Saskatoon councillors look to avoid property tax hikes to pay for arena district

Even though a potential downtown arena and entertainment district is years away, city councillors are beginning to reveal how they'd prefer to pay for it.

At Wednesday's governance and priorities committee, councillors discussed five new revenue streams to fund a downtown arena and entertainment district, per a report from accounting firm KPMG.

But Mayor Charlie Clark and his colleagues made it known how far they have yet to go before any decisions will be considered.

"We've got a lot of work to do on each of these tools, and we need to try to be as clear to the community we're doing our best to come up with a way to pay for it that's fair, that allocates those costs to those who are benefitting from it and that reduces the reliance on property taxes," Clark said.

In its 60-page report, KPMG listed an accommodations tax, a facility fee, tax-increment financing, a vehicle rental tax and parking fee adjustments as five ways to fund the project.

Revenue estimates range from $6.7 million a year to $21.4 million a year, depending on what council decides. Administration has already said it's not considering a vehicle rental tax, and it has its own plans for parking adjustments if the district is to proceed.

An accommodation tax — a mandatory charge applied to short-term hotel, motel, hostel or short-term vacations rentals like Airbnb and VRBO, has been implemented in many cities across Canada.

KPMG estimates the hotel fee could generate up to $4.7 million per year as a high estimate, according to the report.

Saskatoon Chamber of Commerce CEO Jason Aebig voiced his support for an accommodation tax.

"The people who are coming to enjoy what this destination is going to offer into the future should pay," said Aebig.

"I have no trouble charging a fee to a guy from Winnipeg who wants to come and watch a concert versus charging a property tax increase to people who already live and work here."

Aebig and the chamber support an accommodation tax as long as there’s no burden on businesses, there is financial transparency at every level of the tax and independent oversight with various stakeholders.

Aebig wants to ensure the tax serves its purpose and doesn't end up in general revenue.

"It's not without conditions," Aebig said.

"This isn't supposed to pay for potholes. This is supposed to get this district done."

Discover Saskatoon, a non-profit tourism bureau funded partly by the city, already has a similar fee in place. Partners of the Destination Marketing Program (formerly Saskatoon Hotels Association) are able to apply a three per cent fee to every room night stay to guests.

"Those visitor-based assessments are very common," Discover Saskatoon CEO Steph Clovechok said.

"This revenue is very obviously generating wealth and well-being for our community now, and we only stand to do more of that collaboratively under good governance in the future."

Multiple councillors seemed eager pull some of these potential revenue levers — if a downtown arena or district doesn't move ahead, the aging TCU Place and SaskTel Centre may need some additional investment.

"I just want to emphasize that I think that there's no better time than as soon as possible to begin ensuring … that we're beginning to generate the capacity needed for this project," Coun. Hilary Gough said.

"The pressure on finding and generating the revenues to be able to upgrade these facilities in our city — that urgency is already here."

Tax-increment funding, a mechanism which divides property tax revenue earned on properties within a defined boundary for a set period of time into a base stream and a growth stream, was also received favourably by councillors as a way to pay for the new district.

"Where do we want to be in the future? And I think the future is very bright if we make some wise decisions now," Coun. Cynthia Block said.

Since discussions for a new arena began in 2018, council and city administration have expressed a desire to rely on property tax as little as possible.

An overall funding plan is expected to be presented to council in January.