Edmonton City Council and Katz Group move forward on new downtown arena

Today was the latest episode in the downtown arena saga and it was a weird one. Council received an update from Administration on negotiations with the Katz Group and ultimately voted 10-3 to move forward with an altered deal, though one that still closely resembles the framework that was approved in October 2011. Today is being called a “landmark” day for Edmonton, and supporters of the arena are understandably happy that the project is moving ahead, even though they may not be entirely sure why.

Let’s start with what’s new. The price of the arena has gone up $30 million to $480 million, and that pushes the total cost of the project (including the community rink, land, and other elements) to more than $600 million. The other changes include:

• The additional $30-million for the arena over the previous framework will be split between the City and the Katz Group
• The LRT connection, solely funded by the City, has been reduced from $17-million to $7-million
• Katz Group will pay for the slightly increased costs of the Winter Garden
• Under the new framework, the City will own the arena and land, and the Katz Group will pay all operating costs and receive all revenues

There are some other changes too, such as a property tax clause that no one seems to understand. But the biggest difference? Congratulations and optimism all around. Speaking to the media afterward, Mayor Mandel declared:

“It’s 100%, a deal is done. All the other stuff is just going through some steps. I’m absolutely totally confident that we will go ahead…”

And here’s the statement from the Katz Group:

“This is a milestone agreement for a world class facility that will drive the ongoing revitalization of downtown Edmonton,” said Daryl Katz, Chair of the Katz Group. "It also helps to ensure the Oilers’ long-term sustainability in Edmonton. This has been a challenging process for all concerned but we are confident we will all look back on the end result with pride and satisfaction at what we have achieved. I want to thank City Council and City Administration for their work on this file. This is a great day for Edmonton and we are excited to get to work on realizing this incredible opportunity.”

You may recall that when the original agreement was passed in October 2011, there was quite a bit of optimism then too. But it wasn’t along the lines of “the deal is done” as much as it was about moving forward. To be fair, it’s not like there was cheering in Council Chambers today, as Paula noted:

“After all the years of negotiations, the vote was greeted by silence — followed by an awkwardly belated round of quiet applause from the Katz Group and their supporters.”

But for Mayor Mandel and Daryl Katz in particular, their comments represent a complete turnaround. Last September, the mayor was “frustrated” and issued a statement calling for “the Katz Group to clarify its full position.” In response, Daryl Katz wrote a letter in October in which he called for “more time and political leadership.” He said negotiations had “gone backwards” and noted there were 15 open issues. In December, the Mayor said “we’ve gone as far as we’re going to go” and said a deal had to be reached within six weeks.

My read of the report suggests fewer than 15 changes were made, but maybe Katz was just grandstanding in his letter. What’s most interesting of course are the things that have not changed.

There’s still $100 million missing from other orders of government (plus another $14 million for the community rink). Mayor Mandel today said he is “very confident” that the province will come to the table for that amount, but no one knows when or how. There’s also no guarantee that that province would approve the proposed downtown CRL (though it seems unlikely they would reject it) nor that the Katz Group will actually invest in the commercial development surrounding the arena (it’s all “subject to commercial viability”).

I don’t see much of a difference between today’s deal and the agreement from October 2011, but apparently it was enough for Mandel and Katz to declare that we’ve crossed the finish line.

So what’s next? Well someone needs to come forward with $114 million, for starters. Given that the City expects construction to start as early as August 2013, getting the remaining funding issues sorted out would seem to be the priority. But perhaps more importantly, this agreement significantly increases the likelihood that Mayor Mandel will decide not to run again in the next election. As Paula noted, that means “a new political game is just beginning.”

I’ll give Don Iveson the last word on today’s proceedings: “I don’t want our city to fight about this anymore. It’s been an open wound in Edmonton.”