The City of Calgary is defending the fee that will be paid to an American firm selected as the development manager for a new downtown arena.
CAA Icon will be paid nearly $18.9 million for the task.
In an interview with CBC News, the city’s general manager of infrastructure services said the job includes overseeing the design process, obtaining necessary approvals and guiding construction of the $926 million event centre block over a three-year period.
Michael Thompson said Denver-based CAA Icon won the contract after a competitive bid process earlier this year.
“They were the highest rated proponent. They bring great expertise and below our budget. So we’re really excited about working with them,” said Thompson.
He said the company performed similar work on Rogers Centre in Edmonton as well as Climate Pledge Arena in Seattle, Washington.
While the city ran the procurement process for a development manager, the $18,894,750 fee for CAA Icon will be shared by the City of Calgary and the Calgary Sports and Entertainment Corporation (CSEC), which owns the NHL’s Calgary Flames.
When asked if the cost would be equally split by the two partners, a city official said more detail would be made available once the arena agreements are made public in the near future.
The contract fee is larger than the one that was included in the last agreement that was signed in 2019 for a new arena on city land in east Victoria Park.
At that time, an agreement called for the Calgary Municipal Land Corporation to be paid $8 million to oversee the development of a new event centre.
Thompson said a development management fee is typically tied to the value of the entire project. He pointed out the new arena is a larger, more expensive project than what was contemplated under the 2019 deal.
“For a development manager, we would expect it to be in the range of one to two per cent of the capital project,” said Thompson.
“We’re excited that CAA Icon were in that range with them so we’re on budget with the procurement for them as our development manager.”
Thompson said the event centre block includes the new arena, a community rink, a parkade, two community plazas and a parcel of land for future development.
It covers 10 acres of land, whereas the previous arena site was seven acres in size.
The previous arena agreement was terminated in late 2021 after CSEC walked away from the arrangement because of concerns about rising costs.
However, talks aimed at reaching a new agreement resumed in 2022.
In April 2023, an agreement in principle was reached that would see the city and CSEC fund a new event centre.
As part of the deal, the provincial government agreed to contribute $300 million toward infrastructure in a new entertainment district as well as paying $30 million toward the cost of a new 1,000-seat community rink that will be attached to the event centre.
The province will also cover the cost of demolishing the Scotiabank Saddledome once the new arena is open.
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CAA Icon acted as the city’s negotiator during the 2022-23 arena talks with CSEC.
Thompson said there is no connection between that role and the fact that CAA Icon was the successful bidder to become the development manager.
He said the agreement was reached in April and the city put out its development management contract in June.
“It was a multi-phase procurement process,” said Thompson.
“It included internal firewalls between the CAA team that had worked on the negotiation as well as the development management team.”
Many details still to come
The amount of the fee in the development manager contract seemed to catch Calgary mayor Jyoti Gondek off guard.
“I did not know the exact number but that information has been released publicly. As we have told Calgarians from the beginning, we are going to be very transparent about the processes,” said Gondek.
The city has not yet revealed how much it paid CAA Icon to be its negotiator in the talks with CSEC.
A date has not yet been selected for construction to begin on the new arena.
Thompson said that will be set in 2024.
A development permit application has not been submitted yet to the city’s planning department as design work is continuing.
Preliminary work including the removal of some underground utility lines near the arena site is expected to start early in the new year.
CAA Icon’s development manager contract estimates the arena project will be completed by the end of 2026.
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