Downtown arena at impasse, says Katz Group

The city and the owner of the Edmonton Oilers are so far apart on the proposed downtown arena, the project may become too expensive to pursue, says The Katz Group's lawyer.

"We remain hopeful that we can break the current impasse and move the project forward as soon as possible, as a failure to do so will expose the project to additional design and construction costs that could make the arena prohibitively expensive,"John Karvellaswrote in a letterto the city managerSimon Farbrother Tuesday.

'I don't know where these things come from. That's frustrating' Mayor Stephen Mandel

On Wednesday city council rejected a request for moremoney afterThe Katz Group said it can no longer build an "iconic" arena, for $450 million.

But the letter from The Katz Group indicates the need for more publicmoney is only one issue separating the city and the Katz Group.

'Significant challenges'

It lists seven items needing to be negotiated before the arena can go ahead, including sharing of cost overuns, maintenance and operating costs and a casino arrangement.

"They present some significant challenges, but also point the way to creative solutions if we can work together to achieve them," Karvellas wrote.

However he also stated the two sides are still a long way from finalizing a master agreement with time running out.

"To be clear, we are advised that any interruption in the design process will result in an inability to complete construction on the arena by the fall of 2015, as contemplated, with the attendant cost increases to follow," Karvellas wrote.

The letter was a surprise, said Mayor Steven Mandel, Thursday.

Someofthe issues, such asthe casino licenseand non-compete clause with Northlands,had beendealt with before the summer andhe finds it's puzzlingthey're being raised again.

"I don't know where these things come from," he said. "That's frustrating."

Nonetheless he characterized the issues as "substantial."

Karvellas told CBC Newsthatnegotiations with the city arecontinuing and he was meeting withFarbrother later in the day.