Edmonton’s Arena Will Likely Happen, But Would it be a Bad Thing if it Didn’t?

Edmonton Arena District Open House

The proposed downtown Edmonton hockey arena took a hit today. City Council discussed the matter in private, and its motion ex-camera reveals that Oilers owner Daryl Katz asked for more public funding. It’s unknown at this point whether that would have come in the form of an increase to the $450 million budget, a decrease of his $100 million contribution over 30 years, or both.
David Staples has details on the requested changes.

In any case, this is a setback to getting the project, which has dominated discourse about how to revitalize Edmonton for six years (except for the Expo 2017 diversion), completed. I still think it will go ahead. The money will be found either from the province (likely at the expense of other public works for Edmonton), a reduction in the overall budget (perhaps combined with a commensurate increase in ticket taxes or city contribution), or through some additional surcharge or levy should the proposed City Charter give Edmonton the authority to do so. If nothing else, should Calgary move ahead with plans for a new arena, I can envision enough combined pressure from the two municipalities to forge a deal for provincial support. So, while today’s news is a setback for arena advocates, it remains to be seen whether this affects timelines by six weeks, six months, or six years.

All of the above is irrespective of whether or not the arena would actually be a good move. I’m with the economists, who agree that there’s no net economic benefit. I worry about the inherent risks that The Atlantic and many others have written about. And I’m with Jane Jacobs on the idea that mega projects are not the way to revitalize neighborhoods. If one is to be built, it shouldn’t be done so under the auspices of revitalization.

Future Development
“Future Development” near Nationals Park in Washington, taken four years after the project broke ground.

Anyway, back to the present. Nearly six years after the idea was first raised, it’s never been less than $100 million short in funding, and is an unknown amount more at the moment.

What I will continue to give the arena credit for is boosting investor confidence in downtown, but this could be achieved in many ways. As for the economic claims, the next major boosts to downtown’s employment are likely come either from further growth in the energy sector (which will happen whether the arena is downtown, at Northlands, or in Spruce Grove) or from new companies and emerging industries being incubated at places like Startup Edmonton. Further increases in services and amenities are best supported by getting more people to live in the area, rather than visiting on occasion.

Finally, for all the talk about it being necessary for Edmonton’s quality of life, let’s remember that the initial exploratory phase came out of discussions between the City, the Oilers, and Northlands, not a citizens’ push. If it was essential, one might wonder why it didn’t come up in the early stages of the downtown plan’s development, or that the Next Gen report and initiative, launched in 2006, didn’t flag it as a key concern. While the report isn’t online, my recollection is that the cities it looked at as case studies were college towns like Austin, Texas and Madison, Wisconsin – neither of which has a franchise in the big four sports leagues – as well as Phoenix, Arizona, whose hockey team in suburban Glendale…um…probably isn’t the example arena proponents want to use.

So, if the project got delayed, downtown would see its investor confidence shaken in the short term, but creative organizations and entrepreneurs would find a way to forge ahead. And as I said on Twitter, imagine if key decision-makers devoted even a fraction of their efforts that have gone into this project into supporting small-scale ventures that could yield big results (I put forward some ideas here).

The City Centre Market, small-scale revitalization that works.

Finally, remember these two things. Edmonton has often suffered when it’s chased after the latest trend, and some of the best things Edmonton has to offer came about because of decisions that bucked prevailing trends. A few examples in each.

Where Edmonton Has Failed in Chasing the Latest Trend

– By embracing the trendy shopping power centres of the late 1990s and 2000s (while other cities were moving to more compact developments), the city accelerated it’s decentralization and car-orientation at a period of significant growth. It took years and several iterations of these developments to start to see even some elements of mixed-use incorporated.
– In its zeal to embrace latest trends, much of its built history has been erased. It happened to the Edwardian buildings that first dotted its city centre, and now its happening to post-war Modernist gems, which will probably be fashionable again and missed by the next generation. Just one example of the former. The Greyhound depot on 103 St, slated to be replaced in the arena district development, itself replaced a 1920s 8-storey warehouse 30 years ago. The demolished Marshall Wells building, of which Edmonton lost many contemporaries, is precisely the type of space that is coveted in Edmonton (think a larger Mercer Building), and has contributed to urban revitalization across Canada and the United States.
– No discussion about massive downtown Edmonton redevelopment projects would be complete without this story on the history of the Eaton Centre development.

Where Edmonton has Succeeded by Bucking the trend
– It is a global leader in waste management, having embraced curbside recycling and other measures years – if not decades – ahead of many similar municipalities.
– It’s Light Rail Transit (LRT) system is still advanced compared to many similarly-sized cities, in large part because it had the foresight to embrace the technology in the early 1970s, decades before others. It was the first metro of less than 1,000,000 residents to build a line.
– Finally, and most importantly, let’s remember how close Edmonton came to embracing the rampant freeway trend of the 1950s and ’60s. Had the Metropolitan Edmonton Transportation Study been implemented, it would have paved over much of its treasured River Valley, including MacKinnon and Mill Creek Ravines.

As I said at the outset, I still believe the arena will go ahead. But with the evidence and history at our disposal, are we sure it would be a bad thing if it didn’t?


11 Responses

  1. while I agree wholeheartedly with the idea of small-scale development and not chasing trends I want to point out that the economists you cite are associated with the CATO institute which is a hard-line libertarian (some would say anti-government) organization – most of their research is so biased it is useless. There is a report from the Boston Business Journal which gives a more realistic (in my estimation) view of the situation (assuming that no new arena = no NHL hockey in Edmonton) http://www.bizjournals.com/boston/blog/bottom_line/2012/09/boston-bruins-nhl-lockout.html?page=all.

    While I think Edmonton was getting a bit of a raw deal at the outset I had faith that in the long term the conditions would become more favourable to the city as the project matures (the city still has the right to adjust tax rates on the facility, charge the operators additional fees, etc…) and it becomes impossible for the developer to change or move the facility the further along the project goes. Now I’m thinking that the Katz group is hedging in anticipation of future developments in regards to the arena, but then again in-camera discussions only benefit the developer and city council and show disdain for the citizens expected to pick up the difference.

    • Regardless of any associations, Brad Humphries and company seem to have a pretty good argument, and near consensus in their discipline.

      • I seriously question the study cited – the summary indicates that it cherrypicks and does not seem to take into account that the macro economy over the study period also contracted (they should provide relative measures, not absolutes). They also present a few logically inconsistent conclusions and ‘weasely’ wording (including introducing conclusions not explicitly supported by the evidence). They also fail to provide their data sets and measures (unless I simply can’t find them here: http://www.cato.org/pubs/regulation/regv23n2/coates.pdf).

        I’m no more convinced by CATO as I am by Katz, but I do know that “…arenas with big-time tenants may bolster a city’s self-image and quality of life…” even if the economic benefit is dubious. It’s not always dollars and cents (as evidenced by museums, art galleries, symphonies, etc…) which matter to the population.

      • I have no opposition (and often support) facilities like the ones you cited at the end of your comment. As I inferred in my post, it’s the auspices of revitalization and economic benefit that is my biggest issue. Nobody claimed that the new Art Gallery of Alberta would revitalize Churchill Square. Also, the primary tenants of art galleries, symphony halls, and museums are non-profit organizations. I don’t fault the Katz Group whatsoever for asking for as much benefit as they can get (it’s what smart businesses do), but I don’t think comparing a hockey team that’s a private, for-profit enterprise to large non-profits is apples to apples.

  2. there aren’t a lot of ‘apples to apples’ comparisons out there, (IIRC the AGA was a part of ‘revitalization’ of Churchill Square http://www.youraga.ca/about-us/the-building/building-the-new-vision/, as is the proposed RAM http://www.edmonton.ca/city_government/facts_figures/revitalization.aspx) however just because a NP is the primary user does not offset the tax money spent. AGA, RAM, and an NHL team make Edmonton a better city to live in. I agree that selling this to Edmontonians as money earner for citizens is a complete fabrication (especially given the funding model and ROI for the city) but it bears enough resemblance to other public projects as to warrant some comparison.

    • If you take that line of argument, what benefits is Edmonton getting? To use the AGA as an example, much of the work that was done was in order to increase the capacity to host exhibits. It wasn’t just space, but greater climate control was necessary in order to host certain artifacts. What’s the prompt for a new hockey arena, regardless of funding source? Do the Oilers need more revenue (they do better than most clubs, by all accounts), and if so, for what? They’re spending close to the cap most years, so it’s not to take on more salary. Is Rexall Place obsolete? Are patrons and major events staying away because of the facility? The sellout hockey crowds and major concerts and events that frequent would seem to indicate otherwise.

      On the Boston story, everything in there is not incompatible with what most critics say of the economics. Arenas can move activity around, but they don’t create much new activity. I don’t see how that story argues for arenas as inherently positive. Rather, it’s saying that a disruption in normal use would cause problems for businesses that rely on its tenants and events for a large part of their customer base. Unless you think that people would save their money instead of going out for dinner or drinks on other nights and/or at other places, or that the furniture store wouldn’t spend its promotional budget in other ways, I don’t see how that’s an argument for a new arena. It’s an argument against a lockout, frankly. You’ll see people’s spending priorities shift this fall in Edmonton if there’s an NHL lockout. Some businesses that rely on the Oilers will take a hit, but overall consumer spending will go up in other places.

      • People’s priorities may shift, but the effect of losing an NHL team will have repercussions in the short term which will be detrimental to those least able to bear them such as service staff and low wage workers. Of course that is not a strong argument for a new arena, just one aspect with social ramifications. Many affected individuals cannot simply move to a new job which captures the economic activity lost due to missing hockey for a year (or forever). It is not necessarily up to the city to ensure that they have work, but there is an opportunity to support the hospitality industry in the city, for the benefit of not just those working in it but those who enjoy it as well.

        You touched on something else interesting about Rexall – is it obsolete? I don’t know, but compared to other similar venues it certainly isn’t state of the art. Does that cause Edmonton to lose out on events? that is difficult, if not impossible to truly answer because you cannot prove a negative. The underlying assumption is that we currently do see an economic impact from having AN arena and A hockey team in the city – if we accept that Katz doesn’t care about the city then we must also accept that selling or moving the Oilers is a distinct possibility and altogether that will make Edmonton a less interesting and desirable place for people to live in or visit.

        all that said I Think Katz has the city over a barrel because he has leverage and city does not. I don’t know how to balance that out (or if that is even possible) but without something to bargain with the city has to accept Katz’s position as legitimate and negotiate accordingly.

  3. Agree that Katz still has more leverage, and will probably get something close to what he wants in the end.

    • …and this leaves us vulnerable to the false dichotomy of: a. give Katz what he wants or b. lose the oilers. While neither option is desirable I have to think there exists a middle ground such as the city asking Katz to renovate Rexall and getting him to pick up the operating expenses in exchange for full control of the building on NHL hockey nights and retaining the rest of the nights for use by Northlands.

      in any event thanks for the frank discussion, I really hope the city finds another option because at $100mm this wasn’t a great deal and at anything more than that I believe the city is simply getting taken for a ride.

  4. […] Additional reading: Alex Abboud’s Edmonton’s Arena Will Likely Happen, But Would it be Bad Thing If It Didn’t? […]

  5. […] check out Kathleen Smith’s take, Mack Male’s take, Robin Brownlee’s take, Alex Abboud’s take, and councillor Don Iveson’s […]

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