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Arena analysis: Where is the money going to come from?

Making sense of city council's $100M arena decision
You knew that replacing the aged Sudbury Arena wasn't going to be easy, but who knew the process was going to be so complicated?

You knew that replacing the aged Sudbury Arena wasn't going to be easy, but who knew the process was going to be so complicated?

To recap, Tuesday night, city council passed five resolutions committing them to a process that will lead to a new arena/events centre. That is, unless they change their minds at some point and two-thirds of them vote to reconsider.

If all goes well, an RFP should be issued in early summer, when a decision on location should be ready. That would make a final decision possible by the end of the year. According to consultant Ron Bidulka – who has done this sort of thing a lot – the centre is going to cost $80 million, or $100 million if the city has to buy land, do environmental reviews, etc.

If taxpayers are footing the entire bill, that works out to a 2.2 per cent increase in property taxes. Just for the arena. And that doesn't include the cost of the $50 million-$60 million fire optimization plan, money for the Place des Arts, a new art gallery and library, the Synergy Centre, the 2021 Canada Summer Games, etc.

As someone texted me late last night after the vote, “where the hell is the money going to come from?”

Great question. But when it comes to the arena project, at least, it's not that hard to see a way forward. One thing not discussed last night was the impact of the new casino. Word is Gateway has given some people at the city a look at their proposed design for their new casino, and it's quite impressive.

If you're twinning the casino with the new arena, suddenly the business model Bidulka presented Tuesday changes considerably. A casino attracts more people than an arena by itself.

That means more events, which are better attended, and maybe it loses less money every year. Or, dare we hope, breaks even.

When it comes to the location, it's really a matter of downtown or not downtown. If it is downtown, everyone acknowledges it will be more expensive. You will have to acquire land and find a way to accommodate parking, especially with the Place des Arts already going in the same area.

So put downtown at $100 million, conservatively. But that means putting the casino downtown – which would face strong opposition -- or forcing Gateway to build somewhere else by themselves. Hard to see that making sense.

And if the site selection process determines that it must go downtown, likely the only way to make it viable is to get federal or provincial money. That's what Thunder Bay tried – and failed – to do in the past three years for their dream of a downtown events centre. And they already had $25 million saved up.

But if it's not necessarily downtown – and Bidulka said other cities have successfully built outside of downtown – then the math changes.

While you wouldn't have known it Tuesday, local businessman Dario Zulich has been pounding the pavement in recent months, appearing at community meetings everywhere to make his pitch for his True North Centre.

It would see the arena/events centre, a motocross park, a hotel (and maybe a casino) located on land near Moonlight Beach along the Kingsway. While city staff went to some length Tuesday to say no one is offering to pay for and build a new rink for the city, I'd be curious to see what the financials look like for Zulich's plan if he partners with Gateway.

Zulich has said he can build a facility for $60 million, with loan guarantees from the city rather than cash up front. Downtown supporters detest that idea, and some councillors clearly aren't on board. 

Another possibility is that, once the RFP for the arena is issued this summer, a surprise developer steps forward with a plan better and more affordable than Zulich's.

If that happens, great. But there is already a plan on the table; Zulich ponied up by buying the team and he has been working hard to sell the it to the wider public.

Otherwise, it's difficult to imagine how councillors can get the events centre done, along with the rest of their ambitious agenda, without partnering with the private sector on the arena, or raising taxes beyond what the public is willing to accept.