Doubleplusungood

2 Aug

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.”

Mayor Stephen Mandel

Bold is mine.

Call it dumb, delusional or intentionally deceptive, but the one thing you definitely can’t call Mayor Stephen Mandel’s recent statement to the National Post is accurate (I’m going with a dab of the delusional spread across a big misdirect sandwich). Even the math in his own quote leaves around $175-180 million to be covered by someone not named Daryl Katz. We could give Mayor Mandel the benefit of the doubt and expect the Tooth Fairy to cover the remainder of the bill, or we could look at the following tidbits and draw a more logical conclusion:

  • The Katz Group sat in Council chambers a mere eleven days ago and said that a 100% private financing model was not a viable economic option, and that they wanted to arrange a deal with the City, one where the City would help finance the arena, own the arena, and then let the Katz Group collect all the revenues from the arena
  • City Council has since come up with 140 questions for city administration, the Katz Group and Northlands, and they all seem pretty clear on the idea that the Katz Group is looking for public investment
  • City administration, the Katz Group and the Mayor himself have all advocated using a tax known as a Community Revitalization Levy to help pay for the arena
  • Substantial public subsidy, including the CRL, was also recommended in City Shaping, the report that was commissioned by the Mayor and City Council
  • At this point, the City looks to be in charge of collecting revenue from both the ticket surcharge and the personal seat licensing, with no explanation as to who will make up for any revenue shortcomings if those two plans don’t work. Considering the Katz Group is unwilling to cover the shortfall if either the CRL or downtown development don’t go as intended, I think it’s unlikely that they’ll agree to be on the hook if the user-pay ideas don’t pan out
  • The Katz Group requested that the City join them in asking both the Federal and Provincial government for infrastructure funding
  • The City has already spent “less than $100,000″ of taxpayer dollars on the City Shaping document
  • The City already subsidizes the Oilers to the tune of several million dollars a year, providing them cheap rent ($1 a year), concession revenues, parking revenues, ticket surcharge revenue, ownership of the naming rights for the building, and a free ride on property taxes.

So to summarize: existing subsidies and opportunity costs associated with the current Rexall Place, public expenditures to build the new facility and surrounding infrastructure, public ownership of the new facility, public risk and exposure on the CRL and user-pay ideas, opportunity costs from the turning over of revenues from a city-owned and paid-for facility, opportunity costs from the CRL and the direction of taxes towards the arena, and new taxes to cover the mandatory redirection of taxes from the CRL to the arena. If that isn’t public sector involvement and financing, I don’t know what is.

Mayor Mandel has done this type of…let’s call it meandering with language…before, not only on the question of spending tax dollars to finance the arena, but also on the question of whether or not he wanted it located downtown. So it’s clear that the best way to get him to say something different from what he’s said before is to ask him the exact same question. But I don’t get why he’s continuing with this particular line of spin, since about 200 people sat in Council chambers two Wednesdays ago and heard the Katz Group say the only way they could finance a new building was by using public dollars, and the only reason there was a meeting in the first place is that the use of public dollars and public sector involvement are on the table. It does, however, reinforce the fact that, despite the public opinion and independent economic research that point in the other direction, the Mayor is still stubbornly in favour of a publicly-funded downtown arena. I’d also argue that it reinforces how disingenuous he has been throughout this entire process, and that he should be held to account for it in October, but that’s a whole other post and a whole other story.

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One Response to “Doubleplusungood”

  1. Art V August 2, 2010 at 11:13 am #

    I’ve got
    Q141:
    We know the Mayor accepted roughly $15K from the Katz Group for his last election campaign. Did any other councillors accept money from the Katz Group, the Oilers, any associated companies, Daryl Katz, or his family? And how much?
    Q142: For Mandel and any other councillors who accepted such money, will you abstain from any decisions in council that have a material effect on the Katz Group or the Oilers’ bottom line, in the interest of avoiding any real or perceived conflict of interest?

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