Missing funding means arena deal might be dead, councillors say

EDMONTON – The future of Edmonton’s downtown arena proposal is in doubt after one councillor said Thursday he won’t support the city’s latest funding scheme.

A new report recommends city council give the project final approval next week and find the remaining $69 million in financing from other levels of government later.

But Coun. Amarjeet Sohi said he can’t go along with the idea.

“It will be an unfortunate thing to do, but it might come to that, that we might not be able to proceed with the downtown arena,” Sohi said.

“Not getting a commitment from the province at this time, up to the writing of the report, I don’t see how we will proceed with it.”

Edmonton is short $55 million out of the $100 million it banked on the province contributing.

It also hopes to have the provincial and federal governments split an additional $14 million to cover two-thirds of the cost of the attached $21-million community rink.

Despite Mayor Stephen Mandel’s confidence that a provincial commitment for the arena is on the way, Premier Alison Redford has repeatedly refused to provide direct support.

The report suggests pushing ahead anyway.

“While the specific provincial program that could be applied to the remaining provincial funding requirement has not been identified, the funds would not be required until 2015 or 2016,” the report says.

“This allows for time to identify appropriate provincial funding.”

Coun. Kim Krushell, who has worked for years to see the project approved, said she’s frustrated because annual payments to borrow the remaining money could easily be covered by property taxes on future development in the area.

“Four years of trying to get this deal done and we’re at the point where council may very well decide to kill (it) because we’re in essence lacking $4 million over 20 years.”

The only alternatives are to pay at least $200 million to renovate Rexall Place with little surrounding revitalization, have the city build an arena alone or do nothing and possibly lose the team, Krushell said.

She laid part of the blame for the deal’s potential collapse at the feet of Oilers owner Daryl Katz, saying he hasn’t done a good job of public relations.

“He could have had this done a year ago if he hadn’t made new demands. Now we’re in a situation where the province is facing significant shortfalls,” she said.

“The expectation that the province is going to be there isn’t happening at this point in time.”

Last month, council voted 8-5 to put an unexpected boost in the provincial infrastructure grant toward the arena, to which Sohi reluctantly agreed.

But councillors delayed final ratification of the master agreement with Katz until the province confirms where the city can find the rest of the funding.

One arena supporter, Coun. Ed Gibbons, is out of the country on holidays and it’s not known if he’ll participate by telephone in next Wednesday’s crucial council meeting.

Sohi would like the city and Katz to split the $100-million provincial share, saying the two sides have already agreed to each pay half the $30-million increase from arena’s initial $450-million price tag.

However, city manager Simon Farbrother said last month Katz wasn’t willing to boost his $115-million portion of the construction budget, to be paid over a 35-year lease.

A Katz Group spokesman wouldn’t comment on the issue, but Sohi can’t see where else the money will come from.

“I think as a city we have done what we practically could have to make this deal,” he said, calling on Katz to step up and prevent it from falling apart.

“I strongly believe in the potential of the arena and the downtown development … but I just can’t support putting more city money into it.”

Coun. Karen Leibovici suspects there’s funding from the March 7 provincial budget that the city should be allowed to direct to the arena.

While she’s waiting to hear Mandel’s update at the council meeting, she’s unwilling to reopen the current deal in hopes of prying extra cash from Katz.

“It’s unlikely anyone on council will want to put any more money into the arena project. If we’re looking at how do you make up the shortfall of the $55 million, the dollars have to come from somewhere,” Leibovici said.

“We have said over and over again we’re not going to raise taxes to fund the arena.”

The rest of the cash to be borrowed for the facility would be paid off by a ticket tax ($125 million), parking fees, taxes on surrounding future development, redirecting the Rexall Place subsidy and other city sources ($140 million).

This isn’t the first time the project has appeared to hit a crisis.

Last fall, the city broke off talks after Katz asked for a $6-million annual subsidy and other changes to a 2011 framework, then refused to attend council and explain himself.

The two sides went back to the bargaining table in December and reached a tentative agreement the following month.

The total cost of the project is $605 million, including the arena site on the north side of 104th Avenue, the city’s share of the Wintergarden walking bridge across 104th Avenue, an LRT link and a pedestrian corridor.