Yesterday in City Council, we received an update on the progress of the downtown arena project. Overall, it was a very positive report - the project is progressing on time and on budget, and the other associated projects, like the Edmonton Civic Tower and the Casino site, are on track as well.
Of course, by now many people have heard about the funding shortfall for the arena project. The money that the City was expecting to receive from the provincial government for the arena project has not come through, leaving us with a $32 million dollar shortfall.
In the scope of the overall project budget of $604.5 million, $32 million is not an enormous amount. But it does present some challenges that we need to address as a Council. We have known for some time that the provincial funding was uncertain, and we are prepared to deal with the shortfall. I don’t think we should seek direct provincial funding regardless of our recent change in leadership - there are more substantial fish that we will need to fry in the coming months, and it’s important that we don’t expend too much political capital too soon.
The funding will likely be coming from the Downtown Community Revitalization Levy (CRL). What this levy does is essentially leverage borrowing against our increased tax assessment from the arena district. This increased assessment comes from the additional revenue that will be brought in by projects like the Stantec Tower, the Delta Hotel, and the Casino site, along with many others.
In the best case scenario, we stand to make $394 million dollars in revenue from the arena district over the lifetime of the CRL (including the debt servicing costs). Even the worst case scenario economic projections show that we will still be able to recuperate the necessary funds to cover the debt from the CRL. Using the CRL for this funding shortfall is as close to a safe bet as you can get in major infrastructure projects.
As Mayor Iveson expressed, we do need to be careful not to overextend the CRL. We don’t want to put ourselves in a position where we don’t see profits from the arena district until 2050.
To date, we’ve funded $316 million dollars worth of project costs through the CRL for the revitalization of downtown. I’m confident that the decision to fund the last portion of the arena through the CRL will set us up for success upon the completion of the arena project, and assist us in bringing many other goals for the City to life.