Saskatoon unveils $1.2B funding plan for arena district

Saskatoon’s administration revealed its cost estimate for the proposed downtown arena district — $1.22 billion.

More than eight years after discussions about a new arena began, the city unveiled a report Wednesday outlining a funding strategy that it says will use a variety of tools and funds that won’t rely on property taxes to build the mega project.

"We were asked to bring back a plan that didn't rely on an increase in property tax net, and that's what we've done here," said Dan Willems, the city's director of technical services.

"It's a big lift, but what we've identified is a strategy that we believe can get there."

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.

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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.

Between those seven tools, the city believes it could generate between $602 to $777 million in cashflow over 33 years.

"We don't want to be overoptimistic at this point and then run into a significant financial challenge 20 or 30 years down the road," said Clae Hack, the city's chief financial officer.

"So we're pretty confident in being conservative in these estimates that there won't be huge fluctuations, especially on the negative side."

If the city can’t generate that much revenue over the course of the deal, Hack said it's common to extend the term of repayment so it doesn't have to increase property taxes.

Many of the funding options revealed Wednesday come from a September 2023 report from KPMG which suggested many of the tools the city adopted.

Some of them also come with opposition and risk.

The accommodation tax, a mandatory tax of anywhere from three to six per cent applied to a short-term hotel, motel or rental stay, has not received support from the accommodation industry in Saskatoon.

The funding strategy report says the hotel industry currently contributes the equivalent of a three per cent voluntary room surcharge, which funds Discover Saskatoon. If using the projected revenue of $5.7 million per year, Saskatoon would have one of the highest combined surcharge rates in Canada at 5.9 per cent.

The city would also require legislative change to implement the tax.

Another tax getting pushback from SaskTel Centre and TCU Place is the amusement tax. The tax would be an additional charge to event tickets. Currently, SaskTel Centre and TCU Place charge a fixed-rate facility fee on most tickets.

As part of its projections for the district, the city would charge a 9.5 per cent tax on all events at the two buildings. Revenue would be placed into a reserve to help pay for the district when it’s time to build.

With Saskatchewan already being one of the few places to add provincial sales tax to ticket sales, the event industry feels like another surcharge would negatively impact ticket sales.

"At the end of the day, this is a very ambitious project, and to think we're going to be able to achieve it with lower rates and fees than what other municipalities have had to implement, like Edmonton and Calgary, in order to bring their projects to realization, I don't think is a realistic approach,” said Hack.

“So it certainly will have an additional impact above and beyond the city.”

The 15,900-seat arena is slated to cost $632 million. The convention centre is expected to cost $273 million, and a variety of infrastructure improvements, road changes and the associated land costs are projected at $254.5 million. A variety of public plazas and park spaces surrounding the development will cost a combined $50 million, with another $6.7 million for transit infrastructure improvements.

The report will go before Saskatoon's monthly city council meeting next Wednesday, where Willems said council will vote to approve or deny a funding strategy, not a commitment for construction.

"There is no risk as of today," Hack said. "There's a lot of different pieces that still need to come to fruition before there's a construction decision finalized."

While a decision to build is years away and needs multiple forms of government to come up with the brunt of funding, Hack says doing nothing is not an option.

"The doing nothing decision would essentially be running SaskTel Centre into the ground and then having to close in the future," Hack said. "So it's really a renovation or build new decision."