Funding plan revealed for new Saskatoon arena, convention centre

Article content

The City of Saskatoon’s chief financial officer says a funding strategy for a $1.22-billion downtown event and entertainment district “paints the path forward” in the coming years for staff to pursue the completion of the project.

The city on Wednesday released a strategy report that, for the first time, puts an official estimated price tag on a DEED project that would completely change the city’s landscape.

Article content

Of the $1.22 billion estimate, the city plans to seek approximately two-thirds from the provincial and federal governments while paying around one-third — or, as of now, between $354 million and $424 million.

The report will be presented Aug. 28 to city council, outlining a funding strategy the city says “encompasses a mix of funding sources, including public and private contributions, grants and other funding tools that do not require an increase in the property tax” to support and advance the DEED project, which would be centred on a new arena and an expansion and renovation of the TCU Place convention centre.

“Administration was tasked with developing a funding strategy that achieves the goal of constructing (DEED) with no contribution from property taxes,” director of technical services, transportation and construction Dan Willems said on Wednesday.

“We’re confident that the tools within the funding strategy have been formulated to achieve this goal.”

The proposed funding tools include accommodation funding contributions, an amusement tax, parkade revenues, tax incremental financing, property realized reserve contribution, SaskTel Centre reserve contributions, and private partner contribution.

Article content

Article content

The reserve contributions and private partner would provide around $30 million up front, while the city would largely borrow to cover its portion of the project, then repay the money using revenue brought in over the coming decades by the other funding tools.

“It is important to keep in mind this is not about deciding to proceed with construction; rather it is about taking the next step to pursue the financial opportunities to support the potential downtown event and entertainment district,” Willems said.

While he acknowledged that $1.22 billion for the project would be a “big lift,” he pointed to other major projects the city has built by taking a similar approach and working with other levels of government, such as the construction of the police headquarters or the civic operations centre on Valley Road.

Asked about the possibility of doing nothing to replace or renew the city’s aging facilities, Willems asked residents to ponder what the city would look like today if it didn’t have SaskTel Centre or TCU Place.

“Would we be able to attract newcomers, and help major employers attract talent to our city without these types of amenities?” Willems said.

Article content

The city at its press conference noted that provincial and federal funding “will be necessary to bring this project to life,” calling it a “fundamental component of the funding strategy.” The city said its intention is to have a “shelf-ready project so when federal and provincial funding programs are available, Saskatoon will be ready to go.”

Hack, when asked what would happen if revenue projections don’t meet targets, said the city has been “conservative” in its estimates, but if there were shortfalls, a common strategy used by other cities is to extend the term of the payback strategy.

He said city staff are “pretty confident” there won’t be “huge fluctuations, especially on the negative side.”

Even if the plan secures council approval, city staff will have significant work to do to realize the full funding package, and will require approvals from future city councils along the way before detailed design and construction can proceed.

The report to council notes that while hotel industry representatives are broadly supportive of the DEED project, they haven’t agreed to an accommodation tax and have expressed concern their industry is being asked to contribute more than its fair share compared to other businesses that would benefit.

Article content

There is also currently no federal funding program that would help with arena costs. Willems suggested new federal infrastructure programs will likely be created after the next federal election, and that the city would then be able to apply for funding for whatever parts of the DEED project might fit.

The report to council builds on the private partner agreement framework announced recently. Earlier this month, the city revealed that OVG360 was selected as a potential private partner in the DEED project.

OVG has agreed to pay $20 million as an up-front capital contribution toward building the new facilities, in exchange for management rights to the arena and the convention centre.

OVG’s upfront capital contribution would be payable in two instalments, the first coming a year ahead of the opening date for a new arena, and the second due six months prior the first public event at the new facility.

City officials have forecast a further $150 million in revenue-sharing for the city over the course of the proposed 25-year agreement.

Correction: This story has been corrected to reflect that the city  projects $150 million in revenue-sharing from the proposed private partnership agreement with OVG360. A previously published version contained inaccurate information. The StarPhoenix regrets the error.  

Article content

The Saskatoon Star Phoenix has created an Afternoon Headlines newsletter that can be delivered daily to your inbox so you are up to date with the most vital news of the day. Click here to subscribe.

With some online platforms blocking access to the journalism upon which you depend, our website is your destination for up-to-the-minute news, so make sure to bookmark thestarphoenix.com and sign up for our newsletters so we can keep you informed. Click here to subscribe.

Article content