[News] CalgaryNEXT Announcement. New arena details emerge.

[Jay Random]

Originally Posted by jayswin

So this could conceivably take 8 years until we're sitting in the new arena if things drag out enough?

Very probably. Which, by the way, makes a nonsense of claims that the development will siphon off resources or demand from the East Village. I should think the East Village will be pretty nearly finished by the time the proposed arena opens for business.

The more I think about it, the more I am convinced that the CRL is the weak link in the proposal. A centrally located set of sports facilities is a good idea, but unlike Edmonton, downtown Calgary (and its environs) is so densely developed already that there are very few good places to put such a thing. A development of that size on the Stampede Grounds would pretty much wipe out the Stampede itself. Victoria Park just south of the CPR tracks is possible, but not ideal because of the distance from the nearest LRT station. West Village seems to be the only viable place – and that puts the city in the driver's seat.

The funding proposal as it stands is understandable as a first offer, since it's comparable to what Katz actually received in Edmonton. But the City of Calgary is not as needy and insecure as the City of Edmonton, and will be harder to bamboozle in that way. It will take a lot of hard negotiation before a deal is closed, and I suspect CSEC will end up paying a much bigger chunk of the bill than it now proposes. If they want it done soon, they will have to pony up.

I wouldn't be surprised to see something like $300m cash from the Flames, $300m borrowed against the ticket tax, and $300m from the city in a combination of cash and a much smaller CRL contribution (from a larger district, which would probably have to include Sunalta as far south as 12 Ave.)

[mikephoen]

Originally Posted by jayswin

Wow, so yeah we're not even close to watching a game in a new arena. So if we're looking at worst case scenario, it could boil down to...

2 - 3 years negotiating and finalizing/approving the project
2 years cleanup
2 - 3 years building the arena

So this could conceivably take 8 years until we're sitting in the new arena if things drag out enough?

Eight years is more like best case scenario.

[Bunk]

Originally Posted by Jay Random

Very probably. Which, by the way, makes a nonsense of claims that the development will siphon off resources or demand from the East Village. I should think the East Village will be pretty nearly finished by the time the proposed arena opens for business.

The more I think about it, the more I am convinced that the CRL is the weak link in the proposal. A centrally located set of sports facilities is a good idea, but unlike Edmonton, downtown Calgary (and its environs) is so densely developed already that there are very few good places to put such a thing. A development of that size on the Stampede Grounds would pretty much wipe out the Stampede itself. Victoria Park just south of the CPR tracks is possible, but not ideal because of the distance from the nearest LRT station. West Village seems to be the only viable place – and that puts the city in the driver's seat.

The funding proposal as it stands is understandable as a first offer, since it's comparable to what Katz actually received in Edmonton. But the City of Calgary is not as needy and insecure as the City of Edmonton, and will be harder to bamboozle in that way. It will take a lot of hard negotiation before a deal is closed, and I suspect CSEC will end up paying a much bigger chunk of the bill than it now proposes. If they want it done soon, they will have to pony up.

I wouldn't be surprised to see something like $300m cash from the Flames, $300m borrowed against the ticket tax, and $300m from the city in a combination of cash and a much smaller CRL contribution (from a larger district, which would probably have to include Sunalta as far south as 12 Ave.)

East Village is probably 10-15 years from full build out depending on the economy. Other building out areas like Beltline, Eau Claire, Downtown west end have decades of vacant and redevelopable land left too (which also need infrastructure upgrades - especially public realm stuff like new streetscapes).

Also remember Green Line will provide a new LRT station at the Railtown lands people are talking about just north of Stampede (on about the same timeline for completion as arena.

[Strange Brew]

I copied this from the formal City response:

Is The City responsible to pay the costs to remediate the creosote contamination on the West Village lands?

No. In 1997, a Release Agreement was signed between the Province and The City stating that Canada Creosote site contamination was not caused or contributed to by The City.

Interesting answer to their own posed question. Sounds like posturing for the province to pay for this. They could certainly try and get a potential buyer to pay for it, but there would no legal responsibility in that case, simply a negotiating point.

[Bend it like Bourgeois]

Originally Posted by Jay Random

Very probably. Which, by the way, makes a nonsense of claims that the development will siphon off resources or demand from the East Village. I should think the East Village will be pretty nearly finished by the time the proposed arena opens for business.

The more I think about it, the more I am convinced that the CRL is the weak link in the proposal. A centrally located set of sports facilities is a good idea, but unlike Edmonton, downtown Calgary (and its environs) is so densely developed already that there are very few good places to put such a thing. A development of that size on the Stampede Grounds would pretty much wipe out the Stampede itself. Victoria Park just south of the CPR tracks is possible, but not ideal because of the distance from the nearest LRT station. West Village seems to be the only viable place – and that puts the city in the driver's seat.

The funding proposal as it stands is understandable as a first offer, since it's comparable to what Katz actually received in Edmonton. But the City of Calgary is not as needy and insecure as the City of Edmonton, and will be harder to bamboozle in that way. It will take a lot of hard negotiation before a deal is closed, and I suspect CSEC will end up paying a much bigger chunk of the bill than it now proposes. If they want it done soon, they will have to pony up.

I wouldn't be surprised to see something like $300m cash from the Flames, $300m borrowed against the ticket tax, and $300m from the city in a combination of cash and a much smaller CRL contribution (from a larger district, which would probably have to include Sunalta as far south as 12 Ave.)

All good points.

It's easy to throw stones at the flames and King but they aren't stupid and they haven't been sitting on their hands for the last several years. And for all the cynicism about their motives if all the flames wanted was the cheapest deal there are probably easier ways to get there.

So why the west village? Yes it's central but it's not actually *that* ideal, will be more expensive, and adds a lot of complexity. And they won't own any of it in the end. My best early guess is this is how they found the win for the mayor to get him on board to get McMahon replaced on the same time line as the dome. Lots of info to come though so we'll see.

[Ducay]

Cool design and idea, but a no go from me for 2 reasons:

- Huge amount of proposed public funding (total amounts still to be clarified)
- Impact on downtown access via Bow Trail

[YYC in LAX]

Originally Posted by Ducay

Cool design and idea, but a no go from me for 2 reasons:

- Huge amount of proposed public funding (total amounts still to be clarified)
- Impact on downtown access via Bow Trail

You probably live in Aspen Woods or something

[Tyler]

Originally Posted by Ducay

Cool design and idea, but a no go from me for 2 reasons:

- Huge amount of proposed public funding (total amounts still to be clarified)
- Impact on downtown access via Bow Trail

Oh man, Ducay no go'd this. Now it's never going to happen.

[the2bears]

Originally Posted by Tyler

Oh man, Ducay no go'd this. Now it's never going to happen.

Just you wait, someone will complain that KK didn't already get Ducay's approval

[Simanium]

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.

[Kavvy]

Originally Posted by Simanium

(the CRL would create new revenue)

Will it? You're assuming projects which wouldn't be developed if the stadium wasn't built will be built?

I don't think this is true in the short term based on comments I have read from Bunk in this thread, but maybe I am misinterpreting?

I thought the stadium will simply relocate proposed projects from other parts in the city to the stadium CRL district?


As for the ticket tax, I don't think anyone thinks this is unreasonable? I sort of don't understand the point you're trying to make. I haven't seen a single comment against the ticket tax, albeit I haven't read every one in the thread.

[Simanium]

Originally Posted by Kavvy

Will it? You're assuming projects which wouldn't be developed if the stadium wasn't built will be built?

I don't think this is true in the short term based on comments I have read from Bunk in this thread, but maybe I am misinterpreting?

I thought the stadium will simply relocate proposed projects from other parts in the city to the stadium CRL district?

I think there is a lot of confusion as to what a CRL is. Part of it is because it is not called a CRL anywhere other than Alberta. It is more commonly known as Tax Increment Financing and has been used for urban renewal projects all across North America. Basically the West Village will not be included in the overall tax base from which the city collects taxes and taxes earned in West Village will solely be used to repaying the $240 million over the 20 year CRL period. The rest of the city pays taxes and incurs a small increase to the mill rate as the current assessed value of the undeveloped property in West Village is low. After the CRL is repaid in 20 years, West Village then is included back into the tax base for the entire city and taxes will actually go down at this point, in perpetuity, as the mill rate for the city will be reduced and as West Village would have a much higher assessed value.

[shogged]

Originally Posted by Simanium

I think there is a lot of confusion as to what a CRL is. Part of it is because it is not called a CRL anywhere other than Alberta. It is more commonly known as Tax Increment Financing and has been used for urban renewal projects all across North America. Basically the West Village will not be included in the overall tax base from which the city collects taxes and taxes earned in West Village will solely be used to repaying the $240 million over the 20 year CRL period. The rest of the city pays taxes and incurs a small increase to the mill rate as the current assessed value of the undeveloped property in West Village is low. After the CRL is repaid in 20 years, West Village then is included back into the tax base for the entire city and taxes will actually go down at this point, in perpetuity, as the mill rate for the city will be reduced and as West Village would have a much higher assessed value.

I think everyone is pretty clear on the definition of CRL at this point. It's a subsidy, and revenue taken out of the overall tax base is still money we can't spend on other things. For twenty years!

[Simanium]

Originally Posted by shogged

I think everyone is pretty clear on the definition of CRL at this point. It's a subsidy, and revenue taken out of the overall tax base is still money we can't spend on other things. For twenty years!

No, it's money that would never have existed but for the development of the land and CalgaryNext is the catalyst for that development. Arena or not, just like East Village, there is no way it's getting developed without a CRL. It's a 20 year investment for a reduction in taxes thereafter for eternity.

[shogged]

Originally Posted by Simanium

No, it's money that would never have existed but for the development of the land and CalgaryNext is the catalyst for that development. Arena or not, just like East Village, there is no way it's getting developed without a CRL. It's a 20 year investment for a reduction in taxes thereafter for eternity.

There has been a plan for the west village since 2007 now, so I think it's incorrect to suggest the arena is the catalyst for development. I believe the location along the river and its proximity to downtown will be the catalyst for development, as it was in the east village. The land will see action one day, arena or not.

My issue isn't even with the CRL itself, especially with the recent success story in the east village. I firmly believe that a CRL could pay for the remediation and infrastructure requirements of the west village just as it has on the opposite side of downtown. My issue is with this CRL directly subsidizing a private company, the same company that is only willing to foot a minority share of the bill.

save the CRL for the requirements of making the land usable, not for financing the building itself.

[Smartcar]

Originally Posted by Simanium

No, it's money that would never have existed but for the development of the land and CalgaryNext is the catalyst for that development. Arena or not, just like East Village, there is no way it's getting developed without a CRL. It's a 20 year investment for a reduction in taxes thereafter for eternity.

Except the big difference is there wasn't much in the east village and whatever is built is worth a lot more so there was expected to be significant incremental assessment as soon as any development occurred. In the case of west village the existing businesses are paying taxes while the CalgaryNext is proposed to be City owned and exempt. So it will be starting with a negative incremental assessment until spinoff development occurs. I'm pretty sure it will take more than 20 years for the CRL to generate $250M.

[RM14]

Originally Posted by Smartcar

Except the big difference is there wasn't much in the east village and whatever is built is worth a lot more so there was expected to be significant incremental assessment as soon as any development occurred. In the case of west village the existing businesses are paying taxes while the CalgaryNext is proposed to be City owned and exempt. So it will be starting with a negative incremental assessment until spinoff development occurs. I'm pretty sure it will take more than 20 years for the CRL to generate $250M.

It would only be negative if the dealerships and bus depot do not open elsewhere in the city. The business would have to close completely.

[Smartcar]

This is from a CRL standpoint. It's negative for the defined area in the short term. Unless they move to vacant land within defined area, there will be no increase in assessment base to apply to paying back the $250M.

[Smartcar]

Originally Posted by Strange Brew

I copied this from the formal City response:

Is The City responsible to pay the costs to remediate the creosote contamination on the West Village lands?

No. In 1997, a Release Agreement was signed between the Province and The City stating that Canada Creosote site contamination was not caused or contributed to by The City.

Interesting answer to their own posed question. Sounds like posturing for the province to pay for this. They could certainly try and get a potential buyer to pay for it, but there would no legal responsibility in that case, simply a negotiating point.

KK said at the STH session that the agreement not to make the City responsible applied unless the land was disturbed. So if there is development it will have to be dealt with.

Although now that it appears to be migrating across the river there will likely be some urgency to clean it up in any event.

[Bend it like Bourgeois]

Originally Posted by shogged

There has been a plan for the west village since 2007 now, so I think it's incorrect to suggest the arena is the catalyst for development. I believe the location along the river and its proximity to downtown will be the catalyst for development, as it was in the east village. The land will see action one day, arena or not.

My issue isn't even with the CRL itself, especially with the recent success story in the east village. I firmly believe that a CRL could pay for the remediation and infrastructure requirements of the west village just as it has on the opposite side of downtown. My issue is with this CRL directly subsidizing a private company, the same company that is only willing to foot a minority share of the bill.

save the CRL for the requirements of making the land usable, not for financing the building itself.

I'll wait to see if the city says the project helps or hinders the CRL as a whole but that seems a double standard to me.

If I want to build a commercial or residential project, I'll get the land developed for me and a pretty sweet deal upon which I can build my project and make plenty of profits for a long, long time. And that's ok.

If I'm building a public project I'll get all the same plus a sweetheart deal on taxes thereafter, even if lots of private companies make money at the same time thanks to my tax free building. none of them have to put up a dime. And that's ok.

But if I own a hockey team, even if most of the CRL funds a stadium/ field house for public use that I'll never own or make a nickel off, well now it's not ok.