Quote:
Originally Posted by Frequitude
It may net out on a nominal dollar basis but it certainly does not net out on a net present value basis. CalgaryNEXT accelerates the city's planned expenditure by a considerable amount. Let's say the city's discount rate is 5% and CalgaryNEXT causes the cleanup to happen a decade sooner. Accelerating $900M is then a $350M difference in net present value.
When you spend money has just as much of an impact on economics as how much you spend. That is why you need to evaluate all options based on total capital costs, operating costs and revenues, along with their respective time profiles.
But for the sake of argument, lets ignore time value of money for a second and have that discussion. We'll assume that the cleanup/infrastructure costs are the same. Let's also assume that all additional WV development outside the CalgaryNEXT footprint are also the same. We'll call the CalgaryNEXT footprint X acres.
Scenario 1: City puts money into X and receives zero property taxes from X. i.e. money goes out and none comes in.
Scenario 2: City sells X and receives property taxes from X. i.e. money comes in and money comes in.
Yes this is a crude economic analysis, but directionally I think it holds. I don't see how CalgaryNEXT can hold a candle to the next alternative.
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Sure, CalgaryNEXT pushes the city's timeframe forward with respect to cleaning up the creosote.
But if that's the case, it also pushes revenues forward, as other developments will follow the arena into the area.
The costs happen earlier, but so does development (and thus CRL taxes).