PICKING UP SPEED
Valley Line LRT track takes shape while city builders ponder the future of development and traffic along the route
Success on the $1.8-billion Valley Line LRT will be measured not just by the people it moves but by the new residential towers and a string of mini-downtowns around at least five of the coming LRT stations.
But it’s no sure bet, said one local expert. Edmonton’s tax regime will work against redevelopment.
Land speculators will profit from sitting on vacant land and aging buildings as the new line drives up prices.
It could take 20 years or longer to reap rewards if the city isn’t pushing, prodding and stepping up with carrots and sticks.
“Having these (residential) projects built shores up the value of doing the Valley Line in the first place. But the private individual is left to risk their own money,” said Jeffrey Hansen-Carlson, a local manger with EllisDon and founder of the Canadian Transit-oriented Development Institute.
“Once that planning (and zoning) discussion is done, what’s next?”
Construction is now obvious throughout southeast Edmonton, with new elevated track pillars, sound walls and even some track bed in place.
City officials are expected to release anticipated traffic impacts on Thursday.
City officials said Edmonton’s new 13-kilometre line will use a low-floor LRT and its route is mapped in large part to encourage higher-density, mixed-use development in The Quarters, at Strathearn Heights, Holyrood Gardens, Bonnie Doon Mall and the Mill Woods Town Centre.
But there’s no guarantee the billions of private investment needed will follow.
The property tax system laid out in provincial law links the amount of taxes an owner pays to the value of their property.
By sitting on a rundown piece of property, the owner pays less tax while the surrounding neighbourhood improves.
When the land value climbs, the owner stands to profit by selling the property without having to invest in improvements.
Hanson-Carlson said Edmonton’s developer community is eager to actually rebuild sites all along the LRT, but Edmonton needs to understand how many barriers they face.
Well-designed, transit-oriented development is much more complicated than building wood-frame houses in the suburbs.
It involves sewer and road upgrades the banks won’t finance, and selling the units demands a culture change for each customer.
DEMANDING A CULTURE CHANGE
“Implicitly, we’re asking you to sell your vehicle, give up your backyard. All these things are on the fringes of the conversation,” said Hanson-Carlson, who helped organize a recent bus tour and symposium to bring TransEd, city staff and developers together to tour and discuss property along the line’s route.
“You’re relying on people’s habits to change in tandem.
“It’s a play on increased ridership, people’s habits. It takes time,” he said.
“The financial community (also) needs to understand that and not see that as a negative.”
Already, Nearctic Properties is in talks with the city over financing the public walking street for Strathearn Heights.
It can’t get a bank to loan the $13 million needed for a public street — the main public space to sell residents on the new neighbourhood — and wants the city to put up the funds, repaying it with the increased taxes new homes and condos will generate.
The city’s head of planning, Peter Ohm, sounds open.
The city already has an agreement with Brookfield Developments to contribute $14 million for a public walking street and LRT crossing on the Muttart site near Stadium station, counting on the increased tax value of the redeveloped property to reimburse taxpayers.
You’re relying on people’s habits to change in tandem. It takes time. The financial community (also) needs to understand that.
FINDING THE TIPPING POINT
City officials were hoping Muttart would be a pilot project, helping to create guidelines for the next investment, but market conditions prompted Brookfield to delay construction.
The Strathearn project could be a second pilot project, Ohm said, and officials are aiming to get a business case and detailed proposal to council before year end.
The key is to find the “tipping point,” Ohm said, enough investment to make development happen where the city needs it, but not so much it’s paying for things the private sector is able to cover.
Hansen-Carlson said other jurisdictions have looked at changing the tax structure, moving to a system that taxes land more than the buildings on it to decrease speculation.
This is what Edmonton did to drive construction during the early 1900s.
The new provincial City Charters may give more flexibility in this. But Ohm said any move would require “a tonne of engagement (with the industry)."
HIGH HOPES FOR THE MARKET
Mayor Don Iveson said changing the tax regime around LRT stations is not something he’s looked at yet.
But partnerships such as the one proposed for Strathearn Heights are definitely on the table. It won’t get projects built if the market is not there, he said.
But “if it’s close to practical, then can working together accelerate that project?”
“We have high hopes for the market itself to actually evolve,” he said.
“The economics of it are difficult,” he said, pointing to the Century Park development. But even on the west leg — where funding is still uncertain — developers are already starting to plan. Iveson is confident those towers and vibrant, walkable streets will come eventually.
“The strongest catalyst for investment is the transit itself.”