Edmonton Vaporware: The Arena District

Though the video game industry probably comes to mind first when you hear the term vaporware, it is increasingly being used to describe announcements and predictions that never come to pass in other industries too. Like construction. The construction of, for instance, big “transformative” projects that will unfold over a number of years. Sound familiar?

arena district

As you know, Edmonton’s shiny new downtown arena is being funded in part through a Community Revitalization Levy (CRL). The idea is that “projects funded by the CRL spark new developments, and property values rise on existing developments.” From the beginning, the arena was sold to Edmontonians as a catalyst for additional downtown development. It was clear that additional development would be part of the success of any deal. Here’s what the Katz Group’s Bob Black told the Journal in February 2010:

“In order for citizens of the city to have a reasonable assurance that the community revitalization levy debt will be retired by the city, then you have to have that collateral development.”

Even earlier than that, in September 2009, the Downtown Business Association’s Jim Taylor was arguing for ensuring that surrounding development took place:

“Somebody has to say that they’re building a casino or a hotel there, and you don’t get any money from the CRL unless those projects are part of it. So that funding is only available if those projects are there. It’s not, ‘We’ll do a CRL and hope that those projects are there. It’s: ‘The CRL is not available, the money is not borrowed, unless those specific developments are there too.'”

Of course, he and many other business leaders softened their stance over the years and no such requirement was ever put in place. In fact, I’d say the volume about what would be built was turned up, though details and commitments were always lacking.

In January 2011, U of A provost Carl Amrhein talked about the creation of “a university village” for student housing as part of the district. Also that month, local realtor Terry Paranych said if the arena goes ahead, he’d “build two condo towers, one 40 storeys, one 50 storeys.”

In December 2012, the Katz Group and its partner WAM Development Group stopped talking about individual projects and promised something much grander:

“If a new arena is approved, the Katz Group and partner WAM Development Group hope to push ahead this spring with $2-billion worth of nearby development, including 28 and 32-storey office towers. Plans also include two 35-storey or taller condominium highrises, a 10-storey condo building, a 26-storey luxury hotel and other commercial space along with a proposed open-air Oilers Plaza.”

Another article discussed potential tenants:

“Main anchor tenants are expected to include a VIP theatre complex, a grocery store and the headquarters of a major telecommunications company, according to a 60-page overview of the district by the Katz Group and partner WAM Development Group.”

Yet despite all the hype, there have been no commitments. It’s all just talk. Just vaporware.

In March 2011, the Journal’s Gary Lamphier made this clear:

“Not a single other developer has been willing to publicly commit hard cash toward the project. Despite recent talk from the city’s chief financial officer about proposed hotels, a casino and other projects, she hasn’t identified a single one by name. I’ve talked to roughly a dozen developers, consultants and commercial real estate brokers over the past 15 months in an attempt to flush out anyone who is willing to stand up and be counted as a participant in the arena redevelopment. I haven’t found one.”

The arena deal was finally approved, but still there have been zero commitments. And so we find ourselves in January 2014, clinging to the hope that a new tower for City of Edmonton employees will finally kickstart the development:

“Jim Taylor, executive director of the Downtown Business Association, said putting up an office tower a block from the arena would likely stimulate other development.”

Avison Young’s Cory Wosnack is even more optimistic:

“If WAM and Katz Group are successful (with the office tower proposal) — and I believe there will be an announcement within days — then the hotel deal can be announced, the retail can be announced and the domino effects begin.”

Is anyone still buying this nonsense?

Rogers Place

Perhaps the worst part about the proposed tower is that municipally-owned or leased properties do not pay property tax. Which means that all or most of the tower would not contribute to a lift in taxes within the CRL boundary. That land could have been used for a revenue-generating property instead, one that would actually help to pay down the CRL debt.

What about the Ultima Tower, you say? It was going to go ahead with or without the arena. What about the proposed, 71-story Edmontonian tower? Like the Aurora project before it, The Edmontonian has been vaporware since at least 2007, so there’s no reason to expect anything different now.

We’re being played, and the sad thing is, we’ve seen this story before.

In the world of video games, some have managed to shed their vaporware status and go on to be quite successful. Maybe that should give us hope that the arena district in Edmonton can do the same. Maybe there really is a master plan and an order in which these projects will unfold. But I’m not holding my breath.

UPDATE 2: There was some confusion about the paragraph above on taxation, as you’ll see in the comments below. I received clarification from the City. If the City of Edmonton leases space inside a building owned by a private entity, the space leased by the City is exempt from taxation. The remainder would be assessed and taxed as any other property would be.