News / Calgary

Calgary arena deal scuttled over tax exemption, recouping city investment: Sources

Calgary Sports and Entertainment CEO Ken King said meetings with the city have been unproductive

There were two primary sticking points in a collapsed deal for a new Calgary arena to replace the aging Saddledome.

Metro file photo

There were two primary sticking points in a collapsed deal for a new Calgary arena to replace the aging Saddledome.

Property tax exemption and how the city could recoup its investment were the main sticking points in an estimated $500 million Calgary arena deal that collapsed Tuesday, Metro has learned.

Calgary Sports and Entertainment Corporation (CSEC) president and CEO Ken King announced yesterday they would no longer be pursuing an arena deal in Calgary, saying that months of meetings were “spectacularly un-productive.”

"It doesn't look like we're going to get there and I think it's time that we stop pretending," King told reporters Tuesday.

Councillors voted 8-4 Wednesday to release information about the arena. They, along with seniors members of the city administration were behind closed doors for much of the morning debating whether to release the information publicly.

"The city has a very fair offer on the table, one that many Calgarians, most Calgarians, will see as eminently reasonable and there's another offer on the table that many Calgarians will see is eminently unreasonable," Nenshi told reporters.

"I'll have the opportunity to share some details of those thanks to the vote that was just taken in the upcoming days."

Sources had told Metro the latest deal on the table involved a 1/3, 1/3, 1/3 model, where the City of Calgary would provide 1/3 of the upfront cost for the new arena, 1/3 would be recouped through a ticket surcharge and 1/3 would come from the Calgary Flames ownership.

The mayor confirmed that this model is "part of the deal" but he thinks it's important to see more of the details behind what was on offer.

Early cost estimates for a new arena were $500 million, but those familiar with the situation said some city officials believed the final tab would be higher - in the range of $600 million.

Where talks broke down, according to sources, was in how the city might recoup its initial investment, either through property taxes or some type of revenue arrangement, over the next 30 years.

CSEC was apparently looking for property tax exemption and balked at models for the city to recoup its upfront investment.

Calgary Sports and Entertainment Corporation said Wednesday that Ken King would not be available for comment on the latest developments on the arena.

Mayor Naheed Nenshi, who rolled out his redevelopment vision for the Rivers District earlier this week – which included a potential new arena – didn’t provide comment late Tuesday after a marathon council meeting.

"I heard on the radio this morning, Mr. King saying how could this have anything to do whatsoever with the fact that there's an election coming, or with the fact that there's a deal for a fully private financed arena in Seattle," said Nenshi. "I'll just have to take him at his word."

Mayoral candidate Bill Smith told reporters prior to a campaign engagement near the Saddledome Wednesday that since specifics of the agreement aren't publicly known, he wouldn't comment, but believed an arena deal is in the best interest of the city.

"What I can tell you is that as a Calgarian I believe an arena is a good idea for the city, I believe the Flames are an important part of this community," he said.

"However, I've said from day one that the deal has to make sense for Calgarians."

Smith took the opportunity to point out he believes the collapse of this deal shows a lack of integrity on the part of the current mayor.

"I think that's the biggest election issue we've got," Smith said.

When asked to comment on the current deal that's being reported, Smith said more information was needed before responding. Reporters also pushed Smith on his own arena proposal, and the response from Smith was that $600 million seems like a lot for an arena.

In comparison, Edmonton's arena came in around $615 million.

"If the mayor says he's going to negotiate, that would be the first time, because he clearly hasn't negotiated to date," said Smith.

"There's a disconnect between the words we hear from him and the actual facts."

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