It’s a good time to be a developer in Edmonton.
Let’s preface that by acknowledging our appreciation for the development community. Not only is Alberta navigating its way through the worst provincial recession in decades, but developers are constantly fighting narrowing margins and tepid demand as they endeavor to make our city a better place to live and work. Notwithstanding the risks involved in every project, the new energy code has added more costs and overall pressure on real estate values has added even more uncertainty. Cognizant of all these challenges, it’s perhaps more appropriate to say it’s a good time to get approval on massive, unprecedented projects (admittedly, a much less enticing opener).
Fresh off the high of Rogers Place, the City Council is on a development bender. Announced this week was approval for Alldritt Tower, an 80 storey skyscraper that will indelibly change Edmonton’s skyline. Numerous projects have already been approved in Whyte Avenue, each of which required a massive overhaul of an established Area Structure Plan. These projects and others also recently approved, have gone against either senior planner advice, fierce community opposition or even the mayor’s own vote.
Coincidentally, this development is all coming on the heels of rising civic debt and mounting pressure against continuously increasing property taxes. The mill rate for 2017 will be announced anytime now and we’re expecting it to increase yet again. Last week we speculated that these projects are being approved primarily because the City needs the money. Not that the application fees will bring meaningful revenue, but once the projects are built, the corresponding real estate will add to the overall tax base. In theory, the City will be able to spread the revenue it requires over a larger amount of properties, and thus keep mill rates from continuing to rise at disturbing rates.
To be clear, we are not anti-development. Nor is the logic of demand-driven growth lost on us. It simply appears that City Council has resorted to rubber stamping projects that historically would have been denied. Our (unsubstantiated and baseless) conclusion: this penchant for approving new projects is a result of excessive and uncontrollable spending.
City Council has an addiction but it found a drug to feed their habit.
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