A few more details on the City of Calgary’s $1.2 billion deal for a new downtown arena as well as infrastructure in its culture and entertainment district emerged Monday.
A city council committee heard that the city will not impose a tax on tickets sold for events in the new arena and that the owners of the NHL’s Calgary Flames will control the naming rights for the publicly owned building.
Previously, the city had said those matters were subject to ongoing negotiations.
As well, the city will front nearly the entire cost of the $800 million arena with cash on hand.
It expects to recover most of that money from the Calgary Sports and Entertainment Corporation (CSEC), which owns the Flames and other sports teams that will use the arena.
CSEC has agreed to an upfront payment of $40 million for the building. It will then make annual payments of $17 million to the city for 35 years. Those payments will include a one per cent escalation clause for each year of the deal, which is estimated to bring the city over $708 million.
The Flames will be the anchor tenant for 35 years, and CSEC will operate the building as well as control all revenues.
The city also announced that in the event of cost overruns, CSEC and the City of Calgary will share equally the cost of any extra expenditures.
Coun. Andre Chabot, who calls himself a fiscal hawk, explained why he supports the arena deal.
“Obviously, I don’t think that everybody got everything they wanted, but I think it’s as reasonable a compromise as we could have hoped for, and I do believe it will be very beneficial to the city as well as to the community in the long run,” said Chabot, who represents Ward 10.
He said besides the payments from CSEC, the city plans to sell five land parcels in Victoria Park for future developments.
Those sales would generate additional revenue for the city as well as future property taxes. He expects the arena project will enhance the value of that land.
The city will give CSEC the right to make the first offer to buy those land parcels. If it doesn’t wish to pursue them, the city land will be sold on the open market.
Stuart Dalgleish, the city’s general manager for planning and development services, said the new arena alone won’t solve all of Calgary’s problems nor make it a success as a vibrant, amenity rich place to attract people.
He said the arena is a significant, complementary component of the city’s numerous investments aimed at revitalizing Calgary.
“I firmly believe a decade from now we will celebrate the transformative and positive impact the event centre and culture and entertainment district improvements have had on Calgary, our downtown and all Calgarians.”
“This is good city planning. This is good city building.”
The chair of the committee, Coun. Sonya Sharp, said the arena and entertainment district will contribute to the quality of life in the city while guaranteeing the NHL’s Flames remain in Calgary for 35 more years.
“Success for government — like the City of Calgary — isn’t about turning a profit. Success for every single service the city offers is about benefit to Calgarians,” said Sharp.
“Who doesn’t want their hockey team to stay in the city for the next 35 years?”
Negotiations to finalize the arena agreements are continuing and aren’t expected to be made public until later this year.
Sharp, who represents Ward 1, said no timeline has been set for construction.
The city said that on Tuesday it would put out its request for proposals from companies interested in acting as the development manager for the arena project.
In August, the provincial government is expected to give formal approval for its $330 million contribution for infrastructure improvements in the entertainment district.
Those improvements include a new underpass along Sixth Street S.E. to connect the district with the East Village, public realm projects as well as covering half the cost of a community rink connected to the new arena.