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Council votes to re-open Arena Project negotiations

by Ryan Frankson / Edmonton Oilers

EDMONTON, AB – Edmonton City Council voted Wednesday to re-open negotiations with the Katz Group on the downtown arena, breathing new life into the project.

"Our aim today was to restart negotiations with the City of Edmonton, and we're very pleased the vast majority of City Councillors feel the same way," Katz Group Executive Vice President John Karvellas said following the vote.

"We look forward to restarting negotiations with the view to being able to reach an agreement at, hopefully, a very early date to proceed with construction of a new arena and integral surrounding development in downtown Edmonton."

"I represent a couple million Oilers fans across Canada who are very interested in how the Oilers sustainability model is progressing," added Oilers President and COO Patrick LaForge. "For them, and for us in the administration and management group, this is a really exciting day."

Council opened discussions by voting in favour of hearing from the Katz Group, whose speaking representatives included Karvellas, LaForge and Michael Shugarman of Shugarman Architecture and Design, which is the firm responsible for the schematic design of the Arena District.

Karvellas led the presentation and was the first to address Council, asserting the Katz Group "does not want the arena project to die" and suggested to council, in the form of a written document, they make a motion to resume Arena Project negotiations. The talks were to be based on the original framework approved by Council on October 26, 2011.

Karvellas also announced the Katz Group has rescinded its request for an operating subsidy, which caused the negotiations to break off in October. Under an alternative proposal, the City would create an Arena Reserve Fund that would be available to be drawn on over the course of the Katz Group’s 35-year lease to maintain, repair, improve and enhance the arena and its operations. It would be funded with a portion of the taxes over and above what the City expects to recoup with the Community Revitilization Levy. The Fund was not inclyded in Wednesday's motion, as its mechanics will need to be discussed and reviewed with City Administration, and will be subject to approval by City Council.

Shugarman provided Council with an update on the Arena District's schematic design — which is now complete — including new images, and said the project is "ready to build." LaForge then gave a brief recap of the team's ownership transition over the past 15 years, addressed the sustainability of the hockey club and discussed logistics behind operating a NHL facility.

After questioning the Katz group representatives following the three-speaker presentation, and then proceeding with discussion amongst themselves and with city administration, Mayor Stephen Mandel and the rest of council voted 11-2 in favour (Councillor Linda Sloan and Councillor Kerry Diotte were opposed) of the motion to re-open negotiations.

As part of the motion, Council directed City Administration to work with the Katz Group to appoint a mediator, who will then propose a financial analyst to evaluate the Katz Group’s financial analysis for the proposed arena, and work with the City and the Katz Group to evaluate other non-financial issues.

"I think there's still a long road to hoe and the biggest issue is the financial issue … to me, that's fundamental," Mayor Stephen Mandel said. “We need to come to an agreement on that before we can come to a deal. All parties are now in a position to get some things done.”

Council also voted to extend the deadline of the Land Inventory Agreement to April 30, 2013. The agreement, which sets out all of the arrangements for the land transactions contemplated between the City and the Katz Group, was set to expire December 31, 2012, and an extension allows those arrangements to remain in place as negotiations continue.

City Administration will continue to work on a report previously requested by Council that explores other options to sustain NHL hockey in Edmonton. Administration will present those funding and design options to Council on January 23, 2013.

Despite his trepidation regarding the project's financial issues, Mayor Mandel further cemented his support for the project and praised the Katz Group for attending today's discussions.

"It's encouraging that the Katz Group came (to address Council today)," Mandel said. "It shows their passion for this and their commitment to have it done. The Oilers are Edmonton's hockey team and hopefully we can come up with a deal that is beneficial to Edmontonians, as well as the Katz Group."

Karvellas agreed Wednesday's discussions and ensuing motion went along way towards re-establishing a high level of respect and a positive working relationship between the Katz Group and the City of Edmonton.

"We want to express our appreciation to the Mayor and to City Council," Karvellas said. "Number one, for opening their door for us to speak to them. It was hugely important for us to be able to do that and not let this great project drift away. Secondly, I want to thank them for the respectful manner in which the majority of councillors dealt with us today."

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