Analysis of Northlands' Vision 2020

Recommendation:
That the August 31, 2016, Sustainable Development report CR_3540, be received for
information.
Report Summary
The report provides Administration's analysis of Northlands Vision 2020 as
directed by Council on March 15, 2016. The report also includes a Question and
Answer summary document and five working papers.
Previous Council/Committee Action
At the March 15/16, 2016, City Council meeting, the following motion was passed:
That Administration work with Edmonton Northlands and relevant key stakeholders
(including but not limited, to the Province and Edmonton Economic Development
Corporation), to analyze the proposals outlined in Vision 2020 as follows:
1. A review of Northlands' needs assessment for each of the major components (Rexall
Place repurpose, Expo Centre Hall D, and the Northlands Park horse racing track
repurpose) and/or complete a third party assessment as required,
2. Analysis of the results from Northlands public engagement on its proposal and
follow up with key stakeholder groups as required to seek any additional relevant
input,
3. An assessment of the capital construction, capital maintenance and operating and
maintenance costs provided by Northlands on its proposals,
4. A detailed assessment of technical and strategic feasibility of repurposing Rexall
Place into multiple ice rinks, including:
a. Testing alignment with our Recreation Facility Master Plan and Arena
Strategy, i.e. If Rexall Place is repurposed for public amateur sports use, what
impact would this have on other arenas or current/planned recreation facilities
in Edmonton and the agreement between the City of Edmonton and Edmonton
Arena Corporation dated August 29, 2013,

ROUTING Special City Council | DELEGATION - L. Cochrane/R. G. Klassen/T. Burge/B. Latte

August 31, 2016 Sustainable Development CR_3540
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3.
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Analysis of Northlands' Vision 2020

b. A review of all available facility evaluations of Rexall Place including technical
assessments to verify the feasibility of any renovations to the building,
5. Options for capital funding that may be available to fund the various projects as
proposed by Northlands in Vision 2020,
6. A review of Northlands' proposals to determine what land use issues arise, including
any processes and timelines would be required,
7. An assessment of commercial, residential and leasing development opportunities
presented in the Northlands Proposal,
8. Management model options for both operating and capital maintenance of the EXPO
Centre,
9. Preparation of a transition plan for maintaining facilities and key events in the event
that Northlands triggers the orderly wind down scenario,
10. Inclusion of alternate scenarios for highest and best use of the site, including but not
limited to Transit Oriented Development,
11. Options from Administration on the debt request.
and return to City Council for a Non-Statutory Public Hearing in August 2016.
Report
A. Report Context
Throughout 2015, Northlands engaged with a variety of stakeholders and consultants to
prepare a new vision for its organization. That vision is outlined in Vision 2020. In early
2016, it approached Administration requesting an opportunity to formally share its ideas
with Council. On March 15, 2016, Northlands presented Vision 2020 to City Council.
A copy of the presentation was made public as well as additional information on
Northlands website.
During the March Council meeting, Northlands made the following statements and
requests as part of its presentation:
1. The current Northlands business model will not be sustainable beyond 2016.
2. That City Council consider debt forgiveness on the $48 million outstanding debt
on the EXPO centre (this was later revised to include forgiveness of the
scoreboard debt).
3. That Administration work with Northlands to explore the feasibility of the ideas in
Vision 2020.
4. That Council provide clarity on the above request prior to September 1, 2016.

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Analysis of Northlands' Vision 2020

City Council passed an 11-part motion directing Administration to work with Northlands
and key stakeholders to analyze Vision 2020. This report is a summary of the analysis
that has been undertaken between April and July of this year. The results and
information contained in the report and attachments is based on information that was
presented to City Council as well as significant discussions and information sharing
between the City and Northlands. Administration would like to recognize the positive,
transparent working relationship between the two teams. To supplement the analysis,
Administration also engaged two separate consulting teams: Western Management
Consultants (Vancouver office) and Coriolis. Western Management Consultants focused
on the market need and demand assessment for the repurposing of the arena at
Northlands, the Hall D retrofit as well as the proposed Festival Site while Coriolis was
retained to evaluate the market demand for the residential and commercial
development. Administration also engaged in discussions with key stakeholders
including, but not limited to, Horse Racing Alberta, Alberta Gaming and Liquor Control
Commission, local festivals and Edmonton Economic Development Corporation.
B. Northlands Context
Northlands, the organization, is an incorporated not-for-profit company and is a distinct
and separate legal entity from the City of Edmonton. Northlands is governed by its
Board of Directors and has strategic goals and plans that are independent of the Citys.
The Northlands Site is located in the northeast of Edmonton, on a City owned, 160 acre
site consisting of: an arena built in 1974 (Rexall Place); Edmonton Exposition and
Conference Centre (EXPO Centre); Northlands Park Racetrack and Casino (Northlands
Park) and over 6,500 parking stalls.
The entire 160-acre Northlands Site is owned by the City, and is operated by Northlands
pursuant to the long-term Site Lease and Master Agreement. The Site Lease grants
Northlands exclusive possession of the Site for $1 per year. The original term of the Site
Lease was August 1, 1989, to July 31, 2019, and included a right of renewal on similar
terms and conditions until July 31, 2049. In 1994, the Site Lease was amended to
exercise a 15-year renewal over the first 30-year term to allow Northlands to obtain
financing for improvements to Rexall Place. As a result, the Site Lease will now expire
on July 31, 2034, with a further right of renewal until July 31, 2049.
While the Site Lease is in effect, Northlands may operate the Site and its facilities in any
manner consistent with Northlands mandate. This includes the right to construct or
modify facilities, with the following exceptions:
Northlands must, as part of its annual budget reporting to the City, identify any
planned construction of new, additional, or expanded buildings or structures that

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Analysis of Northlands' Vision 2020

would exceed $250,000 or be carried out over a period longer than one year, or
any repairs or alterations of existing buildings or structures that would exceed
$750,000 or be carried out over a period longer than one year. The City may
object to these projects, in which case Northlands cannot proceed.
Northlands may not demolish Rexall Place or other building of major importance
without the Citys consent.
C. Northlands Vision 2020 - A Conceptual Plan
Northlands Vision 2020 is a conceptual plan that contemplates a transformation for both
the Northlands organization as well as the City leased lands. The plan explores two
different directions for Northlands future:
1. A strategic wind down of the business, or
2. A redevelopment strategy that includes the following key elements:
a. Rexall Place Repurposing
b. EXPO Centre Hall D Retrofit
c. Agriculture Strategy
d. Horse Racing Wind Down/Festival Site Development, and
e. South Campus Redevelopment Plan (Commercial, Retail and
Residential).
At the time of writing this report, Northlands had not requested capital support.
It is recognized that Northlands requires financing and/or funding in order to realize the
redevelopment strategy in Vision 2020.
Northlands has indicated it could potentially finance part of the Hall D retrofit through
increased cash flows.
Debt forgiveness was identified as a critical component for Northlands being able to
continue as a viable business and advance with Vision 2020. Administration has
completed its analysis in the context of the request for full debt forgiveness to
Northlands for the EXPO Centre debt and the outstanding loan on the scoreboard in the
arena. The inclusion of the scoreboard loan was verbally clarified by Northlands after
the March 15, 2016 Council meeting.
D. Administrations Approach to Councils March 15 direction
After the March 15, 2016, City Council meeting, the Corporate Leadership Team
appointed a senior leader from within the City to lead the completion of this analysis.
An integrated team was established to focus on five key elements of Vision 2020. There

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has been regular communication between Northlands and Administration at various
levels throughout both organizations. Administration has shared copies of the Working
Papers included within this report and has incorporated Northlands feedback where
appropriate.
The next section, Administration's Analysis, includes an executive summary of
Administrations five working papers and is laid out as follows:
1. Facilities (Arena at Northlands, EXPO Centre Hall D, Northlands Park/Urban
Festival Site)
2. Land Development Proposals
3. Public Consultation
4. Finance
5. Legal and Governance
E. Administrations Analysis
1. FACILITIES
Arena at Northlands
Strategically, the proposal to repurpose Rexall Place generally aligns with the 10-Year
Arena Capital Development Strategy (Arena Strategy). The 10-year Arena Strategy
calls for six sheets of ice to replace six aging, single pad arenas by 2019. While the
Arena Strategy did not contemplate the development of a facility with greater than four
sheets of ice, Northlands proposal to incorporate the six replacement sheets of ice
within Rexall Place would leave a void in the south end of the City, as the original
Strategy only called for four replacement sheets of ice in the North with the remaining
two sheets in the South. Moreover, while replacing aging, single pad arenas with multipad arenas within the relative geographic area is rational from an economic perspective,
it should be noted the Arena Strategy recognizes the importance of undertaking
consultations and seeking citizen feedback with the communities surrounding these
aging, single pad arenas.
In addition, the proposal aligns with some, but not all, of the guiding principles of the
current 2005-2015 Recreation Facility Master Plan, however, this plan is currently being
updated. For the proposed Rexall Place repurposing to fully reflect the Recreation
Facility Master Plan, the redevelopment would need to consider accommodating a
broader variety of recreational and community uses. The Plan also recognizes that new
and replacement facilities should be geographically distributed throughout the city, with
a focus on where high demand and low supply is most evident.

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Analysis of Northlands' Vision 2020

The Rexall Place repurposed arena with six sheets of year-round ice as Northlands has
proposed is beyond the projected market needs in this geographic area of Edmonton up
to 2019. Moreover, City of Edmonton and greater Capital Region spring and summer
schedules and revenues from ice sheets could be impacted by Rexall Place
repurposing if demand is shifted to Northlands. Selected facilities would need to be
seasonally closed or convert ice surfaces to concrete, which typically generate less
revenue. The future demand for ice sheet availability of both ice and non-ice activities
beyond 2019 will be addressed in the updated Recreation Facility Master Plan and
Arena Capital Development Strategy.
A tournament needs analysis was also undertaken. Research by Western Management
Consultants indicated that while tournament organizers may desire facilities with
multiple sheets of ice, interviews with private operators such as Canlan (the operator of
Ice Sports Burnaby 8 Rinks in British Columbia) who have substantial experience in the
tournament hosting business revealed there are many other key success factors that
must be considered to achieve the annual volume of tournaments proposed by
Northlands. Some of these factors include well established in-house sales and
marketing mechanisms, sophisticated web platforms to attract a high volume of
tournaments and in Canlans case, the company leverages its significant market reach
across North America to make connections with important third party tournament
organizers. Finally, further detail is required on the Proposals retail and fitness centre
spaces, particularly within the context of the impact they could have on City of
Edmonton fitness centres currently in operation within the same geographic area.
A financial analysis was conducted on the future operations of a repurposed Rexall
Place in 2020. The revenue estimates in the proposal are approximately 40% higher
than those estimated by the City of Edmontons revenue model and the operating costs
are approximately 8% higher than the City of Edmontons expenditure model.
The proposed repurposing as envisioned by Northlands differs from current Cityoperated arena facilities. Vision 2020:
proposes longer daily operating hours
projects higher overall utilization rates
does not reflect the existing adult/minor utilization mix and the substantial ice
rental rate differences between adult and minors
projects a volume of annual tournaments that is not commensurate with historical
tournament bookings across the current City of Edmonton arena inventory.

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Analysis of Northlands' Vision 2020

Administrations analysis found that the proposed Rexall Place repurposing is possible
from an overall technical and engineering perspective. However, there are three
significant unknowns that may affect project costs and implementation timelines:
unknown soil conditions
assessment of utility service conditions
accuracy of the construction timeline.
The construction timelines are intentionally aggressive to meet the Vision 2020
objective, however, no time has been allocated for approvals or further public
consultation.
The project is not anticipated to align with the Citys Sustainable Building Policy and is
understood to include a level of finishing details below recent City recreation facilities.
Depending on the project governance (that is, if it is managed by the City or by
Northlands), this could have an impact on projected costs.
Capital cost estimates provided by Northlands to repurpose Rexall Place are potentially
underestimated based on a preliminary review of the limited information available at this
conceptual stage. The estimate provided by Northlands of $84.7 million only includes
construction costs and excludes soft costs such as planning, design, public
consultation, project management, quality control and contingency which, if accounted
for, would bring the total project cost estimate to $102 million within -10% to +20%.
EXPO Centre Hall D
Northlands proposes retrofitting the EXPO Centre Hall D to increase seating capacity to
5,000 seats and add ice making capabilities to be able to host on-ice events. The
proposed enhancements are technically feasible, however, there does not appear to be
sufficient market demand for a 5,000 seat venue nor the municipal capacity to attract 50
concerts and events annually, as assumed by Vision 2020. Western Management
Consultants market research of venues across Canada indicated that a maximum of 20
to 24 concerts annually appear to be the upper boundary for this type of building.
Although these could be absorbed across multiple existing venues, research data
indicates Hall D could not attract this volume of concerts without impacting the viability
of other existing venues throughout Edmonton.
In 2015, Hall D hosted six concerts. According to the consultants report, adding seats to
Hall D may not make a substantial difference as the venue already has greater seating
capacity than other competing venues in Edmonton. Section B2 of Attachment 2

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provides additional information on the market demand for Hall D including commentary
on risk.
The proposed retrofit would also add ice making capabilities to Hall D so that it could
host on-ice events. However, without an anchor ice tenant identified, such as a Western
Hockey League team or other confirmed annual ice activities, the benefit to
incorporating ice making capabilities may require reconsideration. This has been
discussed with Northlands, who acknowledge the original proposal did have an anchor
ice-hockey tenant. An analysis of industry data indicates that projected revenues for the
facility as stated in Vision 2020 are ambitious.
The estimates provided by Northlands budget of $36.7 million includes construction
costs and excludes soft costs such as planning, design, public consultation, project
management, quality control and contingency which would bring the total project costs
to $38.7 million within -10% to +30%.
Northlands Park/Urban Festival Site
Vision 2020 considers repurposing Northlands Park and a significant portion of the
parking stalls into an urban festival site. The site may provide a unique opportunity to
the region. Based on industry data, there may be market demand in the long term for
this type of festival site, however, it is unlikely this could be achieved by 2020.
Comparative analysis of other major festivals revealed that drawing 90,000+ visitors
could be achieved, but this would take upwards of five to ten years. Based on the
information provided, it is unclear if there is sufficient market demand to achieve the
necessary revenue to make the site profitable. The total annual site utilization is
projected to be 40%, raising questions about how the site would be utilized and
operated for the rest of the calendar year. Administrations interviews with local festival
organizers revealed there is not significant interest in relocating to the Northlands site at
this time.
The information provided on the capital development was limited in describing the
scope of the removal of the existing horse racing track and its replacement with a large
urban festival area and grandstand, including modifications to the agricultural or urban
barns. Given the lack of details provided around functional program and design, the
updated cost estimate provided by Northlands of $83.6 million cannot be verified as
accurate with any certainty. As well, further investigation is required into the extra
operating costs associated with facilitating large crowds, such as emergency personnel,
traffic management, and site maintenance on non-event days.
More analysis is required to evaluate the extent of how this venue would impact the
surrounding community. In addition to this consideration, there are several operational

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risks identified which require further investigation and could significantly impact the
feasibility of this site.
2. LAND DEVELOPMENT PROPOSALS
Administration reviewed the planning, highest best use and residential components of
Vision 2020. Choosing the optimal use of the Northlands site, from the perspective of
the City, should take into account a wide range of factors, including land value,
economic benefits, social benefits, and others. In the context of the Northlands site,
optimal use is more than a function of establishing high density uses.
Administration retained Coriolis Consulting Corp., a Vancouver based firm with
considerable experience in Edmonton, to assist in the analysis of the Vision 2020
residential, retail, and hotel development proposals. The following are some of the key
findings from their analysis:

Development at Northlands will compete with several other areas that are
redeveloping, or planned for redevelopment, outside of Downtown. Coriolis
estimated that Northlands could reasonably capture at most 15-20% of
apartment demand in the citys mature neighbourhoods. This would mean
demand for, at most, 100-150 multi-family apartment units per year on average
from 2015 to 2035, with a build out period of approximately 25 to 30 years. Vision
2020 suggests a more aggressive pace of development in the amount of highrise residential, with absorption rates of 2,700 units over five years, or 540 units
per year. Additional information can be found in Attachment 3 - Development and
Land Use Working Paper.

If residential development proceeds, it may be advisable from an absorption and

revenue perspective to refine the unit mix to include more townhouses and wood
frame multi-family projects rather than the proposed Vision 2020 mix which is
heavily weighted towards high rise concrete multi-family units.

Vision 2020 concept allocates seven to eight acres to free-standing retail use,
such as individual restaurant spaces or local-serving retail. A small
neighbourhood- serving shopping centre could potentially be accommodated in
the allocated space.

Demand for locally-oriented retail space on the site will mainly come from
recreation and event attendees and future residents of the Northlands
development.

The proposed hotels would benefit from location at the recreation, convention
and events venue, but there is no certainty that viability can be achieved without
those destination facilities being in place.

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Analysis of Northlands' Vision 2020

Administration recognizes that Vision 2020 is a high level concept and a considerable
level of planning and further analysis is required as next steps:
A site strategic plan followed by a supporting updated Area Redevelopment Plan is
needed. This would facilitate further input from the public and neighbourhood
stakeholders. This would also allow for more thorough analysis of infrastructure
capacity and requirements.
More detailed financial models and investment grade feasibility analysis for
residential components should be undertaken before any land related financial
commitments are confirmed.
3. PUBLIC CONSULTATION
Administrations overall assessment of the Northlands public engagement effort on
Vision 2020 is that the consultation was extensive in terms of the number and the range
of individuals who provided input. It also was robust in its use of the engagement tools
employed to build awareness of and assess public support for Vision 2020. However a
few limitations in the research conducted were also identified:
There was no link made between the projects and financial costs (Northlands
released the financial impacts of the projects post-public consultation).
There was limited consideration to concerns raised from adjacent communities.
There was a lack of analysis breaking down results between Edmontonians and
non-Edmontonians in Vision 2020. Administration received the detailed breakdown
from Bannister and the findings were that in some cases there were notable
differences, these are outlined in Attachment 5.
4. FINANCE
Administration has completed an assessment of the financial model prepared by
Northlands to support the cash flow projections in Vision 2020, and the impact on the
cash flow projections if key assumptions are revised. In conjunction with this,
Administration has reviewed the viability of the funding sources and financing
alternatives that have been identified in Vision 2020 as well as other potential sources
of funding that may be available from various levels of government. Administration has
also reviewed options related to the request for debt relief by Northlands. This analysis
included an assessment of the impact of any debt relief on the City of Edmontons
operating budget and financial position.

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Analysis of Northlands' Vision 2020

As of June 30, 2016, the City has a $47.4 million long term debt obligation remaining for
the amount borrowed from the Alberta Capital Finance Authority for the EXPO Centre
loan. The City also has a corresponding loan receivable from Northlands for the same
amount. The loan receivable from Northlands has the same general repayment terms
as the Citys debt to the Alberta Capital Finance Authority. The loan receivable
payments the City receives from Northlands are used to fund the repayment of the
outstanding loan to the Alberta Capital Finance Authority. Currently, there remain
another 36 loan payments to be made between today and 2034 totaling $72.8 million
($4.05 million per year), comprised of the $47.4 million debt obligation and $25.4 million
of interest.
If the City forgives the Northlands debt, there will no longer be an identified funding
source to fund the remaining $72.8 million in debt servicing costs to the Alberta Capital
Finance Authority. The City would need to identify an alternate funding source within its
operating budget. If tax levy was identified as the alternate funding source, it is currently
estimated that this would result in a 0.3% tax levy increase in 2017.
As of June 30, 2016, the City of Edmonton has a $1.3 million long term debt obligation
remaining for the amount borrowed from the Alberta Capital Finance Authority for the
Rexall Place Scoreboard loan. Currently, there remains another six loan payments to be
made between August 2016 and September 2021, totalling $1.6 million ($270,000 per
year). If tax levy was identified as the alternate funding source, it is currently estimated
that this would result in a 0.02% tax levy increase in 2017. Pursuant to the Scoreboard
Loan Agreement, the Oilers had an option to purchase the scoreboard upon leaving
Rexall Place. If the Oilers do not exercise this option, Northlands is obligated to take all
steps to obtain an exit payment from the Oilers, which would cover a portion of the
outstanding loan.
Although Northlands business operations were historically sustainable, it is projecting
negative cash flows of $7.7 million per year with the loss of the existing business at
Rexall ($6.5 million cash flows for 2016), the Canadian Finals Rodeo ($0.9 million), and
the closure of horse racing ($4.8 million). As a result, Northlands may not be in a
position to make its loan payments to the City beginning in 2017.
Without a significant change in operations, like those considered in Vision 2020, there is
increased risk and uncertainty that Northlands will continue to be financially viable and
remain a going concern (as identified in the Auditors Report of Northlands 2015
Financial Statements). Northlands is projecting positive cash flows of $7.5 million per
year by 2020 under Vision 2020. However, this can only be achieved through the
realization of a number of key items, namely:

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Analysis of Northlands' Vision 2020

The City of Edmonton agreeing to forgive the EXPO Centre and Rexall Place
Scoreboard loans.
Northlands obtaining access to capital funding sources with no debt financing for
the Vision 2020 capital projects.
The City of Edmonton agreeing to a ticket surcharge for Hall D and Urban
Festival Site events, and to provide Northlands with the 8% lease revenue
generated by the Commercial and Residential land development of 30 acres.
Optimistic timelines and demand for new events, concerts, and ice usage in
EXPO Hall D, the Urban Festival Site, and the Arena must materialize.
The ambitious plan and timing to use the revenue associated with residential
development to finance facility re-purposing must materialize.
There are risks in achieving many, if not all of these considerations.
Administration completed a sensitivity analysis on the Vision 2020 cash flows based on
changes to the above noted key items. Projected annual cash flows vary from positive
$7.5 million to negative $17.3 million per year, depending on changes to these key
assumptions. It should be noted that Vision 2020 includes $19.5 million of corporate
costs. Further efficiencies may be realized which were not incorporated into the
sensitivity analysis.
Northlands operations under Vision 2020 are also projected to generate positive cash
flows in the interim years 2017 through 2020. Starting with a positive cash flow of
$0.2 million in 2017, the first year of the redevelopment, cash flows are projected to
grow to $7.5 million in 2020, the final year of the redevelopment. However, interim
financing may be required prior to Vision 2020 completion depending on the outcome of
the above noted key elements.
Should Northlands fail to make a loan payment to the City for the outstanding EXPO
Centre loan, the City may give ten days written notice of default to Northlands. If the
default is not remedied, the loan agreement states that the City may take back the
EXPO Centre and terminate the site lease.
5. LEGAL AND GOVERNANCE
Legal
In addition to a number of agreements governing the relationship between the City and
Northlands, agreements between the City and Edmonton Arena Corp. related to the

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construction and operation of Rogers Place also have a potential impact on Vision
2020.
Pursuant to the Master Agreement with Edmonton Arena Corp., the Citys ability to
financially support Northlands is limited. Once Rogers Place opens, the City must cease
providing any payments, subsidies, or financial assistance to or for the benefit of Rexall
Place. In addition, the City must not financially support or advocate in favour of any plan
to rebuild or renovate Rexall Place, unless it is to convert the facility to something other
than a sports or entertainment facility. This restriction is not limited to professional
sports, and as a result, the proposed repurposing of Rexall Place in Vision 2020 would
require a formal waiver of the restriction from Edmonton Arena Corp.
In addition, the City currently imposes a ticket surcharge on all tickets for events held at
Rexall Place. Since 1994, the surcharges applicable to non-hockey events held at
Rexall have been assigned to Northlands, and this assignment will continue until August
2016. Following the opening of Rogers Place, the Master Agreement with Edmonton
Arena Corp. requires the City to continue to impose the ticket surcharge on all Rexall
Place events in an amount equal to the surcharge applicable to non-hockey events at
Rogers Place, to a maximum of 7%. However, pursuant to the Ticket Surcharge
Agreement with Edmonton Arena Corp., the City is prohibited from paying the proceeds
of this surcharge to Northlands or using the revenue for the benefit of Rexall Place.
Therefore, Northlands cannot continue to receive ticket surcharge revenue for Rexall
Place.
During negotiations regarding Rogers Place, and confirmed recently by Northlands
legal counsel, Northlands has indicated that it intends to file a court application
challenging the validity of the ticket surcharge applicable to Rexall Place.
Administration does not have any further details regarding this potential claim at this
time but will respond if an application is filed.
Due to the existing agreements with Edmonton Arena Corp. that restrict the ability of the
City to financially support Northlands and any redevelopment of Rexall Place, without a
formal waiver of all or part of these provisions by Edmonton Arena Corp. there would be
risk to the City in supporting the Rexall Place aspects of Vision 2020. Forgiveness of the
EXPO Centre loan could be permitted under the agreements with Edmonton Arena
Corp., subject to the financial risks identified in this report.
Governance
As part of Vision 2020, Northlands has proposed a new governance model to guide its
operations. As a not-for-profit company under the Companies Act, the governance

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structure of Northlands is determined by its Memorandum of Association and Articles of
Association. While Northlands is a distinct legal entity and the City has no authority to
unilaterally control Northlands governance model, pursuant to the Master Agreement
between the City and Northlands, the City must consent to certain changes to
Northlands governance model, including:
The objects (mandate) of the company, as listed in its Memorandum of
Association.
Quorums, conflicts of interest, and the representation of the City on Northlands
Board of Directors as determined by the Articles of Association.
The not-for-profit nature of Northlands.
Northlands proposed new governance model includes the following changes:
Amendment to one of the current objects to provide examples of permitted
activities that may be undertaken by Northlands for the benefit of Albertans.
Reduction of the share capital of the company to $150, divided into 30 shares at
$5 each. The current Memorandum of Association authorizes up to 1,500 shares
at $5 each, for a total capital value of $7,500.
Reduction of the size of the Board of Directors, and changes to the changes to
membership on the Board.
One of the most significant changes is the Citys role in recruitment of Board members.
While the City will only appoint one Director to the Board under the new model, which
may be an elected official, member of Administration, or member of the public, the City
will establish the slate of candidates for election by the shareholders and will appoint the
Chair of the Board. The costs of recruitment are not addressed in the proposed
governance model, however Northlands has indicated that it would be appropriate for
Northlands to pay these costs, and this could be addressed by agreement.
A full summary of the changes to the Articles of Association is contained in the chart in
Attachment 6. These changes, except share allocation, require the approval of the City
before they can take effect.
As the proposed governance model was approved by Northlands based on the
assumptions contained in Vision 2020, if Council does not support all aspects it would
be appropriate for Northlands to have an opportunity to confirm that the proposed model
remains appropriate for Northlands operations into the future. Following the results of
the August 31, 2016, City Council meeting, Administration will further review the

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proposed governance model with Northlands and will return to Council for approval as
required.

F. Summary of Administrations Analysis

Administration engaged external stakeholders and consultants to supplement its
analysis of Northlands Vision 2020 as per Councils direction.
Administration has based its assessment on the information provided by
Northlands, its consultants and other key stakeholders recognizing that Vision
2020 is conceptual.
Administration is not providing any deadlines to Northlands, and has not varied
any of Northlands existing obligations, such as the next installment for the EXPO
loan repayment (due September 2016) and the requirement to collect and remit
the Rexall Place ticket surcharge as required by Bylaw 10841.
There is some alignment for the Rexall Place repurposing with the Citys
Recreation Facility Master Plan and the proposed physical changes to the
building assuming financing and funding are available.
The EXPO Centre Hall D retrofit appears difficult to justify based on the
anticipated market demand for events that attract up to 5000 spectators.
However, an anchor tenant for Hall D would increase the viability of this proposal.
The Urban Festival concept is not sufficiently detailed to complete an effective
analysis.
Highest and best use of the 160 acre site should include a wide range of
economic, social and recreational factors and the overall site plan should include
significant public engagement.
A site strategic plan followed by a supporting updated Area Redevelopment Plan
is needed if Council wishes to explore potential options for this site.
This site location within the city offers potentially multiple opportunities.
Cost estimates for the capital improvements in Vision 2020 have evolved over time from
the original figures presented in February 2016 to the most recent figures provided to
and assessed by Administration. Administration considers the values in the far right
column of the table below to most accurately reflect the costs of Vision 2020, however
estimates for the Urban Festival Site continue to have the greatest degree of uncertainty
as the plans are very conceptual at this time. The costs total $230.3 million.

Vision 2020 Initiative

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Northlands
Feb 2016
Media

Northlands March 15
Presentation to Council

Northlands
Project Costs
(note 2,3)

Analysis of Northlands' Vision 2020

Release

Low

Mid

High

Rexall Place Repurpose

$85.0M

$76.1M

$84.7M

$93.4M

$102.0M

EXPO - Hall D Retrofit

$35.0M

$33.3M

$36.7M

$40.2M

$38.7M

Festival Site (Phase I and II)

$45.0M

$45.4M

$49.9M

$54.4M

$46.4M

Festival Site (The Barns) (note 1)

$33.0M

$36.4M

$39.7M

$37.2M

Commercial Real Estate (note 1)

$4.8M

$6.0M

$7.3M

$6.0M

$165.0M

$192.6M

$213.7M

$235.0M

$230.3M

Total
1.
2.

3.

The Barns Expansion and Commercial Real Estate capital costs are part of Vision 2020, but were not
separately identified in Northlands presentation to City Council on March 15.
Administrations review of capital costs are based on:
Northlands external costing consultants all-in project costs for the Arena and Hall D retrofits.
For all other projects, mid-point of Northlands updated financial projections provided to
Administration.
Does not include parkade, landscaping, and off-site development costs.

Note - Before any requests for capital financial support could be presented
Administration suggests more rigour to translate the project estimates into a formal
budget estimate would be required.
The request of Northlands is that Council consider forgiveness of its debt for the EXPO
Centre and Scoreboard and to provide feedback/support its Vision 2020.
The new governance model has been provided to Council, however, it is not before
Council for approval.

G. August 31, 2016 Council Meeting Process

City Council has established a Special City Council meeting for the purpose of receiving
Administration's report on its analysis of Northlands Vision 2020 as well as hearing from
members of the public.
Administration will make a presentation to City Council. The delegation for the
presentation will only include members of Administration. After Administration concludes
its presentation, members of the public will be invited to speak to Council in panels.
After questions of the panel by Council, the next panel will have its opportunity to speak.
This process will continue until all speakers have spoken. At that point, Administration
will be invited back to respond to questions of Council.

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Analysis of Northlands' Vision 2020

Anyone interested in speaking to Council on any matter contained in this report, should
register to speak by contacting the Office of the City Clerk at 780-498-8178 or at
www.edmonton.ca/meetings.
Anyone wishing to learn more about Northlands Vision presentation to City Council can
do so by reviewing the March 15/16, 2016, City Council meeting. The presentation from
Northlands was included in the Council minutes, agenda item 6.1.
Budget/Financial Implications
The financial implications of debt forgiveness is discussed in the Finance section above
and in Attachment 4.
Legal Implications
The legal implication is discussed in the Legal and Governance Section above and in
Attachment 6.
Metrics, Targets and Outcomes
This section provides quantifiable data to support the information in the report. Only
metrics that are within the City of Edmontons area of responsibility are provided in this
section.
Metrics

Targets

Outcomes

41 sheets of ice in Edmonton

(both city-owned and private for
public consumption)

The Arena Capital

Development Strategy
references 1 ice sheet per
20,000 population as a
supply guideline for urban
centres in Canada (NOTE
- this was approved in
2007 and Administration
will be updating the
Strategy)

Edmontonians have
access to recreation
at indoor ice arenas.

4 sheets of ice in the north

quadrant are recommended to
replace 4 aging single pad
arenas
6 sheets of ice in Northlands
proposal
To date, 100% of scoreboard
repayments are on time

100% of scoreboard
repayments are on time

Maximum ticket surcharge of 7%

for non-hockey events held at
Rexall are assigned to
Northlands until August 2016

No ticket surcharge for

non-hockey events held at
Rexall will be assigned to
Northlands after August

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Analysis of Northlands' Vision 2020

2016
Site Size = 160 Acres

There is no target for the

size of the site

Edmontonians have
access to world class
events

Current Assessment value:

$33,703,000 for master account
Rexall Place

There is no target for

assessment value.

The site has the

highest best use
taking into account a
wide range of factors,
including land value,
economic benefits,
recreational and
social benefits

There is no specific target

for number of people who
provide input

A city where we are

connected, invested,
and proud to
participate in shaping
our community.

Assessment value:
$193,643,500 for master account
Edmonton Northlands
2016 municipal taxes for Rexall
Place: $81,918
2016 municipal taxes for EXPO
Centre: $37,665
2016 municipal taxes for Track:
$51,848
1,200 Edmontonians responded
to a General Population
Telephone Survey
612 residents in the eight
neighborhoods adjacent to
Northlands responded to an
Adjacent Communities
Telephone Survey
17,016 responses (includes both
Edmonton and non-Edmonton
residents) were collected from
the public in a General
Population Web Survey
172 responses were collected
from both Edmonton and nonEdmonton residents in a
Stakeholder Web Survey
168 event attendees at six
Northlands events responded to

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Analysis of Northlands' Vision 2020

an Onsite/Customer Intercept
Survey
1,360 responses were collected
from panel members through the
City of Edmonton Insight
Community
32.7% of non-residents have
concerns compared to 41.9% of
Edmonton residents/business
when asked in the general web
survey if there are any concerns
about the vision
$72.8 million in debt payments
($4.05 million per year)
remaining until 2034

All debt payments made

on time and completed by
2034

0.3% tax levy increase required

in 2017 if debt forgiven and paid
through tax levy

2017 Target tax levy 3.4%

City remains within

total debt and debt
servicing limits

2018 Target tax levy 4.8%

$1.6 million remaining for the

Rexall Place Scoreboard loan
0.02% tax levy increase required
in 2017 if debt forgiven and paid
through tax levy

Attachments
1. March 15, 2016, Council Motion Question & Answer

2.
3.
4.
5.
6.

Facilities Working Paper

Development and Land Use Working Paper
Finance Working Paper
Public Engagement Working Paper
Legal and Governance Working Paper

Others Reviewing this Report

T. Burge, Deputy City Manager and Chief Financial Officer, Financial and Corporate
Services
A. Laughlin, Deputy City Manager, Integrated Infrastructure Services

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Analysis of Northlands' Vision 2020

R. Smyth, Deputy City Manager, Citizen Services

C. Campbell, Deputy City Manager, Communications and Public Engagement
G. Cebryk, Acting Deputy City Manager, City Operations

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