Issue

Should the City of Medicine Hat construct a new events center to replace the existing hockey arena? 

Executive Summary

The City of Medicine Hat has proposed the construction of a new Events Centre to replace the old hockey arena. The prohibitive costs of renovating and operating the current hockey arena make it an unfavorable option. In addition to this, the construction of a new arena is expected to attract considerable private investment in and around the Events Centre. Because of this, the Medicine Hat & District Chamber of Commerce supports its construction. 

Background

The City of Medicine Hat’s current hockey arena is in need of repair and renovation to be brought up to code. Renovations are estimated to cost approximately $30 million. The current operating loss of the existing arena is approximately $300 000 annually. Renovations would not address venue limitations or reasonably attract new and varied events. 

As the current arena is not conducive to any other events, in 2007 City Council approved the construction of a new replacement arena and events center. 

The New Event Centre as proposed by the GEC Phase 4 study in October 2009 is estimated to cost $94 316 105.00 with operating losses estimated to be less than $153 000. Currently, City of Medicine Hat Annual Debt Repayment on $94 million is $6.79 million per year (based on the $54 million for $3.892 million per year in Administrative Review Part III). The Government of Canada has committed $10 million towards the cost of the center on the condition that the Government of Alberta matches that commitment. To date, no such committal of funds has been made by the provincial government.

Analysis

The construction of a new events center would have considerable effects on the region of construction, particularly in the form of commercial development and attraction of new businesses. Some sources have estimated that the Centre would attract an additional $75 million in commercial developments which would result in an increased tax base of approximately $1.5 million. Other estimates based on the Administrative Review III August 2009 predict anywhere from $400 million to $2 billion in private investment as a result of the creation of such an events center. In addition to this, the new events center would have an operating cost approximately $150 000 less than the existing arena. 

Currently, the cost of the events center has decreased due to the decreased prices in construction services and materials resulting from the depressed economy. 

Recommendations

The Medicine Hat & District Chamber of Commerce supports the City of Medicine Hat in its efforts to immediately pursue the building of the proposed events center as a catalyst to the development of a new commercial district (the Arena District), as presented in the GEC Phase 4 Feasibility Study of October 2009. As such, the Chamber recommends the immediate construction of the Events Center in order to take advantage of the lower costs of construction.

Date Approved: November 18, 2009
Date Completed: 2013