Katz Group pressures city for arena deal

It's already too late for the Oilers to play in a new downtown arena by 2014 and the arena deal with the city is at risk if an agreement is not reached by Oct. 31, The Katz Group said Thursday.

It's already too late for the Oilers to play in a new downtown arena by 2014 and a deal with the city is at risk if an agreement is not reached by Oct. 31, The Katz Group said Thursday.

In a statement sent to Edmonton media outlets, The Katz Group explained why it believes an agreement must be signed by Oct. 31.

"The expiry of our purchase rights on the downtown land is one important factor, but it is not the only one,"  reads the statement written by Katz Group lawyer and executive vice-president John Karvellas.

Edmonton Mayor Stephen Mandel and The Katz Group lawyer John Karvellas embrace in May after reaching a framework agreement on a new downtown arena. (CBC)

"The Oilers’ lease at Rexall Place expires in less than 33 months, and we are already well past the point of being able to have a new arena in place when the Oilers' 2014 season opens.

"Soon we will lose the opportunity to be in a new arena for the 2015 season. And construction costs are rising, as we have feared they would.

"These and other factors create a real and unavoidable urgency to get something done."

The Katz Group has exhausted its rights to extend the closing date on the land needed for the downtown arena and must make a further investment before the deadline in order to keep the project alive, said Karvellas.

"The challenge is that the city has not yet been able to resolve certain fundamental elements of the agreement framework," he said. 

Karvellas is referring to the $100 million funding gap which the city is relying on the provincial or federal government to eventually close.

City must get non-compete clause: Katz Group

The second is a non-compete agreement from Northlands, which The Katz Group "have always understood to be the city’s responsibility and without which the new arena is not economically viable," said Karvellas.

Northlands operates Rexall Place and is counting on concert revenue to keep the aging arena afloat.

Coun. Don Iveson says the city can't force Northlands to reach a non-compete agreement with The Katz Group. (CBC)

Last week Mayor Stephen Mandel mused whether a deal might be reached without solving the two outstanding issues. However, the statement rejects that possibility.

"We are seeking fair and reasonable solutions to these issues so that we can continue to move this project forward."

Coun. Don Iveson said the statement tells him that the Katz Group is more concerned about the non-compete clause than the funding gap. He said the company is working under a mistaken impression that the city is responsible for reaching an agreement with Northlands.

"The city has never been in a position to compel Northlands to agree to that," Iveson said. "That would always be something that we could try to mediate and broker, but at the end of the day the Katz Group and Northlands are going to have to come to terms themselves as two parties.

"We've tried to get them to come to the table but Northlands and the Katz Group need to come to the table and sort this out between themselves. The city can't force them to come to an agreement."

The statement makes it clear that The Katz Group is not willing to ante up more money for the arena and warns time to reach a deal is running out.

"We have great respect for the city’s process and its need to achieve an agreement that is fair for all concerned.

"But ultimately this is not just a debate over a funding model - it is a question of what kind of city Edmonton wants to become."