Edmonton’s proposed $450-million downtown arena is on shaky ground after city council denied a Katz Group request for more public funding.

Mayor Stephen Mandel and the rest of council spent most of Wednesday morning discussing the downtown arena deal behind closed doors at city hall.

The mayor, saying he was “frustrated,” emerged from the private meeting visibly tense after the Katz Group - owner of the Edmonton Oilers - asked for increased funding bucks from the public.

The city has already pledged $125 million to the arena and Mandel said it will not pony up more cash. Just how much more the Katz Group wanted is not being revealed.

In a nearly unanimous vote, council moved instead to support the original funding framework hashed out back in October.

“I feel the October motion went a long way to ensuring what council’s vision was,” he said after the closed-door session.

“We are supporting the motion we passed in October, which in my opinion was a good deal for all parties to keep sustainable, strong, great hockey here.”

The mayor chose his words carefully as he spoke, ever-conscious of the third party investor rules governing how much of the private meeting he could reveal to the public.

“It was a matter of additional public funding that was determined by the Katz Group that they need in order to move ahead,” said Mandel.

“Administration has been working incredibly hard, and so has the Katz Group, to come up with a resolution and we haven’t been able to do that.”

When asked if he was feeling more, or less, optimistic about the possibility of the arena deal going through, Mandel weighed his answer carefully.

“I would say optimistic might not be the best word,” he said. “Frustrated would be more accurate.”

Mandel would not say if the deal itself is now in jeopardy, but did stress that the neither party has issued an ultimatum of any kind.

“I’d have to say that it will be determined over the next couple of days as to whether or not it is (at risk),” he said.

Late Wednesday afternoon, Katz Group officials issued a statement of their own in response to council’s motion.

“We share city council’s desire to develop a world-class arena for $450 million, but two years of design and engineering work tell us it simply cannot be done without sacrificing the public’s demands for an iconic arena that is well-integrated with surrounding neighbourhoods, or in a way that makes economic sense for both parties,” read the statement.

It went on to say the group has “invested countless hours and millions of dollars towards the design and development of a new downtown arena, plus approximately $70 million, including land acquisition costs, to advance the related private sector development.”

Still, it seems the group remains committed, at least for now, to hashing this out.

“The Katz Group is committed to continuing to work with the City to find creative solutions that work for both sides,” it read.

Coun. Kim Krushell — a longtime supporter of the proposed arena project – was surprised by Katz’ request Wednesday and echoed Mandel’s feelings of frustration.

She says council wants to work towards an agreement too, but will likely continue to oppose the notion of more public funding.

As for the missing $100 million in funding, it’s still hoped the province will pull through, said Mandel.

“They are working on a program for that,” he said, adding the arena project can move ahead without that particular chunk of money.

“We’re very confident that program will be in place and we can get the funding we need from the province for the balance of the arena. That isn’t an issue.”

He says he doesn’t know where things go from here, and that the ball is now in the Katz Group’s court.

“We hope that administration can get things back on track and get this moving ahead,” he said.

Back in June, it was revealed the arena project had run over budget, though city administration has since agreed to trim costs down to $450 million.

The city spent $25.9 million to buy the land the arena and community rink will sit on, and paid another $15.4 million for surrounding property, bringing the total to $41.3 million.

The city has also already spent half of the $30 million overall design budget.

Officials are also slated to return to the city with a detailed design for the project at the maximum price by early 2013.

The lease at the Oilers’ current home, Rexall Place, expires in 2014.

Meanwhile, Seattle’s city council has recently backed a $490-million NBA/NHL arena deal with $200 million in public funding.

angelique.rodrigues@sunmedia.ca