Money: Oilpatch downturn has cost Calgary $300M in tax revenue from downtown offices now sitting empty - - PressFrom - Canada
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MoneyOilpatch downturn has cost Calgary $300M in tax revenue from downtown offices now sitting empty

12:51  07 june  2019
12:51  07 june  2019 Source:   cbc.ca

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CALGARY - CBRE says Calgary 's downtown office space got a little less empty in the last quarter for the first time since the sector was gutted by the oilpatch downturn . The commercial realtor says the vacancy rate dropped by 30 basis points to 27.4 per cent in the three months to the end of

For years, Calgarians could rely on the sky-high value of their busy downtown office towers to help cover a healthy chunk of municipal tax revenue .But with the downturn — and thousands of layoffs emptying out oilpatch offices — the value of the core's non-residential properties fell by more than.

Oilpatch downturn has cost Calgary $300M in tax revenue from downtown offices now sitting empty© Robson Fletcher/CBC After years of leaning on downtown's office towers for tax revenues, it appears it will be years again before the City of Calgary can do so once more.

For years, Calgarians could rely on the sky-high value of their busy downtown office towers to help cover a healthy chunk of municipal tax revenue.

But with the downturn — and thousands of layoffs emptying out oilpatch offices — the value of the core's non-residential properties fell by more than $12 billion in three years, sinking city tax revenues by $300 million.

Big drops in property assessments mean fewer tax dollars flowing from downtown officer towers, but the city still has the same revenue demands.

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But with the downturn — and thousands of layoffs emptying out oilpatch offices — the value of the core's non-residential properties fell by more than Big drops in property assessments mean fewer tax dollars flowing from downtown office towers, but the city still has the same revenue demands.

City bureaucrats told to outline M in cuts from Calgary budget causing 'least harm' to services: Oilpatch downturn has cost Calgary $ 300 M in After years of leaning on downtown 's office towers to cover a healthy chunk of municipal tax revenue , Calgary 's politicians are facing tough decisions

That shortfall needs to be made up — and that's putting political heat on local councillors and creating concern for businesses outside the core now faced with picking up the slack.

More than half of business property owners in Calgary are facing property tax hikes higher than 10 per cent this year.

If there was still any hope that a bounce in downtown office vacancies might provide a salve — one that could help city council kick the issue down the road a little longer  —  that is looking like wishful thinking.

Experts are not forecasting a sharp rebound even with things moving in a more a positive direction recently.

"We're looking at very, very, very conservative [economic] growth over the next, certainly, five years," said Greg Kwong, Alberta regional managing director of CBRE, a real estate brokerage company.

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After years of leaning on downtown 's office towers to cover a healthy chunk of municipal tax revenue , Calgary 's politicians are facing tough decisions thanks to a large number of vacancies. Canada's net foreign asset position was up by .7 billion in the first quarter, to 6.1 billion. The increase in the value of

Calgary landlords are turning empty offices into apartments as city’s oil jobs dry up: Landlord fined a second Aside from the renovation cost , the building sat vacant for almost a year. Speeding fines on Calgary pathways have jumped from to Oilpatch downturn has cost Calgary $ 300 M in

"We don't see a huge drop in vacancy, although we do believe that the worst is behind us."

The "worst" was pretty ugly, though.

When the oil boom was still rocking Calgary in the fall of 2012, the same downtown vacancy rate was reported to be hovering around four per cent and under.

CBRE reported downtown office vacancies approached 28 per cent at their peak last year.

It appears the rate has come off last year's highs but downtown offices have still been pegged at roughly 20 to 26 per cent vacant, depending on who you ask.

It's a reflection of the economic, and some argue political outlook for the city and the oilpatch.

"The question is, 'How fast is the expectation for the economy to rebound in Alberta?'" said Roelof van Dijk, a director of market analytics at CoStar Group, in an interview from Toronto.

Van Dijk notes forecasts for slow economic growth in Alberta this year, ongoing issues with getting pipelines built and continued employment challenges. Some outlooks call for a rebound next year, he said.

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After years of leaning on downtown 's office towers to cover a healthy chunk of municipal tax The bylaw amendment makes it an offence to sit or lie on sidewalks on the 100 through 300 blocks of Too noisy for busking: The town of Comox bans the Oilpatch downturn has cost Calgary $ 300 M in

Calgary council unanimously voted to cut million from the city's budget and use million from reserve funds in an emergency bid to lower commercial property taxes , hours after Oilpatch downturn has cost Calgary $ 300 M in tax revenue from downtown offices now sitting empty .

Oilpatch downturn has cost Calgary $300M in tax revenue from downtown offices now sitting empty© Provided by Canadian Broadcasting Corporation

But van Dijk said it could still take "a long time" before a return to the kind of market Calgarians saw at the start of the decade. For one, Alberta will still have to contend with external factors, like trade disputes and growing U.S. oil production, which might also alter the province's economic outlook.

Oilpatch downturn has cost Calgary $300M in tax revenue from downtown offices now sitting empty© Christopher Katsarov/The Canadian Press Calgary Mayor Naheed Nenshi said if council approves a new proposal, which will use $70.9 million for rebates to business properties, it will result in a virtual tax freeze this year for those property owners.

Kwong believes the biggest challenge affecting the downtown has been "bad politics," which have impeded the energy sector by either making no decisions or bad ones.

He said a lot of people will be watching to see what the federal government decides to do with the Trans Mountain pipeline expansion, a decision expected to come later this month.

Regardless, city council faces some difficult decisions.

On Monday, it will debate a property tax rebate package for business property owners outside the core who are facing large tax hikes as the tax burden shifts away from the downtown.

Calgary landlords are turning empty offices into apartments as city’s oil jobs dry up

Calgary landlords are turning empty offices into apartments as city’s oil jobs dry up Office vacancies continue to hover near record highs after an exodus of international producers and industry-wide job cuts . Following the 2014-2016 price crash, companies are grappling with a pipeline shortage that discourages growth. Encana Corp., Cenovus Energy Inc. and MEG Energy Corp. are among producers that have cut jobs in the past two years even as global crude prices rebounded. The conversion trend is also taking root in Alberta’s capital of Edmonton, where new office towers have left older buildings without tenants, as well as in other cities where residents are eager to move downtown.

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The report has a sharp, partisan flavour, including an assertion that the bill is "not as advertised" — the same tag line Conservatives use in a series of ads attacking Prime Minister Justin Trudeau. Oilpatch downturn has cost Calgary $ 300 M in tax revenue from downtown offices now sitting empty .

Mayor Naheed Nenshi said if council approves the initiative, which will use $70.9 million for rebates to business properties, it will result in a virtual tax freeze this year for business property owners.

It follows council's decision the past two years to use rebates to limit tax increases on businesses.

The problem isn't new. Even worse, it doesn't appear to be going anywhere.

In recent years, the city council has made cuts and found savings to the tune of hundreds of millions of dollars. There have been hundreds of layoffs; jobs have gone unfilled.

Now, with downtown facing a long climb back, council could be pushed to go further to reduce taxes. There's talk about the need for a deeper discussion about structural change that shakes up the city's four-year budget plans and could lead to cuts in jobs and services.

That talk may be inevitable because after years of leaning on the downtown for tax revenues, it appears it will be years again before the city can do so once more.

Read more

Trans Mountain still faces huge 'execution risk up until the oil starts flowing’, Moody’s warns.
CALGARY – The oilpatch applauded Ottawa’s long-awaited announcement that it will build the Trans Mountain pipeline expansion, but also worried about further delays to the $7.4 billion project. “Does it change investment strategies at the operating level or from foreign investment? No, it doesn’t,” said Grant Fagerheim, president and CEO of oil-producing Whitecap Resources Inc. “This is one positive step. Do they have the fortitude and desire to push through to get the pipe built?” Fagerheim said, noting that he expected continued legal challenges. Trans Mountain Corp.

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