A proposal to build a new arena in downtown Edmonton has reopened the debate over whether city tax dollars should be used to pay for the $450 million project.

A task force that has been studying the project for almost a year said Tuesday that a new arena is both "feasible and desirable," and recommended a mix of private and public funding be used to finance it.

A task force recommended Tuesday that Edmonton build a new downtown arena and use a mix of city dollars and private financing to do it.
(CBC)

The proposal put forward by the task force calls for the city to cover about 70 per cent of the cost.

Under the funding formula, the city would fund the project by borrowing against future tax revenues in the downtown area.

The panel estimates a downtown arena would attract new hotel rooms, retail business and housing that would generate an extra $20 million a year in taxes.

Mayor Stephen Mandel, who set up the task force, said at the time that city taxpayers would not be asked to foot the cost of the project.

"I've said from the beginning that the citizens of Edmonton can't fund this arena on their own, on their own nickel. I would not support that and I am sure council would not either," Mandel said at an April 2007 news conference.

The committee's recommendations do not contradict that position, Mandel said Tuesday.

Edmonton Mayor Stephen Mandel says the proposal to build a new downtown arena with city funding does not go against promises he has made in the past.
(CBC)

"We said it a thousand times: the money generated from existing property taxes and allocation of grants won't be used in this," he said.

"We are not going to raise taxes to pay for this."

It's a "shell game," Scott Hennig, Alberta director of the Canadian Taxpayers Federation, said about the funding plan.

"The arena in Toronto, the arena in Vancouver, the arena in Montreal — all 100 per cent private financed," said Hennig, who opposes any public money going into the arena project.

"As a worst-case scenario … have the owners of the building charge a ticket levy. Make the people who are going to these events pay for it. I mean, that's at least a user pay type system."

$100M already committed

Drugstore billionaire Daryl Katz has already pledged to contribute $100 million for an arena if his bid to buy the Edmonton Oilers is accepted by the NHL. The task force said that commitment is almost enough to start construction.

Rexall Place, built in 1974, is the oldest NHL arena in Canada, and the third oldest in the league.

Mandel said city council will have to approve any request to help fund the arena.

The next step is for the city, the Edmonton Oilers and Edmonton Northlands, which owns Rexall Place, to decide if they want to pursue the project, he said.

It's estimated a new arena would take three to four years to construct.