October 19 2012 08:52AM
When city council voted 13-0 to cease negoations with the Katz Group, some wondered if this signaled an abrupt end to the dream of a new downtown arena in Edmonton. It didn't, it just means both parties will spend some time apart with the hope to reconcile their differences in the future.
Will it work? I think it might, but why did the city choose this direction. I spoke with Edmonton city councillor Kim Krushell about the city's frustration and how, or if, they plan to move forward.
JG: Explain what it means now that the city administration was told to cease negotiations with the Katz Group?
KK: Well we did a three part motion. I won’t go into tonnes of detail, but the gist of it is that we cease negotiations in terms of us continuing to spend the cash that we’ve been spending on the design costs. And then the rest of it is, listen administration, go out and investigate other avenues which leaves the back door open if the Katz group starts re-examining their situation and says ‘you know, maybe we should reconsider,’ and be more reasonable in what their asking for.
So we haven’t taken everything off of the table, we had to send a stronger message than I think we sent a few weeks back when the first public spending request came. Also councillor Anderson and I moved a motion basically saying we’re supporting again the original deal that we felt we had.
Was I happy that we were going down the direction that we went down today, no. I think that we have tried very hard to negotiate to get a deal done. I think obviously that the frustration has been building. We had to do something to cease the situation and stop and spend some time away. We spent some time debating the word (cease) in council today. It is meant to say to the Katz group, ‘listen, the way that you are negotiating right now isn’t working for us.’
I can appreciate the fact that he didn’t show up. I mean, I don’t know if that would have been productive. But I think that it would have gone a long way to at least getting some public support and I think that that was critical and unfortunately that didn’t happen.
JG: Has a private company ever had to come in front of city council like this before or been asked to come in front of city council?
KK: I’m trying to think, I’m sure we have. We’ve had more than one group come to us asking for different things including funding. But off of the top of my head, nothing is coming quickly to mind.
JG: Now when they were asked to come to city council, some people wondered if a private company has to open up their books. Some people think that this is a unique partnership. What is your personal opinion on it, can it be made public just to city council and not the citizens of Edmonton?
KK: Listen, I’ve never been hung up on the ‘I need to personally necessarily see the financials.’ I need to see the master agreement which is critically important to understanding the agreement at the end of the day. I need to have confidence that the negotiators that we’ve hired, that are lawyers, and that our city administration have seen enough of the financials and have a legal agreement that if action needs to be taken against who you’re doing a deal with, that you have something to hold onto in regards to that deal.
So in this case if Katz didn’t meet his agreements that I would want security of some type, and I think that that is exactly what administration was going for. The challenge with the financials being shown to every councillor is the obvious one and that is unfortunately leaks do happen and have happened in the past on various different issues. And while I would like to think that all of us on council are doing the best that we can and aren’t leaking any information, I know that that has happened in the past. So there is a valid concern there and there is a liability that you open up the city for if information gets leaked, and then it is the city and the tax payer that have to pay when the liability kicks in. Unless you can absolutely prove who leaked the information and that’s hard to do.
There are lots of things that we deal with and that we have to deal with in private, this (arena) is not unique.
Sometimes we cannot divulge the information. I can give you one example; let’s pick the LRT where we’re spending a lot of money. We can’t sit there and say we’ve put this much aside for this individual’s property and this much aside for another. That kind of information, you can appreciate, we don’t divulge to the public.
I think that there has got to be reasonableness. To be fair to Katz I wasn’t as hung up on the fact that he necessarily appear in public for a drubbing by council. I felt that he needed to demonstrate that he was prepared to meet with us in public and perhaps showing up today to say ‘I’m willing to negotiate with you at this time.’ To go into detail may not have been appropriate; I would have even accepted that as at least more of an olive branch. But the guy didn’t show up today. I understand that.
He needs to understand that unfortunately we are a public body; we need public support to make decisions and right now Jason, the emails that I’ve had, I think that there are a lot of people out there that would like to have a deal, but they’re not happy with the Katz group. A lot of them are saying just build it yourself.
JG: Has anyone looked seriously into the benefits or risks of the city building the arena by themselves?
KK: That’s what the motion that we did bring into play today addressed. I have said publically that a build it yourself option is certainly something that we can look at because I would like to keep NHL hockey in Edmonton. But it is a backup plan, because obviously things like location agreements with the Oilers is a bit challenging. The idea of Mr. Katz even continuing to partner with us is one, he owns the team, and those are all factors that we have to take into consideration.
So today we did ask administration to explore all avenues which would include looking at us building it ourselves, but when you start looking at the financials, I have always liked the deal that we had a year ago. I have been very supportive of it because it didn’t get the city of Edmonton into the business of operations of the Oilers. And my concern is that if we go down the road of building it ourselves, well obviously we’ll be involved directly with operations. Now people might like that idea because we’ll be involved in the revenues but I do see some challenges. Certainly other arenas have had some challenges when they go down that road.
JG: There are a few of the other motions that perplexed me. Councillors proposing that all of a sudden the winter gardens shouldn’t be a part of this. I thought that we had a deal, now why are they suddenly suggesting that maybe we should change our mind on the design?
KK: Well there have been some councillors from the very beginning who have not appreciated the design of the oil drop and what makes it an oil drop is the winter garden that goes across. Now some councillors are not happy with the size of the winter gardens because it’s an obvious cost savings. It’s added a huge amount of cash to the project. I mean really if you look at it, it’s like 81 million. You chop that down because you can make some revenue off of it, and you’re looking at a 70 million cost. Now the city isn’t responsible for all of that cost, we’re capped at 25 million, but Katz mentioned that maybe we should cost share on all of these new increased to the design.
And so some councillors were looking to address that.
I think that other councillors are simply not happy that the pedway eliminates people on the street. And we’re trying to demonstrate that we are a winter city and we don’t need to put pedways everywhere, and that we can, in fact, put some people on the street.
And before we’ve, in my opinion, had really good information from the administration going forward, not to mention the architect, I thought it was very premature to support that motion. In fact, we decided to postpone it which I thought was far more appropriate.
JG: When you look at this overall scenario, the casino funding seems to have become a very big issue. And from what I know and all of the research that I’ve looked into, this is more of a provincial thing and not a city thing. Did city administration address the ongoing debate between the city administration and Katz group revolving around the casino license?
K: Oh absolutely and there were a lot of questions of administration today. The casino was one that I actually asked. The administration has said that the casino has never been, I mean sure it’s a wish list of the Katz group, but the reality is, and Mr. Farbrother confirmed this, that the jurisdiction determining the casino, is not within our jurisdiction. It is a provincial matter. We can be supportive of the idea of a casino concept, but that doesn’t mean that we can actually waive the magic wand and make that casino happen and this information I think has been conveyed to the Katz group more than one time.
So when you take the basket of wish list that the Katz group has brought to the table recently, you can appreciate that council has been kind of startled by some of these tasks. Some of them we can simply never deliver on, and that’s where you’ve got a lot of councillors really starting to scratch their heads and saying with the visit to Seattle, is the plan really here to not move forward with us and to look at elsewhere?
JG: So where do we go from here?
KK: Well I’m hoping that the Katz group, I look back at some of the other arena deals Jason, and you always go through a ying and yang, and this has dragged out more than I think it should have. Maybe we’ll get to the point where we’ve hit that drop dead time and maybe the Katz group will look at this and say, ‘you know in the very beginning Daryl wanted to do something to help revitalize downtown and also keep hockey in Edmonton. He bought the team for a reason.’
And I’d like to think that he’ll go back and look at that and come back to the table and say, ‘I have some real concerns, and the design cost is what we might look at and the long term capital.’ Then maybe there’s room for discussion. But right now with the way that the PR has occurred unfortunately, the public support out there, and the frustration that we have on council including myself has reached that limit where we had to do the motion that we did today.
But I still hold out hope. If not, obviously we will be having a lot of different options brought back to us and one of those different options is to look at other partners and to look at building an arena ourselves. We are a great city for NHL hockey. I think that you know that, fans know that.
JG: I think that the city needs an arena more as a way to start the revitalization of our downtown and that’s the bigger thing. NHL hockey is great and I know that we love it, but sometimes I wonder if it’s become too much about hockey and not enough about the city.
KK: I certainly argued, more than once, that one of the main reasons why I’m supporting it, I think most people know that I’m not an expert at hockey. You could quiz me on the players and I’d be hard pressed to name many. I’ve never pretended differently.
The reality for me is the idea of being able to access the CRL. Now remember the province has to approve it and being able to revitalize our downtown. And that I’ve always seen as a huge opportunity, and I’d like to see that opportunity happen. And now one of the questions we have is if we build it ourselves maybe that opportunity can still continue. Because it’s not like there aren’t any other projects that we have heard that are in the hopper.
So I think that that is kind of the information that we’ll get back in the near future. I certainly am willing to consider other options that the Katz group might bring to the table. I think that the challenge the Katz group might have, the vote today was 13 to 0 for the first time, I think that that’s sending the message that it’s really tough to get councillors who serve the public to proceed unless something much more reasonable is put on the table from their direction.
I still believer a deal will be made. Both sides need one another, and like a good relationship, some times both parties just need some time away.
The countdown is on...At 2 p.m. today expect an another Nation first.
If you like trainwrecks, you will love this.
I highly recommend watching The Last Gladiators, a documentary about the life of Chris Nilan. This is not a celebration of fighting, but a realistic look at a guy who had some struggles on and off the ice. It was very honest, real and gripping. I had the chance to do a Q&A with Nilan after the film last night, and his honesty was incredible. He made no excuses, pulled no punches and I think many will be surprised at how good of a hockey player he became.
Did you know Nilan played in the 1987 Canada Cup for the United States and scored two goals in five games. He was a hell of a fighter, but he worked incredibly hard to become a decent player. In 1984/1985 he scored 21 goals and added 358 penalty minutes.
You'll like this film.