New arena, as part of an entertainment district, will attract investment, report says

New jobs and new cash. But still, much is unknown.

A handful of new projects near Calgary's core could lure money and businesses but a new report is generating lots of questions.

Officials with the firm Ernst and Young (EY) presented a report to a city council committee Friday, assessing the economic impacts of a possible entertainment district in and around the Stampede grounds. It's a district that could include a much-debated new arena.

• Read the full economic impact report

The assessment concludes there is a positive economic case to be made for a trio of major projects in the heart of Calgary: a new event centre to replace the aging Saddledome; a major expansion of the BMO Centre at Stampede Park; and a large expansion of Arts Commons.

All three lie within the boundaries of the Rivers District.

Spend money to make money

In what the EY officials called a conservative estimate, they concluded spending $1.5 billion to build the three projects could generate a capital output (or spending in the economy)of $1.7 billion. The yearly operation of the buildings would generated an additional$300 million in annual economic activity, as well.

The report suggested 4,750 full-time jobs would be created during the construction phase of the district. Another 1,536 permanent jobs would be made once the new facilities are open.

To make its determinations, the EY study looked at four comparable entertainment districts, Edmonton, Denver, Nashville and Columbus, Ohio, to examine how much investment has been created by similar projects.

"These numbers are positive," EY strategy partner Lance Mortlock, said.

"These numbers are good and there's probably a lot more numbers that you can take away from that. We can't be certain what those numbers are but there's upside. There's only upside from this."

He also said the assessment did not examine potential tourism impacts nor estimate possible increases in property tax revenues.

Hotels, condos

Coun. Ward Sutherland said the report makes it clear that other cities have successfully attracted hundreds of millions of investment dollars by developing entertainment districts. He said a similar district in Calgary should also draw new hotels, condos, retail and other businesses.

He said public money spent in East Village has attracted private investment and that this should inform the debate on a future entertainment district. It would also add to the tax base.

"The main concern that council should really discuss on Monday is, what is going to generate that outside investment to pay the dollars for the whole area?That's really what the bottom line needs to be," Sutherland said.

In other words, if public money is spent to build the right stuff in the Rivers District, it will attract other private developments which will generate tax revenue. That money can then be used to further develop the region.

Taxes generated stay in district

All property taxes paid in the Rivers District, under the community revitalization levy (CRL), must be reinvested in that area. The province is extending the levy until 2047, which would allow the city to continue work on improving this part of town.

The Calgary Municipal Land Corporation is overseeing the redevelopment of the Rivers District, which includes East Village and Victoria Park. It paid EY $185,000 for this new report.

Its CEO, Michael Brown, told the committee that making decisions on such large projects does involve risk.

"We're almost saying to you we need you to take a leap of faith and I recognize how difficult that is and the decisions that you guys have got before us are very difficult," Brown said.

He told reporters later that the East Village proved that if the right environment for investment is created, businesses and projects will follow.

"But you're never going to get an investor to guarantee anything until they actually commit those dollars."

Both Brown and officials with the Calgary Stampede have hinted that several major hotel chains are interested in building in the vicinity of an expanded BMO Centre and a new arena.

• Read more from CBC Calgary's Road Ahead series

In addition to the economic case, the EY report said the proposed developments in the Rivers District could "enhance the social and cultural foundation of the city, providing facilities and public spaces for all Calgarians to use and enjoy."

The EY report will be added to the agenda of Monday's strategic council meeting.

Council priorities

Council is holding a long-awaited discussion of major capital projects at that meeting. It will also discuss what priority should be placed on those projects. The list includes a new arena, the BMO expansion, a renovation and expansion of Arts Commons, and a new fieldhouse.

The chair of the event centre committee, Coun. Jeff Davison, said there's still a lot of work to be done. Monday's discussion will include how much money the city has available for such projects.

It's believed the city has $200-300 million in cash. Federal and provincial dollars are anticipated to be part of funding the BMO Centre expansion.

Sutherland said as a councillor, he's confident the city can afford to initially undertake two big ticket projects like an arena and the BMO expansion.

"It's there. I've seen the dollars. We can do it and I also think we can do the arts centre, sequence it later on but it's going to be a decision that council will make on Monday," he said.

But who exactly will pay for any new arena has yet to be decided.

City negotiations with the Flames' owners, the Calgary Sports and Entertainment Corporation, have not yet resumed on a possible cost-sharing arrangement for a new arena.

The Canadian Taxpayers Federation is calling for a city-wide vote before tax dollars are spent on a new facility.

Sutherland said council makes major decisions all the time and the idea of a vote by Calgarians is "absolutely ridiculous."

Calgary: The Road Ahead is CBC Calgary's special focus on our city as it passes through the crucible of the downturn: the challenges we face, and the possible solutions as we explore what kind of Calgary we want to create. Have an idea? Email us at calgarytheroadahead@cbc.ca.

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