What's new in Calgary's tentative arena deal and your other questions, answered
Deal at first glance looks much like one rejected in 2017 but there are key differences
On Monday, the City of Calgary announced it had come to an agreement with the ownership group behind the Calgary Flames to evenly split the cost of a new $550-million hockey arena to replace the aging Scotiabank Saddledome.
That means each party's share would be $275 million — $50 million more from the city than it would have paid in one deal that was rejected in 2017 and the exact amount the Calgary Sports and Entertainment Corporation (CSEC) had offered in that deal.
Negotiations over that deal ended in frosty silence between the two parties.
So, what's different now?
And where's the money coming from?
Here's a look at what's changed since talks dissolved two years ago.
Of course, this is all tentative. Calgarians have just a few days to weigh in on the proposal before city council votes on it on Monday.
What did the old deal look like?
In the last deal, the city had proposed a three-way split on the cost of a $555-million arena between the city, the Flames, and the remaining third coming from a surcharge on tickets.
That $185 million from the city would have included land valued at $30 million, $25 million in maintenance costs and the costs of eventually demolishing the Saddledome and $130 million in cash from non-property tax sources. The city would also incur infrastructure costs in the area to the tune of $150 million.
But CSEC had claimed that deal would actually leave them paying a greater share, and countered with an offer of $275 million that would see the city pay $225 million, funded through a community revitalization levy.
Either deal would have seen the Flames ownership get 100 per cent of all revenue and full control of the arena.
The city proposal would have asked the team to pay property taxes.
What's happening now?
So, the city's FAQ on the project addresses how this proposal is different from the one in June 2017.
"While discussions have occurred on this project for some years, this is the first proposal that the parties have agreed to," it reads.
OK, a bit vague. Let's get more specific than that.
The city and the team will each pay $275 million, but the city says the benefit of the 35-year deal is that it will bring in a projected $400.3 million in returns.
The city will own the arena and the land it's built on — while CSEC will pay 100 per cent of the operating, maintenance and day-to-day repair costs — but all revenues will go back to CSEC.
The team also will get the option to acquire some nearby land — the site of the former Enoch Sales house and the Victoria Park bus barns.
The city will get two per cent of ticket revenue at all events held at the building and a facility fee that will be capped at $3 million a year for the first five years.
CSEC will also:
- Make annual contributions of $1.5 million to community sports in Calgary.
- Pay the city $250,000 a year for 10 years for naming rights.
- Create a community engagement program at $200,000 per year.
Oh, and the Flames will stay in the city for at least those 35 years.
But there were some concerns about those financial details that kept city council debating late into the night Monday and into Tuesday morning over how beneficial the deal would actually be.
"This is getting a bit murky" said Mayor Naheed Nenshi, adding that he'd have to put his "finance professor hat back on" to go through the numbers with city administration.
That $400.3 million also might not be the most important number to consider, at least according to economist Trevor Tombe.
Carla Male, the city's acting chief financial officer, told councillors late on Monday the "net present value" (a measure commonly used to evaluate investment decisions over long periods of time) was projected to be –$47 million.
Where's the money coming from? Are property taxes going up?
No, property taxes won't be increasing. And this doesn't impact the city's business property tax relief program.
The city and the Stampede will swap some parcels of land, so no funds are needed there.
Calgary's share will come from a few different sources, the largest of which is the city's major projects capital reserve. That's different than the city's operating budget, which is the one facing $60 million in cuts to services like fire, police and transit.
Where and when would this get built?
If the deal does go through, construction will begin on the 19,000-seat arena in 2021 and take three years to complete.
It'll be built in east Victoria Park between 12th and 14th Avenue S.E., and between Fifth Street and Olympic Way.
What would it look like?
That's pretty unclear.
The only rendering released so far shows a busy streetscape with pedestrian-facing restaurants and retail, but not much of a glimpse at the building itself.
It could even include a second, smaller arena if funds allow.
Ken King of CSEC said the design isn't fleshed out, and Calgary Mayor Naheed Nenshi said once council approves the financing the design will be next.
What's happening to the Saddledome?
The Saddledome will be torn down once the new event centre is occupied.
The demolition and reclamation costs will be split 90-10 between the city and CSEC. The city will pay $12.4 million and CSEC $1.4 million.
The Saddledome's parkade will be handed over to the Stampede once the new arena is up and running.
Sorry, but the Saddledome will be torn down once the new arena opens. But hey, the parkade behind the Dome will retained. 😆 <a href="https://twitter.com/hashtag/yyccc?src=hash&ref_src=twsrc%5Etfw">#yyccc</a>—@CBCScott
How does this compare to Edmonton's arena?
Because Calgarians can't resist comparing themselves to their northern neighbours, here's how Edmonton handled things when the deal for Rogers Place was inked in 2013.
The total cost was set at $483.5 million, with $132.5 million to come from the Katz Group (which owns the Edmonton Oilers) and $226 million from the city, with $125 million coming from ticket surcharges.
The Katz Group was to pay $19.7 million in cash, and the remaining $112.8 million to be paid as rent over 35 years as the city owns the building.
And the city's portion included funding through a community revitalization levy, new parking revenue, and redirecting the subsidy on its old arena, Rexall Place.
The total cost, including the Winter Garden, LRT connection, infrastructure and land rang in at $614 million, which saw the city cough up $313 million and the team pay $166 million.