No direct help coming to fill Calgary office towers, says Toews
The UCP government has no intention of creating a specific program aimed at incentivizing or attracting tenants to fill empty office towers in Calgary's downtown, Finance Minister Travis Toews said Friday.
In an interview following an address to the Calgary Chamber of Commerce, Toews said while the UCP is committed to creating a pro-business environment that makes Alberta an attractive choice for new and existing businesses, fixing the office vacancy rate problem that exists in both Edmonton and Calgary falls outside the realm of provincial jurisdiction.
“I would suggest that the province shouldn't be putting out a specific program for vacancies in both our major cities,” Toews said. “We have a responsibility to create a very competitive business environment, and municipalities can determine what they might want to do in terms of incentivizing their commercial space.”
Toews' comments come one day after the UCP government delivered its 2021-22 provincial budget, which predicts an $18.2-billion deficit and foresees the provincial debt ballooning to a record $115.8 billion by the end of the fiscal year as the province continues to recover from the COVID-19 pandemic and the global oil price crash.
The budget set aside $3.1 billion for measures aimed at helping the Alberta economy and businesses recover from the double whammy of those two catastrophic events. Included in that funding will be $1.5 billion over three years for “strategic investments” in specific economic sectors, including technology, tourism, aviation, aerospace, pharmaceuticals, energy, financial technology and agriculture.
The budget also contains no new taxes. However, it does not offer a specific plan to deal with the hollowing out of Calgary's downtown core due to consolidations and job losses in the energy sector. A report released in January by CBRE Canada pegged the downtown office vacancy rate in Calgary at 29.5 per cent in the final quarter of last year. Six years ago, before oil prices crashed, the combined assessed value of all of the office buildings in the city's core was $24.6 billion. Those same buildings are now valued at just $9.4 billion.
The issue has been a top-of-mind problem for civic officials in Calgary, as the rapid decline in market value in the downtown has resulted in redistribution of property taxes to other non-residential property owners, resulting in untenable tax increases for some small businesses. It has also led to an increase in residential property taxes.
Last month, NDP Opposition leader Rachel Notley vowed to commit to a formal plan to address downtown Calgary's vacancy problem if elected to another term in government. She said a downtown strategy for this city would be a key economic policy for her government, and would include measures to support new small businesses, strengthen existing energy companies and new head offices.
Toews said the UCP has already set the stage for a revival of Calgary's downtown through reductions in the corporate tax rate, through investments in Alberta's tech sector, and by reducing red tape for businesses.
“We are positioning the province to fill those office towers,” he said. “I really believe that broadly it is government's responsibility to create the most competitive business environment, and we're working hard to do that.”
Following Toews' address to the Chamber, NDP finance critic Shannon Phillips said Thursday's budget falls short when it comes to offering solutions to get Alberta's largest city back on its feet.
“Going into the budget we were hoping to see a plan that would get Calgarians back to work today, and that would lay out a vision for the city's future. We didn't see anything of the sort,” she said.
Phillips added if the UCP really wanted to help Calgary's downtown, the first thing it could do is approve the Green Line LRT project.
“The Green Line will connect the downtown core, it will reinvigorate the economic core of this province,” she said. “It is a crucial piece of economic stimulus in Calgary, and it's just sitting on the Minister's desk.”
On Thursday afternoon, Mayor Naheed Nenshi told reporters the provincial budget means that Calgary will see an estimated 25 per cent reduction in the grants it receives for capital projects. He said the budget is a missed chance to do more for Calgary's economic recovery.
“The government of Alberta, I would suggest, had a great opportunity to set a bold path forward for what a post-pandemic Alberta looks like … and particularly how we are going to support cities,” Nenshi said. “What we got was what charitably can be described as a caretaker budget, something that doesn't rock the boat. And to me that's disappointing.”