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The Katz Group project proposed earlier this year includes hotels and a casino east of the arena, a student residence, a small practice arena and an office tower and parkade to the west. ((Katz Group))

A $5 ticket surcharge is one of the options Edmonton is considering to finance the construction of a new downtown arena and entertainment centre.

The suggestion is discussed in a report prepared by Edmonton city administration for next Wednesday's city council meeting, where representatives from the Katz Group will speak to councillors about their proposal.

According to the report, a $5 surcharge would generate annual funds in the range of $8.8 million to $10.8 million, enough to service a debt of $110 million to $135 million.

The amount wouldn't be too prohibitive, city administration reasons, because Albertans don't pay provincial sales tax.

"A ticket surcharge directed toward payment of the capital construction for a new facility would be an effective way for the users of the facility to contribute to the cost," the report says, adding the surcharge could be put toward the maintenance and future upgrades of the building after the construction cost is paid.

The idea of a surcharge was met with mixed reactions among Edmonton councillors.

"It's not any different than some of the user fees that we, as a city, use on some of our facilities," Coun. Jane Batty said.

But Coun. Kim Krushell wondered if people would be willing to pay extra for their Oilers tickets.

"I'm not sure whether the market will bear that or not," she said. "But I'm certainly willing to look at anything, although $5 does seem a bit on the high side."

The report also discusses the prospect of using a community revitalization levy to finance the arena, whereby future property tax revenues generated by surrounding development would be put towards the project.

That scenario would generate $9.6 million to $11.2 million annually, sufficient to cover debt of $120 million to $140 million.

Road improvements, park development and connecting infrastructure for the area around the arena could also be financed from the levy.

Katz would put $100M towards arena

The report puts the cost of the sports and entertainment facility in the range of $400 million to $450 million.

"In my last conversation on potential funding for the arena with the mayor, he had it down to less than $50 million that needed to be found," Coun. Bryan Anderson said. The remaining funding could come from the provincial and federal governments.

Earlier this week, it was revealed that Daryl Katz, the owner of the Edmonton Oilers, is renewing his commitment to put $100 million directly toward the cost of a new downtown arena.

Earlier this year, Katz angered councillors when he suggested the money would go instead toward the development connected to the arena, not the arena itself.

Katz wants to move the Oilers to a new downtown arena when the team's lease expires on its current home at Rexall Place in 2014.

The arena would be part of a larger entertainment district, with hotels, a casino, shops and restaurants.

In June, questions about how the project would be funded prompted the city and the Katz Group to postpone a public hearing on zoning for the project, which is proposed to be built on land around 104th Avenue and 101st Street.