Who will pay for Calgary’s new arena?

WATCH ABOVE: The biggest question regarding the Calgary Flames proposal for a new sports complex is the cost and who is paying for it. Global’s Tony Tighe reports.

CALGARY – After the excitement died down from the unveiling of a new arena and sports complex proposal for Calgary on Tuesday, one key question emerged: Where will the money come from?

“What we’ve seen from this proposal is that taxpayers are on the hook for a very large chunk of it,” said Alberta director of the Canadian Taxpayers Federation Paige MacPherson.

“Ultimately when it comes to building professional sports complexes, we should pay through it through our tickets, not our taxes.”

The $890-million plan calls for the project to be funded through a $250-million ticket tax, a $240-million community levy, $200 million from team ownership and $200 million from city taxpayers for the fieldhouse.

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But that doesn’t include the still-unknown cost of decontaminating the site, which was a creosote wood-treatment plant until the 1960s.

The “ticket tax” listed in the graphic is a user fee applicable to anyone buying tickets to events at the facility. The CalgaryNEXT website said “ticket prices may increase,” but didn’t say by how much.

MacPherson said the ticket tax isn’t a bad way to raise money, but warned it could be an unreliable benchmark.

“What if there’s a shortfall in ticket sales? Taxpayers can’t be on the hook for that shortfall. That has to be a risk and a cost that is assumed by the owners,” she said.

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Mayor Naheed Nenshi noted in a Tuesday statement that it’s unclear if the City of Calgary will be asked to provide upfront financing for the ticket tax, and pointed out the city’s capital funds are fully allocated through 2018.

“There are very significant requirements for public funding beyond the fieldhouse funding, and there is currently no money,” said Mayor Nenshi in a statement.

“I have said for a long time—and continue to strongly believe—that public money must be for public benefit and not private profit. The question for council, the ownership group, and all Calgarians is whether this proposal meets that test.”

Ward 12 Councillor Shane Keating said there are “too many unanswered questions” about the proposal at this point.

The Community Revitalization Levy pegged as the source of $240 million of the project’s funding allows the City of Calgary to “to segregate a portion of the property tax revenue generated from The Rivers District properties and directly invest it in infrastructure improvements within this area” for a 20-year period, according to the city’s website.

The CRL was approved by the provincial for use in Calgary’s East Village; there’s no similar agreement yet in place for the West Village.

Ward 13 City Councilor Diane Colley-Urquhart said the levy has helped revitalize the East Village.

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“We’ve demonstrated for five years now that you can put a red circle around a blighted area like East Village was, and you can plow in tax dollars to put in the infrastructure which will entice the private sector to come in and build,” she said. “Build hotels, build condos and whatever.  That’s what I see happening in West Village.”

Colley-Urquhart said the levy could potentially help the city pay to decontaminate the site.

“We have to do those strategic partnerships with the federal government, with the province, with CMLC, with the City of Calgary, with the entertainment group that’s proposing this,” she said. “And why wouldn’t we be open minded in order to see where this whole thing goes over the next year to 18 months?

WATCH: A big part of the CalgaryNEXT plan is the cleanup of an old creosote plant that sat on the area. Global’s Gary Bobrovitz looks at the history and the long road ahead if there is any possibility of clean up.

Meantime, the taxpayers federation maintains costs and risks should be assumed by private owners.

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“We don’t know what the sites of the cleanup for the contamination is going to be. It could be hundreds of millions of dollars or more,” MacPherson said. “We’re talking about hundreds of millions of dollars in that franchise; the owners are billionaires. This is an industry that frankly can shoulder the cost themselves. It doesn’t have to be taxpayers putting up the money….because we have necessary services to cover with our taxes.”

For comparison, here’s a list of other NHL rinks in Canada including ownership, capacity and cost:

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With files from Tony Tighe

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