Council votes to cease arena negotiations

Exterior aerial view of the proposed downtown arena at night from the south. Supplied.

After discussing the latest developments in downtown arena negotiations, city council has voted to immediately stop negotiations with the Katz Group.

The motion was made by Councillor Dave Loken, to immediately cease negotiations with the Oilers owner about the project.

The motion reads as follows:

1. As a result of Mr. Katz's letter and unwillingness to have an open discussion with Council and the frustration of the Interim Design Agreement, all negotiations and ongoing City work related to the October 11, 2011, framework to cease immediately.

2. That Administration provide a report to the October 31, 2012, City Council meeting to report on the completion of the cessation of negotiations and the status of the City's current, transferable investments in a potential downtown arena project.

3. That Administration provide a report outlining a framework for Council to explore potential avenues to achieve the long term goals of a sustainable NHL Hockey in Edmonton.

The process has become peppered with pessimism, after the latest move from the Oilers owner indicates the deal appears to be off-track.

The update falls a day after Daryl Katz sent a letter to Mayor Stephen Mandel – which was distributed to media outlets – publicly turning down an invitation for the Katz Group to bring their concerns over the downtown arena to councillors, and the people of Edmonton.

The letter said the owner of the Oilers was disappointed with recent communications with city officials on the project, and said a framework agreement dating back to October, 2011 needed to be changed, because costs were higher than expected.

Katz’s letter went on to say there are fifteen outstanding issues with the ongoing negotiations on the arena –and a proposal from the company would not be made until those issues are resolved.

“I think the public is very disappointed, and the public felt that we had a deal, and so did we,” Councillor Kim Krushell said. “Out of the blue, as we all know, the Katz Group came in and changed that deal.

“The feeling is, he’s never going to stop negotiating.”

The invitation to the Katz Group was made by Mayor Stephen Mandel in late September, after Katz appeared to reach out to Edmontonians through interviews with local media and a letter.

That action came after an apparent request from the Katz Group to city council to add more public funds to the downtown arena deal - a request that was turned down.

Ahead of Wednesday’s update, councillors appeared to be frustrated.

“There are a lot of people out there right now that are saying ‘Forget it, let’s just get our own arena and build it’,” Councillor Kerry Diotte said. “But it still comes down to the fact that we’d still be dealing with Daryl Katz as the main tenant.”

Before the meeting Wednesday, Mayor Mandel said, contrary to Katz’s claims, Daryl Katz would have made money under the framework the deal had been working under before.

“The deal we offered to Mr. Katz was very profitable,” Mandel said. “I know the numbers, and so I can tell you, he wasn’t going to lose money.

“So it’s difficult to do something when you don’t have any rationalization to do it.”

During Wednesday’s meeting, city administration told councillors the Katz Group still had 15 outstanding issues with the downtown arena project – and said eleven of those issues could be resolved.

Three of those issues were at the centre of debate: an annual operating subsidy, an anchor tenant in the proposed Katz Group tower, and an additional financing responsibility.

Councillors also talked about the possibility of the city building the arena without the Katz Group.

After the motion to cease negotiations was passed, Councillor Jane Batty put forward a motion to remove the Winter Garden, which would effectively save about $70 million.

Here's a glimpse of the online discussion surrounding the city council meeting: