City and Katz Group will resume arena negotiations, with help of mediator

New downtown arena designs released on Wednesday, Dec. 12, 2012. The Katz Group has requested council vote to resume arena negotiations and extend the deadline to April 30.

After hours of discussion on Wednesday, the city voted to resume downtown arena negotiations with the Katz Group, based on the framework the two parties agreed upon in October 2011 - but now a third-party mediator will also be involved.

The vote comes after representatives from the Katz Group requested to appear before councillors on Wednesday.

Councillors voted in favour of the following:

Mayor Mandel said he hopes the city and the Katz Group can move forward and come to a reasonable solution.

"It's a matter now of the two groups coming together and actually finding a realistic solution that's good for both of us. I think this is now getting at the last kick of the cat more or less," he said.

"I think we're in good hands. I trust that what Mr. Karvellas said today is what they believe... I think there's a deal to be made. We'll see."

Mandel also invited the Katz Group to return on Jan. 23, when city administration will present arena options to council.

Among a number of items discussed by John Karvellas, senior executive for the Katz Group on Wednesday, was that the Katz Group will not pursue a $6 million per year subsidy that they had previously requested.

Instead, Karvellas said an 'arena reserve fund' drawn from excess city revenues is an alternative to the subsidy.

"That proposal involves an arrangement whereby if we build a tax-paying private development quicker than the City of Edmonton anticipates, or build more significantly than the City of Edmonton anticipates in their own projections, a portion of the excess tax revenues derived from that extra development would be put into a fund which we call the arena reserve fund," Karvellas said.

The Katz Group's latest cost estimate on arena sits at $478 million for the arena and $60 million for the Winter Garden.

Karvellas also said that it is not up to the Katz Group to address the missing $100 million in the project.

“We are concerned abut it, but this is not a problem we can solve,” said Karvellas.

“This is up to the city. The province is not and never was going to give money to the Katz Group.”

Wednesday’s meeting comes after the Katz Group declined an offer by council back in October, to publicly negotiate. After they declined, council voted to cease negotiations.

“We were stunned by the decision by city council on Oct. 17 to terminate negotiations,” Karvellas said.

“That is not what we wanted and we don’t think that’s what the city wanted. We do not want the downtown arena project to die.”

Karvellas says the reason the group declined the offer was because they did not feel it was the best way to negotiate.

“We thought then and still think that is not a practical way to reach a definitive agreement with the city for something as complex and important as the downtown arena,” Karvellas said.

“We believe that is best done and typically done with city administration but we recognize that whatever deal we might make with the city is a public one. We understand and respect that.”

Wednesday's meeting included heated exchanges between some councillors and the Katz Group.

Coun. Linda Sloan said the Katz Group's request to speak before council and put forth a request for a motion was out of order.

"All materials to be discussed at council are to be received in advance of the council meeting, at least, we generally try to receive it at least 24 hours in advance," Sloan said.

Coun. Don Iveson said it didn't follow proper protocols.

"This is a suggestion, right, not a demand?" Iveson had said. "It's not common for people to bring us suggested wording for a motion, just as a matter of protocol.”

The Katz Group admitted there were some "trust issues" but Karvellas assured councillors that the group was not trying to play games.

"We're not being sneaky, we're trying to regain the trust we lost," he said.

The Katz Group says they are focused on moving forward with the original arena design with some changes to reduce cost.

Click here to see new downtown arena district designs released on Dec. 12, 2012.

Among several representatives with the Katz Group was architect Michael Shugarman.

Shugarman said the schematic design for the downtown arena district is "one of the world's great sport and entertainment complexes."

He said the Winter Garden is a bridge to "somewhere special" and the entire downtown arena district, with its mixed-use spaces, would be a vibrant village bringing energy to downtown.

Shugarman stressed the Winter Garden is a key component to the downtown arena project and arena district.

Now a mediator, along with a financial analyst, will be appointed and look at both sides financially, before the next arena update scheduled for Jan. 23.

The Jan. 23 update will include a report by city administration that explores options to sustain NHL hockey in Edmonton. The report will also present funding options as well as three design options.

Meanwhile the Katz Group said they hoped to break ground on the arena project in April 2013.

With files from Bill Fortier and Serena Mah