Katz Group Welcomes City Council’s Decision to Resume Talks on Proposed Downtown Arena Project
Edmonton, December 12, 2012 – The Katz Group today welcomed the motion passed by Edmonton City Council authorizing City Administration to resume negotiations based on the October 26, 2011 framework.
“The Katz Group and the City of Edmonton share a common goal, which is to achieve a deal that will enhance the long-term viability of NHL hockey in Edmonton and help drive the ongoing revitalization of our downtown core,” said John Karvellas, Executive Vice President of the Katz Group. “Today’s decision by Council brings that goal back into focus and puts us on a track where success is still possible.”
The Katz Group requested the opportunity to address City Council in an attempt to revive the negotiations. As part of its presentation, Michael Shugarman of Shugarman Architecture and Design outlined the private sector development planned for the lands surrounding the arena.
“The planning principles for the Arena District are the same principles that define the City of Edmonton’s Downtown Plan,” said Mr. Shugarman. “We have put a priority on using the district to connect communities, create active and inviting public spaces, make downtown more livable, walkable and enjoyable, and bring our streets to life with a thoughtful mix of retail, commercial and residential spaces. The arena district is in advanced stages of development. In particular, the response from leading global and national brands wanting to locate their businesses in the heart of downtown Edmonton has been extremely positive. The plans are ready. With the arena as its catalyst and its core, we can be ready to put shovels in the ground on the Edmonton Arena District in 2013.”
In his remarks, Mr. Karvellas told City Council that the Katz Group has rescinded its previous request for an operating subsidy. In its place, the Katz Group has proposed an alternative mechanism for addressing the Katz Group’s concerns with the economic model for the new arena.
Under this 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. The mechanics of the Arena Reserve Fund need to be discussed and reviewed with City administration, and will be subject to approval by City Council. Money for this fund would be based on tax revenues generated by Katz Group development in the arena district over and above what the City has projected.
“Under this model, the Katz Group will have a powerful incentive to accelerate the private sector development,” added Mr. Karvellas. “If the City benefits above and beyond its reasonable growth expectations, everyone wins. If we fail to achieve that level of success, the Katz Group – and not the City or the taxpayer – will suffer the loss. In order to benefit from this proposal, the Katz Group will have to be aggressive in its development plans, which means it will have to assume greater risk beyond the $70 million invested in this project to date.”
The Katz Group also said it understands that City Council and the public must have confidence in the financial projections for the new arena on which the funding model is based. To that end, the Katz Group offered to put its projections in front of a qualified third party, for examination as to their reasonableness, and asked that the City do the same with its projections, which to date have not been shared with the Katz Group.
About Katz Group
Founded by Daryl Katz in 1990 and headquartered in Edmonton, the Katz Group is one of Canada’s largest privately-owned companies with operations in the pharmacy, sports & entertainment, and real estate development sectors.