EDMONTON - Tuesday evening, much of Edmonton city council was under a big white tent for the opening of Cavalia, watching as horses ran round and round in circles, responding to trainers’ commands.
Wednesday morning, under the big glass pyramids of City Hall, councillors must have thought they were still at the circus. Only this time, they were the ones going in circles, being asked to jump over increasingly bigger obstacles.
In a last-minute addition to the agenda, councillors were given a top-secret briefing by city administration on negotiations with the Katz Group over a new downtown arena.
When councillors finally emerged from their closed-door meeting, they were grim. Without revealing any details of their private discussions, Bryan Anderson and Kim Krushell, two of the most passionate supporters of the arena project, moved and seconded a motion, written in the sort of code that could only be deciphered by longtime arenaologists.
Here’s the exact wording: “That in response to the Katz Group’s recent request for additional public funding, administration is directed to respond to the Katz Group that City Council remains committed to the negotiated framework approved by City Council on October 26, 2011.”
No more concessions for Daryl Katz and the Oilers. Councillors were united in their new-found resolve. Only Kerry Diotte and Linda Sloan voted against the motion — and that’s only because they thought last October’s deal was too rich.
What exactly did the Katz Group want? Councillors still won’t say. They voted to keep Wednesday’s discussions strictly confidential, citing provincial privacy legislation. But councillors Krushell and Don Iveson insist the issue wasn’t more money to build the arena itself — but brand-new concessions.
If council’s not talking, the Katz Group made its position somewhat clearer in a letter sent to city manager Simon Farbrother on Sept. 11, obtained by the Journal Wednesday.
The letter, signed by John Karvellas, executive vice-president and general counsel for the Katz Group, does, in fact, assert that the arena cannot be built for $450 million without major design sacrifices. In fairness to the Katz Group, that’s likely true.
But Karvellas also asserts the City of Edmonton has failed to secure an “acceptable casino agreement” for the entertainment district.
His letter further complains that because of expected competition from Northlands and Rexall Place, the Katz Group won’t make enough money to operate the arena.
Under the original deal, the Katz Group was to be wholly responsible for the costs of operating and maintaining the facility.
The Sept. 11 letter, though, requests “offsets to or limits on arena capital maintenance and operating costs.”
It also asks for unspecified increased funding for the arena and Wintergarden pedway, from the property tax raised by the community revitalization levy on new downtown development.
“We believe the City has significant capacity beyond its commitment of $45 million to help fund the arena.”
“It’s a substantially different ask from what we had already agreed to,” says Coun. Ben Henderson. “We’re not backing away from our commitments by any means. But it feels like a really different deal.”
Even Kim Krushell has had enough.
“I want this arena deal. But clearly, we had to send the message we sent.”
So what is the Katz Group’s strategy here?
Is this just negotiational hardball, a canny, pragmatic ploy to leverage the very best deal possible?
Is it a PR blunder, evidence Katz and his team still don’t understand they need broad taxpayer support for this deal, that blindsiding council only weakens their case?
Or could the Katz Group actually be trying to torpedo the whole project, in the hopes of moving to greener, warmer pastures — like Seattle, which is in the midst of striking its own arena deal?
I pick #2. I think the Katz Group simply doesn’t grasp the way municipal politics works — that the mayor, however much he supports the arena, needs public and council consensus for major public infrastructure. Stephen Mandel has spent so much political capital, and risked his political legacy, to make this deal work. And time and again, the Katz Group has sandbagged his efforts to broker a deal, at the worst strategic moments.
So here we go again, like so many Cavalia geldings, round and round the arena.
What happens next?
“I’ve no idea,” says Henderson. “The ball is in their court. It’s so hard for us because of that — we’re only half the equation.”
To read more on the arena debate, go to edmontonjournal.com/edmontoncommonsSept. 11 Katz Group arena letter
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