Latest arena deal not a win-win

Posted on January 23, 2013 in Downtown Arena

Here are some remarks I made during today’s (Jan. 22) city council meeting where I opposed the latest arena deal.

The deal passed 10-3.

“I’m a big Oilers fan and I’ll admit it’s kind of cool some of their players came here today.

Although, it would have been more useful if Daryl Katz had been here instead of the players.

I believe a new arena is an excellent idea.

But any deal has to be a win-win.

That’s why in Spring 2011 I voted in favour of Administration negotiating a master agreement with the Katz Group.

That’s when there were conditions in the deal that capped the maximum price at $450 million.

That’s when it said the deal couldn’t even proceed before there was guaranteed money contributed from the province.

That’s when the City was pursuing revenue sharing and naming rights for the building we would own.

But a lot has changed since spring of 2011.

We’re not even dealing with the Katz Group anymore per se. We’re negotiating with an entity called the Edmonton Arena Corporation.

Just a few hours ago we councillors were provided printed copies of this rather complex deal.

Now we’re being asked in very short order to approved a $601-million arena project.

What’s the rush? If this is such a good deal we owe it to taxpayers to have at least a couple of more days to study it.

This new deal we’re being presented is not a win-win.

At $601 million for the whole project (including LRT connections etc.) it’s already well over budget and we don’t even have a shovel in the ground.

Anybody remember the 1976 Montreal Olympics? Montreal’s Mayor Drapeau said those Olympics “can no more have a deficit than a man can have a baby.”

We all know how that turned out.

Mainly because of ballooning costs of Olympic Stadium they wound up with a debt of $1.5 billion. It wasn’t paid off until 2006.

The other alarming aspect to this latest arena agreement is we’re using millions of dollars of public money to benefit a private enterprise. And we have seen no true financials on the operations of the Oilers or The Katz Group to see if they need any of it.

We’re completely in the dark.

As well, this deal was not supposed to proceed without having provincial money. We don’t have it after two years or so of asking.

So by proceeding now on construction we’re buying a fancy, shiny new car but we don’t know if we can finish paying for it.

Finally, we’ll own a building but not even get naming rights to it. That’s something that could be worth $100 million or so over the life of the deal.

A downtown arena is a great idea. I support that. But it has to be a win-win deal.

This deal is not a win-win for Edmontonians and that’s why I cannot support it.”

  • http://fehardie@yahoo.ca Fran

    Here we go again. Taxes upped from city, provincial gov’t. etc. and, as a senior citizen I am very very unhappy with this deal as a whole. Who will be able to afford to go see a game?

  • Mike

    We all knew how you would vote kerry. The only good thing we can say about you is that you never walked out on the arena issue like one of your cohorts. I dont understand how you can say you needed more time for a decision. This has taken too long for a yes or no answer. City councillors also had the framework of the deal for a long time so to say you just recieved it is total bs. Your vote says a lot in regards to how lopsided the decision was.. Your lack of vision and understanding is rather concerning

  • Tina

    Mike with so many private meetings, Katz going into hiding, city dropping it completely, then invite Katz back, go from 100 mil to now 219 mil, from 450 mil to 609mil, I think a little time would have been a good idea. I want the arena, but not at these costs.

  • Dave

    Mike;
    Respectfully, I don’t agree with your comment. When the deal changes from the city putting up $100M of a total price tag of $450M to the city putting up $215M-219M of a $600M+ total price tag, I don’t think the existing framework of a deal applies anymore. Mr. Diotte and the other councilors were given this information with only a few hours notice. To decide on a $600M+ deal (or put it another way, almost 2/3 of a BILLION dollar deal) on a few hours notice is absolutely irresponsible on the part of the 10 councilors who voted in favour.

  • Luis

    To my wonderful Edmontonians and Mr. Diotte. I am sorry you are opposed to the deal. I would recommend that you move to Red Deer or Calgary so you don’t have to pay for the arena. The freedom of choice is what our soldiers died for all those many years ago, now you have the ability to use that freedom and move. I would gladly give my tax dollars for a hope and dream of a thriving metropolis named Edmonton. A city of champions, a city beloved by all. It is just another component that will make our city great. It will take a lot of hard work and blood and sweat and money. But I dream that we have many Stanley Cups, Grey Cups, MLS Cup’s and wonderful arts and entertainment. Without the Edmonton Oilers what does this city have to offer the world, its weather? WEM? Art Gallery? The new museum? It’s not one thing individually that will make this a great city, but all of it together. Yes, Mr. Katz stands to make a lot of money, good for him, nice to see a great Canadian who loves our city, make it big in this world. All of you supported Apple, Tim Horton’s and Northlands for many many many years without question and support Americans getting richer. And yes, I realize tax payer money was not used for any of those (except Northlands). Just goes to show that you don’t care to spend your money if it doesn’t directly benefit you!! This will boost our economy and provide many many jobs and hours upon hours of enjoyment watching a game in the comfort of my home. To me Mr. Diotte that is called a win win! Why don’t you support a great Canadian? Where is our Canadian Pride? This is the third happiest day of my life, behind the birth of my daughter and the end of the lockout. @Fran, all those in Ft McMurray, rich Edmontonians and those who save for a long time to go to a game. No different than today. Can you afford to go now?

    • C Anne Clark

      How dare you make the comparison between what our Canadian Soldiers fight for and moving from the city (I love) over an arena (I don’t love). This is clearly the talk of an uneducated, non-diligent tax payer.
      If you actually read the deal, (the extensive, complex, multi-chaptered document and shady numbers involved) you would probably change your tune. I can bet you will be the first citizen running to City Hall at the end of this thing asking ‘why was this allowed to happen?? why am I paying for someone else’s benefit’ (a billionaire, no less).
      Time to actually learn what this is about; it’s nolonger about keeping an NHL team, attracting concerts (that already come here to Rexall/Northlands). It’s a classic bait-and-switch that completely panders to people who think like you do; they don’t.

      P.S
      Mr Katz “Loves our city”??? Hardly. He’s present for three months of the year, and when things got tough, immediately went to very publicly peddle his wares to Seattle. He has an exact replica of his home here in Arizona, and I’m sure has sized up some property in the next town he can get a multi-billion dollar deal that walks all over the tax payers there who don’t study and really understand the next deal. You will have nobody to blame but yourself.

    • Thomas

      Obviously you didn’t get the part about Calgarians being ONE OF ONLY TWO markets in the NHL being screwed out of tax dollars for a new arena FOR A BILLIONAIRE!
      Also your stupid comment about “what our soldiers fought & died for” Have you been drinking, had a few too many nips? How is that valid? Were you personally asked to put your stamp of approval on this deal? I was not asked to approve this! I had an uncle die in WW2 and another tortured in a Japanese prison camp and I have a funny feeling that this was not what all that pain and suffering was for in their minds moron!
      You obviously have no idea how a billionaire sees money. All of the cash and concessions that are being sought after have a lifetime value (35yrs) of somewhere between $500 million and $1.5 billion, that’s just the value of the freebies you think we should hand over to the BILLIONAIRE! He WILL sell that value off after the dust settle and leave us with our debt while he personally pockets many many millions from those FREEBIES! You just don’t get it! Peter Puck tried to pull the same crap here and ended up just doing renos to the collesium because we were smart enough to turn him down.

  • Carol Selinger

    Way to go—-keep digging on this——-taxpayers of Edmonton-I am one if them-will be paying for this albatross for 50 years through a special assessment on their taxes in a couple of years———–new arena not needed———–a Stanley Cup is—oh, and somebody that can sing the National Anthem would also be good-she was not fun to listen to last evening-an embarrassment—-nice to look at–can’t sing

  • Concered Tax Payer

    So much remains strange. The City Manager says the deal can’t proceed unless the CRL funds are in place, and that approval (if any) from the Alberta Government will not be made prior to the shovels going into the ground. So why is it proceeding? If the above condition is true, then why would the same not apply to the missing $114 million from various Governments? It would be political suicide for the Redford folks to give out 100 million dollars for ANYTHING related to Katz, considering the donation scandal combined with “how tight” our provincial dollars are.

    The City Manager has stated the ticket tax needs to be a level playing field, so the new arena will get the new arena tax and the old arena which also will collect a ticket tax… well, those funds also go to the new arena? If the purpose is to let those who use, pay… then should the old arena not get it’s “taxes” so it can also deal with repairs and improvements? After all, Northlands WILL continue to operate this for many decades to come.

    I see ‘dirty pool’ written all over everything this stands for.

    • http://kerrydiotte.wordpress.com kerrydiotte

      You make some really excellent points on this. I hear you!

      • A.Burley

        When does my tax bill take the next hit ? That will be the day this homeowner becomes house poor.I am on disability,wife working ,paying mortgage is harder everyday and now I have to pay for a new home for multi millionaires to play for a billionaire. Rexall place was good enough to receive kudos for entertainment fuctions in the entire world. Mandel became a giddy tween girl when the young Oilers came into the council meeting. Give me a break !

  • Leaky W

    $ 6 0 0 M I L L I O N ????????????????? OMG.
    Has city council totally lost all their senses? My city taxes will explode to pay for this billionaire and his multi millionaire employees to live a life of total luxury. It is so absolutely nuts I can’t believe it. I

  • D

    Edmontonians are gonna get hosed on this one… problem is the rest of Alberta gets to ante up some too… I thought billionaires didn’t have to worry about money? Oh wait, they don’t. You don’t get to be a billionaire by spending money I guess…

  • Pierce

    To Luis – I don’t know how familiar you are with business, but this deal is NOT a win win, and Katz is CERTAINLY NOT a great Canadian who loves this city. Keep in mind you’re talking about the guy who threatened to sell the Oilers to an american city if we didn’t go through with this arena deal – a dirty, low down and empty threat, not to mention a spit and a slap to the face for Oilers overly loyal and dedicated fans.

    Now back to the business side of things. This is not how fundraising, and investment capital is gained. You seek INVESTORS who get a PROFIT from their investment. What do we get out of this bargain? Ohh right, a raise in taxes, and we LOSE money. He approached this as if he was making a public offering to Edmontonians – getting each of us to chip in a little bit. So give each tax payer a share in your company and the investors opportunity to capitalize from our funding and it’s a fair deal with me. But no, he’s keeping it all for himself and worse our city counsellors couldn’t even negotiate a good enough deal so that the city itself sees a return on investment. He slime balled his way into a deal by harassing city council and misrepresenting his position to Edmontonians, taking advantage of our city pride and patriotism and love for the Oilers to mislead many into supporting this deal. All while simultaneous taking zero accountability for his unethical behaviour and hoarding the profit and benefits from the city he apparently “loves”

    I’ll agree that this arena will create jobs and improve our economy, and it will add to the city as it wants to grow and thrive. But that’s why it’s even MORE important than anything to make sure the CITY and it’s CITIZENS see a benefit from that, not Katz himself.

  • Gerald Stobbe

    I am concerned as to how this is being portrayed to the public. I hear that this is going to be a great thing for the citizens of Edmonton. I don’t hear people being concerned about equal access to this facility for all citizens. As with the current Rexall deal I see this being a great deal for Oilers season ticket holders as they are likely to receive preferred access to their seats for all concerts and events in the new arena. I am also concerned that we will now need to subsidize Northlands to offset the costs of having a building that is no longer viable. I do not see any of the big events going to Northlands and the building will probably deteriorate. If this is a building for all citizens, let Oilers season ticket holders have the seat for Oilers games, but all seats must be available to all citizens for other events so we can all enjoy equal access to the new building.

  • Sandy Pederson

    What can I say! As far as I’m concerned we all got screwed royally and Katz is laughing all the way to the bank. Yes it would be nice to have a new arena but
    NOT AT ALL COSTS!! You usually build something that you can at least get
    some profit from it and we are getting nothing. I hope he has to pay rent for the
    building but I’m sure that would never happen. Why build something that is costing us millions and get sweet tweet. Oh the Oilers, but most of us can’t afford to even
    go to a game. No sense in this deal at all!! As far as I can see most of the city
    counsellors are losers, and not looking out for the best interest of the citizens and
    taxpayers of this great City.

  • Vanessa

    Unfortunately, for a former reporter, you have very little substance in your reasoning why this is not a good deal. While I don’t know if its a good deal or not yet, your comments above add little to my understanding of the deal as agreed upon.

  • Marie

    I am so tired of public money supporting private enterprise. My taxes have increased by 35-40% annually the last few years. I have no salary increase, no additional services have been provided with this increase, and now weather we like it or not the public tax payer will be footing the bill for council’s decision! As far as support goes from our province, there has been no commitment, and now we are hearing that the oil revenues are down. How can council accept this proposal without even reviewing the details??? This is so irresponsible, I’m very upset.

  • Linea

    “Cities thrive when they’re tightly packed, full of things to do and not interrupted by monoliths like giant stadiums, expressways or convention centres”. Sums up for me why a downtown arena is not part of a vibrant Edmonton. http://www2.macleans.ca/2013/01/23/does-toronto-need-a-casino/

  • Randy Hughes

    This a great deal for katz and an awful deal for the taxpayers of both Edmonton and Alberta. It looks like the katz donation to the Alberta PC party will pay off after all. Lets hope it is a fair deal for diehard oilers fans who would agree to virtually any deal that allows the arena to go forward.

  • Carol Selinger

    Wait until the fans find out what the costs for tickets, and parking are going to be-not to mention the trsffic jsms getting downtown and back home from games, etc-the good situation currently at Rexall Place will be something we all will have wished we would have kept

  • Nancy

    Lol has anyone else wondered if Luis isn’t Katz himself?? Yikes! I hope you run for Mayor Kerry;thank you for the “no” vote. I wonder if This kind of deal would be supported if it was for any other sport? Just sayin would the supporters be happy to shell out this kind of money for any other type of project? Probably not.

  • Jay

    As a business owner this really bothers me. Business owners pay 3.5 times more tax than residential property owners. In three years my prop taxes went from 4,600.00 per year to 14,200.00 per year. My assessment for this year is over 16,000.00 I have not received any better snow removal or pot holes fixed in front of my business. I must not forget that the business licenses have also gone up as well as development fees. In short it is us business owner who are going to get hit hard with this deal. The money has to come from some where and businesses seem to be an easy target. I also do not believe this arena will create any jobs it is just going to move jobs from one arena to another. Now that Clarke stadium is torn down we forgot how well that place flourished next to a brand new stadium. I am afraid that the existing Rexall place will become a shadow of what once was. This 600 million dollar deal is a slap in the face and I am tired of all the B.S that die hard hockey fans spew about how great this is going to be for the city. TOTAL B.S

    • Linda

      Like you, we own property close to the downtown area and our taxes have gone as follows in lease than 5 years.
      Year taxes % change assesment
      2008 $16,175.81 $1,100,000.00
      2009 $18,135.61 112.12% $1,375,500.00
      2010 $18,817.55 103.76% $1,208,500.00
      2011 $20,704.13 110.03% $1,190,000.00
      2012 $20,981.04 101.34% $1,109,500.00
      2013 $23,451.00 111.77% $1,340,000.00
      2008-2013 144.98%

      Like you, I feel that business owners are not considered. We have terrible potholes, poor snow removal. The area is starting to run down, because the city will not support us and just increase taxes, big time. Now what?
      Are we supposed to cheer? Let Katz pay for his new arena!
      The city has no rights to do what they are doing!

  • Fairplay

    To Luis… two of the best days of your life had to do with the end of the NHL lockout and Katz winning this deal? I feel deep sympathy for your pathetic existence. ANd for your family whom you find take second seat to hockey lol.
    BTW, as a former member of the military, I feel you should watch how you bring into your argument your opinion in regards to what soldiers fought for… I know many others (soldiers) who reside in Edmonton or used to be posted here and they are proud of it (Edmonton) with or without an arena or the Oilers. It seems you may want to consider relocating if you don’t see Edmonton as nothing more than a sum of its athletic parts to quote you… “Without the Edmonton Oilers what does this city have to offer the world, its weather? WEM? Art Gallery? The new museum? It’s not one thing individually that will make this a great city” … so if you don’t like it here then it is surely your freedom to leave… I am sure there may be a few throwing you a parade as you leave city limits… Katz might have room in his current Vancouver mansion for you and maybe the Canucks and the Lions may be more your speed. I am more proud to call Edmonton home because of the first class medical research and level of quality care and the level of volunteerism as well as CFB Edmonton.

  • LesD

    Why isn’t the financing cost added in , the CITY doesn’t have $600 million in cash but the Construction company’s will want paid when the jobs done , so where is the cash coming from ? 3% on 600,000,000.00 is going to be 18,000,000.00 per year over 20 years is another $360,000,000.00 !

  • Valerie

    Well said Les, Fairplay, Jay and Randy. How come common sense doesn’t come from most of the city council. Gee if we can figure this out why not the ones who
    make the decisions.

  • Dean

    The way I read the deal Katz group gets basically unlimited use of the arena for about 3.5 million per year & the rights to the profits generated from the use of the facility while the city is unable to recoup any of its costs by staging events such as CFR or Breir.IF a new arena is important why would the city not build it and use it as it sees fit which would include charging an appropriate rent to tentants. 3.5mil/600mil=0.5% That’s IF the project comes in on budget
    A very sweet deal …No home or business owner ever would pay such a small percentage of the value of the property as rent.

  • Johnny

    Mike
    i couldnt agree with you anymore, i love how some councillors still need more time. Seems like if they could get another commitee together they could get another term and string this process out another 4 years.

  • Shane

    Kerry,

    Thanks for voting against this. I’m glad some on council can ask the hard questions and try to look out for Edmontonians.

    When you add this to things like the Indy, the “transit-centric” neighborhood to replace the Muni, the Art Musem, and now the idea the Mayor has about a new Auditorium, the current adminstration is making living in this city a pricey proposition.

    With the neverending property tax increases (I’ve been back in the city for 7 years and it goes up each time), the introduction of new utilities like drainage, the endless rises in city riders to utilities combined with the shape of the provincial finances, I don’t see how council can keep throwing money around like this.

    You should run for Mayor, you would have my support. I don’t know if my family and I can afford another term with Mayor Mandel at the helm.

  • James

    Having been employed by the City for many years, and having dealt with large developers and large contractors like PCL, all that I can say is dot your ‘I’s’ and cross your ‘T’s’ because they have high-priced lawyers and lots of political clout. Usually cost overruns don’t happen until a project begins, which indicates to me that they are already incorporating contingencies into the escalated cost. The trick is to propose a Contract cost in order to secure the Contract, and then add-on contingencies later. PCL has a profit sharing program for superintendents and up, so guess how they operate? And don’t think for a minute that they don’t scrutinize every detail of a Contract beforehand and look for loopholes. Katz didn’t become wealthy by giving things away. Now he has created a shell company to deal with the City and distance himself from possible future litigation(s). I hope that those who deal with him don’t get swayed by the ‘free’ lunches and skybox tickets.

  • Ashley Reimer

    Big profit and advertising rights for the Katz group….and the City of Edmonton…well…we get to pay the brunt of the fees. Congratulations to us! My issue is not that people want a new arena, my issue is that we are paying for the majority of it and yet the majority of the profit is going to a pharmaceutical company and it’s already rich members. And the province has not even agreed to give this extra $100 million dollars!
    It was a sad day to see this go through. Have pride in your city yes, I love my hometown Edmonton, but I am seriously ashamed that this deal was approved when it is so obviously not for us. I know who I am NOT voting for in the future.

  • Jack

    Kerry,you are one of only three members of council with the vision to see what a lousey deal this has become for the City of Edmonton taxpayers,(like me, for forty plus years) Our mayor shoved this in frount of councel and said vote and even some members that are not yes men (and wemen) threw up there hands and voted for it. I am, and always will be against the use of public funds from any level of government to pay for a building for the Katz Group. If you run for Mayor you have my support

  • Colleen

    This deal sucks.

    Let’s talk again about the 2MILLION dollars a year the city is GIVING to the arena for advertising. 2Million is roughly 40% of the entire advertising budget (based on an average of the yearly expenditures for the previous 5 years, 2007-2011). In other words, it is money blindly given to Katz – but not a substity, lol!

    Katz and Redford… She admits she might have called to thank them for the donation. Was that just a one time call? If Redford allows any money to go to this arena, while she claws back essential services I will be MORE than pissed!

    Redford doesn’t care about scandels. At least the WRP were honest while they were running for office in that they said they would support an arena. It is another thing when Redford uses lawyer speak, “There will be no direct funding for the arena”, all so that she can come back later and funnel it through a back door.

    And the deal should have been examined for a short time, not just presented and approved – but wait, we are talking to the council that let the KG present their own motion! Shall we also give them the key to the city now? Or shall we wait until the arena is unveiled?

    The traffic downtown is a nightmare. And many admit that the arena will not promote growth, as we have been told over and over…

    Anderson even taunted that if it did not get passed it would have become an election issue – what would have been so wrong with that?

    This deal sucks.

  • Genny

    Hey Kerry, I’m wondering if there is some action citizens can take to turn this decision around – picketing or petitions? force a referendum? It seems so many Edmontonians know the deal is a bad one for the people themselves; so what can citizens do to halt this deal and wake up city council? I know it has been approved but only by 10 individuals out of how many thousands opposed. We need a formal oppositional approach not just social media-feed back and comment forums.

    • http://kerrydiotte.wordpress.com kerrydiotte

      Well, I guess citizens could dream up some kind of way to push back. I think many would band together for something like that. Let me know if you see any of that happening.
      Thanks for wading into the discussion.

  • Mimi Williams

    Councillor Diotte, I have been contacted from folks as far away as Medicine Hat (and, of course, lots right here at home) wanting to offer support and resources to fight this. The deal, which remains a framework, is nowhere close to being done. Amongst other things, a CRL (as mentioned above) has yet to be formally applied for, never mind approved. That process requires public hearings. There will also need to be at least one borrowing bylaw. All sorts of these steps could trigger citizen action under the Act.

    When I finish up the project I’m currently working on, I’ll be getting back in touch with folks and will be able to more fully turn my attention to the arena debacle and will be sure to keep you and Councillors Iveson and Sloan in the loop about any citizen initiatives I learn about.

    Thanks for your vote the other day.

    • http://kerrydiotte.wordpress.com kerrydiotte

      There certainly is widespread concern from the public about the deal. Like me, many people support the idea of building a new DT arena but are vehemently opposed to the financial framework with the Katz Group’s new company, Edmonton Arena Corporation.

  • Nita Jalkanen

    Kerry, what (what? what?) can we (the taxpayer) do to help stop this fiscal fiasco? CRL not approved (a pie-in-the-sky funding model which is actually detrimental to any future downtown development). MSI funding which we (taxpayers) want and need used for necessities (LRT, roads, infrastructure) not for-profit private ventures (and the “legacy” projects of over-inflated egos). $2 million annual subsidy to advertise in a building we are paying for. No revenue stream to offset the give-away of our tax dollars. A council agreeing to proceed with a project with a capital project with absolutely no idea where the money is going to come from to pay for it in an environment of global fiscal restraint with only rising interest rates ahead of us. The blatant disregard of democracy (poll, after poll, after poll). What can we do? To whom can we appeal? How can we help?

  • Thomas Taylor

    Something is seriously wrong here, someone or some people are being greased behind the scenes!!!!!

    We need an inquiry to see who is getting paid off for this garbage plan!

    $450 mil is toooo much but now we are at $600 mil AND WE GET NOTHING? Not even normal tax revenue over 35 years?

    Construction starting before funds are in place?

    And all after Alison Redford went on TV to talk about being financially strapped how could they even think of tapping into Provincial coffers for over $100 mil???

    WHY CAN MARKHAM ONTARIO ANNOUNCE A 20,000 SEAT ARENA DEAL FOR $325 MIL AND WE ARE ALMOST DOUBLE THAT AMOUNT AND SURELY WILL BE AFTER THE DUST SETTLES!

    HOW DO WE STOP THIS DEAL FROM HAPPENING?

  • Senator George

    When are you going to finally throw in your towel with the Councillors and run for Mayor. I think you would make a good mayor,..and cut the BS that has been shovelled into the Chamber during Mandel’s reign. Enough is enough!!!

  • Senator George

    The graft payments must be just killing Katz and his boys!?!

  • Devin Wilken

    Just wondering how the cost of the land, the $76 million seems to have been forgotten when discussing the cost of the arena! Now we see office towers and the like on Mr Katz’s piece of property across the street. Truly is an embarrassing exercise from start to finish.

  • Thomas

    Kerry Diotte For Mayor

    Go for it Kerry, we need some help here to stop spending taxes on shiny new objects and start restoring this city. Could we please have a politician that wants to support citizens more urgent needs and not the needs of wealthy businesses. How about fixing this place up a little.

    • http://kerrydiotte.wordpress.com kerrydiotte

      I hear you, Thomas!

      I’m your man re those issues.

      Thanks for wading into the discussion.