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EDMONTON - The downtown arena deal is hanging by a thread after Oilers owner Daryl Katz refused a request Tuesday to appear in person and tell city councillors what he needs to complete the project.
“I’m not sure where we go from here,” Mayor Stephen Mandel said. “It’s frustrating. For whatever reason, he doesn’t want to come to city council to talk about whatever the issues are.
“Negotiations are not in good shape.”
Although Mandel has insisted someone from the Katz Group outline the company’s concerns at Wednesday’s council meeting, which he called a “drop dead date,” Katz sent the mayor a letter that said the two sides are too far apart for that to be worthwhile.
“Perhaps with more time and political leadership, this project can still be saved,” Katz wrote in the letter he released to the media.
“On substance, as you know, there are 15 open items in our negotiations. On process, as we previously advised, we will not make a proposal to city council that does not have administration’s support.”
Katz said while he thought the two sides were making considerable progress in their talks, they were actually going backward, and there isn’t even agreement on basic assumptions about arena finances.
“I fear the city has approached this negotiation based on narrow political considerations rather than a genuine desire to strike a deal that is fair and makes economic sense for both sides.”
Arena cost projections are higher and revenues lower than expected when a framework agreement was passed last October, said Katz, who urged Mandel to accept NHL commissioner Gary Bettman’s offer to help forge a deal.
Mandel, who isn’t sure what assistance Bettmann can provide, said he was disappointed by the letter.
“I don’t know whether it’s posturing or not. Many of the things in the letter I don’t agree with. Many of the demands that the Katz Group has put on the city I wouldn’t agree with either.”
In a closed-door September meeting, councillors rejected the company’s request for more public money, which apparently included an ongoing $6-million subsidy and talk of tax breaks.
City officials still intend to provide councillors with an update on the arena issue, but Coun. Dave Loken said there’s no appetite among his colleagues for more concessions to Katz.
“I’m not going to call (the arena) dead right now. I really want to hear tomorrow what our administration has to say,” Loken said.
“The majority of us are supporting the October framework. To stray from that, getting into concessions, hundreds of millions more on this deal, just isn’t in the cards.”
Coun. Amarjeet Sohi said it’s time to explore other options, which could include having the city build an arena without Katz’s involvement.
The team owner should have understood the economics of the project last fall when both sides accepted the 17-part framework, Sohi said.
“If somebody is walking away from the deal, it’s something that (is) not appreciated.”
The city has put up $30 million to design the oil-drop shaped structure, intended to be the centre of an office and entertainment district expected to rejuvenate downtown along 104th Avenue.
Construction of the arena, now estimated to cost $475 million, is set to go out for bids early next year once the design is mostly finished, although either group can pull out in advance if the estimated price is too high.
The city will pay about $70 million for land, part of the cost of the Winter Garden walkway over 104th Avenue and an LRT link and pedestrian corridor as part of the project.
Coun. Linda Sloan called for an end to “gamesmanship” on both sides.
Instead, she wants to remove the administration from the equation and allow council to take over direct negotiations.
“I don’t think at this time we will be able to conclude the deal with the administration and the Katz Group negotiating,” she said.
“We know the market best, we know the city best, and if it’s going to go anywhere that’s where it needs to go.”
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