Calgarypuck Forums - The Unofficial Calgary Flames Fan Community - View Single Post - [News] CalgaryNEXT Announcement. New arena details emerge.

Simanium · 08-23-2015, 02:31 PM

My thoughts on this:

1. $200 million from the Flames. This is obviously just a starting point for negotiations. Nenshi has made his stance on investment for private profit very well known and I'm sure the Flames have budgeted, internally, that there would be push back for more private investment. Just like any contract negotiation the Flames do with their players, they are simply starting low, while expecting the city to come back asking for more and they will meet somewhere in the middle.

2. Ticket Tax of $250 million. This is a user based fee and is a completely reasonable mechanism for financing part of the cost. Simply enough, everyone has the choice of going to events and contributing (or not contributing) to this tax. So for those that are up in arms about the costs because they don't attend events, this won't affect them at all. The real question to be negotiated is who takes out the loan for this. Conceptually the ticket tax is to cover the principle and interest repayment of the loan and the risk arises if not enough tickets are being sold to repay the loan, causing a default on the loan. If the Flames insist that the city takes out the loan, it would be reasonable for the Flames to indemnify the city for any loss sustained on the potential default of the loan and to provide security to the city. The security could be ownership shares in the Flames or other assets owned personally by the owners or business' controlled by the owners. Any bank would ask for similar security.

3. CRL of $240 million. The feasibility of this will depend on the studies that will be upcoming. The results of these studies will be leverage for the city to negotiate either a higher ticket tax or equity contribution from the Flames. The CRL contribution, of course, should ultimately be only what is viable as per the studies. The Flames should make up the difference either through their own equity or the ticket tax.

4. Fieldhouse Contribution of $200 million. This is something that the city has already themselves set aside as a priority, although it is currently unfunded. In Nenshi's statement he indicated that the capital budget is spoken for until 2018, which is completely fine since CalgaryNext is realistically not going to be completed till 2020 at the absolute earliest (as per Ken King), but I would reckon that 2022-2023 would be more realistic. So what the Flames are lobbying for is that once money becomes available in the 2019 budget, that they prioritize towards a project that they already have indicated is important for the city.

Of note is that this is the only portion of the funding that would come from tax revenue that is not already in existence (the CRL would create new revenue). Currently the tax base that the city can earn revenue from are property owners and are levied through property taxes. I'm not sure how many properties there are in Calgary, but let's say there is a tax base of 300,000 property owners. $200 million divided by 300,000 comes to $666.66/person. This could be levied over a 10 year period coming to about $80/year (accounting for interest and inflation) or $6.66/month (a little more than the price of a latte from Starbucks). This is not a massive sacrifice from tax payers, especially given that the city wants the fieldhouse itself and that basically every CFL stadium has been publicly funded.

5. Creosote Contamination Cleanup. This is already a sunk cost that has been incurred and cannot be recovered from the polluter. It sucks, but there is no point crying about spilled milk, rather we should address this rather than let it sit for another 40 years. Arena or not this needs to get done before it spreads further into the river and into West Hillhurst and people start getting cancer down the line. That would be completely unacceptable. Quite frankly, I would venture to say that a lot of people in Calgary (especially given the amount of migration) probably had no idea that the site was contaminated at all and as a result the government (province and city) have not had sufficient public pressure to mobilize them to get the cleanup done. In all likelihood, waiting longer and letting it spread will entail a more costly cleanup in the future and be an endangerment to public health, so better to get it done now.

08-23-2015, 02:31 PM	#2510
Simanium Backup Goalie Join Date: Apr 2014 Location: Calgary Exp:	My thoughts on this: 1. $200 million from the Flames. This is obviously just a starting point for negotiations. Nenshi has made his stance on investment for private profit very well known and I'm sure the Flames have budgeted, internally, that there would be push back for more private investment. Just like any contract negotiation the Flames do with their players, they are simply starting low, while expecting the city to come back asking for more and they will meet somewhere in the middle. 2. Ticket Tax of $250 million. This is a user based fee and is a completely reasonable mechanism for financing part of the cost. Simply enough, everyone has the choice of going to events and contributing (or not contributing) to this tax. So for those that are up in arms about the costs because they don't attend events, this won't affect them at all. The real question to be negotiated is who takes out the loan for this. Conceptually the ticket tax is to cover the principle and interest repayment of the loan and the risk arises if not enough tickets are being sold to repay the loan, causing a default on the loan. If the Flames insist that the city takes out the loan, it would be reasonable for the Flames to indemnify the city for any loss sustained on the potential default of the loan and to provide security to the city. The security could be ownership shares in the Flames or other assets owned personally by the owners or business' controlled by the owners. Any bank would ask for similar security. 3. CRL of $240 million. The feasibility of this will depend on the studies that will be upcoming. The results of these studies will be leverage for the city to negotiate either a higher ticket tax or equity contribution from the Flames. The CRL contribution, of course, should ultimately be only what is viable as per the studies. The Flames should make up the difference either through their own equity or the ticket tax. 4. Fieldhouse Contribution of $200 million. This is something that the city has already themselves set aside as a priority, although it is currently unfunded. In Nenshi's statement he indicated that the capital budget is spoken for until 2018, which is completely fine since CalgaryNext is realistically not going to be completed till 2020 at the absolute earliest (as per Ken King), but I would reckon that 2022-2023 would be more realistic. So what the Flames are lobbying for is that once money becomes available in the 2019 budget, that they prioritize towards a project that they already have indicated is important for the city. Of note is that this is the only portion of the funding that would come from tax revenue that is not already in existence (the CRL would create new revenue). Currently the tax base that the city can earn revenue from are property owners and are levied through property taxes. I'm not sure how many properties there are in Calgary, but let's say there is a tax base of 300,000 property owners. $200 million divided by 300,000 comes to $666.66/person. This could be levied over a 10 year period coming to about $80/year (accounting for interest and inflation) or $6.66/month (a little more than the price of a latte from Starbucks). This is not a massive sacrifice from tax payers, especially given that the city wants the fieldhouse itself and that basically every CFL stadium has been publicly funded. 5. Creosote Contamination Cleanup. This is already a sunk cost that has been incurred and cannot be recovered from the polluter. It sucks, but there is no point crying about spilled milk, rather we should address this rather than let it sit for another 40 years. Arena or not this needs to get done before it spreads further into the river and into West Hillhurst and people start getting cancer down the line. That would be completely unacceptable. Quite frankly, I would venture to say that a lot of people in Calgary (especially given the amount of migration) probably had no idea that the site was contaminated at all and as a result the government (province and city) have not had sufficient public pressure to mobilize them to get the cleanup done. In all likelihood, waiting longer and letting it spread will entail a more costly cleanup in the future and be an endangerment to public health, so better to get it done now.