To paraphrase Jane Jacobs, the majority of Calgary City Council regard Calgarians as “empty-headed young ladies whose main duties were to see that their nails were clean, their curves properly distributed and their behavior seemly.”
These councillors refuse to allow adequate public consultation on their decision to spend $275 million on the new Flames hockey arena while at the same time raising property taxes, wiping out small businesses and cutting $60 million in public services including police and fire.
Only four city councillors, Evan Woolley, Jeremy Farkas, Druh Farrell and Peter Demong, didn’t rubberstamp the Flames deal, which is described by the Canadian Tax Federation as an example of “corporate welfare.” (Ms Soapbox and the CTF agree, did Hell just freeze over?)
The deal’s benefits
Mayor Nenshi and most councillors say investing $275 million in public money will create $400 million in public benefit.
Let’s review the benefits set out on page 24 of the Facilities Update document:
- Ticket tax revenues: Calgary will get $155 million over 35 years through a ticket tax of 2%. If it had negotiated the same 9.5% ticket tax deal Edmonton negotiated with the Oilers, it would have gotten $736 million in revenue. To add insult to injury, Calgary agreed to cap its share of ticket tax revenue at $3 million for the first 5 years, this represents a loss of $1.4 million/year for five years.
- Local community sports payments: $75 million over 35 years. Okay, that’s nice. The $2 million/year will come in handy when we cut $60 million in public services.
- Naming rights: $2.5 million/year for 10 years. Ditto.
- Retail property tax: $19.4 million over 35 years. It’s unclear where this number comes from given that it’s dependent on development that has not yet taken place and would be sensitive to economic downturns which depress business tax revenue.
- Indirect Rivers District Development: This pie in the sky number accounts for $138.7 million and is contingent on many things including whether the Flames exercise two options to buy unspecified Rivers District Lands. If all goes well, this revenue yields a 1.4% return on investment. If it goes pear shaped, the City suffers a .6% loss.
The Facilities Update document also lists a number of soft benefits including Calgary remaining committed to economic recovery (well, I certainly hope so!), and the arena being a “catalyst” for future development and an “anchor” for arts, culture and entertainment.
Sigh, all these benefits are enough to make a girl swoon so I’ll turn to economist Trevor Tombe who said the $400 million in benefits is “misleading” and the real cost of the deal is a $47 million loss. Loss????
The deal’s downside
What the Facilities Update document doesn’t provide is an analysis of the deal’s costs and risks. These include:
- Risk of demolition cost overruns: Demolition is expected to cost $12.4 million. Calgary and the Flames will share this cost 90/10, but the Flame’s 10% is capped at $1.4 million. Some estimates show the cost of demolition and reclamation at $25 million. This means Calgarians could be on the hook for $23 million.
- Cost overruns: The Saddledome was completed in 1983, eight months late and $16 million (about 20%) over budget. A 20% overrun on this project will cost $110 million. Council says each party is responsible for the changes it requests. Good luck with that. It’s easy to request a change order during construction, it’s much harder to figure out who should pay for it after the fact. The operative phrase here is “See you in court, buster!”
- Free options: The City gave the Flames two no-cost options on River District Lands. One lets the Flames buy prime real estate in 2024 at 2018 prices; the other lets them buy prime real estate at fair market value any time up to 2034. Because hey, why shouldn’t Calgarians subsidize the Flames’ desire to become real estate moguls if the spirit moves them.
- Liability: The City will own the arena. This means Calgarians are on the hook for major structural improvements, the cost of City services, insurance, and any flood mitigation costs in excess of $2 million (does “2013 Flood” ring a bell?) and by 2054 when the lease is up, the arena will be ready for demolition and we’ll start all over again.
Of all the stupid reasons I’ve heard against public consultation, these take the cake:
- Councillors had 14 months to get public input: Excuse me??? The financial strategy and negotiation mandate weren’t approved until March 4, 2019. What were councillors supposed to discuss with their constituents…free rides on the zamboni?
- Woolley and Farkas want to run for mayor: This fails to account for Farrell and Demong who also refused to rubber stamp the deal. Besides, who cares. Running a mayoral campaign on the promise that you’ll listen to the people is more convincing when you actually listen to the people.
- It gives Calgary a shot in the arm: This reminds me of a couple I knew who were so depressed about maxing out their credit cards they bought themselves new skis (on credit) for Christmas. Good public services will enhance the quality of life for all Calgarians. Draining Calgary’s emergency fund down to 5% will not.
Don’t worry, be happy
Mayor Nenshi said public consultations is only necessary in two cases: (1) changes are possible and politicians want to hear from their constituents and (2) politicians haven’t made up their minds and they want to hear from their constituents. He said neither of these reasons apply here.
In other words, we’ve made up our minds and there will be no more changes.
Silly Calgarians, clean your nails, make sure your curves are properly distributed and your behavior is seemly. No one wants to hear from you.