An Update on the Event Centre

The City and the Calgary Sports and Entertainment Corporation (CSEC) have agreed to a deal in principle for a new Event Centre that will help spur development of the City’s Cultural and Entertainment District within the Rivers District Master Plan. I recognize that the timing of this is not great, considering the budget talks we are currently having. However, we need to plan for the City today as well as create a vision for the future and the two interests can often appear to be in direct conflict. Additionally, the budget talks are dealing with our operational budget with savings intended to be ongoing, compared to a one time capital fund.

We will be voting on this deal at Council next Monday and we are encouraging feedback from residents. My goal with this blog is to provide you with some background as well as the details of the deal so that you can make an informed decision on where you stand. This is by no means a done deal and I want to hear what you have to say. If you choose to contact me about this, I ask that your reasons for or against the Event Centre deal be fact driven.

So what has happened? In May 2018, we set up the Event Centre Assessment Committee to explore and determine everything Event Centre – location, financial strategy, how to approach a partnership, and to ensure all that fits the long-term goals of the City. Council approved the Committee’s negotiating mandate and laid out seven principles:

  1. The Event Centre should be a gathering place for all Calgarians that includes, but not be limited to: concerts, assemblies, festivals, professional and amateur sports, linked to an outdoor gathering space.
  2. Public funds must be used for public benefit, including but not limited to improving access and availability for individuals and groups, while also providing economic benefits for the Calgary economy.
  3. The Event Centre must be a catalyst to attract further vibrancy and investment as an anchor for further development in a mixed-use neighbourhood.
  4. The Event Centre must be viable and sustainable as its own entity while contributing as part of a comprehensive master plan vision that supports The City of Calgary’s planning objectives and enhances our communities’ brand and reputation.
  5. It is understood that a proposed Event Centre could be a partnership between The City of Calgary and external parties.
  6. Although negotiations will be kept private, there will be engagement with the public throughout the process whenever possible to ensure transparency.
  7. In the event that a funding agreement for an Event Centre is reached between The City of Calgary and external groups, it must be made public and presented to Council for final decision.

Public benefit and acting as a catalyst to attract further vibrancy and investment are two key components and this deal will achieve those. Even if you don’t go to a hockey game, a lacrosse game, a concert, or an e-sports tournament, the Event Centre will still have in impact because it achieves a level of placemaking that mid-sized cities such as Calgary need. Should this deal be voted on by Council, the Event Centre will help create a cultural and entertainment district, attract new residential and commercial properties to the area, help retain businesses and talent in the city, while allowing us to continue attracting new talent, new businesses, and new industries.

For those of you sick of the big name concerts bypassing Calgary in favour of Edmonton, it means you will have the opportunity to see the act here and not have to fork out gas money for the 3 hour drive, hotel money, and other expenses. It means we retain our hockey team, where so much businesses takes place and deals are made. The hope of a deep playoff run will help our bars across the city as patrons gather to cheer on the home team, even if they don’t make it to the game itself.

So what is the proposed deal? First and foremost, this is still a deal in principle and final legally-binding agreements still need to be approved by Council and signed by all parties. The deal in principle covers the design, permitting, financing, construction, operation, revenue, allocation and maintenance of the facility. The final deal will be made public as soon as it is able.

The agreement states that The City of Calgary and CSEC will each invest up to $275 million to construct a new Event Centre. The City’s portion is not funded through property tax, will not have an impact on our budget, and though the timing is really not great, does not have an impact on our current budget talks. The money comes from our Major Projects Capital Reserve, which has been funded in part by completing other capital projects under budget and banking those savings. The demolition costs for the Saddledome will mostly be covered by the City. A land exchange will occur between the City and the Calgary Stampede, providing the Stampede with the Saddledome lands.

So what do we get? We will get a cut of the naming rights for the new arena over the first 10 years. We will collect a facility fee on all tickets sold over the life of the Event Centre. We will collect property taxes on the adjacent commercial and retail taxes. We will collect indirect returns through the incremental property tax generation within the area surrounding the new Event Centre as it develops. Additionally, the agreement provides local community sports organizations with $75 million from CSEC for 35 years, which is the length of the agreed upon deal. All told, the projected indirect and direct benefit to the City of Calgary is $400.3 million. Finally, CSEC will not be able to relocate the Calgary Flames over the 35 year term of this deal. All facility operations, maintenance and repairs will be the sole responsibility of CSEC.

A breakdown of the deal can be found in the graphic below. It’s probably a little small, so click here for the full size graphic. The report to Council that was provided in the closed door session is available here. Attachment 1, the Key Due Diligence Summary, is available here. Attachment 3, a risk summary with mitigation strategies is available here. Attachment 6, Event Centre Cash Funding Sources and Total City Cost, is available here. The remaining attachments will be released as soon as possible, however they contain information that must remain confidential at this time.

Additional information can be found on the City’s website at www.calgary.ca/eventcentre and the news release can be found here:
https://newsroom.calgary.ca/city-of-calgary-calgary-sports-and-entertainment-and-calgary-stampede-agree-to-create-new-event-centre/

If approved, the Calgary Municipal Land Corporation (CMLC) will serve as the development manager for the Event Centre. CMLC will undertake public engagement on the Event Centre’s design, programming and integration into the Rivers District. If approved, construction is expected to start in 2021 and take 3 years.

Now that I have given you all the information that we have, you’re probably wondering where I stand. Due to the ability to recoup all of the funds expended, and more, and the more intangible benefits of the Event Centre to the city, I’m happy to support this. If it wasn’t for the ability to recoup the funds put into the project, I wouldn’t be in support. However, a $290 million expenditure for over $400 million in return is a good use of capital, in addition to the social benefit that the Event Centre and the arts and culture district will create.

If we put the money in the bank and simply collected interest, we would get approximately 2.3% return on investment. By investing in the Event Centre, we are going to get about a 1.4% return on investment. So the difference is about 0.9%. It seems to me that for 0.9% difference in return, we would negate all of the community benefits (i.e. the second smaller arena, investment in local community sports organizations) and economic benefits (i.e. new development, attracting and retaining talent to the City) is not worth not investing in this development, especially at this time with the downturn. We’re moving forward with a number of initiatives to make the city better in the future while putting people to work in the near term.

This is an excellent opportunity to build for our future. I mentioned above that this helps achieve some of the placemaking that cities the size of Calgary need. I wrote a blog at the beginning of the year about this, and some of the concepts are worth revisiting. I noted that an article in Urban Affairs Review, a peer reviewed journal, found that quality of place plays a larger role in medium sized cities such as Calgary. It found that medium-sized cities significantly benefit from more entertainment options and higher density in attracting young, college-educated people. These are precisely the goals that the Rivers District, the Cultural and Entertainment District, with the Event Centre as an anchor, seek to accomplish. Young, college educated people from both here, across the country, and abroad are who we need to aim to attract to help improve and diversify our economy. The study found that amenities make a real difference in attracting young talent to cities, rather than them gravitating to big-name metro areas, which in Canada would include Toronto and Vancouver. Without the Event Centre, we could potentially see a brain drain even to places like Edmonton.

As always, I welcome your thoughtful comments and concerns. You can share them with me here.

Update:
My colleague Councillor Jyoti Gondek posted a blog covering some of the non-economic benefits of event spaces, as well as an annotated bibliography of scholarly articles on these non-public benefits. Please take a look at both of these links.

Update 2:

Council has endorsed the agreement on terms and conditions between the City of Calgary, Calgary Sports and Entertainment Corporation (CSEC), and the Calgary Exhibition and Stampede Limited. The City received an outpouring of public feedback during the comment period and I would like to thank everyone who took the time to share their opinion. Here is a clip from Council where I ask four important questions about the deal.

July 30th Council Meeting