The New Winnipeg Stadium – The Real Cost to Tax Payers

The Mayor is quoted as saying that for an investment of only 6% of the overall cost of $190 million, Winnipegers are getting a new stadium.

That 6% is made up of 10 million dollars in outright grants from the city, and 1.6 million dollars in new infrastructure requirements at the new stadium site.

That’s 11.6 million dollars.

A further 1.1 million dollars in the form of  ‘in kind’ services for building and development permit fees is thrown in as a freebie.

The Mayor is right.  If the $1.1 million in in-kind services is ignored, the $11.6 million works out to approximately 6 % of the overall 190 million dollar estimated cost of the new stadium.

Now if that were the real cost to Winnipeg tax-payer, that would be a good deal.

However, the Mayor (as he frequently does) is telling only a portion of the story.

The City is on the hook for a further  75- 85  million dollars (depending on which numbers you look at) which will be repaid using tax dollars generated through the Tax Increment Financing scheme once the site of the current Winnipeg Stadium is sold and redeveloped.

Because this is new money,  the mayor has conveniently chosen to ignore it.  If this additional money (cost) is factored into the City’s contribution to the stadium project, the total cost to Winnipeg tax payers is in the range of  87 million dollars.

That ups the City’s percentage contribution to the project from 6% to 46%.

In the words of Brian Kelcey,  a former advisor to Mayor Katz, the mayor and councilors need to remember that:

“Just because it’s new money, doesn’t mean it isn’t real money”

Taking into account the true cost to Winnipeg tax payers, is this still a great deal?

Tax Increment Financing

What is Tax Increment Financing (TIF)

Let’s look at it this way.  There is a piece of  property that is generating minimal tax revenue.  If that property were developed and turned into, say, a shopping mall, the newly developed property would yield significant tax revenues.  The upfront costs of the development are high and require borrowing.  In order to pay back the borrowed money, the ‘tax increment’ (that being the difference between the amount of taxes collected prior to and after the development takes place) is designated to pay back the loan incurred to fund the development.

A simplistic depiction might look like this:

  • Current taxes collected on the property    $100
  • Development costs  $100,000
  • Post development taxes $10,000
  • Tax increment $10,000 – 100 = $9900
  • For the first 10-15 years post development the city would use the tax increment ($9900) to pay back the development loan
  • Once the loan is paid off, the taxes generated from the development would return to the city’s general revenue stream

History of  Tax Increment Financing (TIF)


Although relatively new in Canada and especially Manitoba, TIF has been used in the United States for almost 60 years.  In Manitoba the government introduced a bill in 2008 which led to the enactment of the Community Revitalization Tax Increment Financing Act in 2009.

In a 2008  news release when the legislation was announced, the government indicated:

“Our priorities for TIF include support for the further development of Winnipeg’s  inland port, rapid transit system, as well as affordable housing in downtown Winnipeg”.

The government further stated:

Money collected from a community revitalization property would then be invested only in the same designated area”.

The press release concluded by saying:

Tax increment financing is used in several American cities to support revitalization and renewal initiatives.  In Manitoba these levies would be used to support economic development, community revitalization such as housing, social and cultural development and heritage preservation”.

The minister of the day also stated:

It is our intent to consult with and report on the use of tax increment financing to ensure full accountability and support for our priorities”.

The Community Revitalization Tax Increment Financing Act was passed in 2009.

General Assessment of Tax Increment Financing


In the United States TIF has been widely used as a tool to spur economic development in depressed areas.  The general conclusion seems to be that if properly used, TIF can be a valuable tool.

There have been some general criticisms about TIF schemes.  They include:

  • designation of areas as TIF designated areas that would have been developed in any event even without designation;
  • favouritism and special advantage for developers who are politically well-connected; and
  • tax payers bearing the cost of additional public services needed to service the newly developed property.

As an early  attempt at TIF, the Stadium Project, does not seem to fall in line with the stated goals and priorities announced in 2008 prior to the introduction of the legislation.

The tax increment ‘generated’ in the downtown area is being ‘spent’ in the south end of the city- not to develop an inland port, not to support rapid transit, not to create housing in the downtown.  No, instead its being used to build a new stadium at the University of Manitoba.

Stadiums, Marijuana and Photo radar.

Putting the power in the hands of the people who live with the consequences and pay the bills.

Americans are different from Canadians – we all know that.

Their system of government and governance is different as well.  Americans are more likely to demand a direct say in what their governments do at all levels but especially at the local and state levels.

Canada has a different form of democracy, less direct, less hands on. We have a parliamentary system of government; America is a republic.  Under both systems the representatives of the people, once elected, make decisions on our behalf; decisions that may or may not reflect the views and values of their constituents.

Referendums allow the people to have a direct say in what the law should be and which projects should be funded. What a novel idea.

In Canada referendums are rare.  In the United States, referendums are  common and used as tools to guide politicians in terms of what the people want.

The recent mid-term elections in the United States featured many local and State referendums.  The following are of some interest.

In California, Proposition 19, if it had passed, would have seen the elimination of all criminal penalties for adult Californians (21 years of age) who planted marijuana plots up to 25 square feet or possessed up to one ounce of marijuana for personal use.  The proposition did not pass (54 % opposed) but organizers are already planning to put the issue back on the ballot for 2012.

In South Dakota, Measure 13 would have allowed for the medical use of marijuana .  It was defeated with 60% of voters rejecting the measure.

In San Diego, Proposition D, which would have increased sales tax by one half a percent to fund municipal spending, was soundly defeated.  In a bid to gain support for the measure, San Diego Mayor Jerry Sanders had been threatening dramatic cuts to public safety spending if Proposition D failed.  It seems the people in San Diego voted against the measure because they did not trust officials to spend the money wisely.

And lastly, an issue that resonates in Winnipeg:  In Houston, where 800,000 offence notices had been issued since 2006, just over 53 per cent of the votes rejected the continued use of photo radar.  The revenue collected since its inception in Houston amounted to 44 million dollars.

Some Winnipegers might appreciate having a direct say on the issue of stadium funding. Again, what a novel idea, actually asking the people who will have to pay back the loan if they wish to borrow the money.  This, as opposed to allowing millionaire developers and city and provincial politicians (who seem to have difficulty recognizing the difference between an “estimate” and a “wild guess”) making decisions and sending us the bill once all the back room dealing is done.

I sometimes get the feeling we are in a high stakes card game with a number of card sharks.  The problem is the card sharks are playing with our money and we, the public, barely have a seat at the table .  In such a scenario we need to know when, in the words from a popular song, we should “hold’em,  fold’em, when to walk away and when to run”.

With the stadium funding issue, running might be a good option.  Clear the deck, get new players to the table and deal a new hand. Never mind that a hole has already been dug.  It would not be the first time governments have hired people to dig holes and then fill them in.

Perhaps politicians might be surprised with the results if they engaged in open and meaningful consultations with the public.  Given the right time, right location, and most importantly the right players, Winnipegers might just support a major investment of public money to build an appropriate stadium.