Council approves $1.2 billion funding plan for downtown arena, despite tourism industry concerns

Saskatoon City Council approved a funding strategy Wednesday for the downtown event and entertainment district (DEED) it hopes to build one day.

"While there are many unknowns, some things are clear: no other infrastructure project can rival the transformative, citywide economic impact that DEED promises," Saskatoon Chamber of Commerce CEO Jason Aebig said during Wednesday's city council meeting.

As part of the funding strategy approval, the city hopes by the time this "shelf-ready" project can be greenlit, the provincial and federal governments will contribute roughly 40 per cent and 33 per cent respectively. The city would be able to fund the remaining 27.5 to 33 per cent using a variety of tools during a 33-year plan that includes a 30-year debt repayment.

To pay its portion of the tab, the city plans to use seven revenue streams to slowly build funding years before shovels hit the ground to generate $602 to $777 million in cash flow over 33 years.

Those tools include taxes on hotel rooms, event tickets, parking, tax incremental financing, property realized reserve contributions, SaskTel Centre reserve contributions, and private partner contributions.

"We're trying to fund a $1.2 billion budget and adjust those dials appropriately," the city's chief financial officer Clae Hack said.

For hours to start the meeting, councillors heard from hotel owners and managers about the proposed accommodation tax that is expected to add roughly $5.7 million per year to start.

Saskatoon currently has an accommodation tax that's run voluntarily at about three per cent to fund Discover Saskatoon. Administration would like to up the rate to a mandatory 5.9 per cent, which would make it one of the highest fees of its kind in Canada.

"I simply cannot fathom how this model is expecting the hotel industry to contribute more than $200 million to DEED, which is more than ten times what's being asked as an upfront contribution from a private operating partner," Paul Rosten of D3H Hotels Inc. said.

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Much of the concern from hoteliers is making Saskatoon a less attractive place to bring events or conferences, which goes against the intent of building an entertainment district.

They also brought up concerns about using a fund which is meant to increase tourism efforts going to infrastructure instead, and the slippery slope that could create.

"The city of Regina will be subject to a windfall of events for the next ten years if this funding model passes as is. Everything that's a coin flip between the two cities is going to go straight there," Rosten said.

With many other sectors expected to benefit from the district, other hotel managers wondered why hotels are only subject to the accommodation tax.

Many of the funding options revealed Wednesday come from a September 2023 report from KPMG which suggested many of the tools the city adopted, however the city declined to pursue a car rental tax which could generate up to $500,000 per year.

"It was deemed at that point in time to be not enough revenues to chase after," Adam Peterson, the chair of Saskatoon Destination Marketing Hotels Inc., a non-profit which represents 25 hotels in the city, said.

While city council committed to the funding strategy, none of the framework is final as administration committed to working with the hotel industry on a more agreeable numbers, in addition to searching for other forms of revenue over the coming years.

"Understanding that it is really just step number one," Coun. Hilary Gough said.