Saskatoon should seek out private developers to gauge interest in building a new downtown arena the way Kelowna did 24 years ago.
Both Saskatoon and Kelowna held votes on whether to build a new arena in the 1980s. Voters in both cities rejected the idea.
From there, the two cities, one located in the middle of Saskatchewan, the other nestled in British Columbia’s Okanagan Valley, took extremely different paths to building a new facility.
In Saskatoon, after a 1985 referendum failed to secure approval for a new arena near downtown at what is now known as River Landing near the former farmers’ market building, a second arena vote was held.
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Saskatoon voters resoundingly approved a remote northern location to build a replacement for the nearly-50-year-old downtown Saskatoon Arena. Saskatchewan Place, the new facility, was entirely funded by the province and the city — in other words, by taxpayers — for nearly $25 million.
The arena, now known as SaskTel Centre, opened in 1988. While it has proved successful, hosting major tournaments like the world junior hockey championships and major concerts, little to no development has been generated nearby.
Thirty-six years on, the investment of millions of public dollars has yielded little return in that regard.
Kelowna took a very different route. Arguably, it has resulted in a better public payback at far less cost and risk to taxpayers in a shorter time.
In the wake of Kelowna’s failed referendum, city hall considered other options to replace the downtown Memorial Arena, which was built in 1945 and seated only 2,600 people for hockey.
I once covered the Kelowna Spartans hockey team in Memorial Arena and always felt fortunate to leave without the rickety press box crashing onto the ice.
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Despite the absence of a new arena or a concrete plan, a Hamilton family bought the Western Hockey League’s Tacoma Rockets and relocated the team to Kelowna for the 1995-96 WHL season.
Rockets owner Bruce Hamilton told the Okanagan news outlet Infonews in 2019 that he arrived with faith that Kelowna’s mayor at the time and a city councillor would find a way to get a new arena built. In the meantime, the Rockets would play and lose money in ancient Memorial Arena.
A couple of years prior to the Rockets’ relocation, Kelowna businessman Andre Blanleil ran for city council and got elected with a key promise to build a new arena.
City hall wanted to find a way to move forward without a referendum, so council pioneered a novel approach. Instead of solely relying on taxpayers to either fund a new facility or assume the risk, Kelowna officials blazed a new trail.
The city sought proposals from private developers, who would develop and pay most of cost of the new arena and assume the financial risk. But the threat of failing, losing the Rockets and being left without a viable arena remained high.
Indeed, the top proponent failed to secure the required financing, forcing Kelowna city hall to move on.
Next up was a company now known as GSL Group. Led by Graham Lee, it owned a prominent local hotel, which it used as collateral. GSL paid most of the $18.5-million cost of building the new arena and was also granted the right to operate the facility for 30 years.
That agreement runs for another five years. Now known as Prospera Place, the arena can accommodate nearly 7,000 spectators for hockey and 8,000 for concerts — about half the capacity of SaskTel Centre.
SASKATOON ARENA IN ‘WORST PLACE’
As a private operator, GSL had more flexibility in generating revenue than a strictly public venue would, adding a sports bar and a fitness centre to help raise money.
But the deal required substantial negotiation because a public-private partnership (P3) of this scale had never been tried before in B.C. Provincial legislation governing cities needed to be rewritten to allow it.
Despite the private developer’s lead role, Kelowna city hall still contributed funds.
According to the 2019 article by Infonews, which assessed the arena project at the 20-year mark, the City of Kelowna paid $6 million toward the cost of building it.
The city also pays an annual subsidy to the arena that will amount to about $31 million over the three-decade span of the agreement. The developer covers the cost of maintenance and any shortfalls in revenue.
The article concludes that the arena project represents good value for taxpayers, at least in the short term.
A cultural district has been established near the site and Kelowna’s downtown is considered to be more animated. GSL built a 14-storey condominium tower on land adjacent to the arena and is now planning towers of 12, 22 and 26 storeys on the arena parking lot the company owns.
That’s the kind of investment envisioned by advocates for a new downtown arena in Saskatoon, although few would want to wait 20 years for it to materialize.
In an interview last fall with Infonews, Kelowna Rockets owner Bruce Hamilton expressed satisfaction with Prospera Place, despite the current need for upgrades, and in particular its downtown location.
“Saskatoon built (the city’s arena) in the worst place, way out by the airport,” Hamilton told Infonews.
Much has changed in the quarter century since Kelowna’s downtown arena was built, including the staggering rise in construction costs. A consultant has pegged the cost of Saskatoon’s proposed new downtown arena at $320 million.
That could dampen any interest from the private sector due to reluctance to take on that much risk. But you’ll never know if an arena angel is out there unless you ask.
Saskatoon city hall should first seek proposals from private developers before moving forward with the arena district. City hall is searching for a private partner to run the facility and pay part of the construction cost, but it should think bigger, like Kelowna did.
City bureaucrats should be well versed in the Kelowna strategy, since it’s covered in a May 2023 consultants’ report on financing Saskatoon’s proposed district.
Yes, the costs are much greater today than in Kelowna 25 years ago, but so are the potential rewards if a developer can be assured preferential access to develop adjacent downtown lands.
Saskatoon has pursued innovative approaches to infrastructure before, notably the half-a-billion-dollar P3 deal to build two bridges and maintain them for 30 years.
And if private developers shudder at the cost and risk of developing a new arena district, even with incentives, that should raise questions about the project’s viability.
Phil Tank is the digital opinion editor at the Saskatoon StarPhoenix.
ptank@postmedia.com
twitter.com/thinktankSK
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