Calgary businesses fume over timing of arena deal
Amid soaring taxes, backlash emerges as $275M tapped for deal with Flames
CALGARY A deal to contribute $275 million in city funds for a new Calgary Flames sports arena has irked many local small- to mid-sized business owners, many of whom are already furious at the city for double- or triple-digit business property tax hikes.
“It’s a tough proposal to swallow, to be honest, and if anything it’s sad that it’s coming right now because there are many Calgarians, myself included, who would love to see a new arena and would love to support it with big cheers,” said Kelly Doody, who runs a social media and digital marketing training business in the city called The Social School.
The city and the province has been reeling since the oil price collapse of 2014 led to deep cuts in the energy industry, the driver of the economy.
The owners of the Flames, led by Canadian Natural Resources Ltd. executive chairman and billionaire oilman Murray Edwards, have had to grapple with the challenges at their own companies by, in CNRL’S case, cutting senior level salaries and spending. Now, both the city under Mayor Naheed Nenshi and the province under Premier Jason Kenney are looking at spending cuts of their own.
“I’m floored this is on the table this week,” Doody said, adding council has been looking for ways to cut its budget and reduce skyrocketing taxes on small- to midsized business owners. Her own taxes have more than tripled this year.
Calgary councillors and Calgary Sports and Entertainment Corp. executives announced a deal on Monday to build a $550-million event centre and arena two blocks north of the city’s current hockey stadium, the Scotiabank Saddledome.
Under the terms of the deal, which councillors will vote to ratify next week, the city and the CSEC, which owns the NHL’S Flames and CFL’S Stampeders, would each contribute $275 million to the capital costs of the building, though there are revenue avenues for the city to recoup some of those costs. The deal also gives the sports company an option to purchase two parcels of land nearby, one of which is riverfront property.
“This is a good deal for Calgary,” Mayor Naheed Nenshi said in announcing the deal, adding that the city will receive a ticket tax, property taxes from adjacent retail development, partial naming right revenues and will own the asset.
But the timing of the announcement puts the city in an awkward position, as councillors were debating $60 million in budget cuts that would affect police and firefighting budgets. The cuts initially affected transit passes for low-income people but council spared those cuts the day after the arena deal.
The cuts are being considered as Calgary looks for ways to reduce massive property tax increases on business owners across the city, hundreds of whom staged a protest at city hall last month over rising bills.
Some councillors are concerned about the backlash from small business owners of funding the arena deal.
“We have significant challenges in terms of tax increases on all of our small business community and so how we rationalize giving hundreds of millions of dollars to one business while letting every small business in the city suffer with the tax burden we’ve put on them is unacceptable,” Councillor Evan Woolley said of the arena deal.
As of last month, Doody said her business property tax bill has surpassed the $3,000 she pays in rent for her second-floor offices east of downtown Calgary. Last year, she said, she paid $677 per month in business property tax but that has risen a jaw-dropping 374 per cent surge to $3,212 per month when the building she rents was reassessed this year.
Those tax increases have been justified on the basis that the city has lost out on $1 billion in tax revenues from empty skyscrapers in the downtown core following the 2014 oil price collapse and the consolidation of business taxes with property taxes in the city.
“On what planet does that make sense where there are cuts to essential services, front line services — they’re calling it responsible government spending reductions, OK? — and then at the same time we can lose $1 billion (from downtown property taxes) and somehow spend this way?” Doody said.
The Canadian Federation of Independent Business found that 71 per cent of business owners in Calgary either disagreed or strongly disagreed with governments investing money in professional sports arenas the last time it surveyed its members in 2016.
The disapproval rate is higher when the entire province is considered, with 80 per cent of respondents saying they either disagreed or strongly disagreed with government dollars being spent on professional sports facilities.
“City council and the mayor tell us that they’re scratching and clawing to find $60 million in savings to bridge the budget gap and provide tax relief for small businesses in Calgary and yet they somehow have a quarter of a billion dollars sitting around that they can invest in a new arena,” said Richard Truscott, vice-president at the CFIB.
“It’s a real head scratcher for a lot business owners in this city who are understandably upset about the huge property tax increases they were facing and hearing the excuses from the city and the mayor about how hard it is to find cost savings,” Truscott said.
Still, there is some support among Calgary businesses for the arena as it will drive development on the east end of Calgary’s downtown, said Calgary Chamber of Commerce president and CEO Sandip Lalli.
“It’s viewed as a positive for business development,” Lalli said, though she acknowledged that businesses in the city were closely watching how quickly the city is proceeding with this development, and have expectations for similar action on tax reform.
“That sense of urgency needs to be applied to the tax relief situation in order to continue to have the license to make announcements like this,” she said.
“You can’t do (this deal) and say, ‘let me review, review, review’ on property taxes. We need clarity and certainty on the property tax situation because those are day-inand-day-out. That’s the rub right now.”
A proposal on tax relief for business owners is set to go before council in September and Lalli said council would be under pressure to act quickly, as they’ve demonstrated they are capable of acting quickly on arena negotiations.
“It’s absolutely horrible optics, which is why they’re trying to rush it,” said Mount Royal University political science professor Duane Bratt.
The city has allowed itself seven days to gather public feedback before voting on whether or not to move forward with the deal.
“I think one of the ongoing criticisms of city council is the lack of transparency and I think in this case, that absolutely applies,” Doody said of the timeline for public consultations.
“I think they’re going to get a lot more negative feedback than they otherwise would have if they’d gone about it a little bit differently,” she said.