I took a bit of flack for the rhetorical device I employed in my previous post on this topic. If you go back and look, you’ll see that the reasons I said are motivating me to say no are principles: 1) limits on public borrowing authority and the application of those borrowed funds; and 2) public consensus among my constituents.

The other issues I noted were more practical challenges I have with the proposal and overall situation. I simply judged the principles more important to my decision making that the practicalities.

I accept that the well orchestrated public relations effort will, if nothing else, cause this to be an election issue again which will give anyone who goes door knocking a chance to take a fresh sample. I look forward to that. I think there are probably now more than one in a thousand who would support this type of proposal, but my read from questions I get asked at Community League events and in correspondence with the public is that there remains an overwhelming degree of skepticism among the people I represent about the financing. I think public opinion is more mixed about whether it’s compatible with Downtown. I’m open in principle to such a development downtown, and would evaluate an application for rezoning coming forward to Council with an open mind.

Meanwhile, Paula Simons at the Journal has addressed some of the factors in play with the Community Revitalization Levy (CRL) model in today’s paper. She notes that $1 billion in development (if and when completed) would yield on the order of $14 Million in annual property tax revenue (quoting a city official). At today’s interest rates this might leverage up to $150 million in borrowing. Presumably it will take other revenue streams (casino bucks, ticket surcharges, expanding the levy area into Downtown North Edge, and maybe others) to cover $400M borrowed.

There is another issue she didn’t cover which I call the zero sum problem. No doubt the hypothetical new hotel next to the hypothetical arena is induced by the arena. However, the demand for at least some of those new hotel rooms already exists for people coming to events at the current Rexall Place. Same with pubs and restaurants, etc. This is about moving demand around, and creating some new demand in the process, which is fine. But a new arena can’t be given credit for all the demand for new property development nearby. A related consideration: if new capital is invested in an arena complex hotel instead of a hotel in the Quarters, we’ve lost the tax revenue elsewhere. It’s just false to argue that all the tax lift in the hypothtical CRL can and should be linked to a new arena.

I anticipate a retort to this: why use a CRL in the Quarters and not for an arena? Simple: the $160M we plan to spend in the Quarters is for sidewalks, streets, parks, and so on – in other words, municipal infrastructure. Yes it’s designed to attract capital to develop the area that might go elsewhere, but the success of turning around Downtown East hinges on that. While I have said that a new arena complex could be positive for Downtown, I don’t think that the success of Downtown Edmonton hinges on it. Indeed, Hyperbolic suggestions that the future of our city depend on this development have added little to the debate.

I think the sport and entertainment industry and development business together need to build a business case and a project scope they can afford, then what we’d be talking about is something sustainable in its own right, and therefore not requiring government involvement.

But If this is really about small market NHL hockey not being sustainable without government involvement, let’s debate that and let’s talk about which orders of government should be involved in solving that issue, bearing in mind that municipal government has five cents from the average Edmontonian’s tax dollar, while the province has 26 cents and the Feds have 69 cents.

Here’s one of the most important questions about the future: If the new arena were built, in 20 years will it then be too small and dated and whathaveyou? I just want to be mindful of getting onto a treadmill of having to do this over and over again. I think that if we go for this once it will never stop.

My answer is no.

I am not saying no because the request was announced to a room full of people other than City Councilors (at a building owners and managers industry luncheon).

I am not saying no because our municipal borrowing power is limited by law, nor because what’s left within our ‘credit limit’ will be needed for the most part to fund our portion of the next phases of LRT, should the province in turn come forward to fund the NAIT, West and Millwoods LRT lines.

I am not saying no because the Coliseum (as I knew it growing up) has a generation of functional life left in it as far as I can tell, nor am I saying no because Northlands needs a better seat for any new scheme than the spot in the nose-bleeds they currently occupy.

I am not saying no because the deal seems to be changing and Katz’s $100M seems to be off the table for the arena and is now proposed to go toward the surrounding development.

I am not saying no because the province just cut the Municipal Sustainability Initiative (MSI) grants for infrastructure from $260M to $160M for 2010.

All of these are related issues, but the two reasons I am saying no are:

Firstly, because it’s not our City’s place to give private industry access to government borrowing power. We are fortunate enough as municipalities in Alberta to borrow through something called Alberta Capital Finance, which – thanks to the fiscal discipline of both local governments and the province – enjoys among the best credit ratings you’ll find (and thus lowest interest rates) anywhere. The public sector has earned this. The private sector has not. Which raises another question about who else would we do this for, or alternately why for an arena and not, say, for a hotel/spa?

The second reason I am saying no is that I knocked on thousands of doors in 2007 and this issue was raised by at least a thousand people. Only one told me the city should help finance a new arena. So I have my marching orders.

This is a relief. I was waiting for something concrete I could react to. So there you have it.

(Update: this has provoked some vigorous follow up debate in the blogosphere and on Twitter. Some fair critiques of style and rhetoric. Guess I shouldn’t write these while taking a redeye flight. One clarification I should have added: I am not against a planning application to develop something like what’s been proposed. It could be compatible and positive for downtown. However, I’ve always seen the financing question as separate.)