taxpayers can’t afford to build another village
Taxpayers are on the hook for the balance of payments on hundreds of millions of dollars for the heavily subsidized East Village.
Some are now calling to repeat that performance on the other side of downtown with another project born under false pretences called the West Village.
What is now the East Village began as an area of Calgary where decades ago, affordable housing was knocked down in preparation for redevelopment that did not happen. The city accumulated enough real estate in the ensuing years to guarantee that redevelopment could not be successfully performed without municipal co-operation. Around 2000, city council put the area up for private sector development proposals. Several excellent ideas were put forward and one was chosen. It was felt the two best proposals were overlooked.
In 2002, the winning proponents had their project cancelled in what became known as the East Village scandal. The taxpayers took a $3 million or so reported bath and that chapter ended.
What is important to remember is the private sector was willing and able to come up with the capital and expertise to perform the job without public subsidy.
Statements that the private sector would not touch the East Village are false and were used to justify the current course of action.
Rather than go back to the deep and bountiful private sector well with a new commitment to transparency and protection of the taxpayers, city council, at the urging of then-mayor Dave Bronconnier, signed up for a city-led development with a very deep public subsidy courtesy of a tax increment financing scheme, renamed community revitalization levy by the provincial government.
In many American cities, such schemes have led to debt-ridden, tax dollar sinkholes.
Here in Calgary, city council, rather than using the expertise of the most successful development industry in a hot economy at the confluence of two rivers in the fastest growing city during the biggest boom in history, chose to ignore that resource and the favourable circum- stances by creating a new developer to complete the job.
This financial scheme is financed by siphoning off tax revenue from Encana’s new headquarters called The Bow, even though that building is blocks away from and has nothing to do with the East Village.
The tax revenue coming out of The Bow will reach more than $5 million per year at completion and could be used as a subsidy for 20 years.
That is arguably $100 million worth of roads, transit, libraries or recreation facilities gone from public benefit forever.
Enter the Expo bid and council’s decision to commit $300,000 to prepare for it. The resulting report was an embarrassing bait and switch used as a sales pitch for a repeat performance called imaginatively, the West Village, with only passing mention of Expo.
Taxpayers are still on the hook for the East Village. Any new tax revenue achieved there is only displaced from an unsubsidized development that would have occurred somewhere else.
Despite a competent job done by the Calgary Municipal Land Corp., much of the land remains unsold and vacant. This only adds to the glut of condominiums in the city and a large debt to be serviced.
The question now needs to be asked, can we afford another village? I say not if it is financed in the same way. I am in favour of urban renewal and redevelopment of inner city areas with industrial uses sandwiched between highrises and residential uses.
The real question is, who should pay? We still have a successful development industry here. We are again coming into a positive financial period. We are now investing around $1 billion to build an LRT line to bolster the transportation needs of this area.
Should this area be redeveloped? Yes. Should the taxpayer subsidize another prize location that the development industry is drooling to get its hands on instead of selling it at a big profit for the taxpayers? Should we divert badly needed revenues to subsidize a profitable private enterprise? No way.
City council still has time to learn from this financially failed idea and Calgarians should expect them to do so.