[thommyjo]

Downtown is one of the only areas I think this sort of subsidy is worthwhile because of all the derivative impacts on commercial leasing, retail, vibrancy, crime/disorder costs, increased transit revenues, slower sprawl, etc.

It’s not cheap, but racing towards a 20-25k downtown population as fast as we can is critical.

 

[kcantor]

Well I'm not so sure about this one...

Taking a quick look at the numbers in the Schedule, they used an example of a property with a current assessment of $5,000,000 and a future assessment of $42,000,000. After investing that $37,000,000 in additional monies to complete the project. This program would then provide a stabilized rebate on future property taxes of $160,000 per year for 10 years.

That $160,000 per year represents an additional "return" to the developer of 0.43% on his incremental investment. In exchange for that, the developer needs to front end all of the development costs and accept a minimum $78,000 in reduced rents (assuming all units are one bedrooms as the "qualifiers" for others are not apparent) to qualify for that rebate - roughly 0.21% of his incremental investment. The net return to the developer from this program is therefor 0.22% for which he is expected to cede project control of 40% of his project and incur his accounting a reporting costs to participate.

In my experience, new development projects don't proceed or not proceed on the basis of a 0.22% incremental return. So, unless I'm missing something, this is an ongoing program that the city needs to administer - which won't come for free - for some 14 years or longer that won't actually increase the housing stock that would be developed without it.

If I'm missing something here, I'd be happy to know what it is...

 

[policyenthusiast]

Edmonton's housing shortage (assuming one exists, not making an inference one way or another) is not proportionately represented by Downtown vacancy. This is pouring water into a lake while the plants die.

Affordable housing investment should go where people want to live, not where the City wishes they would move. For example, SE Edmonton has a lack of rental supply, while current DT rental properties are having to offer staggering incentives just to get renters to agree to a one-year lease, which are seldom being renewed.

 

[CplKlinger]

Well I'm not so sure about this one...

Taking a quick look at the numbers in the Schedule, they used an example of a property with a current assessment of $5,000,000 and a future assessment of $42,000,000. After investing that $37,000,000 in additional monies to complete the project. This program would then provide a stabilized rebate on future property taxes of $160,000 per year for 10 years.

That $160,000 per year represents an additional "return" to the developer of 0.43% on his incremental investment. In exchange for that, the developer needs to front end all of the development costs and accept a minimum $78,000 in reduced rents (assuming all units are one bedrooms as the "qualifiers" for others are not apparent) to qualify for that rebate - roughly 0.21% of his incremental investment. The net return to the developer from this program is therefor 0.22% for which he is expected to cede project control of 40% of his project and incur his accounting a reporting costs to participate.

In my experience, new development projects don't proceed or not proceed on the basis of a 0.22% incremental return. So, unless I'm missing something, this is an ongoing program that the city needs to administer - which won't come for free - for some 14 years or longer that won't actually increase the housing stock that would be developed without it.

If I'm missing something here, I'd be happy to know what it is...

Here's the Schedule, just so others can see the numbers that @kcantor is analyzing.

 

[whattheheck]

Will there ever be a time where we as taxpayers DON'T have to subsidize private sector residential development in the DT?

I would rather see public dollars go to public services that address issues such as dealing with social disorder, safety (and perception of), cleanliness etc.

 

[thommyjo]

Edmonton's housing shortage (assuming one exists, not making an inference one way or another) is not proportionately represented by Downtown vacancy. This is pouring water into a lake while the plants die.

Affordable housing investment should go where people want to live, not where the City wishes they would move. For example, SE Edmonton has a lack of rental supply, while current DT rental properties are having to offer staggering incentives just to get renters to agree to a one-year lease, which are seldom being renewed.

View attachment 716468

This picture means nothing. There are thousands of more units downtown vs riverbend for example. Doesn’t mean riverbend has high demand, there’s simply low supply there.

In the end, we want to grow our downtown population, not our car dependent suburbs.

If the demand is high and supply low in suburbs, than the private market can deliver the units easily. We shouldn’t use taxpayer dollars in areas without significant spillover effects (like retail support, transit use, vibrancy, removal of derelict land in high traffic areas).

 

[thommyjo]

Will there ever be a time where we as taxpayers DON'T have to subsidize private sector residential development in the DT?

I would rather see public dollars go to public services that address issues such as dealing with social disorder, safety (and perception of), cleanliness etc.

Downtown subsidizes taxpayers’ suburbs….so….

 

[kcantor]

Will there ever be a time where we as taxpayers DON'T have to subsidize private sector residential development in the DT?

I would rather see public dollars go to public services that address issues such as dealing with social disorder, safety (and perception of), cleanliness etc.

My guess is that doing that with the same dollars would drive more new development than this program with a lot less admin.

 

[IanO]

Not mutually exclusive and given that our Downtown continues to lag behind the rest of Canada's big cities, it can use all of the help it can get (for now).

 

[IanO]

Infill Development in Edmonton Association — IDEA Blog

www.infilledmonton.com

 

[policyenthusiast]

This picture means nothing. There are thousands of more units downtown vs riverbend for example. Doesn’t mean riverbend has high demand, there’s simply low supply there.

Downtown has supply and low prices, and yet no one is moving there. So why would we not build affordable housing where people want to be?

If anything, the welfare approach to housing construction (and the concentration of low-income residents to Downtown) is a detractor to commercial investment.

 

[thommyjo]

Downtown has supply and low prices, and yet no one is moving there. So why would we not build affordable housing where people want to be?

If anything, the welfare approach to housing construction (and the concentration of low-income residents to Downtown) is a detractor to commercial investment.

Downtown has the highest average rental prices. What do you mean “low prices”?

I think you need to review some data to recalibrate your perspectives. “Low income residents” are the ones filling up Sky residences, parks, Falcon, switch, sync 111, CX, legends, and thousands of other condos being rented by owners for well over $1800/month??

 

[policyenthusiast]

Downtown has the highest average rental prices. What do you mean “low prices”?

I think you need to review some data to recalibrate your perspectives. “Low income residents” are the ones filling up Sky residences, parks, Falcon, switch, sync 111, CX, legends, and thousands of other condos being rented by owners for well over $1800/month??

I could provide the chart which I've already shown in the past showing constant value declines of DT residences since 2009, or I could link the CMHC's average rent by neighborhood by bedroom type showing that Downtown does not have the highest prices, CMHC data showing vacancy rates, or I could show the CoE map listing the city-supported affordable housing developments by neighbourhood, or I could show the CBRE reports demonstrating sustained weakness of economic investment of downtown CRE.

I believe that new supply should be where supply is lacking. Downtown supply is not lacking. You are free to disagree with both or either of those points, and it is not my duty to convert you.

 

[kcantor]

Not mutually exclusive and given that our Downtown continues to lag behind the rest of Canada's big cities, it can use all of the help it can get (for now).

There’s a big difference between actual help today and simply giving up future tax dollars from 2029 to 2039 for no real impact today.

It’s past decisions like this from previous councils and administrations that are a larger part of what is financially hamstringing our current council.

 

[Kosy123]

Got curious with all this conversation on the rental market talk, so I dived into the CMHC's Housing Market Portal to take a look.

For comparison purposes, here's the data for the City, and a few select neighbourhoods by Census Tract (when available)

Downtown Edmonton as a neighbourhood seems to be on par and slightly lower with rental rates in the newer suburbs in the Southeast and Southwest. However the neighbourhood region includes a massive chunk of Boyle Street, which probably depresses overall asking rental rates due to the older rental stock in these areas. Makes sense.

Situation becomes much different once we focus on the Census Tract which is mostly located in the municipal boundaries of downtown.

Downtown Edmonton, when defined by boundaries closer to what we see municipally, shoots up to have one of the highest average rental rates in the city for 1 bedroom units, and is easily the highest area in the city for 2 bedroom units. Considering this is where most of the newer units with better amenities we have popping up in downtown, that checks out.

Pretty big contrast in comparison to the southern end of downtown and Rossdale where average rental rates drop significantly, probably due to older rental stock.

.