The City says CalgaryNEXT isn’t feasible in present form or location

Back in August, the Calgary Sports and Entertainment Corporation unveiled their concept for a new arena (for the Calgary Flames, Hitmen and Roughnecks) and combined stadium/fieldhouse (for the Stampeders). The idea was to replace the aging Scotiabank Saddledome and McMahon Stadium with newer facilities, and do to so in a centralized manner in the underutilized West Village area west of downtown.

In early November, City Council set some terms of reference for evaluating the CalgaryNEXT proposal and the city manager’s office got to work on Phase 1 of their evaluation – effectively crunching the basic numbers and seeing how everything shook out. The report was made available today on the City’s website.

In short? (Emphasis added.)

Administration has come to the conclusion that CalgaryNEXT is not feasible in its present form
or location.
It is recommended that CSEC be given an opportunity to respond to this report and
that The City and CSEC work together to investigate
potential locations on or near Stampede
Park for an innovative new arena/event centre that
benefits Calgarians. It is also recommended
that Council reconfirm the Foothills Athletic Park
as the preferred location for The City of
Calgary fieldhouse project, and that work continue
with respect to addressing the contamination
issues in West Village.

So what doesn’t the City like about the proposal? We dug into the report to find out.

THE RUNDOWN

Here’s the gist of the many, many pages of reports and additional background reports:

  • The City accepted the $890 million estimated cost of the facility itself at face value because they noted the designs are currently in the “concept stage.” Meaning it could very well end up costing more, depending on the actual design of the buildings.
  • In addition to those costs, the city estimated between $863 and $936 million would be required for “land, municipal infrastructure, environmental remediation, and financing.” (The range is because they investigated two different strategies for creosote remediation.) That would bring the total cost of the whole shebang – assuming that the concept doesn’t become more expensive – at between $1.7 and $1.8 billion. The cost to the City would be between $1.2 and $1.3 billion, depending on how the ticket tax money is financed (and which creosote strategy is used).
  • In regards to the remediation two options were presented: an expedited approach and a measured approach. The expedited approach would just dig everything up, clean the whole area and be done with it, costing $140 million but getting everything done in 6-8 years with continuous construction throughout. The measured approach would basically just involve doing the minimal amount of digging required and doing some decontamination on-site, costing $85 million but taking 8-10 years to complete with more of a seasonal approach to construction and development. The report mentioned a few small-scale funding options, but noted that no larger provincial or federal funds have been ear-marked for such a project.
  • The combined stadium/fieldhouse concept itself appears to work, but the report mentioned challenges in regards to the Stampeders sharing the facility (and the CFL team eating up a lot of “prime-time hours” in the facility):

Based on
the 2015 McMahon Stadium usage
report, the 2015 Stampeders event calendar, and estimates for prime time use, there will be
consumption of prime time hours by the Canadian Football League. In addition, the
CalgaryNEXT concept does not include complementary
outdoor amenities that currently
exist at Foothills Athletic Park, including an outdoor track, rectangular fields and tennis
courts.

  • It’s noted in the report that further study is needed to determine the compromises and challenges, and that the CSEC indicated they’d be willing to work with the City to mitigate compromises. (In other words, they’d be willing to help make the partnership work.)
  • Related: The cost of modernizing McMahon Stadium was estimated at between $69 to $89 million by the McMahon Stadium Society, which would theoretically fix many of the issues with the building and make it usable for another 25-30 years.
  • The estimated value of a Community Revitalization Levy for the West Village was given as $345 million without a commercial anchor tenant and $435 million, with the lower figure noted as more likely (and that there was no guarantee that the province would grant a CRL). It was noted in the report that the amounts in the range provided wouldn’t be enough to cover the facility, infrastructure, land remediation and financing, and that the figures were likely subject to a lot of variation due to the real estate and other market forces.

THE MAIN CONCERNS

In closing, the report noted concerns in all of the areas they were asked to investigate, which are generally summarized as follows:

  1. There will be significant costs incurred by the City to support the facility (and the estimates rely on the assumption that both parts of the facility will never be used at the same time).
  2. The funding model isn’t fully aligned with the principle that public money should be used for public benefits. (There are some access concerns for the public, in particular related to having the Stampeders use the fieldhouse a lot.)
  3. In a related concern, feedback from stakeholder groups was “either neutral or unsupportive of the West Village location and/or the incorporated fieldhouse concept.”
  4. The cost of the proposal would force the City to have to choose between funding this project and other high-priority areas.
  5. The development time in the West Village is quite long (9-13 years) and dominated by environmental remediation. (This also connects with some of their concerns about CRLs, which are set at 20 years by legislation and might expire if there are any unforeseen delays.)

There’s a certain irony to the concerns, as you have to imagine that the CSEC thought that integrating the components into one building and placing them in the blighted West Village would be seen as a positive. Instead? All of those factors – the location, the contamination, combining facilities – seem to contribute to the City’s issues with the project.

NEXT STEPS

The Impacted Organization analysis identified Stampede Park and surrounding area as a
potential location for a new arena/event centre, due to the existing infrastructure and planned
investment in the area, including the future Green
Line LRT. It is recommended that
Administration work with CSEC and CESL (Calgary Exhibition and Stampede Limited) to investigate the potential for a new arena/event
centre on or near Stampede Park. This work would consider potential funding and operating
models, functional design, urban planning, transportation, parking, utilities, and environmental
matters. It is recommended that Administration investigate potential upgrades to McMahon
Stadium, as well as reconfirm Foothills Athletic Park as the preferred location for The City of
Calgary fieldhouse project. Administration and CMLC
should also continue to work with Alberta
Environment on addressing the contamination issues
associated with the West Village Canada
Creosote site and surrounding areas. An update report on these matters should be presented to
Council no later than 2016 October 30.

What now? Well, City Council will discuss the report at Monday’s regular meeting. Presumably Mayor Nenshi will expand on his remarks, which basically amounted to “here is a report.”

But CalgaryNEXT as proposed by Ken King and cohorts with much fanfare and ballyhoo back in August? It’s probably dead.

      • RedMan

        glad to hear –

        the first plan almost looks like it was intended to fail but create an environment where the second (real) plan seems so much more reasonable – a decoy for the ol’ bait and switch.

        The original plan had such limited parking that i don’t see how it could ever have succeeded, regardless of the LRT.

        And, as mentioned, the cleanup takes much longer that the time frames ever acknowledged, making me suspicious of their real intentions with “plan A”

      • al rain

        “It is recommended that… The City and CSEC work together to investigate potential locations on or near Stampede Park for an innovative new arena/event centre that benefits Calgarians.”

        To me that says it all. Calgary Next is clearly designed to benefit the billionaires, not the people. So glad to see that the city understands this and won’t be pushed around.

        Nenshi, you’ve got my vote. Forever.

      • Parallex

        Yup, deader then dead.

        The majority of citizens didn’t like the proposal at 890M… no way you can sell the public on it at 1.7B to 1.8B.

        I expect token resistance from CS&E upcoming followed by “Plan B” in late summer/early fall.

        • cberg

          The dollar figures are a smoke screen. Whether this plan goes ahead or not, the City will eventually have to do the remediation, as well as fix the transportation issues e.g. Crowchild interchanges which is going to swallow up the majority of the extra $800-900mm. By presenting the plan in the way they did, it makes it seem like its $0 or $1.4B, while all the while fully accepting the CSEC facility number at face value.

          The City may not wish to proceed with this plan, but its all politics to present it as they did while pretending the alternative is no cost to the City. It isn’t.

      • It was such a assanine proposal to begin with. I wrote back in summer last year when it was proposed that the cost would be closer to 1.5billion (only 300m off) when you take into account infrastructure and remediation. So the Flames weren’t really consideirng the City needs.

        I guess “We dont have a plan B” turns into let’s hurry up and come up with a plan B and screw Flames fans for another 20 years with a rushed secondary proposal. Collassal fail by KK and the CSEC. KK should be fired for this.

      • wot96

        I am no fan of this plan. At all. Arenas and stadiums do not yield sufficient benefits when one conducts a cost-benefit analysis, as has been pointed out elsewhere.

        However, it is not particularly reasonable to associate the remediation with the development. The creosote will have to be cleaned up with or without the development. The development just brings that forward and there is no money currently allocated for it. But that is beside the point and I’m sure CSEC will point that out.

        • Parallex

          I disagree, it would be part of the cost of developing an arena project at the proposed location so it has to be included in the cost estimates just as it’ll have to be included in the cost estimates for any other hypothetical redevelopment of the WV.

          • piscera.infada

            Not to mention that if the city completed re-mediation, and then the West Village was redeveloped without the use of the CRL, the city would benefit from all the excess property tax from the area. If a CRL is being used for the area, the cost of re-mediation needs to be factored in, moreso than if it isn’t.

        • piscera.infada

          Reading the report, I think the bigger umbrage the city takes with re-mediation is the length of time it will take to complete. They note that it could (and likely will) take as long as 6-10 years for proper re-mediation–including all obstacles prior to actually physically doing the job. Is that really feasible for CSEC? Especially with the scope of the contamination, I’m not sure you really want to rush the re-mediation effort once it begins. The city is making an argument that it will be both dollar and time intensive–which makes West Village are troublesome site for a development like CalgaryNEXT.

          I fully believe that the city knows it will have to spend money on re-mediation, and under the right circumstances, it’s the correct use of public funds. I’m don’t think this project is the right circumstance though. Ken King can waive his arms all he wants about “getting the conversation about re-mediation started”, which he did–his project, or not.

      • Matty Franchise Jr

        Are Ken and Murray the ones trashing all the comments, or is it Troilers (Trolling Oilers – feel free to use it) with misplaced angst over having given Katz everything he asked for?

      • The GREAT Walter White

        Maybe I missed it, but what would the cost be of:

        Building a new hockey arena at Stampede park (including the roads and restaurants etc) PLUS the upgrades at McMahon PLUS a new field house at Foothills PLUS the Creasote cleanup PLUS the Crowchild widening which needs to happen anyway.

        Maybe more than $2 Billion?

        WW

        • Backburner

          To me the city is going to have to deal with these issues eventually down the road anyway.. they might as well come up with a strategy now.

          On the other hand, I don’t see what how it would benefit the Flames Organization to wait that long, to me it makes more sense to look at other more affordable options like building a new arena at Stampede Park, as it’s a cash cow for the city anyway.

      • Hypothetically, if the “deal” is a $550 million arena project in Stampede Park (as in, all-in costs are $550m) with the Flames kicking in $275 million and the city kicking in another $275 million, does that get the job done?

        • Greg

          It certainly comes across as more reasonable. I’m starting to buy into the theory that the initial proposal was just a decoy to make this back up plan seem pragmatic and easy to sell.

        • Parallex

          In that hypothetical the devil is in the details…

          Where does the money come from on each side of the ledger?

          How are revenue streams divided?

          Who owns it? if jointly owned how much ownership on each side?

          __________________________________________________

          Those details are as important as the frontline dollar totals.

          • Parallex

            I realize that you’re being facetious but really it doesn’t matter how the revenue is derived from the facility only that it is.

            From my point of view the city could cover 100% of the cost and it would be fine so long as the pre-approved, legally binding, ironclad use agreement used a deterministic (or at least probabilistic) model to reimburse the city wholly over time.

            • beloch

              I’m actually being serious here. The CalgaryNEXT finance plan is formulated so that the best the city can do is break even, and that’s assuming the revenue the CRL assumes actually comes into being. There’s a lot of risk the city has to put up with, but no opportunity for gain. If King and Co. manage to book the place every night with awesome acts that let them rake in the profits, all that happens is the city gets the money it borrowed against the ticket surcharge a little bit faster. That’s it. On the other hand, if a thriving CalgaryNEXT complex totally fubar’s traffic in the area, the city is the one who has to pay for upgrades.

              This is the heart of what is wrong with public stadium deals. Rich owners treat the public as a bunch of chumps who will assume risk for them without taking a share of the reward. No private investor would accept such a deal. It’s utterly idiotic to do so. So why should we expect the city to accept this kind of deal on our behalf?

              If the public invests, the public is entitled to a proportionate share of the rewards. If that’s such an unreasonable expectation that King decides to build the arena with is own funds, so be it.

      • Greg

        Interesting the mention the Green Line and a prefered location of stampede. I didn’t know it was being designed to service stampede as well. Looking at the planned nap though, if they build a new stadium in the north of the grounds, there would be another station about equidistant as the Victoria park stampede station. That would give direct access to 2 of the main LRT lines, without everyone having to dump out and switch lines downtown to cram into 1. Makes a ton more sense if you ask me.

        Also, if you ask me, the green line is “slightly” higher on the priority list than a new stadium. Since they can’t even figure out how to fund that yet, no way CalgaryNext should be getting public money.

      • Derzie

        We don’t need a new arena. It is a case of ‘keeping up with the Joneses’ and for some “fans” to have better facilities to consume and expel beer. I’ve never once been to the dome and thought “gee, someone should spend a couple bil on new concrete. This game would be so much better.” It is silliness. Trash if you’re part of the better toilets crowd.

      • MontanaMan

        No doubt issues with this project. But taking direction and guidance from the City Manager’s Office is a joke. These clowns can’t build an off ramp in two years and if you’ve seen the design and budgets for City of Calgary projects, you’d scratch your head. And they are critiquing a project of this magnitude. Why not hire someone with credibility and objectivity to at least get the truth.

      • BlueMoonNigel

        Read the history of mega projects in this country. A visionary proposes a grand scheme and the taxpayers foot the bulk of the bill. It is the Canadian way. The CBC, public health care,and taxpayer-funded mega projects are what separate us from the damn Yanks.

        The more the owners of the Flames and Stamps are expected to pay for the new digs, the more expensive it will be to use them. In a Stanley-Cup winning season, the Flames will use their barn around 60-63 nights, including exhibition games. That leaves 300 days open for other events. If the building is privately owned, you know the owners will charge the highest possible fee to rent it out, so add another 15% to 20% to the cost of your Motley Crue tix. Any building user will pay through the nose to use it, and in turn pass that cost on to those who attend the event.

        The city has a mandate to make its facilities inclusive to as many Calgarians as possible, so that kind of gouging the users and patrons simply won’t happen.

        If you think a $10 snag at a city-owned venue is pricey, imagine what it will cost if the building is privately owned.

        World class facilities cost huge bucks, but if you want to attract world class talent, you have to have those costly facilities. The second matter is inclusiveness. The more the facility is publically owned, the more inclusive it is. This country prides itself on egalitarianism and not elitism. A facility that is owned privately would simply be too expensive for the vast majority of citizens to use it regularly. The day they have to build a moat around the new arena to keep the riff raft out is the day that Calgary becomes India and Pakistan where the elite segregate themselves from the commoners with high walls. That is not the Calgary I want to live in. Give me the Calgary where Joe Millionaire rubs elbows with Joe Down-on-his-luck at Timmy’s.

        • mattyc

          It doesn’t matter how much the taxpayer subsidies the arena — ticket prices are still going to be as high as people will pay.

          As asides:

          Most American stadiums are also publicly funded. However, if you go in, you’ll see it’s hardly an inclusive representation of society.

          Joe Millionaire never rubs elbows with Joe Down-on-his-luck. Joe Millionaire gets his secretary to pick up a coffee for him.

        • BitGeek

          “The more the owners of the Flames and Stamps are expected to pay for the new digs, the more expensive it will be to use them.”

          This is not true. There is a limit to what the fans will pay to attend the games. This level of tolerance is what governs ticket prices not the cost of the facilities, salaries of the players or other costs.

          Ownership can only raise the price to that limit no matter how fancy the building is. Even the very rich have a limit to what they will spend to go see a Flames game.

      • ApolloRising

        I’m glad to hear this proposal isn’t going to go forward. You can’t ask taxpayers to fork over 1.8 Billion when Edwards moved to the UK just to avoid paying taxes in Alberta. If he wants to pay for a stadium that will make him money, then I have no problems. But it has been proven that there is very little benefit to the public on these projects. There’s no reason to give handouts to billionaires just so they can get richer. Which is ironic, because these people abhor giving handouts to the poor.

      • ApolloRising

        What is the viability of building a Flames stadium beside the Stampeders stadium? The land & infrastructure is already there. I’m not sure if the university owns the land or not.

        Also is anyone actually surprised by the Calgary Next offer? It never felt genuine to me. It felt like throwing out a high/unrealistic offer before the second real offer. That way the second offer seems cheap and therefore more realistic. My guess is the next proposal comes in around $500 million.

        • The infrastructure is not there.
          Have you seen banff trail station at a Stamps game?

          Have you seen Crowchild Trail @ 24th just on a busy UNI day….
          That being said infrastructure upgrades to that area would be easier then West Village. Obviously there would still be costs there.

      • Hubcap1

        “The Impacted Organization analysis identified Stampede Park and surrounding area as a potential location for a new arena/event centre, due to the existing infrastructure and planned investment in the area, including the future Green Line LRT. It is recommended that Administration work with CSEC and CESL (Calgary Exhibition and Stampede Limited) to investigate the potential for a new arena/event centre on or near Stampede Park.”

        Just what I have been spouting since the Calgary Next proposal came out.