Originally Posted by New Era
The Flames can continue to charge a property tax if they like, to the interest that owns the building. In this instance that would be the City of Calgary. Charge away.
Well, if the City of Calgary wants the team to pay rent, then shut the #### up about negotiations, build the arena, and then try and negotiate a lease. It is as simple as that. But the City doesn't want that. They want the Flames to put up a whole whack of money, and then pay rent, and then pay property tax on a building they don't own. You want to talk about fair? How has the City's proposal done anything to address the CSEC's strategic goals? Yet you expect CSEC to just accept the terms that are greatly beneficial to the City and the execution of their development strategy? Fairness is a real double edged sword here.
Let me guess, then you sign a long term lease and you have to pay the first three month's rent up front, you're not really paying rent at all? You're staying there for free?
What this deal ends up being is a leasee providing the lessor the capital to build their project through the pre-payment of the lease. The Flames are guaranteeing the City better than twice the rent that the next closest operator is paying. Chew on that for a while. The Flames are willing to pay twice what the Oilers are paying in a lease deal.
Not even close. The crappy deal is the one that comes when the City is forced to eat all of the construction costs, own the building outright, then have to negotiate a lease with a new interest.
Now I know you are going to immeditaley dismiss that, because you're going to dream up something about land values and other unrelated garbage, but the reality is that if the City has a building they wish to lease, they are going to have to negotiate on what the traffic will bear. Any interest coming in is going to beat the City to a pulp with the lease up in Edmonton and argue that establishes market value, then refuse to pay a cent more. This is what is being completely missed in this discussion. If the Flames walk away from this City, the next team coming in is going to screw it even harder. This will be all business, and the City will have to eat a massive amount of money to get a deal done.
Okay, so this is interesting. If the Flames don't have the ticket tax issue to deal with they will just raise their tickets to that maximum level, for sure! Because there is no ticket tax they are going to be greedy and pocket the cash. Well, if this is indeed the belief, then this completely supports the claim that the revenues from a ticket tax are coming directly from Flames revenues and they are in reality paying for that component of the City's plan as well.
See, here's where you're wrong. The Flames cannot institute a ticket tax. They do not have the legal capacity to institute and collect a tax on their own. Only the City has the ability to do this, and only directly on this facility. So it would be the City instituting the ticket tax, and as Resolute has clearly indicated, it will be a haircut on the revenues from the team, which they are then paying.
I've read some ridiculous things in these threads, but this takes things in a new a weird direction. The Flames $275M contribution would be a public contribution because the rent is public revenue? I guess if you consider your rent on any City owned property as being a public contribution, but that is not how that money is classified. I mean, there are logic leaps, then there are logic leaps. If that is indeed the case, then the guys who built the NMC white elephant should stop fund raising and leave it competely up to the city. It is public revenue they generating, and that is not in their mission or charter. The City can have complete ownership of another jewel in their entertainment district.
It seemed pretty straight forward. The City wanted the Flames to own the building so they could recover their costs through property taxes. This is where the Flames were accurate in their comments of them ultimately paying the whole thing.
I really think you guys have to ask yourself if you would get involved in a deal where:
1) You were asked to put up a big down payment to construct a building you would not own.
2) You would then dedicate a chunk of your revenues, based on sales, to cover another chunk of the building.
3) You would then either have to pay property taxes, on the building you don't own, or rent on a building you just fronted the majority of the money to construct.
Would you seriously do that? Now I understand there are are possible benefits extended to you, like exclusivity to use the building, and potential to make money from all events in that building you are leasing, but it still begs the basic question. Is this a fair deal to you?
Conversely, would you be willing to get into a deal where you sign a 35 year lease on a non-existent building, one where you pay your money upfront, kno0wing you are going to be then operating in a rent free environment, because your rent has been paid upfront and used to construct the building? Seems this might be a little more attractive to you? Seems it might be a pretty fair deal for the party trying to build the facility? Be honest.
To me, there is still some room for improvement in both proposals. I think there is still room in getting both parties to pony up. The Flames should be pushing the City to move aggressively forward on the completion of the entertainment district and making them commit to that. The City should be finding a way to recover their money in a less impactful way and be prepared to do so over the full 35 years of the life of the building. The negotiations need to be done honestly. I think there is room to do so, the parties just need to look at the good things in each other's proposals and put a common plan together using those mechanism.
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