Revenue options to help fund the potential Downtown Event and Entertainment District in Saskatoon were discussed at the governance and priorities committee Wednesday.
City administration said right off the hop that it would not be considering two of the options brought forward by KPMG, noting it would not be considering changes to parking rates or hours, or a vehicle rental tax.
Other options brought forward in the report included an accommodations tax, facility fee and tax-increment financing.
Chief financial officer Clae Hack said administration will be developing a draft funding plan and coming up with more accurate estimates based off the report.
“We expect several legislative changes, and conversations with the province and other stakeholders will be required before the funding plan can be confirmed and project started,” Hack said.
Mayor Charlie Clark addressed the accommodations tax, noting that was a piece that has already stirred some parts of the community.
Clark wanted Hack to speak more to the tax and what the intent of it is.
“I know preliminary conversations have started with the hotel industry and partners, and I think (it is) important to note for this report is this is really the 100,000-foot level and we have a lot more work to do to get it down to the 10,000-foot levels,” Hack said.
Hack said the tax would be 100 per cent dedicated to the Downtown Event and Entertainment District, noting future discussions will likely go into how to govern a tax of this nature with bylaws and will include more discussion with stakeholders.
The accommodations tax would see a mandatory charge applied to short-term hotel or Airbnb stays, but city administration said amendments would be needed to the Cities Act to implement such a tax.
KPMG’s report highlighted that an additional one-per cent tax increase would generate $1.6 million annually, a two-per cent increase would raise that to $3.1 million, and a three-per cent increase would bring in $4.7 million annually.
City manager Jeff Jorgensen noted that discussions are still very early regarding revenue options, but said the intent of these revenue options would be to only fund the Downtown Event and Entertainment District and would not go towards the city’s general funding.
Coun. Sarina Gersher asked if this would be enough for there to be no property tax impact.
Hack said there were several other potential funding options on the table, but said it was very early in the works.
“We’re very early days to be making a statement but administration is still very much working with the goal to rely on property taxes as little as possible with this project,” Hack said.
Coun. Bev Dubois asked why a tax-incremental financing option is being considered if it would impact residents.
Hack justified the financing option, saying it’s very important to establish a boundary for it.
“A good example is if we were to build the arena and because of that arena, a new hotel goes up right next door, and we dedicate those property taxes to the project. That hotel likely wouldn’t have been developed had we not invested in the public infrastructure.”
He said tax-incremental financing was a way to capture some of the benefits of the project without affecting people who live in the suburbs.
Tax-increment financing would see property tax revenue broken down into a base stream and a growth stream.
The reports said over a period of 25 to 30 years, an incremental increase would be added to the growth stream, which would then help repay the costs of the development.
It said $2 million to $9 million annually could be generated through tax-increment financing.
Several stakeholders have already weighed in on the report from KPMG, with mixed reactions.
The North Saskatoon Business Association (NSBA) wrote a letter showing support for the funding tools, stressing that the burden of funding this project should not fall on the taxpayers.
The letter, signed by NSBA executive director Keith Moen, said the Downtown Event and Entertainment District remains a priority, but did give recommendations that capital projects like the district should be put on hold to address the city’s funding gap for 2024 and 2025.
Saskatoon resident Sherry Tarasoff sent a letter saying that if the city wants to not impact property taxes that a tax-incremental financing option should not be considered.
She noted that while she thinks a tax-incremental financing option would be a good idea for redevelopment of an area, it shouldn’t be used for a single project like the Downtown Event and Entertainment District.
“Future property taxes should not be used to fund one single project in an area of development that would have happened anyway if left to the private sector,” Tarasoff’s letter read.
Greater Saskatoon Chamber of Commerce CEO Jason Aebig said some of the tools brought forward in the KPMG report made a lot of sense.
He addressed some of the concerns around the accommodations tax, saying that it will be guests coming from out of town who will be covering that cost.
“The people who are coming to enjoy what this destination is going to offer into the future should pay more. I have no trouble charging a fee to a guy from Winnipeg who wants to come and watch a concert, versus charging a property tax increase to people who already live and work here,” Aebig said.
He added that if there’s a reason to come to Saskatoon, people will pay to stay here.
“People go where the entertainment is, they go where the destination offers value.”
Aebig said he doesn’t fear the possibility of the tax continuing to be used down the line after the district is paid off, noting extra revenue to improve the city is a good thing.
He stressed that he wants to see strong governance around something like an accommodations tax, suggesting things like an independent board made up of hotel owners to make sure that the funds are being used properly, separate reporting and financial transparency.
Aebig said there are several similar models around the country the city could pull from for inspiration.
“There are dozens across this country and the United States that could serve as a good template for us. I think council is on track with that and we certainly support it.”
Discover Saskatoon CEO Stephanie Clovechok said opinions around this project should be set aside, as the main goal right now is to explore options.
“This report is a presentation of opportunity. What’s most important going forward is the good governance and collaborative partnerships that will lead the way forward,” Clovechok said.
She said having stakeholders at the table when considering something like an accommodations tax is very important.
Clovechok said she can see this project taking shape in a way that doesn’t burden residents.
Gage Haubrich with the Canadian Taxpayers Federation said residents need to be aware that if these revenue measures don’t pan out they’ll be left holding the bill.
“City council needs to make sure taxpayers are aware of that,” Haubrich said.
He said this was a bit of a gamble, pointing to Winnipeg’s situation with the Blue Bombers’ stadium, saying taxpayers were put on the hook for over $100 million.
Haubrich took issue with the accommodations tax, tax-increment financing and the facility fees, saying the city is expecting people to utilize the arena and go to events, but also expects them to pay more.
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