CARE NEEDED TO SUSTAIN CITY'S FRAGILE ECONOMIC MOMENTUM
After suffering through an abysmal 2020, there are legitimate reasons to believe an economic recovery is coming for Calgary — if we can finally get some big things done.
On Thursday, Calgary Economic Development's annual Report to the Community event highlighted some recent progress in the city, from a growth spurt in the tech sector to expectations GDP will grow by more than five per cent this year.
Yet, a pause on the $550-million arena project and the continuing delay of the $5.5-billion Green Line LRT development — two key pieces in a much larger puzzle — highlight a nagging concern.
Calgary has plenty of plans to re-energize the downtown and big-ticket public projects to unlock other investments, but needs to prove it can get them over the finish line.
“We are primed for opportunity, but we have to stop the negative narrative because the investment community listens,” said Coun. Jeff Davison, who sits on CED'S board of directors.
“We want people paying attention to Calgary as not only the place to invest but seeing us as doing things — not just talking about doing them.”
The COVID-19 pandemic triggered a severe economic recession in Calgary, as it did in many other cities.
A collapse in energy prices last spring, the back-and-forth of business closures due to public health measures and a spate of layoffs — the unemployment rate surged above 15 per cent last June — unfolded during a particularly bleak period.
This year, a few encouraging signs have emerged recently.
Oil prices are now above US$63 a barrel. Capital spending is modestly increasing and the jobless rate eased to 10 per cent in March, although it's still far too high.
Last month, multinational information technology firm Infosys announced 500 new jobs will be coming to Calgary. The housing market is heating up. More TV and film productions are coming to Calgary.
“The feeling in the city, even in these dark times, it feels a bit different,” Mayor Naheed Nenshi said in an interview after speaking at the event.
“At the moment, just like in my front lawn, there are lots of green shoots.”
CED chief executive Mary Moran told the online forum that research in key Canadian and international markets last fall found 44 per cent of business executives said they would consider expanding to Calgary.
But a prospect isn't a firm promise; the development authority has to reel them in.
“We certainly have some challenges ahead of us, but there is no denying we see can lots and lots of positive momentum,” Moran told the event.
“It feels like it's finally our time.”
Things are improving, yet there are no assurances a recovery is inevitable. Vaccination rates and fickle commodity prices can have a huge effect on the future of the economy.
While funding deals for the arena and Green Line LRT development are in place, there are no guarantees these major projects will go off as planned.
The funny thing about momentum is it can quickly swing back in the wrong direction if you're not paying attention.
On Wednesday, Calgary Municipal Land Corp. said the new event centre — approved in 2019, with the city and Calgary Sports and Entertainment Corp. (CSEC) agreeing to contribute $275 million each — has been paused to resolve differences in the project's current budget estimates.
It's reported the costs have increased by $70 million.
More clarity is needed to properly weigh the consequences of what a cost increase would mean for taxpayers, CSEC or the project's timelines.
However, even the potential of a delay is sparking apprehension.
“We are quite concerned about the pause, we are quite concerned about possible cost estimates
that might be larger than anticipated and about accountability for those,” said Calgary Chamber of Commerce interim CEO Murray Sigler.
“But we also want to see the events centre-arena proceed. We want to see it proceed on a viable basis … it's another example of what a robust city requires.”
As for the Green Line, talks are dragging on between the UCP government and the city, making it unlikely that full construction can begin this year, although some early work may get started, Nenshi said.
In December, procurement activity on the development's southern section was paused to permit further discussions between the two levels of government.
Speaking to reporters, Moran noted there is a commitment to go ahead with both projects.
“It's more a snooze button than it is a stop,” she said. “I am confident today they will get done.”
Nenshi said this is the right time to spend on infrastructure, particularly as U.S. President Joe Biden moves ahead with a mammoth eight-year, $2-trillion jobs and infrastructure plan south of the border.
Conversations with the provincial government on the Green Line are going well, although Nenshi acknowledged he's growing a bit impatient.
As for the arena project being put on pause, “it's not something I am ringing any fire bells over,” he added.
It is time, however, to make sure the fragile momentum the city has in place keeps going.
In other words, take nothing for granted.
“We must resist the urge to take our foot off the pedal,” cautioned Nenshi.
“We are moving in the right direction on many measures, but it's going to take a lot of hard work, as well as some good luck, to be able to move fully into recovery.”