February 28th, 2024

Arena deal conditions costing city more

By COLLIN GALLANT on July 8, 2021.

A worker prepares to pack new roadway leading to the Medicine Hat Arena site on Monday afternoon. Newly released documents state the city's costs to close a sale of the facility for new housing have risen.--News Photo Collin Gallant

cgallant@medicinehatnews.com@CollinGallant

The city’s cost to meet conditions of the Medicine Hat Arena sale have risen, and including tax abatement and grants to a proposed housing project, it may not realize a boost in the tax base – the driving goal behind the deal – for a decade or more.

That is according to calculations made by the News this week as city contractors work to install new roadway and utility servicing to the 50-year-old arena in the North Flats.

It could be torn down this fall to make way for a condo tower planned by New Rock construction.

That will act as a catalyst for future development, city officials said Wednesday, and eventually boost tax base, though the city will pay more to avoid demolition costs – now born by the developer – than the city’s own demo cost estimates.

In all, the city could spend $3 million in work and grants at the site, which would change hands at no cost, on condition NewRock handles demolition estimated to cost $3 million.

Chris Perret, the city’s director of land and real estate development, said the deal is a positive for the city, will result in a clean site, new marque building and spur activity that otherwise would not have taken place.

“You do have to offset costs when you are dealing with a brownfield site (redevelopment),” said Perret, who added the city’s own costs have risen due to construction inflation, outdated estimates and additional work.

“We’ve added some land aspects that incorporate the greater Waterfront District vision, some roadway and other things. That will facilitate some future developments in the area.

“We always are making sure there is a positive to the taxpayer.”

Perret said other work includes additional roadway and retaining one acre of parking for the YMCA Downtown location, which sits on leased city land.

From an estimate of $1.5 million two years ago, the work is now expected to cost $2.6 million.

Senior New Rock officials were out of town on Monday, and not available for comment, but have previously said their plan to build high-end condominiums on the difficult site was ambitious and would add a new dimension to housing in Medicine Hat.

The conditional sale, announced in 2019, was posed in terms of using several financial enticements in exchange for long-term tax assessment growth in older areas. That is a key plank in city development strategy to arrest costs and seemingly lead to higher revenue aiding the effort to balance the city budget.

Under the deal, the developer would pay nothing for the land but assume costs for demolishing the 50-year-old structure, while the city assumes costs to subdivide the parcel from neighbouring municipal land and upgrade services.

According to the city’s property tax calculator, if the new building was valued at $25 million for tax purposes, it’s annual municipal tax bill would be $205,000, requiring 15 years to total $3 million.

The project, originally estimated to cost $1.5 million, was at year-end revised to $2.75 million, in the capital project summary released in April 2021.

The project will also be eligible for “Waterfront District” housing grants launched this year to increase residential construction in the city’s central area and revitalize the area from the Athletic Park baseball diamond, next to the Arena, west and including downtown.

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