New arena could earn more than $6.5 million in taxes a year
Council needs to decide within a month, mayor says
The city could earn more than $6.5 million a year in property taxes, which would help pay off the debt it would incur by covering one-third of the cost of a downtown arena, city administrators told city council Wednesday.
Mayor Stephen Mandel says councillors need to make up their minds to ink or tear up the deal within a month. “It’s enough already. I think we’re going around too many circles and let’s make a decision.”
Chief financial officer Lorna Rosen told council the $6.5 million a year is a conservative estimate counting the two hotels, retail shops, parking and the casino already proposed for the area. Other projects will come up, she said. Their models suggest the city could take in as much as $350 million in additional tax revenue if it agreed to borrow $125 million under a provincial program called a community revitalization levy, or CRL.
Under that program, all of the municipal and education taxes from around the arena project would go toward paying off the city’s debt for a period of 20 years.
“The site is currently underdeveloped, particularly given it’s location in downtown Edmonton,” Rosen said. “In the last 10 years, less than $2 million total in municipal taxes was generated from the site.
“The fact that this location has sat underutilized for decades strongly supports the position that development is not likely to occur in this area unless an initial investment in a capital project goes forward.”
The Katz Group, which owns the Edmonton Oilers, wants a new arena to be built for the team at a site north of 104th Avenue and west of 101st Street, where the Baccarat Casino is now. The group has promised to contribute $100 million for arena construction and $100 million toward surrounding development.
Rosen provided an update for council on administration’s research into arena funding options. The full report is scheduled to be presented April 6, which is when Mandel said a vote should be taken.
“There’s an issue of timing and construction,” the mayor said after the meeting. “As the economy in Edmonton gets more heated, that creates a problem. Right now we’re fine for a year or so but ... what happens if it gets too expensive? Then you don’t build it.
“There is not an option of fixing Rexall. Either we build a new arena or we become a second-class city, which in my mind, I don’t want to be. I believe the City of Edmonton will negotiate a good deal with the Katz Group.”
Other councillors did not sound as convinced.
Coun. Linda Sloan said she thinks administration wrote the report intending to convince council to approve the arena.
“I feel as though council is being corralled on this report,” she told Rosen. “I don’t know why a report from administration would not be more neutral.”
Coun. Amarjeet Sohi said he is having a difficult time convincing his constituents that a decision hasn’t already been made on the arena.
Coun. Kim Krushell said she, too, has not made up her mind and would like to read the details of any agreement in detail before signing on. She said she want to know who holds naming rights for the building, and who will be on the hook if construction costs come in higher than current estimates.
