“We might not like to hear such a statement, we might hate the notion of the Oilers leaving Edmonton, and a vocal minority certainly detests the idea of any public money going to a new downtown arena. Nonetheless, the Katz Group’s position is rational and reasonable.”
Emphasis is mine.
That’s columnist David Staples in today’s Edmonton Journal. Turns out the Katz Group doesn’t need to threaten relocation. David will do the dirty work for them.
“The more the Oilers play this move-the-team card about moving the team, the more they remind me of Pocklington, the colder I get to any plan to build a new arena for them in Edmonton. It’s not a good notion to push, I would suggest. It degrades their brand.”
Apparently David isn’t keen on applying that same logic to himself.
——–
**Update** It appears that Oilers President and CEO Patrick LaForge was in Hamilton last week for a secret meeting with some city councillors. The Hamilton Spectator is reporting that LaForge was there “to talk about the NHL, HECFI, and the Pan Am stadium.” Apparently there’s an NHL subcommittee in Hamilton, and LaForge was meeting with members of that group. Impeccable timing by the Katz Group, really. Right as Edmonton City Council is meeting to discuss the use of a Community Revitalization Levy, and approves your zoning application, you’ve got your team president having secret meetings in a city dying for an NHL franchise.
I was happy to have a chance to talk about the downtown arena, and in particular some of the questions asked in the City of Edmonton’s recent poll of Edmontontians, on the Rob Breakenridge show tonight. Audio is here.
“In his report to the city on best practices in arena district development, consultant Mark Rosentraub of the University of Michigan pointed to the example of San Diego’s Petco baseball field, where the city took on a $300-million loan.
A CRL-like mechanism was put in place to pay off the city’s loan, but only after John Moores, owner of the Padres baseball team, guaranteed that if there was any shortfall with the CRL, he would make up the difference. In the end, taxes from the new real estate development produced far more than was needed to pay the San Diego’s debt.
So these things can work brilliantly, but that doesn’t mean it will happen here.”
“Even though a lot of development has taken place, the city still owes about $154 million on ballpark bonds, and the recession has hotels seeing less business.That means the city has seen a drop-off in the taxes it receives whenever someone books a room. Those taxes were supposed to help pay off the stadium.”
In this struggling economy, UCSD Political Science Professor Steve Erie says it’s evident San Diego could have made a better deal with the Padres.
“Should there have been more public benefit built in to the initial agreement? And more of a spread of the initial risk, because all of the public risk is on the front end,” Erie says.
Now San Diego is facing multi-million-dollar deficits and is making cuts to police, fire and other public services. Erie wonders whether it’s the right time for the city to be thinking about building a Chargers stadium.
“What are the civic priorities of San Diego? And have we handed the keys over to professional sports teams because that’s our marker of major league status?” he asks.
“San Diego’s downtown redevelopment agency will shoulder debt payments for Petco Park for the next five years, relieving the city of one financial burden as it struggles with ongoing deficits and budget cuts.”
“Built for $454 million, the baseball park is within one of two redevelopment areas managed by the CCDC and was partly financed with bonds. The city has about $153 million to pay on the ballpark bonds.
In the past, San Diego used its general fund – which pays for parks, libraries, fire and police services – to make debt payments.
But faced with a $54 million deficit in the fiscal year that will start July 1, council members decided unanimously that the money for the debt service should no longer come out of city coffers.”
“Even when economic development is part of the deal for a taxpayer subsidy, it won’t work if there is no market for it. Look at the deal in East Village that the Padres wangled. They promised to build office buildings, retail establishments, hotels, and condos. They reneged on most of the promises, and the condos and hotels that were built have few people in them.”
“‘If you build it, they will come.’ It works in fantasy movies (Field of Dreams, 1989). But it hasn’t worked in San Diego’s East Village. As part of the $301 million ballpark subsidy, developers created a slew of condo and hotel units. But few folks are in them. The whole project is a drain on an insolvent city’s general fund.”
So there might have been a lot of private investment generated by the government subsidies, but was it efficacious spending? Of course not. The conclusion is inescapable: all the subsidized construction accomplished was to exacerbate a big, bulging glut.
Indeed, the study confesses on page 61, “Would redevelopment have happened anyway? Likely, but not to this extent, and not at this rapid pace.” The ballpark project just hastened and exacerbated the harmful overbuilding, which won’t be worked off for some time, particularly as the economy sags anew.
“Very few of the condos were built because of the ballpark,” notes Mike Aguirre, former city attorney. Kogan and Richard Rider of San Diego Tax Fighters agree. The subsidies, not the ballpark, seduced builders to erect those condo towers. If there had been a market for them, they would have been built without a ballpark.”
“Last week’s ballyhooed consultant report saying Petco Park has been a boon for San Diego didn’t mention a possible Chargers stadium downtown — but that may be where it’s heading.
In keeping with its client history, the consultant — Conventions, Sports & Leisure International of Texas — could be warming up to examine a proposed Chargers relocation. If the firm’s previous analyses are any guide, expect promising forecasts for stadium boosters.
In San Diego, CSL found risking taxpayer money paid off handsomely, with each $1 of public investment in the ballpark met by more than $5 in private investment.
The report is just one of dozens the consultant has produced for governments, universities, professional sports teams and the tourism industry to assess public and private investment, often predicting positive economic benefits before projects are undertaken, according to a review by The Watchdog.”
“The assumptions in CSL studies have worried critics, who say these types of reports can overestimate the money generated from surrounding developments, underestimate the amount governments spend and fail to factor in the benefits taxpayers might receive from alternate uses of tax money.”
“Though the report calls this “return on investment,” the reality is actually far murkier: The taxes in question are for a “ballpark development area” that was drawn around the new stadium, within which a large number of hotels and other development has since been built. But there are two factors that aren’t taken into account by the study: the “but-for” question (the Gaslight District was actually starting to draw development interest even before the Padres landed there, one of the reasons the team chose it for their stadium site), and the substitution effect, wherein at least some of the tax revenue now being generated around the stadium would have been generated elsewhere in the city otherwise (if fans had spent their entertainment dollars on something else — like, say, Padres tickets at their old ballpark).“
“Sports economist Mark Rosentraub, meanwhile, is quoted as saying that even if some tax revenues were just relocated, Petco Park is a success because it’s “a model of how you can use a stadium to rebuild an entire neighborhood.” Not mentioned in the article: Rosentraub served as a paid consultant to MLB and the Padres during the campaign for the new stadium.”
“Sanders points out that when the San Diego convention center wanted to hype an expansion, it turned to Conventions, Sports & Leisure International, a firm with offices in metro Dallas and Minneapolis. When the San Diego Regional Economic Development Corp. wanted to show that the $300 million ballpark subsidy had been a success, it turned to — you guessed it, Conventions, Sports & Leisure International. Even though the ballpark area still suffers from economic depression, the consulting firm delivered.”
“But Kogan said the study overstates Petco Park’s benefits by including the hotel occupancy taxes that likely would have been generated anyway because of the convention center.
‘To attribute all of the economic impacts of the convention center to Petco Park is a huge problem,’ he said.
Henderson added that CSL’s calculations left out the cost of financing the bonds, totaling more than $11 million per year. That cost was initially covered by the city, although the Centre City Development Corp. is now making the payments.”
“But the U-T story does not state that Mark Rosentraub was a paid consultant in the development of the ballpark and surrounding real estate. This information could have been culled from the pages of the U-T. Rosentraub calls the Petco project “a model of how you can use a stadium to rebuild an entire neighborhood.” The last time I talked with him, for a Reader column that ran Aug. 26 of last year, he was raving about all the buildings (condos, hotels) that have been built in the ballpark district. I told him those condos had very few residents and the hotels had very few guests. He had no response.”
“I’m all for pride, but not at any price. So I asked my friend Ron Johnson – who lives in San Diego and enjoys watching the Padres at Petco Field – for his view of the matter. Is the result there as positive as portrayed by Rosentraub? Here is Ron’s reply:
‘I had the same reaction when I read Rosentraub’s piece last week. Where is his evidence? I don’t know of a single ex-post study on the impact of Petco Field. The San Diego Union Tribune ran an article a while back and it was fairly balanced, but the type of analysis that would convince economists was absent. Essentially, Petco has added to an already booming downtown, but whether it could possibly yield a positive return on taxpayer dollars is a big stretch. The area where Petco was built was considered blighted when Petco was proposed, but by the time construction started the surrounding area was already seeing new hotels and huge expensive condos going up. In my opinion this had little or nothing to do with Petco.’
“But Mike Aguirre, candidate for city attorney, says, “Every time we spend money on the Chargers ticket guarantee or subsidize Petco Park bond payments or have to pay into the pension plan to correct past underfunding or retain outside law firms because of past legal mistakes, the opportunity cost is imposed on the neighborhoods, the taxpayers, the community groups. We are like a family that doesn’t use income to pay for essentials because it is busy spending money on a wasteful lifestyle.”
“For one, the team didn’t follow through on a promise in a campaign mailer to price 10,000 to 20,000 tickets from $5 to $10. The ballpark redevelopment project also was supposed to create 17,000 jobs, but a Padres official now says there is no way to know if that will happen.”
“The final cost of the San Diego Padres’ new Petco Park is in: $474 million, $63 million more than was originally proposed. Of that, the team is paying $173.2 million and public sources the remainder, but even that calculation is subject to interpretation: so-called “soft costs” of public financing are estimated to add another $74 million to the city’s stadium expenses, while the Padres’ “private” share includes $60 million in naming-rights fees on the publicly owned stadium.”
An excellent essay on the history of PETCO Park by Mark Hitchcock. A couple highlights:
“Today, the City of San Diego finds itself with a $1.2 billion deficit. To improve the City’s cash flow, libraries have been closed or had their hours cut-back, roads have gone neglected, police and fire departments have been under-funded, salaries for City employees have been frozen, and jobs have been cut. Meanwhile, thanks to a generous financial contribution from the City, the Padres now play in brand-new PETCO Park. “
“Of the $115 million that the Padres were responsible for, most was not an out-of-pocket contribution. Instead, the Padres’ contribution was to come from revenue generated by the new stadium, “including the naming and advertising rights, ticket and luxury sales, concessions, and potentially, the sale of private seat licenses.”
“Enter into discussions with the Katz Group of Companies and Northlands on a framework for the financing, not including an increase in current property taxes, and operations of a potential downtown arena and entertainment project.”
—Motion passed by Edmonton City Council on July 21, 1010
“Council’s direction expressly provided that the funding model must not increase current property taxes.”
Yes. CRL stands for “Community Revitalization Levy.” In the United States, a similar procedure is known as a TIF (Tax Increment Financing). In both cases, a government collects (levies) property taxes in a designated area and uses them to pay off the debt incurred on a new development or project. In this case, the CRL would be used to pay off a taxpayer-funded downtown arena for the Edmonton Oilers.
Is the CRL a property tax?
Yes. Municipalities in Canada collect the majority of their revenues through property taxes. With property tax revenues, the City of Edmonton finances services such as road maintenance, parks, swimming pools and recreation centres, public libraries, garbage collection and police services.
Is the CRL a new tax?
Yes and no. When the CRL is created, the City draws a line around an area and labels it as a Community Revitalization Levy Zone. In this instance, that zone will be around the downtown arena and the projected downtown arena district. The City then determines what it currently collects in property taxes in that area, and guesses what it will collect from the new development that is supposed to occur alongside the arena. The difference between these two amounts is what the City will then use to pay off the debt it incurred in financing the downtown arena.
But as both Councillor Don Iveson and ScottHennig of the Canadian Taxpayers Federation have pointed out, the taxes collected in the CRL zone are not new taxes. It is not bonus money. It is merely redirected money. Consumers do not spend extra money with the addition of new businesses in a city. They merely shift their spending habits from one business to another. Instead of going for a beer and a burger at Coliseum Steak and Pizza on game night, for example, or for Mac-N-Cheese at Blue Plate Diner, they will go for wings and pizza at the new Boston Pizza near the new arena. Spending that occurs around the downtown arena doesn’t occur inaddition to spending in the rest of the city, therefore. It occurs instead of spending in the rest of the city. The same goes for development. If, for example, a new hotel goes up downtown, it means that a new hotel doesn’t go up in the west end. It also means that another hotel, say a hotel around the current Rexall Place, loses business, which means they shut down, which means the City no longer collects those property taxes. In the end, the CRL is zero-sum. The gain of new taxes in the CRL Zone will be offset by the loss of taxes outside of the CRL Zone.
Will the CRL lead to an increase in property taxes?
Assuredly. The taxes collected with a CRL aren’t just redirected taxes. They are also taxes that are now locked into paying for only one thing: the debt on the downtown arena. The City still has to pay for things like potholes, police, snow removal, community hockey rinks and libraries. Except it now has less tax revenue to draw from, as taxes have been redirected and locked into paying off the arena debt. This means that shortfalls in revenue from the creation of the CRL have to come from another place. Since the City can only tax property, it really only has one choice: property tax increases.
Are there other issues with the CRL?
Yes. They include:
The line the City draws in creating the Community Revitalization Levy Zone is completely arbitrary. It can be as small or as large as the City wishes it to be. The danger here is that the City can make the CRL Zone larger, likely as a result of insufficient tax revenue from around the arena district itself, and cut even further into tax revenue available for the City’s core services. The City has already admitted as much, in fact, noting that the size of the CRL Zone will in part be determined by “the funding requirements for the arena.”
If the City borrows the money to pay for the downtown arena, and there is a shortfall in CRL revenues from a lack of development and “revitalizing,” it is on the hook for that shortfall. That means the taxpayer is on the hook for that shortfall. During the July 21st meeting between City Council and the Katz Group, several Councillors asked the Katz Group what guarantees they could make about development in the arena district, and what role they would play in covering any shortfall in tax revenue in the CRL Zone. The Katz Group would not guarantee anything other than the $100 million that Mr. Katz has pledged to put towards the development of the district, and would not agree to cover any shortfall in tax revenues in the CRL Zone. Ultimately, even if the Katz Group guarantees development the CRL is still just a tax shift, but there is an added risk of even more debt for the City, and therefore taxpayers, without it.
Establishing another CRL could put a strain on the City of Edmonton’s ability to offer core services. The Province recently approved the establishment of a Community Revitalization Levy for the Quarters District in the east part of downtown. Yet it has the same issues as the arena CRL: it’s a tax that’s going to be redirected and locked into one single development project. Without property tax increases, that’s yet another drain on the City’s ability to offer core services. It is a dangerous game for cities to get into the habit of utilizing CRLs. It is not free money, without consequence. One only has to look at the City of Chicago to see tax-increment financing gone wild.
In allowing the City of Edmonton to institute the arena CRL, the Province of Alberta will be letting the incremental increase in education property taxes in the CRL Zone go to the City to help pay off the arena debt. Unless the Province subsequently raises its own taxes, that means less money is going into the Alberta School Foundation Fund (ASFF), less money is going to school boards, and less money is being used educate students.
Conclusion
The City of Edmonton’s proposed Community Revitalization Levy is money that is coming out of the public purse. It is a tax. It is also a tax that will lead to property tax increases for the citizens of Edmonton. To deny this is to deny economic theory so thoroughly established that one might as well be denying that the world is round. If Council decides to pursue this option in financing an arena for the 721st richest man in the world, it should at least be honest with Edmontonians about what it is in fact doing. It is taxing them to pay off the debt incurred in the building of a downtown arena for Daryl Katz and the Edmonton Oilers. Mr. Katz will receive all of the revenues from the arena, as well as the increased value of the team that will come with this sweetheart of a deal. In addition to being taxed, residents will take on the further risk that comes with downtown development and “revitalization” being nothing other than an optimistic guess.
These are the realities of the Community Revitalization Levy. Council is on the record saying that a funding model for a new downtown arena must not include an increase in current property taxes. Since the word “current” could be used to justify property tax increases a day after an arena CRL is approved, let’s hope that Council isn’t being cute with their language. The majority of Edmontonians do not want their tax dollars being used to fund a downtown arena, either now or in the future. The Mayor has been all over the map when it comes to the use of taxpayer dollars to finance a downtown arena. Hopefully his colleagues on City Council will take the more honest, straightforward approach.
At the City of Edmonton’s Executive Committee meeting last evening, the Finance & Treasury Department provided a two-page report regarding Northlands’ repayment for the EXPO Center, as well as an infrastructure assessment report for Rexall Place. The assessment report, prepared this year, “indicates that Rexall Place has been well maintained and is in good condition for a building of its age (opened in 1974).” Some highlights:
Architectural elements are in good condition, with any items recommended for attention being minor in nature. Some low priority painting and sealing is recommended.
The building envelope appears to be well maintained and in good condition. No indications of moisture infiltration or related damage were noted. The main building roofing system is in good condition. Attention to the roof over some small ancillary areas is recommended.
Structural components are in good to very good condition, with minor concrete sealing and repairs recommended.
Mechanical components are in good condition. The building heating and cooling plants have recently been renewed. Replacement of the fans in the arena air handling units is recommended in the near future.
Electrical components are in very good condition. Replacements and improvements have been made to the main electrical service, lighting, and fire alarm systems.
Most importantly, the report notes that “Northlands has updated its capital replacement plan and estimates that approximately $31 million is the total cumulative investment required to maintain the existing building at its current standard and level of operations through the end of the 2023 operating year, consistent with the 50 year economic life of the structure.”
Bold is mine.
Rexall Place is neither old, nor in poor shape. It’s undergone three renovations since it opened, first in 1994, then in 2001, and finally, in 2007. The reality is that the building is in the middle of its life cycle, and has been very well taken care of. Something to keep in mind the next time someone, including the Mayor, Patrick LaForge, and City Administration, trots out a line about Edmonton’s old, and therefore bad, hockey barn.
“This could be Edmonton’s Sistine Chapel. We could do something underneath that thing that was artistic … And I don’t mean painting God up there, I mean a light show, sculptures, something on the underside that makes it a recognized and valid public art display.”
—Jim Taylor, Executive Director of the Downtown Business Association
You might think it’s just a pedway, but clearly you aren’t thinking big enough. This Wintergarden is going to be our very own Apostolic Palace. Added bonus: tourist dollars during Papal Enclaves!
“But profound change is more likely to result from a deeply considered idea that alters an essential component of an urban environment than from an elaborate master plan that requires abundant resources and considerable political capital.”
Ok, this is getting embarrassing. In today’s Edmonton Journal, David Staples, for what seems like the millionth time, has written about the supposed virtues of the arena district in Columbus, Ohio. In doing so, Staples once again references an academic paper by Professor Brad Humphreys, of the University of Alberta, as evidence that an arena district can be a financial boon to a city. This is what Staples wrote:
After studying the Columbus model, two economists, the University of Alberta’s Brad Humphreys and fellow researcher Xia Feng, found that pro sports facilities can bring important economic benefits: “A new state-of-the art facility integrated in a comprehensive urban redevelopment program and located in the heart of a large city might be expected to generate increases in residential property values near hundreds of millions of dollars within a mile of that facility, if the location, planning, construction, and development is carried out carefully.”
What’s so frustrating is that I wrote twoposts about Columbus in August, and one of those posts dealt quite specifically with the Humphreys’ paper on Columbus, and the important items Staples was leaving out in discussing that paper. For example, Staples glossed over the fact that:
1) The paper was a working paper. It had not been subject to the peer review process, an essential step in the validation of any academic work. Professor Humphreys’ methodology and conclusions have not been screened and looked over by the people who understand these issues best: his colleagues.
2) The paper did conclude that residential property values were higher in proximity to Nationwide Arena, but it also included a great big, giant caveat that they could not determine how much of that was due to the arena and how much was due to the fact that the arena was downtown.
3) The paper did not take into account the 75-100%property tax abatement provided by the City of Columbus to encourage people to live downtown (Nationwide Arena received a 99% tax abatement).
4) A similar study Humphreys cites in his paper found no effect on property values from the new football stadium in Dallas.
5) A simple calculation shows that even if the increase in property values was a result of the new arena, it was not enough to offset the cost of the facilities.
Most importantly, I showed that even if you take all those other caveats away, you simply can’t “make an argument that the City should invest tax dollars into an arena because it will get more money back from an increase in property taxes. It won’t, because an increase in property values in one part of the city leads to a decrease in property values in another party of the city, and because the City of Edmonton doesn’t collect property taxes in the same way as Columbus.”
All of these items have been cut and pasted from my previous posts. The posts have been sitting here for the world to see for over two months. David Staples reads this website. Yet at no time have I seen him address the points I brought up in my two Columbus posts, points which I have now been forced to make again. They certainly weren’t considered in his article today. Instead, Staples is doing what he’s done on the arena issue since he started covering it: sticking by a case that is at best an outlier, choosing personal experience over sound academic research, and ignoring anything that might get in the way of the narrative he has constructed in his head and in his columns. He’s never applied any real level of scrutiny to the claims made by those in favour of a downtown arena. He’s never looked at cities like Cleveland, Baltimore, Detroit, Washington or even New York City, where massive public subsidies for sporting facilities have done little to nothing in terms of “revitalizing” the areas around them (he chose to visit two cities recommended as case studies by the Katz Group and the loaded Arena Feasibility Committee). Recently, he also decided to speak to a single source—the decidedly pro-arena Mayor Stephen Mandel—before declaring in a story that the arena project was gaining momentum. All this, from the Journal’s new urban affairs columnist.
In 2008, sociologist Rick Eckstein released an article noting that mainstream media are “noticeably biased toward supporting publicly financed stadiums, which has a significant impact on the initiatives’ success.” He stated that:
“This bias usually takes the form of uncritically parroting stadium proponents’ economic and social promises, quoting stadium supporters far more frequently than stadium opponents, overlooking the numerous objective academic studies on the topic, and failing to independently examine the multitude of failed stadium-centered promises throughout the country…”
I can’t help but read that quote and think of David Staples. I also can’t help but read that quote and think of the coverage the downtown arena issue has received in the mainstream media, in particular at the Edmonton Journal. Has the coverage become more critical over time? Yes. Writers like Paula Simons and Scott McKeen definitely changed their course over the years and started asking for more from City Hall and the Katz Group. The problem is that, from the very beginning, media like the Journal framed this issue in a way that was extremely beneficial to the pro-arena side. And we’ve never gotten away from that. It’s never been framed in terms of a government bailout or corporate handout. Instead, it’s always been framed by the media as finding a solution to the “problem” of downtown. But that gives credence to what is ultimately a false dichotomy. It’s not arena district or nothing. It’s not arena district or horrible city. And it shouldn’t be that the Oilers get a new hockey arena because Edmonton needs to revitalize its downtown core. That’s illogical, and framing it that way has been a disservice to Edmontonians.
I’ve come to realize that David Staples is never going to stop writing pro-downtown arena articles. Nor will John MacKinnon. David’s heart and eyes have told him that what has “worked” in Columbus will work here. John wishes Edmonton was Montreal and wants a stadium close to where he lives (Todd Babiak’s call for a benevolent dictator to build a new arena still has me baffled). That’s fine. But it would be nice if the Journal found some other voices to chime in on this matter. Maybe tasking some writers to dig a little bit deeper, to provide a little more objectivity. To frame the issue in a new way. At the very least, I’d like it if they found a voice that did something other than bang the same, erroneous drum about Columbus over and over again. I don’t think that’s too much to ask, when it comes to matters of this importance.
***Update*** The blog post title for Staples’ story is even more bold in its declaration: “A downtown arena can be a jewel for Edmonton, but only if best practices are followed.” Yes, a jewel. Gag.
“If we do (build a new structure), we need to be creative and not burden the taxpayers.” –Dec. 22, 2006
“…we’re not going to burden our taxpayers with a $400-million or $300-million debt to have a new facility. That just won’t happen.” –Feb. 22, 2007
As for who is paying for this new arena, Best, Bouma and Mandel all indicated that taxpayers will have to chip in for at least part of the cost. “But I don’t want it digging into taxpayers’ pockets all the time,” Mandel said. –April 24, 2007
“I have said from the beginning the citizens of Edmonton can’t fund this arena on their own nickel,” said Mandel. “I have got some ideas how it can be financed that wouldn’t require any city money, and I think it can be done creatively, with limited amounts of public dollars, but to say no tax dollars — that would be irresponsible.” –April 25, 2007
Mayor Stephen Mandel isn’t ruling out using taxpayer dollars to make his dream of a new downtown arena a reality. –April 25, 2007
Rightly, the mayor insists no city tax dollars will be involved… –Oct. 10, 2007
“As I’ve said hundreds and hundreds of times before, we just can’t afford to take our municipal tax dollars and put it into an arena.” –Dec. 15, 2007
“I’ve said it a hundred times and I’ll say it another hundred times, we’re not going to raise taxes to pay for this.” –March, 26, 2008
Mayor Stephen Mandel, a booster of the downtown location, has said that there would be no property tax hikes to finance the arena, but the committee is discussing a community revitalization levy to help finance it. –March 29, 2008
“…it has to be funded some way, and we think we have a reasonably creative way of doing it that is not going to involve any current property taxes or grants from other orders of government.” –July 20, 2008
Mandel has ruled out property tax hikes to pay for the arena. But he said recently he has not ruled out improvement levy options, such as allowing the city to essentially borrow against the future value of the developed site to fund the construction. –Aug. 31, 2009
Mayor Stephen Mandel said last week he would be open to using a community revitalization levy in the area surrounding the new building to help pay for some of the facility.
It would work by seeing a portion of taxes paid by new neighbourhood developments set aside for the arena. –Sept. 1, 2009
Edmonton Mayor Stephen Mandel has said arena funding won’t come out of general revenues. A city committee that looked at Edmonton’s arena situation recommended that there be a 70/30 public-private split on building a $450-million (Cdn) downtown arena. –Dec. 13, 2009
He repeated his desire to have the city own the arena and help fund construction costs–estimated at $450 million last year–with a community revitalization levy. It would use property taxes generated by development in the area.
“We would not use grant money from the federal government (provided) for other projects. We would not use current city taxes to build the arena.” –Feb. 11, 2010
…the only acceptable deal is only one that does not divert existing tax or capital dollars. –Feb. 18, 2010
However, Mandel made it clear that he would only support a deal that doesn’t divert existing tax or capital dollars, and can prove that the CRL as a funding model actually works. “I would stress that a CRL is only possible when it goes hand in hand with proof that the revenue streams assumed into a CRL calculation are achievable,” he said, adding he would only consider a city-owned deal if city dollars are to be used to fund the arena. –Feb. 18, 2010
“The public sector isn’t paying for it. The fact of the matter is it’s a $400-million arena. [Oilers owner Daryl] Katz is putting in $100-million. That leaves $300-million. We’ll come up with some sort of a package for a ticket tax, which is probably another $120- to $125-million. That’s generated from people who use the facility — a user fee, which is not, I don’t think, unreasonable.” –July 30, 2010
Mandel’s recipe is the Community Revitalization Levy, a ticket tax, Katz putting in money, and small amounts of support from other orders of government. “Boom! You got an arena.”
I ask Mandel about all those who say they don’t want one penny of taxpayer’s money to go for an arena for millionaire players and a billionaire owner. “I agree with them. I don’t want my money going to them either. All I’m saying is what will go to them is what they can develop within their own complex. And without the arena downtown that wouldn’t happen. So I absolutely agree with those people. I don’t want my money going to a millionaire hockey player. I got to fix roads.” –Oct. 12, 2010
After re-reading my posts from two weeks ago on the Collective Bargaining Agreement and salaries, and discussing the CBA with people, like Tyler Dellow, who understand it much better than I do, I’ve come to realize that I’ve written poorly about the issue of non-Hockey Related Revenues, to the point of being erroneous. I’d like to take a moment to correct myself, in particular for this statement: “Non-HRR cannot be used by the owners to run their teams.”
Non-Hockey Related Revenues can be used to operate an NHL hockey team. When I said that they couldn’t, I meant (and wrote) that at a team level, additional revenues couldn’t help the Oilers ice a more competitive club because they’re not allowed to spend beyond the salary cap, and they’ve already been spending at or near the limit. Additional revenues of any kind will simply improve the owner’s economic return.
At a league-level, the salary cap itself is tied entirely to league-wide Hockey Related Revenues, which guarantees the players a fixed share of HRR. The other point I was trying to make is that the owners (collectively) would rather earn a whole dollar of non-HRR rather than just a portion of HRR. It therefore makes sense for them to make deals where they get all the non-HRR revenue, where there are more luxury suites and concessions, and where the city they operate in foots the bill on arena construction.
Where this explanation got muddy is that I made the CBA’s revenue definitions (which govern the salary cap system) sound like rules that restricted the spending and investment activities of individual clubs. They don’t, and I apologize for the error.
I stand by my view that the Oilers need to be transparent and open their books to prove they are in fact losing money. I also stand by my view that if they are losing money, it is because they are spending too much, spending unwisely, and putting in place a management group that isn’t getting them to the playoffs.
In the two posts I mentioned above, I will keep the current text, along with an asterisk that will lead people to this post. I don’t feel that it’s appropriate to erase my mistakes and pretend like they never happened. Over the past four years I have worked very hard to be a credible source on the arena issue, and have tried my best to bring to light facts and opinions about it that I felt were being ignored by the mainstream media. In particular, I have been very critical of some local publications and journalists for providing what I considered to be one-sided and sloppy reporting on this issue. Well, I did a really sloppy job. It’s my time to eat some humble pie.
Why Downtown? 