Monday afternoon, the City of Edmonton concluded a deal with the Katz Group to purchase three parcels of land for a proposed new downtown arena and entertainment district for a total cost of $74.9 million.
Wait, what the? $74.9 million? Where’d that come from?
The answer, explains the Edmonton Journal’s Paula Simons, is that the original land buy for the arena will now cost $25.9 million, but the city picked up two other adjacent parcels as well for an additional $49 million. These will be used for development around the arena, and Oilers owner Daryl Katz has already promised to buy back one of the site for $33.6 million.
The catch, explains Simons:
Daryl Katz had long pledged to invest $100 million in commercial developments in the arena district.
At last Wednesday’s city council meeting, Coun. Tony Caterina, a staunch opponent of the arena deal, changed his position and voted in favour of the proposal — but only after he successfully amended the city’s agreement with the Katz Group to include a clause that would require the company to invest a minimum of $30 million in those ancillary commercial developments before construction of the arena is to begin. I had rather assumed — perhaps naively — that such a $30-million commitment would involve some kind of visible development, like a hotel or an office block.
Not quite. Moyles said the Katz Groups’s repurchase of the 3.7-acre south parcel would be considered as representing that $30-million investment. … Katz is a tough negotiator — and with this land swap he’s just reduced his capital commitment in the ancillary developments to $70 million. In effect, Caterina’s amendment didn’t make this a better deal for the city — it made it a better deal for Katz.
In any event, the remaining $41.3 million land cost is on top of the $450 million price tag of the arena itself, meaning Edmonton taxpayers are looking at a close to half a billion dollar expense, with the only money supplied by Katz coming in the form of $3.5 million a year in rent (rising to $5.5 million after ten years), parking revenues, user fees and ticket taxes.
It’s still not the worst arena deal in the world — that’d be this one — but it’s definitely getting worse and worse.