Council Approves Financial Framework for Downtown Arena, Moves Ahead with Design
October 26, 2011
City Council has agreed to move ahead with the design of a new downtown arena and approved a financial framework for the project. The City will spend $30 million to complete the design to 60 per cent, which will enable contractors to bid on delivering a Guaranteed Maximum Price of $450 million for building construction.
“I am pleased that after thorough and careful consideration and debate, we have been able to put together a fair deal that respects the interests of all parties and reflects our commitment to building a strong future for Edmonton,” says Mayor Stephen Mandel. “Edmontonians have been clear to us about what they wanted to see and I believe this deal includes many of the conditions they have told us they could support. Without increasing current taxes, the city will get a new arena, a showcase for our city, which will contribute significantly to revitalizing our downtown core and keep the Oilers in Edmonton for the next 35 years.”
The decision to move the project ahead comes after months of Council discussion and citizen feedback, culminating in the October 25 public hearing where 88 people spoke. Other opportunities for public input have included an online survey which received over 30,000 responses, public meetings, a telephone survey and over 6800 calls to 311.
“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.”
Under the approved financial framework the maximum cost of the building is capped at $450 million. Of that, the City will pay $125 million towards the project, another $125 million will be generated through a facility improvement fee paid by building users and the Katz Group will contribute $100 million. Other orders of government have been approached for the remaining $100 million.
Other key aspects of the financial framework include:
- The City will be the owner of the arena.
- The Katz Group will pay all operating and capital maintenance and repair costs of the new arena and taxes; in return the company will receive all operating revenues, including naming rights and parking revenues.
- The Oilers will sign an agreement to stay in Edmonton for 35 years.
- The City will have access to arena for 28 days a year.
- The Katz Group will enter into a Community Benefits agreement with the City.
- The Katz Group will commit $100 million to spark development in the area around the arena, of which $30 million must be invested before construction of the new arena started with the remaining $70 million subject to commercial viability.
- The City will enter into a 10-year marketing partnership with the Edmonton Oilers at $2 million/year. The partnership is limited to 10 years and the marketing plan will be reviewed every two years at the City's discretion.
City administration will now prepare a Master Agreement for Council’s approval.
Earlier this month Council agreed to move ahead with purchasing the land for the new arena. The final cost of the land will be made public after the transaction is concluded, as per the normal City processes for land transactions.
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