The Edmonton Oilers' new downtown arena received final approval on Tuesday during a meeting with city officials and construction is scheduled to begin next month.

The $480 million Rogers Place, designed in a shape that resembles a oil drop, should be completed by fall 2016.

"This is an exciting day for Edmonton as we move ahead with a project that will help realize our vision of a more vibrant downtown and ensures that the Edmonton Oilers remain a vital part of our city for years to come," Edmonton Mayor Don Iveson said.

"The look of Rogers Place is bold and forward-looking, just like Edmonton. As part of our downtown vision, it will serve as a symbol of our city's great future."

A major hurdle in negotiations involved determining who would pay for cost overruns with the project. A guaranteed maximum price agreement ensures that the construction company would cover any expenditures over the $480 million budget.

Oilers owner Daryl Katz acknowledged that he visited Seattle to access the market when talks with the city of Edmonton bogged down. The final green light from Edmonton ends any threat of the franchise relocating.

"For the Katz Group and the Edmonton Oilers, we have always believed Edmonton's need for a new arena was a huge opportunity to help transform our downtown into the vibrant, diverse and dynamic community that is the hallmark of every great city," Katz said.

"We couldn't be more excited to see that vision becoming a reality and I want to thank Mayor Iveson, City Council, former Mayor Stephen Mandel, and the entire team at the City and everyone else who has labored over this project for years for their tenacity and faith in this project."

The new arena is projected to seat 18,641, which will make it the 14th largest venue in the NHL.