Saskatoon council approves downtown arena funding plan

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Saskatoon city council heard from business groups and residents before a unanimous vote to allow city staff to pursue a funding strategy for a new downtown event and entertainment district. 

Council members did not, however, hear from a representative of OVG360, a large American-based firm that has promised to pay $20 million up front toward building the DEED, which would include a new arena and a renovated and expanded TCU Place convention centre.  

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An OVG representative had been expected to answer council questions at a meeting earlier this month, but this was delayed amid final drafting of the proposed agreement.

With OVG not present again at this week’s meeting, Ward 9 Coun. Bev Dubois sought to delay all discussion of the DEED funding plan until the company could make someone available. 

Dubois could not find a seconder for a motion to defer the debate. With no other councillor wiling to back the motion, it failed to reach the council floor.

Despite losing the bid to hold off on the discussion, Dubois later voted to support the funding strategy. She said she felt it was “important” the vote be unanimous, and said she could vote to allow city staff to “carry on” in the knowledge that future councils will have many more opportunities to weigh in before any construction proceeds.

The funding strategy leans heavily on projected revenue from a combination of tools that would help the city raise somewhere between $354 million and $424 million over about 30 years; this would be the city’s share of the project costs.

As it stands, none of this proposed funding would be tied to property tax increases.

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The proposed revenue tools instead broadly seek to raise money from those who would benefit most from the DEED, using things including a surcharge on event tickets and tax increment financing, a tool that would seek to capture tax revenue growth from private development near the DEED.

The plan then calls for the remaining roughly two-thirds of the $1.2 billion total DEED project cost to be secured in negotiations for contributions from the provincial and federal governments. 

Ward 1 Coun. Darren Hill, while voting in favour of allowing city staff to pursue the strategy, signalled that he too was doing so in the knowledge that there is still a lengthy process ahead, with future opportunities for council to have its say.

Hill noted he would not support a proposed accommodation tax on hotel room and short-term rental stays if it comes back for council approval in its current form.

Council heard at the meeting from several stakeholders in the hotel industry who were against the proposed rate of 5.9 per cent.

Paul Rosten, chief business development officer for d3h Hotels Inc., said this rate could make Saskatoon hotel rooms more expensive compared to other provinces, leading events to book elsewhere. 

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He also singled out a part of the plan that suggested the city could create a higher property tax class for hotels if it is unsuccessful in imposing the accommodation tax. Rosten noted such a measure would be even worse for hotels, as a higher property tax rate would be a fixed cost, while a tax on room stays rises and falls along with business.

Other representatives from the hotel industry noted the proposed accommodation tax doesn’t account for Discover Saskatoon; the agency relies on money collected through a voluntary levy paid on room stays by members of Saskatoon Destination Marketing Hotels.  

Adam Peterson from Destination Marketing Hotels told council accommodation taxes in other jurisdictions typically go to promotion agencies like Discover Saskatoon, rather than infrastructure.

Discover Saskatoon CEO Steph Clovechok took the opportunity to express her “unwavering support” for the DEED project, but said this comes with a need to “balance our ambitions” and create an approach that doesn’t unduly burden the visitor economy.  

All the hotel representatives expressed support for the DEED and its potential to help drive large events and tourism dollars to Saskatoon, but urged council to find ways to lessen the reliance on revenue collected from hotels. 

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During questions, council heard from city staff that approval of the funding strategy wouldn’t lock in the accommodation tax; the measure would still require provincial and further city council approval, and would not be brought forward without further consultation with the hotel industry.

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