Amidst the backdrop of a potential downtown arena and an entertainment district taking shape over the coming years, city council members have shown early indications revealing their preferred financing methods. These methods were discussed at a recent meeting of the governance and priorities committee, focusing uniquely on five potential avenues for revenue generation, as proposed in a report by accounting firm, KPMG.
Mayor Charlie Clark, along with his associates, underscored the long journey that lies ahead before final decisions can be made. Mayor Clark stressed the importance of transparent dealings with the community, striking a balance in funding the project to benefit those who stand to gain from it and, crucially, minimizing dependence on property taxes.
The suggestions from KPMG’s 60-page report include an accommodation tax, facility fee, tax-increment financing, a vehicle rental tax, and parking fee adjustments — all to aid in the funding of the forthcoming project. The projected revenue from these initiatives could rake in anywhere between $6.7 million to about $21.4 million annually, contingent on the council’s final decisions.
However, the idea of a vehicle rental tax has been rejected outright by the administration in contrast to plans for parking fee adjustments, provided the district development goes ahead. At the heart of many cities across Canada, lies the accommodation tax. It’s essentially a compulsory fee slapped onto short-term accommodation solutions such as hotels, motels, hostels, or services like Airbnb and VRBO. If implemented, KPMG approximates that the hotel fee alone could conjure up to $4.7 million a year.
Saskatoon Chamber of Commerce CEO, Jason Aebig, voiced his support for the implementation of this accommodation tax. In his view, the onus of the cost should fall on the shoulders of visitors who would enjoy the facilities, rather than burdening the residents with an increased property tax.
However, Aebig’s support for the tax is not without conditions. He expects complete financial transparency and strict oversight, with stakeholders ensuring that the tax funds its intended cause and doesn’t merely swell the general revenue. He insists that the tax is reserved to aid the completion of the district.
Lending further legitimacy to these plans, Discover Saskatoon, a city-financed non-profit tourism bureau, already enforces a similar fee as part of its Destination Marketing Program. These visitor-based assessments have become a prevalent trend, generating wealth and prosperity for the community.
The looming need for additional funds if a downtown arena or district fails to materialize has prodded many councillors to consider these revenue opportunities. Tax-increment funding, a mechanism designating the property tax revenue from properties within a specified boundary, is also viewed favorably by council members as a plausible method to finance the new district.
Since the initiation of discussions for a new arena in 2018, both the council and city administration have emphasized their shared aspiration to keep dependence on property tax as minimal as possible while forging ahead with future plans.