Did the OEG con the City of Edmonton?

[SK13]

Thing is Stantec was already downtown.

Dollars will now be allocated from general pool to the CRL - which ultimately have to be covered by taxpayers or a reduction in city services.

The only way the City's property tax revenues (which in turn are used to fund city services) don't suffer is investment into the city / creation of new permanent jobs.

I'm not convinced the new arena district has done anything in that regard.

Question: Do you reside in Edmonton? Do you have any concept of downtown Edmonton at all?

Again: what Stan-Tec is building far dwarfs what they already had, but even if it it didn't, there are a dozen other Katz partners that would not be involved in downtown Edmonton without the Ice District.

We've heard the numbers on the CRL. The City is out from under this in a decade, as of like two years ago.

 

[Jimmi McJenkins]

Thing is Stantec was already downtown.

Dollars will now be allocated from general pool to the CRL - which ultimately have to be covered by taxpayers or a reduction in city services.

The only way the City's property tax revenues (which in turn are used to fund city services) don't suffer is investment into the city / creation of new permanent jobs.

I'm not convinced the new arena district has done anything in that regard.

Then you're probably overlooking/ignoring a lot.

 

[Crusty Quinn]

I was a huge supporter of bringing the Oilers downtown from early on in the process and it was absolutely the right move.

That being said, there's no debating that the OEG took the City to the cleaners in many ways. The OP is just bringing some of these to the light. Not that these issues haven't been raised before, but it's nice to discuss and make abundantly clear how well the OEG made out here.

Of course it's too late to actually do something about it, but I'm not sure discussing PP2 line combinations in the middle of July is any more interesting than this.

 

[CantHaveTkachev]

Still laughing at the "Confirmed with Link" prefix used in the title. Like it adds some legitimacy to the thread.

articles from 4 years ago too

 

[Neatman]

It's Katz's job to make money on business deals. If they conned the City of Edmonton, it's the city's fault for voting in incompetent leadership. At least it seems like Edmontonians are appreciating the new facility and the improvement of the city's image.

I'm more interested in whether or not Mandel benefited financially from the deal, via sale of land he owned or any other means. That would be far more disturbing to me.

 

[Speed220DChalavan]

Then you're probably overlooking/ignoring a lot.

Please cite example of the new job creation (permanent, not construction) the new arena district has directly contributed towards?

New companies from out of the city settling in downtown Edmonton?

You are aware Edmonton's office vacancy is at near all-time highs and an large influx of space is coming in with the completion of Stantec Tower in 2018?

 

[Marc08]

With public declarations (Las Vegas owner) that the Oilers are a top 5 revenue team in the NHL, it’s vital we step back and reflect how they got there. Did the OEG con the city of Edmonton taxpayers for largely a private venture? Was the public (including myself) too ingrained with the Oilers that the details and fine print was overlooked? Did the ‘rah rah rah’ David Staples’ of the world help mold an inaccurate view in quest to be “world class�

Here is the agreement and a few resources

https://www.edmonton.ca/projects_plans/rogers_place/the-agreement.aspx

http://edmontonjournal.com/news/local-news/the-oilers-the-arena-city-council-and-you

http://www.edmontonjournal.com/Simons+Arena+funding+puts+hook/11041912/story.html

https://www.theglobeandmail.com/spo...town-home-of-edmonton-oilers/article15739948/

http://www.cbc.ca/news/canada/edmon...arena-naming-rights-says-councillor-1.1392959

- Katz gobbled up real estate in the arena district area and that North of it prior to contruction. The property values shoot up as a result of this project and surrounding development.

- Katz cash contribution towards the project upfront was a mere 19.7M

- The initial $112.8M of contribution is in the form of rent over 35 years [imagine that, paying for rent]. The initially promised $100M by Katz never transpired.

- The Community rink – bait and switch and is now bare bones from initial renderings.

- City conceded naming rights of the arena to the OEG. These have significant value. In the Skyreach Centre days, they were worth at least $1M IIRC.

- Quietly and separately from the arena agreement:



- Discussions surrounding the City of Edmonton tower aren’t fully public, but that contract too was awarded to the Katz Group.

- Taxpayers bear all the risk if the CRL revenues cannot cover annual payments.

- Strong economic cases and studies there really isn’t any new property tax revenues or new investment – merely a redistribution from one area of the city to another. Commercial and residential property taxes that went to the City of Edmonton are now in effect, partially subsidizing/funding the new arena. There is also risk with the oversupply of commercial/residential properties in the arena district you are lowering the value of properties in other areas of the city/downtown (and subsequently property taxes to the general pool).

To be fair, the city did gain something - a more vibrant downtown, inspiring confidence and enhancing the image of the City. Potential human capital benefits over the long run.

Having that said, this was a deal performed/brokered by people with vested interests. You and I, and all of Edmonton taxpayers ultimately paid for it and have directly contributed to the wealth of a private citizen. This isn’t necessary an indictment against the Katz group – this is a common theme in North America. It is however, something the public should be cognizant of, question thoroughly, and don’t get lead astray irrespective of how many articles David Staples pumps to the contrary.

Theoretically? Yes
Practically? No

 

[Speed220DChalavan]

http://www.collierscanada.com/en/co...ton-office-market-report-q1-2017#.WW-falGQxtQ

And this is before a massive influx in Stantec Tower comes online.

So no, a new arena doesn't directly create long-term permanent jobs.

The first quarter of 2017 reflected the ongoing story for the Edmonton office market, marking the market's ninth consecutive quarter of negative absorption. While vacancy decreased very slightly in the previous quarter due to the conversion of Macdonald Estates, overall vacancy rates began to increase again, rising from 17.22% to 17.53%. This rise in vacancy resulted from the 110,762 square feet of negative absorption the city experienced as a whole.

While there were a number of tenants that either downsized or vacated the Downtown market over Q1 2017, a large reason for Downtown Edmonton’s rise in vacancy rates from 16.76% to 18.14% was the relocation of the provincial government from the Centre West Building in the Government District to the J. G. O’Donoghue Building located in the Neil Crawford Centre.

Despite greater and more creative tenant inducements including large improvement/turnkey allowances; long early occupancy periods free of gross rent and basic free rent; and even temporary reductions in parking rates, attracting new tenants has become increasingly difficult for landlords across the city.

 

[ManofSteel55]

http://www.collierscanada.com/en/co...ton-office-market-report-q1-2017#.WW-falGQxtQ

And this is before a massive influx in Stantec Tower comes online.

So no, a new arena doesn't directly create long-term permanent jobs.

I'm sure the guys working those temporary construction jobs don't care if the arena doesn't add long-term jobs. And the arena construction could lead to further development and more construction jobs.

Also, if you are expecting the arena to do much "directly", you will be disappointed because you have to look at what it contributes to indirectly as well.

That said, I don't live in Edmonton, so I have no horse in this race - I'm just glad the Oilers have a new barn.

 

[Cawz]

So no, a new arena doesn't directly create long-term permanent jobs.

Do you have anything to back up this statement?

This is a rhetorical question by the way, since the arena hasnt been there for long enough to conclude anything, but if youre going to speak in absolutes, expect to be called out on it.

 

[Speed220DChalavan]

I'm sure the guys working those temporary construction jobs don't care if the arena doesn't add long-term jobs. And the arena construction could lead to further development and more construction jobs.

Also, if you are expecting the arena to do much "directly", you will be disappointed because you have to look at what it contributes to indirectly as well.

That said, I don't live in Edmonton, so I have no horse in this race - I'm just glad the Oilers have a new barn.

Opportunity cost. The dollars the City allocated towards this new arena could for example, been allocated towards construction projects that would benefit the public on a larger scale (LRT, Rec Centres, Yellowhead, etc.) and created the same indirect jobs you speak of.

I don't disagree Edmonton needed a new arena, and downtown was an ideal place for it. The City officials however brokered a deal that is undoubtedly one sided for the private investor. The taxpayers got taken to the cleaners.

 

[Cawz]

- Strong economic cases and studies there really isn’t any new property tax revenues or new investment – merely a redistribution from one area of the city to another. Commercial and residential property taxes that went to the City of Edmonton are now in effect, partially subsidizing/funding the new arena. There is also risk with the oversupply of commercial/residential properties in the arena district you are lowering the value of properties in other areas of the city/downtown (and subsequently property taxes to the general pool).

Do you have any examples of these strong cases?

Heres something for you to consider:

https://renx.ca/mixed-use-development-edmonton-brewery-district/

"Huizinga says the high percentage of restaurants in the development are partly supported by the high density neighbourhoods bordering the district, but also by its proximity to the Ice District and the Arena – about 15 blocks to the east. That means the area should develop into a pre-stop for consumers heading to arena events, particularly since there will be a stop in the middle of the district on the western leg of the Edmonton’s Light Rail Transit western line when it is eventually built."

 

[Speed220DChalavan]

Do you have anything to back up this statement?

This is a rhetorical question by the way, since the arena hasnt been there for long enough to conclude anything, but if youre going to speak in absolutes, expect to be called out on it.

There have been decades of studies on this.

http://archive.jsonline.com/news/mi...99505176z1-305579531.html/?subscriber_login=y

http://news.stanford.edu/2015/07/30/stadium-economics-noll-073015/

https://www.brookings.edu/articles/sports-jobs-taxes-are-new-stadiums-worth-the-cost/

Many others by Brad Humpreys, one of the leading edge sports economists.

Edmonton won't be any different.

Natural resources like oil and gas, not new arenas, lead to economic development.

In fact, the near 18% office vacancy only substantiates this.

 

[Crusty Quinn]

It's Katz's job to make money on business deals. If they conned the City of Edmonton, it's the city's fault for voting in incompetent leadership. At least it seems like Edmontonians are appreciating the new facility and the improvement of the city's image.

I'm more interested in whether or not Mandel benefited financially from the deal, via sale of land he owned or any other means. That would be far more disturbing to me.

I feel like this is an important point. The OEG tried to get the best deal for themselves and they did it. The City obviously should have done better.

However, while there was definitely some opposition to the deal, most of the public supported it without understanding the full details. I doubt there would have been much support for the Council/Mayor if they couldn't come to an agreement.

As for whether they "conned" the City of Edmonton (Gov't). No, the City knew what the deal was and what the risks were (although the major risk, the CRL, turned out fine).

Did they "con" the people? Not really. I mean Katz promised $100M, which they are providing albeit over 35 years (assuming the City floated the construction/debt servicing costs here).

The only real "con" the OEG pulled was the trip to Seattle to pretend like they were considering moving the team. I wouldn't consider this a con either though because it was very transparent, the backlash was bad, and they ended up apologizing soon after. I mean, Seattle wouldn't have been able to pull anything near top 5 in revenue.

 

[Paralyzer]

Did someone tell you to sit back in your seat or something? I don't know why this is a concern...we got a revitalized downtown out of this and we are finally going to get the respect from other cities for having a very beautiful downtown. So what's the issue?

 

[Gord]

It's not fully politics. It's a relevant issue concerning both the team (current owner) and the City.

I thought HF was mature enough to discuss pressing issues like these.

only the fact it's been discussed to death many times over.
why rehash it yet again?

 

[Paralyzer]

only the fact it's been discussed to death many times over.
why rehash it yet again?

Because McDavid vs Matthews polls are so last week?

 

[iCanada]

Conned maybe isn't the right word. They certainly got a sweetheart deal though.

 

[Cawz]

Opportunity cost. The dollars the City allocated towards this new arena could for example, been allocated towards construction projects that would benefit the public on a larger scale (LRT, Rec Centres, Yellowhead, etc.) and created the same indirect jobs you speak of.

I don't disagree Edmonton needed a new arena, and downtown was an ideal place for it. The City officials however brokered a deal that is undoubtedly one sided for the private investor. The taxpayers got taken to the cleaners.

But what you seem to be disregarding is that money was going to be spent regardless, unless you think continuing to play in the oldest arena in the league with no money poured into it was an option.

You are comparing reality to an unrealistic option, instead of comparing reality to what would have needed to be done as plan B, which the owner (justifiably so) was not on board with. The old arena was a junk pile in the hood. If I owned the team, no way would I want to keep it there.

So Katz was going to invest money in the city, but needed to make it worth his while. What did you see as plan B if the city told Katz to take a hike?

 

[Mr Positive]

I'm not against agreeing with this premise, but I don't know what is normal for teams and cities when it comes to arenas. I don't buy for a second that we are in similar position as Toronto for example, where of course they can privately fund that all the way.

I'd wonder what goes into that revenue that Vegas was talking about. If it is just season tickets as of now, then that could be a sliver of the total picture. I know a Forbes valuation of franchises in 2016, we were 14th in valuations, and our team's income was a fraction of the big boys at the top.

 

[Cawz]

There have been decades of studies on this.

http://archive.jsonline.com/news/mi...99505176z1-305579531.html/?subscriber_login=y

http://news.stanford.edu/2015/07/30/stadium-economics-noll-073015/

https://www.brookings.edu/articles/sports-jobs-taxes-are-new-stadiums-worth-the-cost/

Many others by Brad Humpreys, one of the leading edge sports economists.

Edmonton won't be any different.

Natural resources like oil and gas, not new arenas, lead to economic development.

In fact, the near 18% office vacancy only substantiates this.

Thanks, I'll take a look when I have some time and see if those articles are legit, or as bad as the articles that say arenas arent worth investment that have been debunked on the Business board. Hopefully its not another of those articles that say people who go to hockey games go to the museum less, or other nonsense like that.

 

[McGoMcD]

- Strong economic cases and studies there really isn’t any new property tax revenues or new investment – merely a redistribution from one area of the city to another. Commercial and residential property taxes that went to the City of Edmonton are now in effect, partially subsidizing/funding the new arena. There is also risk with the oversupply of commercial/residential properties in the arena district you are lowering the value of properties in other areas of the city/downtown (and subsequently property taxes to the general pool).

.

The thing is this never happens. It is one of the subtle things that people miss over and over. It happens constantly. People think if they allow development it will lower the value of existing developments. However, for things like downtown cores the exact opposite is true. It is kind of like how car dealers like to actually locate next to other car dealers. you get a positive feedback from being close to others. Having many people living downtown creates more businesses and density that further attracts more poeple. Just think of New York or Hong Kong, there are insanely crowded yet the real-estate is through the roof. According to this logic the extra development would lower value, but it doesn't. The city was stuck in a bad rut where it ignored downtown for far too long. Did Katz get a great deal, yes. But it was something that needed to be done. Katz had a vision for a better downtown for every one. I give him credit for getting it done. The reality is it was as win win deal. Was it a little more win for Katz than tax payers, yes!!! but I think we are missing the bigger picture when you start to think that way.

 

[Speed220DChalavan]

But what you seem to be disregarding is that money was going to be spent regardless, unless you think continuing to play in the oldest arena in the league with no money poured into it was an option.

You are comparing reality to an unrealistic option, instead of comparing reality to what would have needed to be done as plan B, which the owner (justifiably so) was not on board with. The old arena was a junk pile in the hood. If I owned the team, no way would I want to keep it there.

So Katz was going to invest money in the city, but needed to make it worth his while. What did you see as plan B if the city told Katz to take a hike?

Nenshi in Calgary is playing hardball for many of the reasons expressed in the original post.

http://www.660news.com/2017/06/07/brian-burke-slams-city-calgarynext-nenshi-calls-part-script/

“How many people know that the City of Edmonton actually pays money to the Oilers every year, millions of dollars every year to be sponsor of the Oilers?†he said. “That was part of the deal, we’re not doing anything like that.â€

Edmonton didn't really negotiate. No upfront contribution from Katz, separate marketing agreement, bait and switch on community rink, development on Katz real estate properties, side deal for new City of Edmonton tower.

Basically took all the risk and no financial reward.

 

[Paralyzer]

Nenshi in Calgary is playing hardball for many of the reasons expressed in the original post.

http://www.660news.com/2017/06/07/brian-burke-slams-city-calgarynext-nenshi-calls-part-script/



Edmonton didn't really negotiate. No upfront contribution from Katz, separate marketing agreement, bait and switch on community rink, development on Katz real estate properties, side deal for new City of Edmonton tower.

Basically took all the risk and no financial reward.

So what would you have suggested, oh mighty enlightened one?

 

[Cawz]

Nenshi in Calgary is playing hardball for many of the reasons expressed in the original post.

http://www.660news.com/2017/06/07/brian-burke-slams-city-calgarynext-nenshi-calls-part-script/



Edmonton didn't really negotiate. No upfront contribution from Katz, separate marketing agreement, bait and switch on community rink, development on Katz real estate properties, side deal for new City of Edmonton tower.

Basically took all the risk and no financial reward.

Yeah, thats his job - to be a mouthpiece. He's not actually the one who plays hardball. Same as Burke. Two blowhards who love to talk, when the real negotiations are going on behind the scenes.

The thing is that Edmonton needed more work that Calgary does. The Saddledome is already in a great part of town and redev is already taking place in the area.