The Calgary Flames proposed their hometown pay $225-million toward the cost of a new arena while the NHL club's owners contribute $275-million upfront, according to documents the sports organization released on Thursday as it duels with the city through news releases and pie charts.
The Flames' owner took out ads in local newspapers and distributed a statement Thursday outlining plans for a new multimillion-dollar arena in Calgary's downtown east end, near the existing Scotiabank Saddledome. The Flames and the city have, over the past 10 days, taken turns publicly promoting their respective proposals after closed-door negotiations stalled earlier this summer. Indeed, the city countered the Flames' morning slide show with an evening statement challenging the club's assertion that it is, indeed, chipping in $275-million.
Calgary Sports and Entertainment Corp., which owns the Flames and other professional sports teams, and local politicians do not even agree on how much an arena will cost, let alone who should pay for it.
Calgarians go to the polls next month, and the proposed arena is now an election issue, particularly as politicians spar over how to manage the city's finances in Alberta's extended financial slump. The city believes a new facility will cost $555-million; the Flames reckon it can be done for $500-million. Neither side has released design concepts, although the Flames' documents noted the proposed arena would seat about 18,000 people for hockey games and roughly 20,000 for concerts.
"In a 'small-market' city, even one with an NHL team, a privately funded arena is not economically viable," the Flames said in a news release. "The city's proposal is just not workable (or even for that matter, 'fair', based on other arena deals in comparable cities)."
The Flames proposed that Calgary chip in $225-million using a financing mechanism known as a community-revitalization levy (CRL). The Flames said their $275-million share is "similar to prepayment of rent for 35 years of tenancy." The Flames did not provide further details on their slice.
Calgary took issue with the Flames' description of the club's $275-million contribution. The city, in its rebuttal statement, said the Flames suggested their $275-million slice come three sources: $100-million in cash, $150-million from a ticket surcharge that the city would finance and an additional $25-million "the source of which was not clarified." The Flames' proposal, according to the city, does not account for $30-million price tag on land.
The city also attacked the Flames' CRL suggestion. Cities use these types of long-term funding arrangements to spark development and attract private investment in areas private investors consider unattractive. Essentially, municipalities designate an area for improvement then borrow money to build infrastructure, such as roads, sidewalks, streetlights, libraries and other amenities to make it more livable. This, in theory, spurs business and residential development, creating economic activity that otherwise may not exist. Then, property owners within the CRL boundaries pay the same amount of tax they usually would, except those funds are earmarked to pay back the money spent on infrastructure inside the designated zone. Once the CRL time limit expires, the property taxes are directed into the city's coffers.
A CRL already blankets the area where the proposed Victoria Park arena would go. The levy was introduced about 10 years ago and another decade remains on the agreement. The projected revenue from the existing CRL is not enough to finance a new arena, Calgary said in its statement. Calgary needs the provincial government to approve or extend CRL deals. Alberta also foregoes revenue under CRL agreements.
Calgary released its arena proposal last week after the Flames publicly said the club was no longer negotiating for a new facility. Calgary's pitch included the equivalent of $185-million from the city, another $185-million from the club, and the final $185-million from a ticket tax spanning 35 years and financed by the Flames. The city's contribution consists of $130-million in cash, $30-million in land and $25-million to maintain – but ultimately demolish – the Saddledome.
Under the city's arrangement, the Flames would pay property tax if the club owned the arena or rent if city held the title, Calgary noted Thursday. Under the Flames' proposal, the club's owners would pay neither rent nor property taxes, according to the city's interpretation. A spokesperson for the Flames did not return an e-mail seeking comment.
Ken King, the president of the organization that owns the Flames, is scheduled to address Calgary's business community at a luncheon next Monday. King last week said Calgary Sports and Entertainment would soon release design plans.