EDMONTON - Wednesday afternoon, city council decided to resume negotiations with the Katz Group regarding the downtown arena project. The Katz Group appeared before council Wednesday morning, and asked that the process be restarted.
In the end, the motion to resume negotiations with the Katz Group was passed 11 to 2.
"Motions are motions, and results are results," said Mayor Stephen Mandel following the vote approving the motion. "We'll see what happens with the results, and it's a matter now of the two groups coming together and actually finding a realistic solution that's good for both of us. I think this now getting at the last kick at the cat."
Katz Group officials arrived at City Hall Wednesday morning and made a presentation on the downtown arena project to council members.
Katz Group Executive Vice President, John Karvellas spoke to media following council's decision.
"We want to express our appreciation to the mayor and city council for two things today; number one, opening the door for us to speak to them. It was hugely important for us to be able to do that."
"Secondly, I want to thank them ... for the very respectful manner in which the vast majority of councillors dealt with us today. We didn't know what to expect," added Karvellas, "like an invitation to a public hanging, our own. That is not at all what we experienced today, and we're very appreciative of that."
"Our aim today was to re-start negotiations with the City of Edmonton."
That aim appears to have been achieved.
The City ceased negotiations in October after the Katz Group asked for an annual $6-million operating subsidy.
During the presentation Wednesday morning, Karvellas said, the group was "stunned" by the city's decision to stop negotiations.
"We do not want the downtown arena project to die," said Karvellas.
The Katz Group told council it's now willing to scrap the subsidy request and proposed another option.
"If the City realizes tax revenues related to development by the Katz Group or its development partners around the arena in excess of its reasonable growth projections, we propose the City direct a portion of those excess revenues to what we've referred to as an arena reserve fund, which would be available to be drawn on over the course of our lease of the arena to maintain, repair, improve, and enhance the arena and its operations," explained Karvellas.
Karvellas added this would give the Katz Group "a powerful incentive" to invest into private business in the area.
"We think this is viable for the city, too," said Karvellas. "It will drive tax revenue, which drives the CRL and will let the city make other improvements downtown."
City Council did express concern whether the idea would be legally acceptable under the CRL program.
The Katz Group also requested a third party take part in negotiations, if city council agrees to re-start the process.
Both council and the Katz Group acknowledged there is a "trust issue" after the last round of talks fell through.
"Are you prepared to be reasonable going forward?" asked Councillor Kim Krushell during Wednesday morning's meeting.
"Not to be facetious, but I am always reasonable," answered John Karvellas with a laugh.
Councillor Tony Caterina asked if Karvellas agrees with the October 2011 framework. Karvellas responded, the Katz Group agrees with it, but also thinks it needs to be supplemented.
Oilers President Patrick Laforge shared with council future risks and opportunities going forward that didn’t exist when negotiations first started.
"Another major wrinkle to our forecast is a new arena in Calgary, which will - I'm certain, if it happens - feature new and improved concert features and benefits; the kind of things that will affect the non-hockey events touring in Alberta."
Laforge added, "you may all know that Edmonton has enjoyed a luxury in that regard."
The Katz Group finished up its presentation to council shortly before noon Wednesday. Council continued to discuss the details after the presentation.
The City ceased negotiations in October after the Katz Group asked for an annual $6-million operating subsidy.
On Wednesday, Katz Group Executive Vice President, John Karvellas said, the group was "stunned" by the city's decision to stop negotiations.
"We do not want the downtown arena project to die," said Karvellas.
The Katz Group told council it's now willing to scrap the subsidy request and proposed another option.
"If the City realizes tax revenues related to development by the Katz Group or its development partners around the arena in excess of its reasonable growth projections, we propose the City direct a portion of those excess revenues to what we've referred to as an arena reserve fund, which would be available to be drawn on over the course of our lease of the arena to maintain, repair, improve, and enhance the arena and its operations," explained Karvellas.
Karvellas added this would give the Katz Group "a powerful incentive" to invest into private business in the area.
"We think this is viable for the city, too," said Karvellas. "It will drive tax revenue, which drives the CRL and will let the city make other improvements downtown."
City Council did express concern whether the idea would be legally acceptable under the CRL program.
The Katz Group also requested a third party take part in negotiations, if city council agrees to re-start the process.
Both council and the Katz Group acknowledged there is a "trust issue" after the last round of talks fell through.
"Are you prepared to be reasonable going forward?" asked Councillor Kim Krushell during Wednesday morning's meeting.
"Not to be facetious, but I am always reasonable," answered John Karvellas with a laugh.
Councillor Tony Caterina asked if Karvellas agrees with the October 2011 framework. Karvellas responded, the Katz Group agrees with it, but also thinks it needs to be supplemented.
Oilers President Patrick Laforge shared with council future risks and opportunities going forward that didn’t exist when negotiations first started.
"Another major wrinkle to our forecast is a new arena in Calgary, which will - I'm certain, if it happens - feature new and improved concert features and benefits; the kind of things that will affect the non-hockey events touring in Alberta."
Laforge added, "you may all know that Edmonton has enjoyed a luxury in that regard."
The Katz Group finished up its presentation to council shortly before noon Wednesday. Council continued to discuss the details after the presentation.
Wednesday afternoon, city council voted a motion that would:
- re-open negotiations with the Katz Group
- negotiate an extension of the deadline
- work with Katz Group to select a mediator
- have the mediator appoint a financial analyst
- work with the Katz Group with the mediator
- have City Administration continue to gather information and present options to council on January 23, 2013
This was the first update on the arena for councillors since they voted unanimously to end negotiations with Katz in mid-October.
The Katz Group had not been invited to speak, but requested the opportunity to appear before Council. It's a turn around from two months ago when Darryl Katz refused to meet with the City to go over plans for the project.
Mayor Stephen Mandel said he welcomes the group, but doesn't want to read anything into it.
"For the most part, council would like to see something happen, but it has to happen in a way that's respectful of our October 2011 agreement," he said Monday. "That's what Council approved and anything beyond is something that does create challenges."
"The question now is whether we build it ourselves or not," Councillor Kim Krushell said Monday.
"I mean, we've always said - the original deal, Council supported, what we said 'no' to, is the huge number of increased asks," she explained.
Mandel added that all discussions on the downtown arena will be made in public.
According to the Katz Group, the arena will cost about $478 million and $68 million for the winter garden.
The group's goal is to have shovels in the group by April 2013.
With files from Edmonton Journal
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