunately it’s expected (in Calgary’s case) or known (in Edmonton’s case) that they want taxpayers to foot a big chunk of the bill. Every new NHL arena built in Canada over the past two decades (Ottawa, Montreal, Toronto and Vancouver) were built with virtually 100% private funds. The owners of the teams, or other private sector interests in Edmonton and Calgary, should do the same.

Recently, the Oilers owner has proposed a $1.4 billion entertainment complex that called for Edmonton taxpayers to pay $400 million for a new hockey arena. Katz expects the federal and provincial governments to help with infrastructure, including a nearby connection to a planned LRT station. Edmonton mayor Stephen Mandel suggested a $5 ticket tax at entertainment venues to cover this cost.

When I heard about this on the news I certainly thought it was an outrageous idea. Any thoughts as to whether or not it will go through, if people actually want it or why it should or shouldnt go through?

As cool as some new arenas would be, I just think we have bigger concerns right now. I think they should put the whole plan on hold for awhile.

[kimmy]

From www.taxpayer.com:

When I heard about this on the news I certainly thought it was an outrageous idea. Any thoughts as to whether or not it will go through, if people actually want it or why it should or shouldnt go through?

As cool as some new arenas would be, I just think we have bigger concerns right now. I think they should put the whole plan on hold for awhile.

Edmonton's downtown is full of undervalued and vacant property. Moving the Oilers to a downtown arena would spur a lot of activity by getting a lot more people downtown. Downtown should be a source of property tax revenue and in Edmonton I think a lot of potential is going to waste because it's so underutilized.

I think Ottawa should be left out of the comparison. It's fine to point out that "The Palladium" or Scotiabank Place or whatever it's called now was built with mostly private funds, but that thing is halfway out to Arnprior. It's of little value to the City of Ottawa to get people to drive 20km out of town. At the time it was built it was outside the city's tax boundary, probably not by accident. The kind of project they're talking about in Edmonton, on the other hand, would be a cornerstone of downtown revitalization.

I'd like it to happen. I don't think taxpayers should be on the hook for it. Maybe some of it, but $400 million seems like an awful lot.

-k

[Bonam]

I don't see the construction of entertainment venues as an acceptable use of taxpayer's money, unless it can be shown that the money will be recovered as a result of increased business generated by the presence of those venues. If they have a rigorous analysis showing that the city will get back $400 million or more in tax revenues within the next decade or two as a result of building this thing, then sure. Otherwise, no.

[Black Dog]

Edmonton's downtown is full of undervalued and vacant property. Moving the Oilers to a downtown arena would spur a lot of activity by getting a lot more people downtown. Downtown should be a source of property tax revenue and in Edmonton I think a lot of potential is going to waste because it's so underutilized.

Indeed. I mean, look at what Rexall did for that neighbourhood.

[kimmy]

Indeed. I mean, look at what Rexall did for that neighbourhood.

That's not really the same thing. Rexall is more like Scotiabank Place outside Ottawa. People go, they watch the game, and they get their ass out of their as fast as possible.

The only difference is that at Scotiabank Place, people don't have to roll hobos off their car before they drive home.

-k

[fellowtraveller]

Recently, the Oilers owner has proposed a $1.4 billion entertainment complex that called for Edmonton taxpayers to pay $400 million for a new hockey arena.

There are simply no facts in that statement.

Please try again.

[ninjandrew]

I've heard kimmys argument before, and would totally agree with it, but like Black Dog said about Rexall...

Where does the concept come from that a building that generates a lot of money would put a lot of money into the community it's in? Does it have something to do with zoning (which I have almost no understanding of)?

If construction was to begin within the next two years, I would want Bonams argument followed through, and the bill lowered from $400 mil.

[dre]

I dont have a problem with cities chipping in for sports facilities. But if theyre going to pay for 1/2 the building they should get 1/2 the profit generated until the money + interest is repaid, and even a piece after that.

And I think it really depends what the books look like. Does Edmonton have the $400 million? Or will they have to borrow it.

On the other hand... building an NHL arena is a fuck of a lot better for tax payers than building an Olympic venue...

[MiddleClassCentrist]

They should be seeking investment from oil companies.

The Oilers can play in "Big Oil Arena"

The Flames can play in "Oil Sand Paradise Place"

This is an example of bad tax money use... fiscal irresponsibility. The tax payers will never get their money back. Entertainment spending will not grow, only shift in location. The net gain will be negligible, or non-existant.

Promoting new investment from firms that bring money to the cities will in turn improve the core. They give net gains when money flows from an external source, into the city.

[BubberMiley]

It can be a big plus for a community to use tax money to build an NHL arena. Just ask Glendale who invested $180 million to build theirs. Now they get to be threatened every year with an empty white elephant as the NHL threatens to leave. They panic and pay off the NHL $25 million a year to keep the team, and everybody's happy.

[GostHacked]

Let the team pay for the arena itself. Advertisers can help pay for it, they already help pay for the operational cost of the arena.

We pay for the arena through taxes, we keep paying for the arena through admission and fare.

[Black Dog]

That's not really the same thing. Rexall is more like Scotiabank Place outside Ottawa.

Rexall is what, five minutes from downtown by LRT? In a residential area no less.

People go, they watch the game, and they get their ass out of their as fast as possible.

And why is that? Because the neighbourhood is a dump. But if sports facilities spur revitalization, why is it a dump?

Fact is - and there's plenty of work by sport economists on this - standalone sports facilities don't cause revitalization of their surrounding areas. They only work in that capacity when included in part of a comprehensive development plan, which is not the same thing as "spurring revitalization".

Now, as for Edmonton, it's interesting that for all the talk of this being part of some downtown renaissance, there's been next to no information on what they have planned for the arena district.

[Shwa]

Plenty of news about the Thrashers moving to Winnipeg.

Few hurdles in the way of potential Thrashers sale to Winnipeg

So can the MTS Centre - a small building by NHL standards, house them?

[fellowtraveller]

Does Edmonton have the $400 million?

This number has nothing to do with the project or taxpayers liability.

At this point: Katz will pitch in $100 million. About $125m will come from a ticket tax, a tax which already exists on Rexall events. $75m will come from increased property taxes in the area, which currently generates much less. What has not yet been accounted for or sourced is the $100 million remaining.

What is under negotiation is who gets the revenues, who operates the venue and who pays for project cost overruns, if any.

Just ask Glendale who invested $180 million to build theirs.

Glendale invested in a sport that has no support, and a league that is dependent on gate revenues. Dumb. Neither applies in Edmonton. Glendales actions are analogous to Edmonton investing $400 million in a soccer stadium.

Now, as for Edmonton, it's interesting that for all the talk of this being part of some downtown renaissance, there's been next to no information on what they have planned for the arena district.

There is unquestionabaly a renaissance in downtown Edmonton. Recent years have seen landmark buildings like Grant MacEwan, city Hall, the Winspear, Churchill Square,the cool new Alberta Art Gallery,Epcor Centre,new highrises just announced in Chinatown and of course the $300 million Provincial Musueum nearby. All are tied into the LRT, as will the arena district. The area immediately south of the arena district ahs already seen plenty of new condo contruction, lofts,restaurants, the market on 104th st, etc etc etc. This project will bring much more of the same.

Recall that people blasted the province for building Grant MacEwan on derelict railroad land(right next to the arena site, the province and city said it would be the centerpiece of revitilization of a dead zone in downtown. And..... it did and still does.

Same-smae here. In 15 years the area bounded by 97th to 124th streets, and the river to 107th ave has exploded with development. I think this project will bring plenty more action to the north and east sides of that area, where it is most needed.

[fellowtraveller]

Oh, and for those that use the derelict area around Rexall as an excuse that the arena being located downtown won't stimulate development?

Consider this- the neighbourhoods of Norwood and Eastwood were much better places to live when Rexall was built, the area called Alberta Ave (or 97th St)and downtown were Edmontons worst neighbourhoods. Not any more. Downtown Edmonton had very few people living there, and the flight to the suburbs for shopping was well advanced. Not any more, the flight is reversed.

In the last couple decades people have flocked back to downtown, which raised property values, raised rents , raised taxes and squeezed many of the poor and derelict out of downtown. Where did the poor go? They went to Norwood and Eastwood, the areas immediately adjacent to Rexall. That is now one of the poorest parts of the City, and it is occupied by people who used to live in and near downtown.

Things change, Downtown Edmonton is alive again, and this project will be pure adrenaline. What is needed now is twofold: figure out the few remaining dollars and issues in dispute, then get on with it while construction costs are still manageable.

[Black Dog]

This number has nothing to do with the project or taxpayers liability.

At this point: Katz will pitch in $100 million. About $125m will come from a ticket tax, a tax which already exists on Rexall events. $75m will come from increased property taxes in the area, which currently generates much less. What has not yet been accounted for or sourced is the $100 million remaining.

First, there's no accord on the ticket tax yet.

The use of a ticket tax to raise $125 million for a new downtown Edmonton arena was raised as one of the "significant outstanding issues" in a letter sent last week by Oilers owner Daryl Katz to Mayor Stephen Mandel.

"I wish to make it clear that I have not agreed to that," Katz writes, adding he can make himself available to Mandel for discussing the reasons why.

Second: the city's other $125M would be through a loan or bonds to be paid off by an increase in property taxes in the area. But what happens if the district fails to generate the necessary tax revenue because of lack of growth?

There is unquestionabaly a renaissance in downtown Edmonton. Recent years have seen landmark buildings like Grant MacEwan, city Hall, the Winspear, Churchill Square,the cool new Alberta Art Gallery,Epcor Centre,new highrises just announced in Chinatown and of course the $300 million Provincial Musueum nearby. All are tied into the LRT, as will the arena district. The area immediately south of the arena district ahs already seen plenty of new condo contruction, lofts,restaurants, the market on 104th st, etc etc etc. This project will bring much more of the same.

Be that as it may: why do the taxpayers need to pick up the tab here?

Oh, and for those that use the derelict area around Rexall as an excuse that the arena being located downtown won't stimulate development?

Consider this- the neighbourhoods of Norwood and Eastwood were much better places to live when Rexall was built, the area called Alberta Ave (or 97th St)and downtown were Edmontons worst neighbourhoods. Not any more. Downtown Edmonton had very few people living there, and the flight to the suburbs for shopping was well advanced. Not any more, the flight is reversed.

I'm not sure how any of this supports your contention that an arena would stimulate development.

In the last couple decades people have flocked back to downtown, which raised property values, raised rents , raised taxes and squeezed many of the poor and derelict out of downtown. Where did the poor go? They went to Norwood and Eastwood, the areas immediately adjacent to Rexall. That is now one of the poorest parts of the City, and it is occupied by people who used to live in and near downtown.

Cite? I grew up in Edmonton. The area around Rexall was sketchy back during the glory days of the Oilers, long before downtown started to revive.

[GostHacked]

Who here can afford to go to hockey games on a regular basis?

[guyser]

Who here can afford to go to hockey games on a regular basis?

Me !

Cuz businesses like to give me tickets. As for payin'......I dont for the most part.

[scouterjim]

Edmonton's downtown is full of undervalued and vacant property. Moving the Oilers to a downtown arena would spur a lot of activity by getting a lot more people downtown. Downtown should be a source of property tax revenue and in Edmonton I think a lot of potential is going to waste because it's so underutilized.

I think Ottawa should be left out of the comparison. It's fine to point out that "The Palladium" or Scotiabank Place or whatever it's called now was built with mostly private funds, but that thing is halfway out to Arnprior. It's of little value to the City of Ottawa to get people to drive 20km out of town. At the time it was built it was outside the city's tax boundary, probably not by accident. The kind of project they're talking about in Edmonton, on the other hand, would be a cornerstone of downtown revitalization.

I'd like it to happen. I don't think taxpayers should be on the hook for it. Maybe some of it, but $400 million seems like an awful lot.

-k

Idiot hockey fans will willingly pay more taxes for a hockey arena whilst squawking about paying taxes for children's lunch programs.

[MiddleClassCentrist]

Conservative hockey fans will willingly pay more taxes for a hockey arena whilst squawking about paying taxes for children's lunch programs.

I fixed it for you.

[fellowtraveller]

Be that as it may: why do the taxpayers need to pick up the tab here?

Again, what tab? So far, nobody from the city has said the city will pick up any hard costs. The ticket tax already exists and taxes users of the facility, not taxpayers.

No accord on the ticket tax yet? Pffft. Katz has no control over it, if he wants cooperation from the city he won't oppose it. His option is to pay it all himself.

He has been making mild noises about leaving Rexall in 2014 and veiled threats to leave Edmonton. Fine, let him. There are half a dozen teams that would move here in a heartbeat. Why? Because it is a very profitable market, with or without Katz.

All this crap about 'no accord on ticket tax' is for dense rubes who don't recognize a weak negotiating stance when they see one.

[ninjandrew]

Again, what tab? So far, nobody from the city has said the city will pick up any hard costs. The ticket tax already exists and taxes users of the facility, not taxpayers.

The ticket tax was only a suggestion by the mayor, and expected to raise $125 mil (why not more, I dont know). Another $125 mil from a CRL.

Community Revitalization Levy

Plus $100 mil from Katz.

[Black Dog]

Again, what tab? So far, nobody from the city has said the city will pick up any hard costs.

The city will be taking on at least $125M in debt to finance this.

The ticket tax already exists and taxes users of the facility, not taxpayers.

The current ticket tax expires in 2014, the same year as the Oilers' lease.

No accord on the ticket tax yet? Pffft. Katz has no control over it, if he wants cooperation from the city he won't oppose it. His option is to pay it all himself.

I agree. In fact, I'd like them to jack up the ticket tax.

He has been making mild noises about leaving Rexall in 2014 and veiled threats to leave Edmonton. Fine, let him. There are half a dozen teams that would move here in a heartbeat. Why? Because it is a very profitable market, with or without Katz.

I agree, which is why I wonder why the taxpayer (in the form of the city) needs to be involved at all. Every single new Canadian rink was built with private funds. Hell, even Nationwide Arena in Columbus, the rink/arena district most often cited as a model for Edmonton, was 100% privately financed.

Also: I don't know if it's "very profitable". I have no doubt the Oilers make money, but no one gets involved in pro-sports to turn a profit.

Finally: Katz's implied threats to relocate ring pretty hollow when you consider that this is really about real estate, not hockey. Dude stands to make a pretty penny off his holdings in the "arena district". He can't move that land with the team.

[fellowtraveller]

The city will be taking on at least $125M in debt to finance this.

So what? As long as the means of repayment are defined, and the money does not come from any existing tax base, who cares?

The current ticket tax expires in 2014, the same year as the Oilers' lease.

Again, so what? It takes 15 minutes in council to renew or amend the tax. And the tax is not coming from taxpayers, it comes from facility users.

Every single new Canadian rink was built with private funds. Hell, even Nationwide Arena in Columbus, the rink/arena district most often cited as a model for Edmonton, was 100% privately financed.

Doesn't matter what happened elsewhere, what is at issue is really this: if the city has an equity stake in the project, do they get an equal stake in revnues or control of the project?

The CRL is the wild card here, it is unclear if the increased tax revenues from the areana/arts area will be less, equal to, or more than the payments on the $125 million. It seems a small risk for a potentially large return.

Oh, and the claim that private money built the arenas is misleading. All those municipalities kicked in big chunks of money-in-kind through large infrastructure injections, roadways, transit, ongoing tax breaks. A major sport venue is no different than any other business in that sense, cities routinely offer many and major incentives to business to locate and expand within their borders.

[Black Dog]

So what? As long as the means of repayment are defined, and the money does not come from any existing tax base, who cares?

As I said: the means of repayment are the expected increase in the taxbase from the development.If that doesn't come through, then what?

The CRL is the wild card here, it is unclear if the increased tax revenues from the areana/arts area will be less, equal to, or more than the payments on the $125 million. It seems a small risk for a potentially large return.

Thing is, we have no idea what the return actually is.

Oh, and the claim that private money built the arenas is misleading. All those municipalities kicked in big chunks of money-in-kind through large infrastructure injections, roadways, transit, ongoing tax breaks. A major sport venue is no different than any other business in that sense, cities routinely offer many and major incentives to business to locate and expand within their borders.

They don't routinely offer to help build capital projects for other businesses though.