Quote:
Originally Posted by Regorium
How the hell is ticket tax "Flames contribution" when the City is fronting the money?
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The city would not front the money covered by the ticket tax. This has been covered several times. I'll say it again: the city
does not front the money for the ticket tax portion.
The money would be borrowed. The debt service cost would be covered by the ticket tax revenue.
It has been presumed that the city would guarantee the loan (more likely the province IMO - and if I'm not mistaken, city borrowing is all done through Alberta treasury anyway, so it would in fact be a provincial loan). While it is not certain that they would guarantee it, it makes sense, as that would reduce the total cost of the project.
So what that means is that the amount - $200M presumably - would be added to the provincial debt. I don't want to trivialize that, but it really isn't a large amount. And no, it wouldn't affect the province's credit rating.
Think of it like this: your child wants to get a mortgage to buy a car but can't get the bank to approve it. So you co-sign. You aren't fronting the money, you're just helping them acquire the loan. And unlike your child's loan, there is little to no risk of the ticket tax not covering the debt service, because we're talking about hockey fans in a Canadian city.
Ticket taxes are popular solutions because they basically boil down to two things:
1) the people that want it most end up paying for it, and
2) it is actually a reduction of revenues for the owners, so it is a second, albeit somewhat indirect, contribution on their part