Downtown Arena Master Agreement and Location Agreement Approval

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ROUTING - City Council | DELEGATION S.Farbrother/R. G. Klassen/L. RosenApril 10, 2013 Sustainable Development 2013SCO511

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Downtown ArenaMaster Agreement andLocation Agreement

Approval

Recommendations:

1. That the Master Agreement betweenthe City of Edmonton and Edmonton

Arena Corporation for thedevelopment and operation of theDowntown Arena, be approved andthat the Agreement be in a form andcontent acceptable to the CityManager.

2. That the Location Agreement andLocation Support Agreement, beapproved and that the Agreementsbe in a form and content acceptableto the City Manager.

Report Summary

This report recommends the approvalof a Master Agreement, LocationAgreement and Location SupportAgreement, based upon theNegotiated Framework, approved byCouncil (January 23, 2013) andprovides an update on the DowntownArena Project.

Previous Council/Committee Action

At the January 23, 2013, City Councilmeeting, the following motions werepassed:

1. That the advancement of OptionA as the basis for design of adowntown arena in accordancewith the agreement with the KatzGroup, be approved.

2. That Attachment 2 of the January23, 2013, Sustainable

Development report2013SGM002, be replaced withthe revised Attachment 2 -Summary of NegotiatedFramework re: EdmontonDowntown Arena (January 22,2013).

3. That the revised negotiatedFramework for the design andconstruction of the Option A asper revised Attachment 2 of theJanuary 23, 2013 SustainableDevelopment report.2013SGM002, be approved.

4. That Administration enter into aMaster Agreement, a Tax

Agreement under section 333.1of the Municipal Government Act,and all other agreementsnecessary to finalize the designand construction of theDowntown Arena and associatedinfrastructure, and that theagreements be in, form andcontent, acceptable to the CityManager.

5. That prior to entry into the MasterAgreement, the Agreement bebrought to Council for finalapproval.

Report

The Master Agreement is in accordancewith the terms contained within theframework as approved by City Councilon January 23, 2013, and provides thelegal basis for the City and Edmonton

Arena Corporation to pursue the design,construction, and operation of a newdowntown arena.

The Agreement confirms the followingkey elements:

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Downtown Arena Master Agreement and Location Agreement Approval

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The Design is to reflect the designas approved by City Council onJanuary 23, 2013.

The Maximum Budget for the Arenais $480 million.

Edmonton Arena Corporation is tocontribute $115 million towards the

Arena. The Maximum Budget for the

Wintergarden is $56.5 million. The maximum contribution from the

City towards the Wintergarden is$25 million.

The City is to proceed with thedesign and construction of theCommunity Rink with a maximum

budget of $21 million. The City willown and operate the Communityrink.

The City will contribute a maximum$15 million towards the pedestriancorridor.

The cost for the link to the LRTstation is a maximum $7 million.

The City and Edmonton ArenaCorporation will enter into a Tax

Agreement providing for an annual

maximum payment of $250,000 forarena facilities open during eventhours.

Edmonton Arena Corporationremains responsible for the paymentof the Provincial School Taxes.

Edmonton Arena Corporation willenter into a lease agreement andpay rent for the use of the Arena.

The Oilers will remain in Edmontonfor 35 years.

The City will enter into aSponsorship Agreement at anannual cost of $2 million per year tosecure marketing and promotionalservices.

A ticket surcharge will be leviedthrough bylaw on all events at the

Arena to pay for $125 million of thecapital investment.

A ticket surcharge will be levied onall events at Rexall Place at amaximum of 7 percent with theproceeds remitted to the City.

The City will pursue a BorrowingBylaw to secure funds for theconstruction of the Arena,Wintergarden, Pedestrian Corridor,LRT Link and Community Rink.

A Community Benefits Frameworkhas been developed which includesthe creation of a community basedadvisory committee to ensureongoing liaison with the Arenaoperators.

A secondary community benefitprovides the City with the ability touse the Arena and Wintergarden forcommunity purposes for 28 days peryear at the incremental costs arisingfrom the Citys use.

The development of a GuaranteedMaximum Price for the Project willreflect both the existing design andbudget constraints.

In addition to the Master Agreement, anumber of ancillary agreements arebeing finalized and will be executedconcurrently with the Master Agreementbefore the end of April, 2013. Theyinclude:Location Agreement;

Location Support Agreement Lease Agreement Lease Indemnity Agreement

Restated Land InventoryAgreement Land Inventory Amending

Agreement and Acknowledgement

Sponsorship Agreement Ticket Surcharge Agreement Tax Agreement


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Construction AdministrationAgreement.

Each of the above agreementsreferenced contain terms and conditionsthat further reflect the framework asapproved by City Council.

The Location Agreement and LocationSupport Agreement are of particularimportance as they provide the legalsecurity to ensure that the Oilers willremain in Edmonton for 35 Years.

Project UpdateIn addition to the completion of the

Arena Project Legal Agreements, thisreport also provides an update relativeto a number of related items including104 Street access, Casino operation,and interest from MacEwan University.

With respect to 104 Street,Administration has been in discussionswith the owners of Square 104 todevelop a shared access concept toallow for the use of the existingcontrolled access from 104 Avenue.Shifting the arena to the west and using

a shared access concept will permit amore efficient operation of the arenaand enable the introduction of a new102 Street connection across the site. Itwill also increase the amount of Cityland available for resale anddevelopment. Any costs associatedwith the acquisition of land orconstruction will be funded from withinthe existing Arena and land ProjectBudget.

Positive discussions between the City,Edmonton Arena Corporation, and theowners of the Baccarat Casino continuein an effort to maintain the presence ofthe Casino within the Arena District.

MacEwan University has beenapproached by the City and Edmonton

Arena Corporation to discuss theopportunity to assist in the developmentof the Community Rink. The partnershipwould enable them to operate theirhockey and physical educationprograms out of the facility. Discussionshave been very positive and the Boardof MacEwan University has endorsed, inprinciple, the involvement of theUniversity in the Project together with afinancial contribution to cover costs ofany enhancements to the CommunityRink that may be necessary to meet theUniversitys hockey requirements. Aprocess for the scheduling and rental of

ice time is being developed whichensures that an appropriate amount ofice time for community use at optimumtimes (evenings and weekends) ismaintained.

As outlined in the Community BenefitsFramework (as attached to the Master

Agreement), administration is facilitatingthe creation of a community basedadvisory committee to address issues

and opportunities associated with theProject. A meeting has been tentativelyscheduled for April 30 with theprospective representatives of the ArenaProject Local Advisory Committee, toreview Terms of Reference for theCommittee.

The Project Team, led by ICON VenueGroup, is continuing to refine the designas approved by City Council.

Guaranteed Maximum Price documentsare to be prepared by the fall. Onceprice certainty can be assured within thecurrent budget limits, construction cancommence. It is anticipated that sitepreparation can commence this summerwith construction of the building


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expected to begin in the spring of 2014.The opening of the Arena is scheduledfor September 2016.

Timelines and Targets

September 2013 PreliminaryGuaranteed Maximum PriceDocuments completed by 360

Architecture

October 2013 Costing ofpreliminary Guaranteed MaximumPrice Documents completed by PCL

February/March 2014 - ConstructionCommencement

September 2016 Arena Opening

Corporate Outcomes

Improve Edmontons Liveability Transform Edmontons Urban Form

Justification of Recommendations:

1. The Master Agreement reflects theframework approved by City Councilon January 23, 2013.

2. The Location Agreement andLocation Support Agreement ensures

that the Oilers will remain inEdmonton for 35 years.

Others Reviewing this Report

D. H. Edey, General Manager,Corporate Services

L. Rosen, Chief Financial Officer andTreasurer

L. Cochrane, General Manager,Community Services