Archive | October, 2010

They’re The Same Face

29 Oct

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 two posts 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.

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It Depends On What The Meaning Of The Word “Is” Is

25 Oct

Mayor Stephen Mandel dances on “taxes”:

“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

The Corrections

14 Oct

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.

Live And Let Die

2 Oct

“While paying lip service to downtown revitalization the complex is in fact just another destination shopping center, blocked off from the surrounding community. You drive there, you park your car, you stay inside the complex, and you leave. You don’t integrate yourself with the surrounding community. You don’t patronize businesses in the neighborhood. Drive. Park. Shop. Leave. That’s it.”

Some excellent posts from Los Angeles residents about L.A. Live, the AEG-built stadium district so often touted by the Katz Group and others as an ideal case study for a downtown arena district in Edmonton. I recommend reading the comments, too.