As the President and CEO of The Institute for Public Sector Accountability, I was opposed to the last proposal for the Calgary Entertainment Arena (CEA.) It was not because I did not want a new arena, but because I did not think the financing model was fair to Calgary taxpayers..Now that we have a new premier who is supportive of the CEA, and who has been bold enough to appoint a provincial negotiator to at least get the discussions rolling, it is time for us to look at a new financing model which will allow the city council to prove they really want to ‘engage’ Calgarians in the process..Although I believe that private investment should be the majority of the financing, in my view what is already in place, as far as partnerships are concerned, is good. However, we need to look at a real participation by Calgarians. While a Keno lottery would be one way to do it, I propose that we make use of Tax-Free Municipal Bonds (TFMB) that can partly finance this project and remove some of the burden from taxpayers of all levels. Municipal bonds are federally tax-free and in some cases are free from provincial and local taxes too. That means depending on where you live, you may never owe income taxes on the payments you receive from the bond's issuer. It will also be advantageous to get it eligible to be a TFSA investment. The other advantage of municipal bonds is that if they are tax free, investors are open to accepting lower interest rates..This works. This financing vehicle has been used in the U.S for more than 200 years to finance infrastructure as varied as schools, highways, airports and sport arenas. Today, two out of three infrastructure projects in the US are financed by municipal bonds. For example, the city of St. Paul, Minnesota, began using green bonds in 2015 to better manage storm water flow by investing in tree canopies and financing green improvement projects to reduce untreated storm water. FedExForum, home of the NBA’s Memphis Grizzlies and New York’s $850 million Citi Field, which opened in 2009, are two arenas that used municipal bonds. Denver Airport was financed using municipal bonds..Should the city and the province decide this model would be acceptable, Calgarians and the public in general could be the new additional partners in this endeavour, and at the same time remove some of the opposition resulting from a reluctance to burden the taxpayer. The repayment could be made through a special tax on tickets and thus make it a more user-pay model..Calgary deserves a new entertainment arena, but the taxpayer must be relieved of some of the burden. I believe that the use of Tax Free Municipal Bond to partly finance this project will go a long way to getting more acceptance from the public. I urge the committee to really consider this additional alternative to the financing model..Marcel G. Latouche is President & CEO of MLG Associates.
