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Thin ice: Decision looms on new downtown rink for NHL's Edmonton Oilers

The Hockey News

The Hockey News

EDMONTON - After years of debate, it's down to decision time on whether the Edmonton Oilers should get a new downtown hockey palace. And, if they do, who should pay for it.

The issue transcends table-top hockey.

Get it right and the proposed $400-million rink becomes the transformative force for a cultural and economic renaissance.

Get it wrong and generations of taxpayers pay the price and the core, just springing back to life with condos and storefront shops, is killed in the cradle.

"It's been frustrating. It's been high anxiety," says Patrick LaForge, president of the Oilers.

"We've missed the playoffs four years in a row. We have great loyalty from our fans, but they are tough. They want us to commit to a better future on the ice, and we need a new building. I don't think that's even up for debate."

City councillors are to convene June 28 to officially consider the zoning change required by the Edmonton Arena District, a group run by the Oilers that is looking to kickstart the project.

Time is of the essence.

The Oilers want spades in the ground in 18 months so that the new rink is ready to go when the lease expires in 2014 on their current home, the aging Rexall Place.

Team owner Daryl Katz has 6.4 hectares of land, mostly parking lots, in the downtown ready to go. Conceptual drawings envision a T-shaped complex of office towers, hotels, restaurants, a casino and student residences. At its heart is an 18,000-seat rink linked to surrounding amenities by a sprawling, above-ground bubble-topped "winter garden."

The whole project is valued at $1.5 billion.

"This is a project that will create new demand in the downtown core," says Bob Black, the point man on the project for the umbrella Katz Group.

"I've heard an awful lot of people say that this is just something Edmonton needs. (But) there are a lot of questions about how we're going to pay for it."

Who pays leads straight to Katz, an intriguing, enigmatic figure with a swooping mane of hair and who is at the centre of it all—a man considered as philanthropic as Bruce Wayne and as manically reclusive as Howard Hughes.

At age 48, Katz is a billionaire twice over, the epitome of local boy makes good. He started out as a lawyer and made his fortune in the pharmacy retail business. Rexall drugstores are the crown jewel in a chain of stores that spans the continent.

He, his wife and children live in a $20-million mansion—with 11 bathrooms and two swimming pools—on a bluff overlooking the winding curves of the North Saskatchewan River, which bisects the city.

His largesse is legendary. He has donated millions of dollars to the children's hospital, the art gallery, heart research and care, civic events and programs at his University of Alberta alma mater.

Two years ago, he bought the Oilers for $200 million, and immediately took up the drumbeats of previous ownership to build a new downtown home for the Oilers. Katz promised to put up $100 million of his own cash for it.

However, his public comments and appearances are close to non-existent. He speaks through executives such as Black, in letters to the editor, or via in-house webcasts of faux-interviews with hand-picked employees.

Critics, including columnists and some local letter writers, suggest he is attempting to pull off a cynical master-stroke of corporate sleight of hand: Convince hundreds of thousands of taxpayers to build him a $400-million fun palace without ever going out in public to meet them.

Many argue Rexall Place is ripe for replacing. It opened in 1974 at a cost of $19.4 million, paid for by government funds, grants and loans. It has always been operated by Northlands, a non-profit group.

It can handle 16,839 fans for hockey, but is now the second-oldest rink in the NHL—only the New York Islanders play in an older barn. It is about half the size of the new rinks that have sprung up in the last 15 years.

It's a two-tone concrete bowl situated in the city's north end, surrounded by industrial yards, the odd eatery, low-end housing and warehouses with walls scarred by graffiti.

The seats are tight and the concourses narrow. Fans trying to go to the bathroom at intermission are confronted with long lines outside the men's room, longer ones at the women's. It's not unheard of at rock concerts for men at the urinals to be surprised by the odd pack of giggling, embarrassed women, eyes shielded, making a run past them for a toilet stall, the bounds of decorum giving way to the leg-crossing call of nature.

Three years ago, Edmonton Mayor Stephen Mandel created a task force to study the feasibility of a new rink. The committee—composed of business, city and Oiler leaders—reported back a year later that not only was a new rink needed, it should be built downtown as part of a larger revitalization project.

The committee said the Oilers should pay for a third of the rink, which would have 18,000 seats, 64 or more luxury suites and cost $400 million or more.

The committee raised eyebrows when it wouldn't let city councillors, who helped fund the study, see some key financial data that underpinned the findings. It was proprietary Oiler information, said the committee.

Months later, it was revealed by the Canadian Taxpayers Federation that the committee had deliberately removed references in its final report to the fact that in the last 20 years, NHL rinks in Toronto, Vancouver, Montreal, and Ottawa had all been constructed with little or no public money. The committee chairman told CBC he didn't believe that fact was relevant.

Since then, the Katz Group has taken the lead by buying the land and helping design the project. But it has also stirred controversy with its pitch to have the city own and operate the rink, while the Oilers would pay minimal rent and keep profits from all games and other non-related events.

With the arena going up, the Katz Group suggested it would then kick in $100 million to attract businesses and hotels to the projects around it. The rink debt would be paid off by the resulting increase in property taxes.

The project is massive because it's visionary, the group argues, and to have one owner like Katz shoulder the burden is not only unworkable, it's unfair.

Katz has not threatened to move the Oilers if the rink goes south but says the deal is "crucial" to the team's long-term viability.

Opponents, however, say there's no guarantee that if you build it business will come, especially given that Edmonton's corporate rental market is traditionally soft and another oil boom appears to be a long way off.

Scott Hennig of the taxpayers federation says there is no reason Joe and Jane Taxpayer have to take the hit.

There are, he says, lots of private options to funding a rink: seat licences, ticket taxes, purchasing surrounding land to sell at a increased rate when the rink drives up property values.

"Why are you talking about taxpayers funding it when we haven't had that happen in 20 years in Canada?" asks Hennig.

"Is it harder for them to put together a package with private money? Absolutely. It's a whole lot easier to stick your hand out and ask somebody else to pay for it."

If Katz has to take a big risk, that's not such a bad thing, Hennig suggests. Redevelopment projects with private money tend to work well, he says, "because then those (business) people have their skin in the game. It means something to them."

Premier Ed Stelmach has already said no to direct provincial funding for an arena, but maybe to infrastructure like a transit line to the new rink.

The timing is critical and politically dicey. Councillors are facing an election this fall, and perceived tax breaks for a pro hockey team can be poison on voter doorsteps.

Meanwhile, some residents who live near the proposed project are giving the Katz Group an earful, most recently at a public hearing this week.

Laurie Blakeman, the legislature member for the downtown area, says she and community leaders have made little headway with the Katz Group on nuts-and-bolts issues such as parking.

The Katz Group says parking is no problem: about 3,000 spots will be built and there are already 12,000 sites in the area.

Which spots are they talking about? asks Blakeman. Will downtown condo owners have to park 10 blocks away from their buildings on game nights?

What about the noise, the litter, drunken revellers peeing on someone's lawn? And what about the possible dead zone that will be created under the proposed winter garden, which runs counter to the city's master plan to get people out of above-ground pedways and onto the streets.

"How do we say, 'Yes, we support this' if we don't know what we're supporting?" Blakeman asks.

"The Katz Group doesn't seem to understand they're playing in a different ballpark, where they need buy-in, not only through elected officials, but also through the public."

Edmonton's downtown has struggled for decades to attract people and regain vibrancy lost decades ago to Whyte Ave., a trendy strip of bars, clubs, shops and restaurants near the university on the south side.

But with a new supermarket, condos and the expansion of post-secondary schools, people are trickling back to the core, says Blakeman.

"But if they get us to come downtown (to live) and then our front yards become unworkable, we're going to leave.

"And you're going to end up back where you were in the 1970s with Deadmonton, when everybody deserted downtown for West Edmonton Mall."


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