Today, the City of Calgary released its proposal for an arena funding framework. This offer is very fair, in fact, it is generous.
The City’s proposal identifies a 1/3, 1/3, 1/3 model, whereby The City contributes land, Saddledome demolition costs, and significant cash, totaling $185 million. The remainder of the estimated $555 million would include a ticket fee for 1/3, and a 1/3 contribution from Flames ownership, the Calgary Sports and Entertainment Corporation (CSEC).
The source of City funds is to be determined, but would likely come from reserves or debt. This contribution would be in addition to the hundreds of millions in Victoria Park investments already planned by the City, such as the Green Line LRT and other necessary transportation and utility upgrades.
In exchange, The City would require a modest return on investment through property taxes, rent, or profit sharing, to ensure that the public contribution is paid back over time. In the US, it is standard for arenas to pay a combination of sale tax to the municipality, rent and property tax.
CSEC perceived this offer, in which they control 100% of the revenue, as so unfair that they walked away from the table. The City of Calgary remains at the table, but requires a willing partner to make a fair arena deal a reality.
Like most Calgarians, I support the idea of a new arena and what it could mean for Calgary, our downtown, and CSEC.
At issue is whether public dollars can be justified for its construction. My position remains consistent: public money for public benefit. Calgarians must receive a clear return on investment, as well as a return on less tangible factors, such as economic development and tourism.
I’ve heard the argument that since we paid $250 million for the new central library, why shouldn’t we do the same for an arena? Well, there is a spectrum of public versus private facilities.
On one end, the library is clearly a public institution: it’s universally accessible to the public, it’s free to enter and use, and its goals of literacy, education and community are wholly for the public good. On the other end of the spectrum, some facilities are fully private, such as corporate office buildings or country clubs that have exclusive access and are not generally open to the public. An arena is somewhere in the mushy middle: it is an important part of civic culture but there is an entry cost that is unaffordable for many people. An arena’s tenants and operator are private and highly profitable enterprises.
As such, I will continue to advocate that the Flames organization and CSEC clearly demonstrate the degree of public benefit from a new arena.
Calgarians need to know how we will recoup any public investment in dollars and cents, either through property taxes, rent, or profit sharing.
CSEC is asking for a partnership with the City, and hence, with Calgarians. A partnership shares the risk, responsibility, and ultimately, the profit of an enterprise between parties. Having one party take on the risk, and the other party the financial reward, is not a partnership.
Sports facilities have often been mistakenly viewed as a silver bullet to urban revitalization. Although a properly situated and well-designed facility can be a positive asset, it is far from the only rejuvenating factor. If The City is successful in negotiating a new arena, we must then undertake the effort to surround the arena with complementary uses, leverage other cultural facilities or public assets, and connect to new transit facilities, in order to create a showcase district and gathering place for Calgarians and visitors.
See the full statement on the City of Calgary’s proposed funding framework: