'Nothing comes for free': Questions linger for Saskatoon's $1.2B entertainment district

Saskatoon's most expensive infrastructure project is generating plenty of attention and questions a day after the price tag for the downtown arena district was revealed.

"We're excited about it, but our Spidey senses are tingling when it comes to costs, for sure," NSBA executive director Keith Moen said Thursday.

After having a chance to review some of the numbers and reports going to city council next week, Moen says the funding plan gives residents a good starting point to understand where the $1.2 billion project is going, but plenty of detailed questions remain.

The usual staunch critic of city spending commended administration for exploring a variety of ways to generate revenue that won't draw on property tax. But Moen says you're likely footing the bill, one way or another.

"There will be costs associated with it that people will be having to pay because nothing comes for free. We know that, we understand that," he said.

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While Moen wasn't surprised by the price tag, Ward 1 Coun. Darren Hill was caught off guard by the cost.

"That's a really large number," Hill said. "I wasn't expecting it to be quite that much. I hadn't factored in all of the additional groundwork and infrastructure work that would be required."

Of the seven levers the city hopes to pull for funding, one drawing immediate criticism is the accommodation tax.

The city is proposing to increase the rate and usage of the accommodation tax, which is currently imposed voluntarily by hotels at a rate equivalent to about three per cent.

If the city is to realize its projected annual revenues of $5.7 million per year (increasing to $10.8 million by the end of the 33-year funding strategy), the accommodation tax would need to be increased to 5.9 per cent and applied to all short-term rentals and hotels in the city.

"This is controversial because this is putting a huge part of the financial burden on the hotel sector and industry, and the short-term accommodations, because this would apply to VRBO and Airbnb as well," Hill said.

"And that's not necessarily fair. There's other sectors that are going to benefit."

According to administration, the tax of 5.9 per cent would apply the accommodation tax sufficiently while also maintaining funding levels for Discover Saskatoon. However, the combined surcharge would be one of the highest in Canada.

Moen said hotel members of NSBA have indicated the charge would be too high and would burden the industry, but nothing is close to final at this point.

"Everything is at this point still just an intangible, because they're talking about pieces of the puzzle that can be fit one way or another way," Moen said.

According to the report, the city would need the province to alter and update legislation to implement the tax.

Administration could also seek an alternate agreement with the hotel industry or create a property tax sub-class for hotels — essentially singling them out to pay higher property tax — to bring in the same amount of revenue as an accommodation tax.

Hill and Moen say plenty of questions remain, and Hill still wants to be assured residents won't be burdened with big tax increases in the years to come if revenue projections aren't realized.

"If one of these seven pillars falls short, what is the backflow valve that is going to protect us?" Hill asked.

"Right now, all I can see is the property tax holder."