Friday, 1 June 2012

Edmonton Downtown Arena & The Missing $100 Million

If you build it, the money will come!

Word has it the proposed downtown arena has the green light and the shovel should be hitting the ground before hell freezes over. In all seriously though, the released video and pictures of the new arena look promising and in a few long years the City of Edmonton will be the envy of all municipalities in Alberta. Edmonton will be basking in it's glory of potholes and higher taxes while Calgary, Red Deer and Lethbridge will have fresh asphalt roads and new community centres.

Does this rant sound familiar?

I truly don't understand why people are so afraid of spending money! So what if it means Daryl Katz will collect $200 without passing GO! Or a new building will make Northlands obsolete!

Most people who are opposed to the new arena hate the idea of tax payers money being used to support a hockey team that is owned by a Billionaire. Sure Daryl Katz could build his own rink, but why should he! Any smart business man uses other peoples money to create opportunities for his business, it's called using your brain. Katz orchestrated a sweetheart deal with the city but lets not forget the benefits that will be enjoyed by all Edmontonians and Albertans.

This is a classic case of the rich getting richer, but I have sneaky suspicion that if the Oilers were still owned by the EIG we wouldn't be seeing as much opposition. This idea of a downtown arena is nothing new, before Katz the EIG were researching about building a new barn in the downtown core. For some unknown reason a few people in Edmonton are uncomfortable with a Billionaire residing in this fair city; for me we can't have too many.

It's no secret that there is no love between Katz and Northlands. When the new arena is completed, Northlands will be left in the cold and will have to find new and creative ways to utilize the old barn. Northlands will be without a tenant along with the $35 Million they receive from the city for maintaining the arena. Is Edmonton big enough to sustain two NHL size arena's? I guess we'll find out.

So we know the new arena is going to cost no more than $450 Million. As of today, $350 Million is accounted for but there is a question mark on the remaining $100 Million. From the get go, the city was hoping the provincial and federal government would help with the funding of the new arena. Neither government wants any involvement with any project that benefits wealthy sports philanthropists. Fortunately for the city, the Alberta government has created a loophole that will allow the city provincial funding without political repercussion.

This loophole was created a few years ago known as the MSI. The Municipal Sustainability Initiative was designed to spread provincial money to all municipalities in Alberta. The money is allocated based on population and area of the city. This year, Edmonton will be receiving $167 Million from the MSI fund; based on the last few years, the province has set aside 18% of the MSI for Edmonton.

Now here's the kicker, the city has already budgeted the next few years to use the MSI for projects across the city. The money has already been accounted for, but what hasn't been accounted for is the 56% increase in the fund by 2016.

The provincial government allocated $896 Million across Alberta and have decided to bump the MSI to $1 Billion in 2 years and $1.6 Billion by 2016. Edmonton should continue to receive 18% of the fund and by the time the arena is finished the city will have an extra $150 Million from the MSI.

Mayor Stephen Mandel has already anticipated the increase in the fund and has not designated this money to any future budget. Let's be honest, city council would not have agreed to the framework if they didn't have the $450 Million accounted for. The MSI is the perfect solution for the city and the province where both parties get what they want.

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