Monday, August 31, 2009

Columbus a model for Edmonton?

Battle of Alberta's Andy Grabia put me on to a new report out of the John Glenn School of Public Affairs in Columbus, Ohio.

It looks at the economic benefits of the Arena district in Columbus.

Ironically, Patrick Laforge, newly appointed arena salesman spokesperson for the Katz group also cited Nationwide Arena in Columbus as the model for Edmonton. While, Mr. Laforge and I are likely to disagree on most things about the new arena, here we agree, Columbus is a good model for Edmonton... particularly because it was 100% privately financed.

Anyway, I digress... the new report from Columbus (paid for by the team) makes all kinds of wild claims about the economic benefits of the new arena district. And it goes into detailed calculations showing, what should be completely self-evident. I mean, should it shock anyone that a bunch of vacant lots and former jail grounds on which you put a large real estate development, is now producing more economic benefits than the land did before? However, they fail to look at the rest of the city to see what wasn’t developed instead or what areas have lost tenants to the arena district and therefore have suffered.

It’s all just a big closed loop. There are x number of businesses that can successfully operate in any given economic region. Period. Putting them all in one building or spreading them out around 10 mile radius doesn’t matter, it’s the same economic benefit.

They at least attempted to look at money that was coming in from outside the region, but again, make the wrong assumption that these are new dollars, or are dollars that otherwise wouldn’t have entered the same city. Who’s to say that these same people going to Blue Jacket games wouldn’t otherwise be going to a college football game, a movie or a concert in Columbus if they didn’t have an NHL team. People’s entertainment budgets are fixed, to which entertainment they flow might change, but that’s it. If you stop going to Oilers games, you will likely go to more concerts, Esks games or play more golf. From an overall economic benefit argument, it makes zero difference.

Although, I did find the report interesting, in so much as it provided some financials on the team, and the arena.

For example:

I also found the city spending data on infrastructure info, very interesting as well. Good numbers to use for comparison. Although they still attempted to make the ridiculous Tax Incremented Financing (TIF) argument to suggest that the city is recouping its “investment.” Again, they make the wrong assumption that the number of businesses in any given city is not fixed. The restaurant that’s in the arena district would have been built regardless, whether inside the district or not, and the city would have collected the exact same amount in taxes. It's the same shell game that Mayor Mandel is attempting to pull over on Edmontonians under the name: Community Revitalization Levy (CRL).

The only economic benefit that I can find in the whole report is the $3.8million the city collected in taxes from visiting teams over 6 years. So, thanks to the Blue Jackets and the new arena the city gets a whopping $633,333 per year in additional revenue. At that rate, the City of Edmonton could pay off a $300-m taxpayer-funded investment in 1,000 years or so.

Bottom line: If done right, a new arena (or any land development) can be used to spruce-up a specific area or vacant lot, if that’s your goal. But more often than not it’s done wrong, and you end up having what we currently have in Edmonton with an arena jammed between two freeways and acres of parking lots surrounding it.

But in Columbus, it was done right. It re-shaped a vacant space in the downtown, created a new arena for an NHL team, and didn't cost taxpayers anything (other than public infrastructure).

All the faux economic benefit arguments should be shelved, as should the TIF, CRL shell game schemes.

1 comment:

Feynman and Coulter's Love Child said...

Not only am I tired of hearing about the two successful models (not, say, the new arena in Glendale Arizona that's due to become a ghost town, or the Seattle home of the Sonics, or even New Orlean's Superdome) in existence, but just once I'd like to hear two key pieces of information addressed:

a) We live in Edmonton. It gets unbelievably cold in the winter. Hockey games are played in the winter. These models assuming that people are going to wander around the downtown arena and frequent shops and restaurants nearby makes no sense. Telus Field is downtown, and people don't do this. Commonwealth Stadium is basically downtown, and people don't do this (EndZone Pub is busy but not packed after games). These venues are open in the summer. This is Edmonton. We like to drive. Go to any casino in the city an hour after the game ends, and its full of people who left the Oilers game. Sports pubs in Sherwood Park and Callingwood get post-Oiler traffic. Why are these businesses inferior to some building next to the arena, even if people go there?

b) The current location of the hockey rink is a hub. There's a transit station and an LRT next door. There's a casino, there's several bars, there's even a couple of nearby hotels. Diesel nightclub is next door, there's residental zoned areas... and yet it seems to be an economically distressed zone. Why is it that nobody can explain whats so different about 118 ave and 75 street and 107 ave and 101 street? (The latter, one may note, is currently even more scummy than the Rexall area)

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