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Councillors, Oilers agree to split final $30M to green light new arena

EDMONTON - The on-again-off-again deal to build a new rink for the Edmonton Oilers is on—again.

City councillors and the Edmonton Oilers agreed Wednesday to split the cost of the final $30 million needed to green light the wavy-shaped steel-and-glass structure in the city's downtown in time for the 2016-17 NHL season.

"This has been a long and difficult process," Mayor Stephen Mandel told councillors. "We need to make sure that we build a city that attracts and retains the younger generation."

Construction is to start next spring and the city plans to pay off some of its debt through increased tax revenues from shops and businesses expected to spring up around the arena.

The total cost, including the rink and surrounding infrastructure, comes in at $604.5 million.

Under the arrangement, the Oilers are to pay $161.5 million, the city $279 million and another $125 million is to come from a ticket tax.

Last week, Mandel and political leaders from surrounding regions voted to seek another $25 million from the province under a regional grant program. The city says it will seek an additional $14 million in grants for a community rink attached to the project.

"The result today is a landmark agreement that enables our city to move forward in an enormously positive way," said Edmonton Oilers owner Daryl Katz, who was not at Wednesday's council meeting, but spoke with reporters via speaker phone.

The decision saves a resurrected deal agreed to by council and Katz in January, but which had slipped into limbo after Premier Alison Redford's government refused to provide $100 million.

Redford and her predecessor Ed Stelmach never promised any direct funding, but city council struck the deal in January anyway, hoping the money would come through somehow.

When it didn't, councillors scrambled to find alternative sources for the cash.

Last month, they voted to use $45 million in provincial infrastructure grant money. On Wednesday they changed that plan. They now expect that money to accrue from increased tax revenues around the arena.

Political leaders from the capital region narrowly voted last week to back an application for the $25-million provincial grant.

That left $30 million. Half of the remainder is to come from Katz and the city expects the other half to be recouped from increased tax revenues arising from the development.

The deal has divided Edmontonians into those who want public dollars to go to the arena, those who don't and those who are OK with public money, but say the deal is far too lopsided in Katz's favour.

Last week, Mandel got into an argument with hecklers in council chambers, who demanded he put the arena on a plebiscite.

The city is to build and own the arena and pay for all major repairs and renovations. The Oilers, in turn, are to pay $6 million a year in lease payments and pay for day-to-day arena upkeep.

Katz is to keep all the profits from tickets, concessions and parking for all events—Oilers-related or otherwise. Katz also is to receive $2 million a year from the city in return for advertising for 10 years and to keep naming rights for the building, estimated at $1 million to $3 million a year.

In return, Katz has promised the Oilers will stay in Edmonton for 35 years.

The vote was not unanimous. Coun. Kerry Diotte said the deal was poor for taxpayers when it was first struck in 2011 and is worse now.

"This has morphed into a Frankenstein monster. Even the worst referee in the NHL could see this is way offside," Diotte told councillors.

Coun. Tony Caterina agreed. He said no one knows for sure if the extra tax revenues from the arena will materialize. The risk tolerance for taxpayers, he said, is "way too high."

Council's decision wrote what many hope will be the final chapter in what has become the city's longest-running soap opera.

The deal has been talked about for seven years and been on a roller coaster for the last two.

Councillors and Katz first shook hands in the fall of 2011, but the deal fell apart a year later when Katz demanded an extra $210 million from taxpayers and refused to meet with councillors in public to explain why.

He also incurred wrath from fans and councillors when he began talks aimed at moving the team to Seattle.

Katz eventually dropped the Seattle threat and the $210-million demand, and in January the two sides resurrected the deal, with Katz off the hook for major repairs to the facility.

Katz—a pharmacy billionaire who owns the Rexall chain of drugstores—is currently tenant of Rexall Place, where the Oilers now play. It's an arena owned by an arm's-length city board.

Katz says the Oilers need wider revenue streams to be viable.

He has said he is losing millions of dollars a year, but city council has not been allowed to see the team's books. The Oilers are ranked in the middle or higher among revenue-producing teams in the NHL.

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