Daryl Katz finally reveals some information about the Edmonton Arena District

At a media briefing attended by a select few journalists on Thursday, Daryl Katz finally revealed some information about the Edmonton Arena District. The event was timed to coincide with the launch of the new district website that has lots of photos, videos, and other information about the project. It’s definitely worth checking out.

Downtown Arena Press Conference

He pitched the journalists on the scale of the project and the impact it’ll have on Edmonton, and judging by the words that were written, it sounds like he did a convincing job. But incredibly, Katz also talked about an apparent lack of knowledge about the district:

“We have a world-class sports and entertainment district under construction now in the city and nobody really knows about it.”

Surely he doesn’t think Edmontonians lack awareness about the district. There have been lots of opportunities to hear or read mention of it. For instance, the phrase “arena district” was mentioned in 251 Edmonton Journal articles since 2008. We just had a big flashy launch for the new Stantec tower. Before that there was the new City of Edmonton tower. People at least know that there’s this thing called the “arena district”.

So he must mean that no one knows about the specifics of the district. The overall design of the project, what it will include, that sort of thing. We still don’t know all that information. So the question is, why? Because Daryl Katz and his associates have never wanted to talk about it.

It’s not like the question was never asked. Despite it being critical for the CRL which will help to fund the arena, no one from the Katz Group has ever been willing to say much about the arena district. That’s why journalists couldn’t find anyone who was participating in the project. Whenever the question came up, the answer was always, “we’re not going to talk about the district today.” Only very recently did that become, “we will be providing details on [the district] soon.” If there’s a lack of knowledge about the project, that’s entirely because the Katz Group refused to share any information about it.

Daryl Katz

I understand that Daryl Katz wants to try to control the message as much as possible, and that’s his prerogative. But to lament that no one knows about it after intentionally keeping everyone in the dark? That’s rich.

Edmonton will officially join the skyscraper club with Stantec’s new tower

Stantec today unveiled their new headquarters, a 62-storey tower that will be built on the corner of 102 Street and 103 Avenue right in the heart of the Edmonton Arena District. Along with the Katz Group, WAM Development Group, and City of Edmonton, Stantec shared details on the new building which will be the tallest in Edmonton and one of the tallest in western Canada.

Stantec Tower

As expected, the new building will open directly into the public plaza in the Edmonton Arena District, and is being considered the “anchor” project. Construction on the $500 million project will begin this fall, with the new building slated to open in the summer of 2018.

It was back in June that City Council officially removed the Airport Protection Overlay, clearing the way for buildings higher than 150 meters to be possible. That height is significant. A building is generally considered a “high-rise” until it reaches 150m, at which point it becomes a skyscraper, at least according to most definitions. As of April 2013, there were 90 such buildings in Canada: Toronto has 56, Calgary has 16, Montreal has 9, Vancouver has 4, Mississauga has 2, and Niagara Falls and Burnaby each have 1. With the new Stantec tower, Edmonton will officially become a member of the skyscraper club!

Stantec Tower

The new tower will rise to 224 meters (or 746 feet), though officials today clarified that it could still rise higher. The design features 26 floors of offices and could accommodate another 2 floors if the market demand makes adding them feasible. The building will also include approximately 320 residential units taking up 33 residential floors. Another 2 floors are mechanical, and the first floor will feature retail.

“This new building will revolutionize the downtown landscape in Edmonton and will set expectations for future buildings in the city,” said Darren Durstling, President and CEO of WAM Development Group. “This tower is being designed, engineered and project managed entirely by Stantec, showcasing their vast capabilities and experience.”

The new building will have a dramatic effect on Edmonton’s skyline when it opens. The current tallest building in the city is EPCOR Tower, which rises to 149 meters (490 feet). Manulife Place, which was the tallest structure in Edmonton for 28 years, rises to 146 meters (480 feet). Down in Calgary, the iconic Bow tower rises to 236 meters (774 feet).

Stantec unveils new tower

Daryl Katz said the new tower will “set the tone for new buildings in Edmonton for years to come.” He called it “an extraordinary addition” to Edmonton’s skyline. Mayor Don Iveson joked, “I’m a tall guy, but I am intimidated by this!” He highlighted the building’s impact on Edmonton, saying it will transform our city’s image across the country. “This is an indication of what the power of investment in our downtown can do,” he said.

Stantec Tower

Stantec is taking about 450,000 square feet of the new building, or approximately 19 floors. They have signed a 15 year lease which of course includes naming rights (the official name is yet to be revealed). Today’s announcement was hosted at Stantec’s head office on 112 Street, one of four local offices that will be consolidated into the new building. Dozens of Stantec staffers were on hand to witness the unveiling.

“We are proud to have both our people and our designer’s work play a role in enhancing the vibrancy of the Edmonton Arena District,” said Bob Gomes, president and CEO of Stantec.

You can see Gomes and WAM President & CEO Darren Durstling literally press a button to reveal the new building with this GIF. Stantec Senior VP Keith Shillington said “our hearts were downtown” while acknowledging the proposal received some stiff competition.

Stantec unveils new tower

I am very excited about this building. Stantec, one of Edmonton’s biggest success stories, is making a significant commitment to the future of our downtown. On top of that, this building is the first major private project in the Edmonton Arena District. During the press conference, Mayor Iveson did some back-of-the-envelope calculations to suggest that if Manulife Place currently contributes about $3 million in annual tax revenue, the new Stantec tower could contribute $4-5 million into the CRL. That’s extremely significant. Just as the Bow tower “paid for” the Rivers CRL in Calgary, the Stantec tower makes the success of the downtown CRL much more likely. And hopefully it’ll allow us to attract even more private investment. For me, the “district” just became real.

Stantec Tower

If you look closely in the renderings, you’ll see a building directly to the north that features the word “hotel” across the top. I understand that the next big announcement for the Edmonton Arena District will include details on the hotel. It’s a very exciting time for downtown Edmonton!

You can see more photos from today’s announcement here.

Photo Tour: Rogers Place construction is well underway!

Construction is well underway on Rogers Place, and yesterday morning the local media had the opportunity to see the activity from above and up close. You can check out the live view here.

We started off with a trip to the top of the EPCOR Tower. From there, you get an excellent view of the 9.5 acre site. When finished, Rogers Place will be about 60% larger than Rexall Place is today. It’ll seat 18,641 for hockey games, and up to 20,734 in a centre stage concert setup.

Rogers Place Construction Update

The former site of the Staples is now empty, and there was limited activity there yesterday.

Rogers Place Construction Update

The Baccarat Casino remains open, and will remain open for as long as they want. The City of Edmonton owns the land and is now their landlord, but the arena development will not encroach on the area where the casino is in any way. It seems strange to me that it could remain open next to the arena, but apparently there’s a strong possibility that’ll happen.

Rogers Place Construction Update

The LRT station is more or less finished, with just signaling to go. There will be some impact to the station once the 5,300 square foot connection to Rogers Place is constructed.

Rogers Place Construction Update

After the media had assembled, the brief press conference was held. On hand to answer questions were: Rick Daviss, Manager of Corporate Properties at the City of Edmonton; Bob Black, Executive VP of the Edmonton Arena Corporation at the Katz Group; Mike Staines, Construction Manager at PCL; Patrick LaForge, President of the Edmonton Oilers; and Dan Valliant, SVP and Project Executive for Rogers Place with ICON Venue Group.

Rogers Place Construction Update

PCL’s Mike Staines gave an update on the construction taking place. “We have around 30 of 400 columns in place, and two or three elevator shafts today.” There are about 150 craftsmen and craftswomen on site working. The steel and concrete structure will be erected starting this fall with two cranes that are three times the size of the ones there today. That work will take about a year.

Next we hopped on a bus to go across the street to see the construction up close.

Rogers Place Construction Update

The crew had setup a PCL flag to denote where Centre Ice will be. About 80,000 m3 of material will be excavated, with up to 300 truck loads removed each day.

Rogers Place Construction Update

Here you can see how deep they have excavated the site, and also the wall that has been setup to separate the arena project from the casino.

Rogers Place Construction Update

About 10,000 pieces of structural steel weighing 9,000 tonnes and 25,000 m3 of concrete will be used in the construction of Rogers Place.

Rogers Place Construction Update

Across the street, there is limited construction activity thus far. Eventually the Winter Garden will cross 104 Avenue, connecting the north and south sites. I expect that’ll be the focus of a future construction update.

Rogers Place Construction Update

Bob Black addressed questions about the arena district right away: “There’ll be much more to come in the coming months as the project evolves. I know that many of you will have questions on the district, and we will be providing details on that very soon. But today, the focus is on Rogers Place.”

Rogers Place Construction Update

Construction has been hugely impactful on the residents of Square 104, but the City of Edmonton’s Rick Daviss said that communication has been good and the City and Katz Group have been quick to take care of any issues that have come up. The City is meeting regularly with residents and business owners in the area.

Rogers Place Construction Update

Rogers Place is slated to open in the fall of 2016. It will bee the first LEED Silver-certified NHL arena in Canada.

Rogers Place Construction Update

You can see more photos of the construction site here.

Green light given for Rogers Place, Edmonton’s new downtown arena

Construction on Rogers Place, the future home of the Edmonton Oilers, will begin in March now that the $480 million guaranteed maximum price has been met. The announcement was made at a press conference today at City Hall that featured a rare public appearance by Daryl Katz.

Downtown Arena Press Conference

The new downtown arena will seat 18,641 for hockey games, and is being described as “the most technologically enabled sport facility in all of North America” (details on what that means are still to come, I presume). The arena is part of a $606.5 million package that includes a community rink, LRT connection, pedway, and the Winter Garden.

The stage today was backed with hockey boards while a face-off circle emblazoned with the Oilers logo sat in front. Giant renderings of the new building flanked each side. Mayor Don Iveson, City Manager Simon Farbrother, Daryl Katz, and Ian O’Donnell from the Downtown Community League (DECL) were the speakers.

Downtown Arena Press Conference

I have to say the press conference seemed a bit over the top for what was announced. It was very unlikely that the guaranteed maximum price wouldn’t be met, and even if it hadn’t been met, that would have been little more than a speed bump. Council would have voted, and construction would have gone ahead one way or another.

Very little that was announced today was new (would it have killed them to talk about the building, even just a little?). Most of the speeches consisted of the various parties involved thanking one another, and extolling how great the new arena will be for Edmonton. And we heard the same old arguments once again. City Manager Simon Farbrother said:

“With this announcement, we are able to announce two very significant goals for this city. The first one this does is helps us on that continued journey of building a great downtown. The second one it does is it supports NHL hockey in Edmonton for the very foreseeable future.”

Nevermind that downtown has been on the upswing for years and that the threat of losing the Oilers was misleading at best.

But those arguments are over and done with – today was about the future, as Daryl Katz said. I suppose his attendance was meant to suggest a sense of finality, but I’m not sure that came across. He certainly didn’t look like he wanted to be there. Sure, he expressed his relief at getting to this point and his thanks to all involved, but he looked and sounded to be going through the motions more than anything else.

Downtown Arena Press Conference

Why was DECL invited to participate? Maybe it was just to play the role of “downtown supporter” in the story. I hope it wasn’t to represent the members of the public that were apparently involved in the decision, because just two or three people on the board were involved. As someone who both lives and works downtown, I don’t feel that DECL represented me in the process (this is a great example of how community leagues are setup to promote “tick the box” public engagement).

But I guess that was the point of today’s event – the process is done, the arena will be built. I’m happy that we’ve reached this point and I do think the arena will have a positive impact on downtown. I have great respect for everyone who has gotten involved, whether it was to support to the project or whether it was to ask hard questions. There are still questions remaining too. Will the remaining government funding be confirmed? What will happen to Rexall Place?

One thing that’s clear is that the arena won’t succeed on its own. It needs a district surrounding it. In his remarks today, Daryl Katz made mention of that development, saying that we can expect to learn more this spring. I have heard the project described as a series of dominoes, with the new City tower following the arena, and more still to fall. I sure hope that’s the case.

Downtown Arena Press Conference

There were a couple of other interesting tidbits of news shared today:

  • Katz Group Executive VP John Karvellas confirmed that the Oilers have an agreement in place to continue playing at Rexall Place until the new facility opens in time for the 2016 season.
  • MacEwan University has come to the table and will be contributing $2 million to the community rink to “increase capacity and improve functionality”.

You can see more photos of the press conference here. The Oilers have audio and video of the press conference available here. The City has made renderings of Rogers Place available here.

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.

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.”

The arena deal is dead, but the City of Edmonton came away the victor

After a heated discussion on the arena yesterday afternoon, City Council voted to cease all negotiations with the Katz Group and directed Administration to explore alternatives. Here are the three motions they passed:

  1. As a result of Mr. Katz’s letter and unwillingness to have an open discussion with Council and the frustration of the Interim Design Agreement, all negotiations and ongoing City work related to the October 26, 2011, framework cease immediately.
  2. That Administration provide a report, as soon as possible, to City Council to report on the completion of the cessation of negotiations and the status of the City’s current, transferable investments in a potential downtown arena project.
  3. That Administration provide a report outlining a framework for Council to explore potential avenues to achieve the long term goals of sustainable NHL Hockey in Edmonton.

That means the arena as we know it is dead, but it doesn’t mean that a new arena is completely off the table. With that third motion, Administration is empowered to explore alternatives to working with the Katz Group, which could mean the City builds a new arena by itself. Here’s the full video of Mayor Mandel and City Manager Simon Farbrother answering questions about yesterday’s meeting:

Supporters of the arena will no doubt lament the fact that we appear to be no further ahead than we were four years ago, but I don’t think that’s true. Here are some of the reasons that I think the City and Council came away the victors in this whole debacle:

  • The City owns the land. No matter what happens with the arena, that land was a great investment. And I’d much rather have the City own it than some speculator who is just going to sit on it.
  • The City owns the design of the arena. Last October, Council directed Administration to spend $30 million to get the design completed to 60%. The City can take this design to a new partner or use it as the basis for building the arena itself.
  • The City now has a head start on a CRL for downtown. I think a case could be made for a downtown CRL even without the arena. Maybe it would be scaled back, but all the work that has already been done to develop the CRL plans could be reused.
  • Council no longer look like the bad guys & gals. I’m no fan of the way that Council handled the negotiations over the last couple of years, but fortunately for them Katz handled things even more poorly!
  • It may seem as though Katz has the upper hand with the ability to move the team elsewhere, but that has always been an empty threat and remains so. The NHL still wants hockey in Edmonton, and I honestly believe that Katz wants to keep the Oilers here too. If anything has changed, it’s that the NHL would be even less likely to allow a move now that Council has done everything it can to work with the Katz Group.

I’m less confident this will actually come to pass, but I was encouraged by comments made yesterday by one of the Councillors that the “unprecedented” use of in-camera sessions should be avoided in the future. It’s clear that the private meetings did more harm than good in progressing the deal and getting Council what they wanted, and I hope that means Council will avoid in-camera sessions in the future.

The arena is getting all the attention right now, but in the grand scheme of things, there are far more important issues for Council to be dealing with. More than 150 neighbourhoods need renewal and it’s going to take billions to maintain all of that infrastructure. At the same time, Edmonton’s population and economy continue to grow much faster than the national average and that means big pressures in terms of where we put new infrastructure, how we move people efficiently throughout the city, etc. As soon as they were done with the arena issue yesterday, Council starting talking about the LRT.

Back to business.

Was today’s downtown arena news a setback or a setup?

Today behind closed doors City Council discussed a request from the Katz Group for more public money for the downtown arena project. In a letter to City Manager Simon Farbrother, the Katz Group’s John Karvellas wrote:

“…we believe the City has significant capacity beyond its commitment of $45 million to help fund the arena, which by all accounts is the catalyst for the CRL itself and which can help to fund so many other important projects to benefit downtown and the entire city.”

Council voted simply to reaffirm its commitment to the funding arrangement that was agreed upon nearly a year ago. Though the Katz Group letter outlines rising costs, it seems as though the request was actually for new concessions. And that didn’t sit well with Council. Only Councillors Sloan and Diotte voted against the motion (they had also voted against the funding deal).

Much of the discussion about today’s news has focused on the absurdity of a last-minute request from the Katz Group. Many have been critical of Daryl Katz’s decision to remain quiet and unseen, suggesting the approach has led to distrust among Edmontonians. And of course, Mayor Mandel’s statement that “frustrated” is a better word than “optimistic” has for many turned the arena from a done deal in to a big question mark.

But I’m not so sure. What if instead of a major setback, today was actually a major setup?

There’s a few things that don’t sit well in my mind. First, the timing is highly suspect. Two weeks ago the Downtown Business Association released a report that suggests $4.8 billion of investment could take place downtown in the next five years. Last week the Chamber of Commerce warned of a “massive setback” if the arena is not built. In between all of that, the province announced its financial outlook and said that revenues will fall short of projections, so a boost from that level of government doesn’t seem any more likely now than it did a year ago. Were the DBA and Chamber announcements simply well-orchestrated PR efforts designed to try to force the City’s hand? One wonders how much influence the Katz Group exerted.

Secondly, there’s much more than just the arena riding on the CRL. Municipal projects including the arena make up half of the DBA’s forecasted $4.8 billion, and most rely on the downtown CRL being approved. If there’s no arena, there’s no CRL, and if there’s no CRL, it’s back to the drawing board on how to fund all of the other initiatives. Talk is cheap yes, but I really do think that most on Council believe in the importance of a strong downtown. The prospect of putting all of the positive momentum and recent progress at risk must not be sitting well with them.

Thirdly, I just can’t get past that suggestion in the widely-circulated Katz Group letter that the City actually has the ability to contribute more money than previously agreed to. That seems like an odd thing to bring up now, at this juncture. Whether it is true or not, the seed has been planted.

Lastly, I think the Katz Group’s statement from this afternoon is quite strange. It focuses on the amount of time and money the organization has invested into the project, but remains optimistic about getting the issues resolved:

“The Katz Group is committed to continuing to work with the City to find creative solutions that work for both sides so that we can get on with the business of ensuring the Oilers’ long-term sustainability and accelerating the revitalization of the downtown core.”

Even more interesting, the statement seems to leave open the possibility that a larger deal can still be arranged:

“We have also offered to pay a fair share of arena construction costs above $450 million as part of a comprehensive package that makes economic sense.”

All of these things have me feeling as though today was more of a setup than anything else. Definitely to position the agreed upon $450 million limit as too low, and maybe even for a white knight to swoop in and save the deal, as I tweeted this afternoon. Could Katz himself now come forward in public with an increased financial offer and make Council look like the bad guys for refusing to match the increased funding requirements? Could someone on Council, perhaps someone angling for the Mayor’s chair next October, have a trick up his or her sleeve? Or perhaps most intriguing of all, could this finally be an opening for the province to step in and look like the heroes for salvaging the deal?

I guess we’ll find out soon enough.

Roundup: Reaction to the latest downtown arena vote

On Wednesday afternoon, City Council approved a financial framework for the new downtown arena. The vote passed 10-3, with Diotte, Iveson, and Sloan voting against. Council also agreed to spend $30 million to complete the design of the arena to 60%, to enable contractors to bid on the construction project with a Guaranteed Maximum Price of $450 million. From the news release:

“A new downtown arena is a catalyst for revitalizing downtown. This is a fair agreement and will help sustain NHL hockey in Edmonton while increasing economic activity in the city,” says City Manager Simon Farbrother. “It will also improve land values and the livability and sustainability of Edmonton for all citizens.”

John Karvellas from the Katz Group also issued a statement:

“We very much appreciate City Council’s strong vote of support for the downtown arena, as well as the considerable time and effort Mayor Mandel and City Administration, in particular, have put into this project. We will work with the City administration to understand the implications of the new elements of the deal introduced in today’s motion in the context of the agreements that need to be completed by month-end.”

NHL Commissioner Gary Bettman also shared some comments:

“I am thrilled for the City of Edmonton and I want to congratulate and thank Mayor Mandel and Daryl Katz for their hard work and commitment. The future of the Oilers couldn’t be brighter.”

I was paying attention to the meeting on Wednesday, and as the vote approached I tweeted much of Council’s final remarks. Here are some of the highlights:

  • Mayor Mandel: “I have not had one, not one call since SLRT opened about what it cost us to build.”
  • Mayor Mandel: “Today is about making a decision to change our downtown.”
  • Mayor Mandel: “This is a project about Northern Alberta, it’s not just about Edmonton. The province should come to the table.”
  • Councillor Anderson: “Thank goodness he lives here.” (referring to Daryl Katz)
  • Councillor Anderson: “I believe that the casino and the gravel project would sit for another several decades if this does not go forward.”
  • Councillor Anderson: “We all have to remember however, that no matter how we vote on this, it is still subject to $100 million appearing from somewhere.”
  • Councillor Batty: “I applaud Daryl Katz for his perseverance.”
  • Councillor Gibbons: “Hopefully we can work toward keeping Edmonton on the map.”
  • Councillor Gibbons: “We’ve done such a good job of growing out, maybe we can grow back inside.”
  • Councillor Gibbons: “I’ve travelled all over the world, and a great city has to have a great downtown.”
  • Councillor Leibovici: “We do have a downtown that needs a bit of a lift.”
  • Councillor Leibovici: “Do we need an arena? Yes. Do we need to change what we have? Yes.”
  • Councillor Leibovici: “A lot of this reminds me of the airport debate.”
  • Councillor Sohi: “I know it’s not a perfect deal, but it’s a reasonable deal that I can defend to the people I represent.”
  • Councillor Krushell: “It’s time to tell the Prongers of this world that Edmonton is not just a city with great people.”
  • Councillor Krushell: “The project will play a key part in revitalizing our downtown, and that is why I am supporting this.”
  • Councillor Loken: “This is a game-changer in my mind.”
  • Councillor Loken: “This is about Edmonton, this is about vision, this is about the future.”
  • Councillor Diotte: “There’s no reason to agree to a bad deal.”
  • Councillor Diotte: “I think we can all agree that the majority of Edmontonians want to see a new downtown arena.”
  • Councillor Sloan: “I maintain grave reservations about the costs and associated risks that the City is undertaking.”
  • Councillor Sloan: “I am further concerned that a lack of clarity has resulted in both Council and Admin losing face in the public.”
  • Councillor Caterina: “I’m comfortable that this is a much fairer deal than what was brought back from New York.”
  • Councillor Henderson: “I’m prepared to continue moving forward because I think at this point that our interests are being served.”
  • Councillor Henderson: “I don’t think the arena by itself is the magic wand.”
  • Councillor Iveson: “Nothing would anger me more in my old age than to see this debate play out again in my lifetime.”
  • Councillor Iveson: “I’m sold on what a new arena can do for our downtown, but I believe a better deal can be found.”

Slowly but surely, our Councillors are becoming more familiar with the tools and technologies available to them. Three Councillors blogged their final remarks, something I’d like to see the norm rather than the exception.

Many people tweeted about the news on Wednesday, and as I showed in my brief analysis, the response seemed to be mostly positive. There was also a fairly active thread on Connect2Edmonton about the deal.

Here’s what Paula Simons wrote about the deal:

“On Wednesday, Mayor Stephen Mandel described the arena as something to benefit all of northern Alberta. Sohi called on Edmontonians to petition Premier Alison Redford for financial support. Indeed, the province may be more willing to come up with the necessary cash, perhaps by some sleight of hand with casino money, now that the city and the Katz Group have come to terms. But this story, dear readers, isn’t over. We’ve just taken a whole new plot twist.”

Here’s what John MacKinnon wrote:

“Now that Oilers owner Daryl Katz’s downtown arena project is a qualified ‘go,’ maybe people can focus on what should have been the main issue all along: how this facility will help transform Edmonton’s downtown.”

Here’s what Gary Lamphier had to say:

“As I’ve said repeatedly over the past couple of years, I’d love to see a new downtown arena. But not at any price. I don’t think this deal represents anything close to an equitable sharing of risks and rewards between Katz Group and city taxpayers.”

In that same article, U of A sports economist Brad Humphreys shared his thoughts:

“It’s a terrible deal. They’re still short $100 million and I don’t see it going very far until they come up with the remainder of the funding.”

Here is what David Staples wrote:

“So did we get fleeced? Not even close. This is a good deal, far better than the existing Oilers deal at Rexall, and certainly right in line with what we see in terms of public/private funding models for new arenas in other NHL cities.”

Here is what Terry Jones wrote:

“The late great city of Edmonton has dared to be great again.”

Northlands CEO Richard Andersen hasn’t made many statements since the vote, but the Sun quoted him yesterday:

“We want to move on and get busy doing the other things we do. This is a huge distraction.”

Oilers star Taylor Hall tweeted his reaction to the news:

“Excited news on the new arena for Edmonton. In other news @ebs_14 and I got iPhones and they put BlackBerrys to shame.”

Here is what Yukon Jack wrote in his column:

“Finally! Finally another step in the downtown arena project. To say this thing is moving at a glacier’s pace is an insult to climate change.”

Bruce Urban, owner of the Edmonton Rush, is a fan of the project:

“It’s very exciting. Let’s picture Downtown Edmonton with this beautiful arena, the businesses that will follow, the restaurants and entrepreneurs who will follow. It’s very exciting for the city.”

The Calgary Herald asked Flames CEO Ken King to comment and received this statement:

“The news coming out of Edmonton regarding their new building is wonderful.  A state of the art new facility will be a great boon to their community and create a viable future for their team.”

Writing for the National Post, here is what Jesse Kline had to say:

“This is nothing more than corporate welfare, and by threatening to relocate the Oilers, Mr. Katz was essentially threatening to make business decisions based on how much money he can extract from local governments, rather than what city is the best market to do business in.”

The Edmonton Sun said that with the deal done, it is time to move on:

“City council has decided to proceed with a package that will see a major chunk of downtown Edmonton revitalized. It has been an acrimonious two-year debate, and the sensible move at this point is for the city to move forward together.”

The Edmonton Journal said the decision was the right call for our city:

“In this corner, the belief is that all Edmontonians will benefit – from economic spinoffs boosting the tax base, from the proliferation of non-hockey entertainment options that they will use, from the greater future attractiveness of Edmonton as a place to live, and from the fact that NHL hockey will now be guaranteed to remain a key part of community pride for at least the next 35 years.”

I’m sure I have missed some reaction, but I think the quotes I have highlighted are fairly representative.

With a positive vote on the arena, Council can get back into the driver’s seat

City Council probably could have done a better job of handling the arena issue this year. I asked Councillor Sohi about this a couple weeks ago, and he agreed. “In hindsight we should have been in the driver’s seat rather than letting the Katz Group drive the process,” he told me.

How much have things skewed in the Katz Group’s favor? Some would say a lot. Here’s what Paula Simons wrote about Council’s vote to purchase the land for the arena:

I am honestly awestruck at Katz’s audacity — and his brilliance. The city takes two large parcels straight off his hands, at his cost, allowing him to assemble and flip the land, with no expense or debt. The city pays all the upfront costs of the arena but still agrees to let the Katz Group choose and hire the architect, come up with the design, and keep all the revenues. We actually pay the team to promote the city. And, at Katz’s behest, we slap a tax on his business rival. It’s the most stunning power play in Oilers history.

The entire article is worth a read. It may have been a brilliant move on the part of the Katz Group, but I think it also opened the door for Council to gain some leverage. There are two key things to consider here – the land, and the design.

Purchasing the land that Katz assembled is a good deal for the City. Underutilized, valuable land is now owned by the City rather than speculative developers. The latest report on the proposed Downtown CRL pegs the cost of the land at around $30 million, a very reasonable amount. “The big piece of land for the arena proper is below market value so that was a no-brainier,” Councillor Iveson told me. Importantly, the City owns that land now regardless of what happens with the arena. “If the deal falls through, it’s a good asset,” Councillor Iveson said. I don’t know about you, but I’d much rather have the City own that land than a private interest. You might argue that the City could just as easily fail to do anything with the land, but at least we can put pressure on the City to make something happen. A private developer could just sit on the land forever. Getting rid of the parking lots is one of the most appealing aspects of this project.

Moving forward with the design process is an important next step. Conceptual stuff has been done by the Katz Group of course, but a vote in favor of the arena deal this week would really get the ball rolling. As I understand it, the City and the Katz Group would sit down and figure out the necessary retentions. They’d select the design architect, the local architect, and any consultants. An RFP would go out for the construction manager, and once the retentions were in place, the design process would start. According to the latest City report, “the City will fund the cost of design to a 60% level on which the tender documents will be based in order to get the best possible Guaranteed Maximum Price for the arena.” Keeping in mind the $450 million ceiling, the goal would be to produce a design that could be taken to market for that price, and the design itself is an element of that total amount. Importantly though, the City owns this design work (the Katz Group would retain ownership over the conceptual work they completed). “If either party elects not to complete the deal, the City will have ownership rights to the design work undertaken by the City.” You can read more about the budget request to start the process here.

The City needs the Katz Group’s help on this, so I think the collaborative approach makes sense. The Katz Group understands the market and they know what will sell. They’ve done the research and they know what has worked elsewhere around the league. Of course we want the design to be attractive, to comply with the Capital City Downtown Plan, and to support Edmonton’s other priorities, such as The Way We Green. But it has to be functional, too. With the proposed agreement, the City would get all of that design for less than all of the cost.

The design process also presents an important opportunity for Council to re-engage the public. The public consultation that will take place as part of getting to the final design must be taken seriously. It really should be seen as a rare chance to dramatically improve the way the City solicits input and feedback from citizens. We must do better.

Armed with both the land and a ready-to-build design for an arena, Council (and thus the City) will be in a much better negotiating position. Let’s assume for a minute that the deal falls through, perhaps because the province refuses to come to the table, and that Katz or a subsequent owner wanted to move the team. The City could justifiably go to the NHL and say “look, we have land and the design for a building ready to go” which would put the brakes on any move pretty quickly. The league is very unlikely to approve any move if the municipality is ready to play ball, especially in an important market like Edmonton. It gives Council leverage they lack at the moment, and it should put any relocation fears to rest, unfounded as they may be.

Not everyone agrees with this perspective. Councillor Caterina, for instance: “We could be spending taxpayers’ money…before we even know if an arena is a go or not.” But I don’t think there’s much harm in this limited amount of strategic spending. Everything appears to rest upon another level of government stepping up to the plate with $100 million or more. If that doesn’t happen, at least Council will be in a stronger position to move forward.

Maybe it’s not too late. Maybe with this week’s vote on the arena deal, Council can get back into the driver’s seat.