CalgaryNEXT

CalgaryNEXT is a proposed private-public $890 million^[1][2] multi-purpose 365-day-a-year sports complex^[1] to be built in Calgary, Alberta, Canada. According to the privately owned Calgary Sports and Entertainment Corporation (CSEC), who unveiled their megaproject in August 2015 during a period when slumping oil prices and layoffs in the energy sector were leading Alberta into a recession,^[3] CalgaryNEXT would provide an much needed economic stimulus.^[4] CSEC owners - Allan Markin, Alvin Libin, Jeffrey McCaig, Byron Seaman as well as billionaires^[5][6] Murray Edwards and Clay Riddell,^[7] include some of Calgary’s wealthiest oilmen.^[4]

The proposal includes two buildings: a 19,000–20,000 seat events centre^[1] that would serve as the home arena of two hockey clubs, the National Hockey League's Calgary Flames, and the Calgary Hitmen of the Western Hockey League,^[6] as well as the Calgary Roughnecks lacrosse team; and a 30,000-seat football stadium and fieldhouse^[1] that would be the home of the Canadian Football League's Calgary Stampeders and serve as a public training and activity space. The complex, to be located in the West Village along the Bow River^[1][2] for the "hub of pro and amateur sporting activity."^[1]

CSEC had proposed to pay $200 million of the cost directly, have the city pay $200 million to fund the field house,^[8] and the remainder funded by a ticket surcharge on events at the new facilities, and a community revitalization levy. Environmental remediation required to clean up creosote contamination on the site, would provide an additional cost to the project. Immediate reaction to the proposal from local politicians was mixed; they supported the plan to redevelop the West Village area, but many – including Major Naheed Nenshi – expressed concern at the proposal,^[9] which would potentially have the city initially fund between $440 and $690 million of the projected cost which promoters claim will be recouped over a long period of time. As part of the proposal, the city would own the facilities and be managed by CSEC - thus exempting the land from property taxes - but would not receive any share of the profits.

Based on a City of Calgary report released on April 19, 2016, it was estimated that CalgaryNEXT would cost about $1.8 billion with taxpayers paying up to two-thirds of the total.^[10]

Private-public partnership

"It’s also important to note that at least two of the six Flames owners are billionaires (and three are among the wealthiest 100 individuals on Canada)...I’m sure the other 3 aren’t that far off. They need taxpayer help."

— Josh White, City of Calgary Policy Analyst January 2013.

In June 2014, after Flames executive Brian Burke announced plans to replace the 31-year-old Scotiabank Saddledome that would require public financial investment, Calgary city councillors received 199 emails opposing a public subsidy for an arena and one in support.^[5] The wealth of Markin, Libin, McCaig, Seaman, Edwards and Riddell - the six men who co-own the Calgary Sports and Entertainment Corporation, a profitable private entity, that is also the parent group of the Flames, Stampeders, Hitmen, and Roughnecks, "often played a role in residents’ strident letters to councillors about potential taxpayer support."^[5] Edwards and Riddel alone "have a combined fortune of $4.8 billion according to Forbes."^[6]

Facilities

Calgary Sports and Entertainment Corporation proposed the new complex to replace the city's two primary sporting venues, each of which is among the oldest in the league of its respective primary tenant: McMahon Stadium, a dual purpose Canadian football and soccer venue, while the Scotiabank Saddledome, Calgary's main indoor arena, opened in 1983.^[11]

The Calgary Flames, Calgary Stampeders, Western Hockey League’s Hitmen and National Lacrosse League’s Roughnecks are all owned by Calgary Sports and Entertainment Corporation. CSEC CEO, Ken King was quoted as saying,^[1]

"“You don’t replace things because they’re old....You replace things because they’re not efficient and they’re not functional and they’re not doing the job that they were originally designed and intended to do."

— Ken King Calgary Sun August 18, 2015

The Scotiabank Saddledome — home of the Calgary Flames since it opened in 1983 — and Calgary's largest indoor arena, is one of the oldest venues in the National Hockey League,^[1] and the McMahon Stadium, opened in 1960, is considered among the worst facilities in the Canadian Football League.^[12]

The CalgaryNEXT development would consist of two facilities with a shared atrium. It is proposed for the West Village on the west end of Downtown Calgary, and located along the Bow River.^[13] CSEC had looked at other locations within the city, including Stampede Park, where the Saddledome and the Stampede Corral are located before determining that the park could not support the size of the proposed complex.^[14]

Events Centre

The Events Centre would replace the Saddledome as the city's primary indoor arena and become the home of the Calgary Flames (National Hockey League), Calgary Hitmen (Western Hockey League) and Calgary Roughnecks (National Lacrosse League).^[14] CSEC proposed that the Events Centre would have a seating capacity between 19,000 and 20,000.^[15]

Fieldhouse and stadium

In April, 2013, Calgary's community and protective services committee approved the location of an "indoor multisport complex in the northwest, at Foothills Athletic Park at University Drive and 24th Avenue N.W. At that time it was noted by Donna Dixon, then head of the Calgary Multisport Fieldhouse Society, that even though there was a lot of support from the city, council and administration to look very hard at trying to find funding sources... the time frame is probably still five years out, because the funding hasn't been found yet.^[16] After the decision was made to prioritize the building of the Fieldhouse, Alderman Brian Pincott commented, "Putting the fieldhouse first means we're going to have to find a great gob of money for that first. You need to find $200 million."^[16] In the 2015 CalgaryNext proposal the fieldhouse—a "hub of pro and amateur sporting activity"—would be located in the West Village along the Bow River^[1][2][1] The second facility would be a combination Canadian Football stadium that would seat 30,000-50,000 spectators and public fieldhouse that would be constructed to also meet FIFA standards for soccer and would include a 400-metre indoor running track, volleyball, basketball, tennis and badminton courts.^[15] It is proposed to be a fixed-roof facility with a partially translucent roof to allow for natural sunlight.^[11]

Financing

In August 2015, CSEC estimated the cost of construction would total $890 million^[1][2] and proposed four funding sources: The organization would fund $200 million of its own funds, while the city would also provide $200 million to fund the field house. $240 million would be funded via the city's Community Revitalization Levy program, and $250 million would be through a ticket surcharge on events held at the two facilities; CSEC's CEO Ken King stated on the project's announcement that the initial funding source that the ticket surcharge would repay had not been determined, but suggested that loans by the City or from conventional commercial lenders were both possibilities.^[15] In a written statement, Mayor Naheed Nenshi called the proposal "intriguing", but reiterated his personal opposition to the use of public funds for private profit, and noted that the city has already allocated its available capital funds through the 2018 budget cycle.^[17] As part of the proposal, the city would own the facilities and be managed by CSEC.^[18]

Community Revitalization Levy, Tax Incremental Financing

In an interview with the Calgary Sun in February 2015, Michael Brown, president and CEO of the Calgary Municipal Land Corporporation (CMLC), an arms-length organization that handles Calgary's land holdings, said they were looking into the Community Revitalization Levy (CRL)— a Tax Incremental Financing (TIF) system^[19] widely used in the United States — ^[20] for the development of the West Village similar to that used to finance the remediation of the East Village. The East Village CRL benefited from the Bow as an anchor building for the revitalization.^[20] Though supportive of the CalgaryNEXT project in principle, several local politicians expressed concern about the funding model, which proposed that the city would front between $440 and $690 million of the projected cost, most which would only be recouped over a long period of time if at all.^[21] By August 2015 the total projected cost of CalgaryNEXT was $890-million.^[1][2] Nenshi commented that one of a number of challenges to the CalgaryNEXT proposal was the requirement of a community revitalization levy, along with the need for a land contribution from the City, "and significant investments in infrastructure to make the West Village a complete and vibrant community."^[9]

According to a majority of city councillors, using a Community Revitalization Levy for CalgaryNEXT, would not generate any property tax because it would be a city-owned building.^[22][10]

By December 2015, while King maintained the $890-million project "could generate as much as $900 million in ancillary property tax revenue, in part through the use of the $240-million revitalization levy", Nenshi disagreed "saying the success of the levy in that location is intimately tied to the cost of remediating the land."^[22]

"The early numbers that I’ve seen, and this was before we really did in-depth analysis which is being done right now, indicate that it doesn’t balance... The (levy) doesn’t even raise enough to cover the cost of clean up let alone put $200 or $300 million into an arena...I’ve never heard anyone say anything close to $900 million with any credibility behind it."

— Mayor Nenshi December 30, 2015 Calgary Herald

The land corporation’s 2016 analysis estimated that the levy would generate, "at most, $430 million over 20 years if it could secure an anchor tenant in a 700,000-square-foot building. Without a tenant, the levy would only generate $350 million over the same period."^[10]

Ticket surcharge

One funding source would be a ticket surcharge on events held at the CalgaryNEXT facilities.^[15]

Timeline

WorleyParsons was hired by the Calgary City Hall^[2] and the Calgary Municipal Land Corporation to examine the CSEC proposal, and to conduct a six-month economic and environmental assessment study in the West Village with a report due April 30, 2016. They will assess the scale of contamination in the area" and the cost of an "environmental cleanup and analysis of potential revenue from a levy."^[22]

In August 2015, King told reporters he would like to have the CalgaryNEXT operational for the NHL campaign in 2020-2021.^[1]

Debate

During a high-profile sold-out downtown Calgary luncheon meeting held January 11, 2016 and attended by Calgary's community leaders, business elite, Flames CEO Ken King, city officials and representatives from the mayor's office - but not Mayor Nenshi or councillors - the New York-based NHL commissioner Gary Bettman "delivered an aggressive sales pitch" calling on Calgary to "embrace" the $890-million CalgaryNEXT proposal or deal with the consequences."^[2] and expressed his impatience with the city for not moving ahead with the project.^[23]

"It is not an overstatement to say the future stability, viability and continuity of the Calgary Flames, and perhaps the city of Calgary, rests on the achievement of CalgaryNEXT."

— Gary Bettman January 11, 2016 Calgary Herald

After his speech to Calgary's Chamber of Commerce, Bettman reasserted,^[7]

"If this project is going to happen, the mayor needs to embrace it, the city needs to embrace it... If he’s not prepared to embrace it, then the people will have to deal with that."

— Gary Bettman January 11, 2016

Mayor Nenshi responded to Bettman's comments,

"In other cities these sorts of deals are presented to the public as a fait accompli with a gift wrapped ribbon on them...That is not how we’ve chosen to operate, that’s not how council in public unanimously decided to move forward."

— Mayor Nenshi January 11, 2016 Calgary Herald

Proposed location

The proposed site for CalgaryNEXT was used by the Domtar-owned and operated Creosote Canada plant from 1924 until 1962. For decades chemicals leached deep and wide into the ground.^[24] According to the City of Calgary's website,^[25]

"The West Village is a 130 acre area immediately west of Calgary’s downtown. The boundaries are the Bow River to the north, the Canadian Pacific Railway (CPR) right-of-way to the south, Crowchild Trail S.W. to the west, and 14th Street S.W. to the east."

— City of Calgary

The City of Calgary purchased the 4.2-ha parcel of land in November 2014 for $36.9 million^[26] in order for the City and Province to protect the environment and ensure public safety given the level of environmental contamination of the site. Mitigation has included a 1995-96 provincially-funded containment wall and later on a containment system for the contamination. In 2010 the City approved the West Village Area Redevelopment Plan which along with the West LRT project required the acquisition of additional land.^[25]

Creosote-contamination site

Councillor Evan Woolley estimated that the environmental remediation of this site would cost much more than remediation for the "East Village, which cost in the hundreds of millions."^[26] The costs of the clean-up is not presently known, but estimated between $50 and $300 million.^[11][22]

Floodplain concerns

In an interview with a Calgary Herald journalist, Professor John Pomeroy, Canada Research Chair in Water Resources and Climate Change, expressed shock that two years after massive flooding, the only location proposed for CalgaryNEXT is on the floodplain. He argued that this area will be flooded in the future.^[27] Gian-Carlo Carra, City councillor, who represents the inner city in Ward 9, expressed his aggravation at the promotion of green spaces and parks in the floodplain. Carra would prefer to see tax-generating development in the floodplains.^[28] In January 2015, Alberta WaterSmart, an engineering consulting published the report entitled Room for the River commissioned by the Province of Alberta. Kim Sturgess, chief executive of Alberta WaterSmart, agreed with Pomeroy that there will be a flooding event and it is a matter of how much risk the Flames organization is willing to take on.^[29] In her report Sturgess recommended "revisiting property buyouts, preventing future floodplain development and widening riverbanks" to mitigate future floods and manage watersheds."^[29] In an interview with the Herald, Calgary Flames president Ken King "acknowledged they are considering potential flooding as part of the building’s design." He said that the proposed location on the Bow River is "far less problematic than where we are now, but nothing is immune."^[27]

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