Arena negotiation discussion. UPD: Flames release their proposal

[GGG]

Originally Posted by krazycanuck

In the US I know lots of stadiums are paid partially on hotel and rental car taxes. Is this something that is possible or legal in Canada as a source to fund stadiums? I never hear of it being explored here.

It's still just a wealth transfer from the state to the the Flames. The theory is most people using those things come for the arena but that is false. People in Calgary are renting cars for business. Hotel rooms are filled for business trips. It's one of the Arena funding economic myths that get repeated continuously.

We help out the tourism industry so we should get a tax from the tourism industry. Its just not real.

[Strange Brew]

Originally Posted by GGG

It's still just a wealth transfer from the state to the the Flames. The theory is most people using those things come for the arena but that is false. People in Calgary are renting cars for business. Hotel rooms are filled for business trips. It's one of the Arena funding economic myths that get repeated continuously.

We help out the tourism industry so we should get a tax from the tourism industry. Its just not real.

But it is a funding mechanism for many US stadiums and it taxes a slightly different group of people. Doesn't mean travelers are visiting for the arena or stadium.

[Flash Walken]

Originally Posted by GGG

It's still just a wealth transfer from the state to the the Flames. The theory is most people using those things come for the arena but that is false. People in Calgary are renting cars for business. Hotel rooms are filled for business trips. It's one of the Arena funding economic myths that get repeated continuously.

We help out the tourism industry so we should get a tax from the tourism industry. Its just not real.

Originally Posted by Strange Brew

But it is a funding mechanism for many US stadiums and it taxes a slightly different group of people. Doesn't mean travelers not visit for the arena or stadium.

It just makes commerce slightly more expensive. It's like a nice hidden corporate tax.

[Classic_Sniper]

Originally Posted by RM14

On the last page, my very hack attempt at trying to find out the cost per "taxpayer"


* Total 2016 City of Calgary Revenue: $4,700,000,000
* 450,000 households X $3,000 each per year = $1,350,000,000 (29% of city Revenue)
*City Expense for Arena funding: $250,000,000 X 29% = $72,500,000 to Households. Or, $161 per house.
*$161 cash upfront / 30 years - about $5 per year per house.

Nice work. Honestly, with these kinds of numbers, it's almost a blip on the radar. For me, I'm fine with whatever outcome at this point, it's just not a number that I'm going to get myself worked up for. Ken King and co, would have an easier time convincing people if he just said it'll cost everyone $5 a household per year. The optics certainly sound better than the hundreds of millions I keep hearing about.

[Blarg]

Just curious, are any of the recent office towers built in dt Calgary financed by the city? I was just checking the Bow, and it looks like it was 100% privately financed by a REIT and exclusively leased by Encana.
Why can't the Flames do something similar?

[Tron_fdc]

Originally Posted by Classic_Sniper

Has anyone bothered to do the math on how much a new arena will actually cost each tax payer? When the public hears hundreds of millions will be spent, that obviously doesn't sound too good. But when you divide the total by every tax payer, what's the actual cost to each individual? if someone with the knowledge can find that out, I think that might open some eyes here.

The only way to find out the cost per taxpayer is to come up with a percentage and apply it to your tax bill. No one entity pays the same (or very, very few do).

Rudimentary speaking take the city portion of building cost, divide it by the city revenue, then multiply that percentage by your yearly bill. You would also need to know when and how much of the cost is being paid, as that impacts the yearly income statements from the city. THEN figure out if you are cutting from other areas to fund it, OR raising taxes to account for the shortfall. There is no simple math.

It's going to vary obviously, but likely resulting in larger amounts being paid by entities that pay more in taxes (corporations).

Not exactly a "business friendly" thing to do IMO.

[Tron_fdc]

Originally Posted by Blarg

Just curious, are any of the recent office towers built in dt Calgary financed by the city? I was just checking the Bow, and it looks like it was 100% privately financed by a REIT and exclusively leased by Encana.
Why can't the Flames do something similar?

They could, but as we are all well aware at this point it's a bad investment. Or it would be built already.

[Blarg]

Originally Posted by Tron_fdc

They could, but as we are all well aware at this point it's a bad investment. Or it would be built already.

Okay, but what is the difference between a real estate company owning and building an office tower and leasing it to a firm, and a real estate company owning and building a stadium and leasing it to a sports entity that have three teams that would play in it?

[topfiverecords]

Originally Posted by Classic_Sniper

Nice work. Honestly, with these kinds of numbers, it's almost a blip on the radar. For me, I'm fine with whatever outcome at this point, it's just not a number that I'm going to get myself worked up for. Ken King and co, would have an easier time convincing people if he just said it'll cost everyone $5 a household per year. The optics certainly sound better than the hundreds of millions I keep hearing about.

That's not 100% true. It won't be $5/year for 30 years. Taxes would need to cover the $275M outlay much faster.

[robaur]

At the end of the day, Nenshi can be a blowhard all he wants. I'm glad he is since he is representing my money in these negotiations. My money as well as every other taxpayers' money. We should be grateful to Nenshi for taking this stance.

[morgin]

Originally Posted by Blarg

Okay, but what is the difference between a real estate company owning and building an office tower and leasing it to a firm, and a real estate company owning and building a stadium and leasing it to a sports entity that have three teams that would play in it?

The Flames would have to be paying in the neighborhood of 30 Million a year in base rent over a lengthy term and all operating costs to cause any development company to consider that deal I would imagine. Then there’s the issue of whether they are even have enough financial strength as an entity to interest anyone - might need guarantees from the owners for any default if for instance the league shuts down or drastically changes in the next 30 years. It’s an extremely risky development, which is why no one wants to do it.

[taxbuster]

Originally Posted by Blarg

Just curious, are any of the recent office towers built in dt Calgary financed by the city? I was just checking the Bow, and it looks like it was 100% privately financed by a REIT and exclusively leased by Encana.
Why can't the Flames do something similar?

They can and they could.

They just won't because the owners think they can soak the taxpayer for it.

They may well find out they are incorrect.

[Flame On]

Originally Posted by nik-

I guess that's true, if you think this process started last week.

You were obviously referencing the most recent round of negotiations by talking about the Flames backfired publicity stunt. Like everyone else bending over backwards and tripping over themselves to paint the Flames as the exclusive bad guys, you ignored the City presser with the launch of the new shiny stadium.

[EldrickOnIce]

Originally Posted by ComixZone

What? I’m not talking about NEXT.

I’m saying that he disingenuously included an arena in his bid for re-election. He has no funding in place, no funding partner in place. It’s the ultimate politician fluff. “Look at this, if I’m re-elected here’s my vision...completely unfunded”.

Sept 11 Nenshi presents to public his grand vision for an arena anchored entertainment district. His mayoral rivals criticized it as electioneering, because of the lack of substance in the 'vision' and the timing of it.

Sept 12 King announces that earlier that morning the Flames have an owners meeting at which they determine they are no longer pursuing an arena deal.

I think it would be unfair to suggest it was the Flames who turned it into an election issue.

[Blarg]

Originally Posted by morgin

The Flames would have to be paying in the neighborhood of 30 Million a year in base rent over a lengthy term and all operating costs to cause any development company to consider that deal I would imagine. Then there’s the issue of whether they are even have enough financial strength as an entity to interest anyone - might need guarantees from the owners for any default if for instance the league shuts down or drastically changes in the next 30 years. It’s an extremely risky development, which is why no one wants to do it.

Wait, why $30 mil+ a year? Let's say the building costs $600 mil to build, that would be a 20% cap rate. That's a little insane for a commercial building. To put into perspective, the Bow cost $1.2 bil to build. 20% for the lease amount would be $240 mil a year. Are Cenovus and Encana really paying that much for office space?

Nevermind, my calculations are bad

[Flames Fan, Ph.D.]

Businessmen who run a tough bargain on behalf of their private business: tough guys who know how to negotiate in the real world.

Civil servants who run a tough bargain on behalf of their constituents: smug egomaniacs.

[nik-]

Originally Posted by Flame On

You were obviously referencing the most recent round of negotiations by talking about the Flames backfired publicity stunt. Like everyone else bending over backwards and tripping over themselves to paint the Flames as the exclusive bad guys, you ignored the City presser with the launch of the new shiny stadium.

No, I actually wasn't. I mean come on, I clearly mentioned CalgaryNEXT several times, that didn't click for you? I'm saying that people here can act like Nenshi is treating the Flames unfairly, but the truth is they started this entire thing off in a truly dickish way. If I had a supposed "partner" who went around my back from the very start to try and tug on public emotion for support, I'd be pretty hesitant to deal with them in a trusting manner.

Again, the Flames are getting the treatment they deserve.

[Roughneck]

Good twitter thread read right here

https://twitter.com/collenbe/status/910966048836521984

[calgaryblood]

Nothing would be more awesome than Nenshi coming out and announcing a private arena deal that the city will run and profit from and do it for way less than $600 million. And then announce they aren't going to renew the Flames lease.

[Tron_fdc]

Originally Posted by Blarg

Wait, why $30 mil+ a year? Let's say the building costs $600 mil to build, that would be a 20% cap rate. That's a little insane for a commercial building.To put into perspective, the Bow cost $1.2 bil to build. 20% for the lease amount would be $240 mil a year. Are Cenovus and Encana really paying that much for office space?

A developer is going to run an NPV on their investment, use the figures the flames want to pay in "rent", laugh and walk away.