CalgaryNext project isn't dead, as council votes to study further

Calgary city council opted to keep the CalgaryNext dream alive for at least another 90 days, despite an earlier report from city staff recommending against the project.

The city was looking into other options, but now administration will also examine original mega-project

Calgary Flames CEO Ken King says it makes sense to put the new sportsplex in the West Village because of the proximity to the Sunalta C-Train station. (Calgary Flames)

Calgary city council opted to keep the CalgaryNext dream alive for at least another 90 days, despite an earlier report from city staff recommending against the project.

The combined arena-stadium-fieldhouse facility would cost $1.3 billion to build, according to the Calgary Sports and Entertainment Corporation, including the price tag for cleaning up. That figure has been contested by the city, which pegs the costs at $1.8 billion.

Some on council said even at $1.3 billion, the project is too expensive, despite the fact Calgary needs new sports facilities. 

Whereas the city was previously studying a "Plan B" which would see a new arena at Stampede Park and renovations to McMahon Stadium, on Monday council directed administration to include CalgaryNext in that study that's due in October.

Confused by all this? Here are some answers to what we anticipated will be frequently asked questions.

I thought the city rejected CalgaryNext. So what's this all about anyway?

Back in April, after getting a report from city staff recommending against CalgaryNext, city council voted to do two things.

Thing one: Have city staff investigate the potential for a new arena on the Stampede grounds and a renovation plan for McMahon stadium, and to "reconfirm" Foothills Athletic Park as the "preferred location" for a new fieldhouse. In other words, to forget about an arena-stadium-fieldhouse combination at the West Village location, and to report back to council by October.

Thing two: Invite a response from the Calgary Flames ownership group to meet with council at a strategic meeting to discuss "next steps" in the wake of the report that pegged the total cost of CalgaryNext at $1.83 billion and advised against the project.

That's what happened Monday.

CEO Ken King and other executives with CSEC used the opportunity to make another pitch for CalgaryNext, rather than talk about a "Plan B" for a new arena and stadium plan elsewhere.

The crux of their argument was that the city estimates were way off and the actual, all-in cost for building the combined facility in West Village would actually be more like $1.35 billion. That's $480 million less than the city's projections.

They also argued the city wasn't considering other benefits it might enjoy, like increased property taxes if McMahon Stadium were to be redeveloped into something else.

Apparently that argument worked, at least in terms of further study into the project. 

How are the Flames and the city $480 million apart on their estimates? What gives?

They make different assumptions.

For one, the Flames say some of the related infrastructure needs included in the city's estimates for a larger redevelopment of West Village are "optional." Get rid of the proposed 18th Street underpass, and you save $80 million. Kill the pedestrian bridge over the Bow River; there's another $30 million. The CSEC presentation to council also included $105 million in unspecified "other" optional infrastructure.

So, instead of $327 million, CSEC figures the actual cost of ancillary infrastructure is more like $112 million. On top of that, the company also claims that only 11.5 per cent of that cost should be "allocated" to the CalgaryNEXT project, since the arena-stadium complex would only occupy 15 of 130 acres in West Village.

CSEC also believes the creosote-contaminated land can be cleaned up a lot faster and cheaper than the city does. While city staff estimate it would take between six and 10 years and cost between $85 million and $140 million to remediate the whole site, King told council it would only take about two to three years and $50 million to do a simultaneous clean-up in a more limited area, while the complex was being built.

Furthermore, King figures the clean-up cost could be covered — in full or in part — by the original polluters or, more precisely, their corporate descendants, who have so far avoided paying for it.

Canada Creosote Ltd., later known as Domtar Corporation, operated a wood preserving operation in the area from 1924 to 1962, leaving behind the creosote contamination.

Why would the polluters pay up now, when they haven't for decades?

With a major project like CalgaryNext on the table, King figures it would be good publicity.

"I think that the polluter may say, 'Hey, this is a great-public relations opportunity for us here,"' he told council.

"That may sound naïve," King added, but he insisted it's possible, and at least worth attempting.

"It would be fun to get in a room with them — with yourselves and the polluter — and talk about what each of those parties might want to do to stimulate over $1 billion of economic activity," he said.

Nenshi had concerns with the logic of the overall plan though, which includes $240 million in funding from a community revitalization levy (CRL), which is essentially a loan that is paid back from the anticipated growth in future property taxes in the area.

"If you're remediating only the land for the stadium and the arena, that means you're not remediating the land that's required for the office buildings, which means the CRL won't balance," he said.

"All of these things are actually intricately tied to one another."

Wait. What does it mean for a CRL to "balance?"

The $240 million the Flames ownership is seeking through a CRL to build the arena-stadium complex would need to be repaid one way or another.

It's up to the provincial government to approve a CRL and, if it does, the timeframe for that money to be raised via property tax growth is fixed at 20 years.

Since there's no guarantee there will be enough new development in 20 years to generate that much new revenue, the loan is backstopped by the general tax base.

That means, if the CRL fails to meet its target, Calgary taxpayers, as a whole, are on the hook for the balance.

Why can't the Flames and Stampeders just pay for a new arena and stadium, themselves?

Ken King says that's just not feasible for a market of Calgary's size.

"They need to be public-private partnerships or they simply can't work," he said.

"Toronto and Montreal, at four and five million population, can easily handle it. Edmonton and Calgary, Winnipeg, Saskatchewan, Hamilton, Ottawa all have serious public investment in the facilities. It's the only way you can have a sustainable sports team in those markets."

King also said CSEC's plan to kick in $450 million ($200 million from the ownership directly and $250 million from a loan to be repaid by a ticket tax on future events at the facility) is "unprecedented" and other partnerships have seen a greater input from the public side.

"If you ever want to offer us the same deal that they have in Edmonton, I can speak for our group: We will take it tomorrow," King told Calgary councillors.