CalgaryNEXT Discussion pt. 2

[Hot_Flatus]

Originally Posted by Erick Estrada

Welcome to the big city.

So not only do taxes go up/get re-directed from areas in need to build this arena but then we as fans and taxpayers also need to get pitchforked on the other side of the coin? Completely inefficient access, overpriced offsite parking and further ballooning transit fees is somehow attributed to simply being in "the big city"?

I would recommend re-phrasing your comment to "Welcome to the big fubar" for anyone buying into this steaming load of poopy that is CalgaryNEXT. The only ones truly benefiting from this proposal in its current iteration are the Flames organization and blowhards like Brett Wilson who are likely in line to offload investment property for mega dollars.

[Frequitude]

Originally Posted by Bingo

And I've said a dozen times that I agree the cost is $1.8B if the options are
a) CalgaryNext
b) Leave it

You could add a hundred more alternatives (hell, X could be rebuild Bonzai waterslides on the WV) and the cost of CalgaryNEXT would still be $1.8B.

And there is a third alternative currently on the table, and that would be the city's current West Village ARP which was approved by council in 2010. I would love to see the racked and stacked economics of those two side by side, including capital costs, operating costs and revenues from the city's perspective.

My gut tells me that the current ARP would crush the current version of the CalgaryNEXT proposal.
-both have the city paying to clean up creosote so that nets out
-both have the city doing the infrastructure upgrades so that nets out
-CalgaryNEXT requires the city to kick in a bunch of money for the facility itself
-CalgaryNEXT occupies a big chunk of land that doesn't generate property taxes compared to the ARP

[Bingo]

Originally Posted by Frequitude

You could add a hundred more alternatives (hell, X could be rebuild Bonzai waterslides on the WV) and the cost of CalgaryNEXT would still be $1.8B.

And there is a third alternative currently on the table, and that would be the city's current West Village ARP which was approved by council in 2010. I would love to see the racked and stacked economics of those two side by side, including capital costs, operating costs and revenues from the city's perspective.

My gut tells me that the current ARP would crush the current version of the CalgaryNEXT proposal.
-both have the city paying to clean up creosote so that nets out
-both have the city doing the infrastructure upgrades so that nets out
-CalgaryNEXT requires the city to kick in a bunch of money for the facility itself
-CalgaryNEXT occupies a big chunk of land that doesn't generate property taxes compared to the ARP

Well at least you see that netting out, taking this back to a $900M issue and how that should be shared.

I think that should be the discussion, as well as pros and cons from the stadium/arena as an anchor tenant.

From there you go forward or kill it based on actual numbers and not hyperbole.

[nik-]

Except point four means it's not just a $900M issue. It's a $900M issue plus the greatly reduced tax income for the cleanup investment.

[Tyler]

What I don't get.. is there not some sort of provincial or federal environmental grant that The City can apply to to help pay for this?

You gotta think that a toxic dump in the 4th largest city in the country's downtown would be something we can get a few bucks for to clean up.

Cripes, a few ducks go swimming in a tailing pond and Fort Mac get's a billion dollars catapulted in with no questions asked.

I may be oversimplifying things..

[Bingo]

Originally Posted by nik-

Except point four means it's not just a $900M issue. It's a $900M issue plus the greatly reduced tax income for the cleanup investment.

Is that a fact though? I'm asking this honestly.

Seems like a lot of assumptions in a lot of opinions that can't possibly be known.

I'm sure it's $900M + x - y + z - w - u +v = XXXX

If the city feels they don't want this I honestly don't have a problem with that. I just yearn for a real discussion without all the knee jerk posturing.

[Coach]

Originally Posted by Tyler

What I don't get.. is there not some sort of provincial or federal environmental grant that The City can apply to to help pay for this?

You gotta think that a toxic dump in the 4th largest city in the country's downtown would be something we can get a few bucks for to clean up.

Cripes, a few ducks go swimming in a tailing pond and Fort Mac get's a billion dollars catapulted in with no questions asked.

I may be oversimplifying things..

I think there is, but the reason this is going to take so long is to figure out who's paying for what and how much. Legal action against the original company will have to go through and then any payments would be based on the outcome of that. When all is said and done, I think it'll be a combo of everything. But yeah, it'll take years to figure out.

[Frequitude]

Originally Posted by Bingo

Well at least you see that netting out, taking this back to a $900M issue and how that should be shared.

I think that should be the discussion, as well as pros and cons from the stadium/arena as an anchor tenant.

From there you go forward or kill it based on actual numbers and not hyperbole.

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.

[Frequitude]

My last post got me thinking. What do you think the city's stance would be under any of the following scenarios. In all scenarios assume CalgaryNEXT does not pay property taxes.

1) Flames agree to pay for all $1.8B themselves with no city input
2) Flames agree to pay for $1.7B in CalgaryNEXT+infrastructure costs and the city pays the $100M creosote cleanup costs.
3) Flames agree to pay for the entire $900M inside-battery-limits scope (i.e. CalgaryNEXT) and the city pays for the $900M infrastructure and cleanup costs. The fieldhouse is still considered a public facility.

I'm pretty sure they say yes to 1 & 2. Because the tradeoff of a sooner but smaller tax base is probably better than a later but larger tax base. But even that's a debate.

I'm not sure about 3 though. They do get a free "fieldhouse" out of it, but its in a suboptimal location with less than complete access. But that's probably worth the $200M savings. Then it becomes a debate around spending $900M now for a smaller tax base or $900M later for a larger tax base. Man, I'm not sure. #3 is certainly not a slam dunk on first thought.

[nik-]

Originally Posted by Bingo

Is that a fact though? I'm asking this honestly.

Seems like a lot of assumptions in a lot of opinions that can't possibly be known.

I'm sure it's $900M + x - y + z - w - u +v = XXXX

If the city feels they don't want this I honestly don't have a problem with that. I just yearn for a real discussion without all the knee jerk posturing.

Is it a fact that they will get less return on the cleanup investment?

It's an assumption on my part, and others, but I think it's a very reasonable assumption. When you have a massive plot of the redeveloped land not paying taxes for pretty much forever, it's just a straight up lost opportunity to recoup any of those remediation costs.


So it's Remediation + Infrastructure + unknown - tax income

or it's Remediation + Infrastructure + unknown. Plus the added acceleration of schedule, since the Flames want to go sooner and the City wants to wait for the East Village to build out to prevent the West Village from cannibalising its market.

[Enoch Root]

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.

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).

[Frequitude]

Originally Posted by Enoch Root

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).

Yup. Spot on. I was just playing along with the ignoring of time that had been going on. I tried to build time back in to my next post though. Figured I'd start at the other end of the spectrum with the Flames putting all the money in, then working towards more and more city involvement to see if we (ok me just thinking aloud) could logically reason where abouts the threshold might exist. I'm already stumbling at the Flames kicking in $900M for the entire inside-battery-limits scope.

[Fighting Banana Slug]

Originally Posted by Frequitude

My last post got me thinking. What do you think the city's stance would be under any of the following scenarios. In all scenarios assume CalgaryNEXT does not pay property taxes.

1) Flames agree to pay for all $1.8B themselves with no city input
2) Flames agree to pay for $1.7B in CalgaryNEXT+infrastructure costs and the city pays the $100M creosote cleanup costs.
3) Flames agree to pay for the entire $900M inside-battery-limits scope (i.e. CalgaryNEXT) and the city pays for the $900M infrastructure and cleanup costs. The fieldhouse is still considered a public facility.

I'm pretty sure they say yes to 1 & 2. Because the tradeoff of a sooner but smaller tax base is probably better than a later but larger tax base. But even that's a debate.

I'm not sure about 3 though. They do get a free "fieldhouse" out of it, but its in a suboptimal location with less than complete access. But that's probably worth the $200M savings. Then it becomes a debate around spending $900M now for a smaller tax base or $900M later for a larger tax base. Man, I'm not sure. #3 is certainly not a slam dunk on first thought.

1 and 2 would be slam dunks. I think 3 would pass pretty easily as well, in my opinion. For as much hair there is on the project, it would tick a lot of boxes.

So many possible scenarios and variables. I understand CalgaryNext should address the Stampede grounds location, but I wonder if their plan B is actually just the arena in WV. Smaller footprint might provide for a workable CRL, perhaps lessen the infrastructure costs, allow for the fieldhouse plans to remain in Foothills Athletic Park.

[Cappy]

Originally Posted by Enoch Root

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).

It potentially pushes the revenue forward. Or it leaves a big hole that the city needs to fill with existing money until the city is large enough and there is enough demand for additional units.

given the economy now and even average/normal growth rates, you risk diluting the market in EV and WV. As well as everywhere else in the inner-city.

Does Embassy Bosa want to start buying up land and selling units when demand is so low? is Brookfield going to start contacting architects when commercial real estate is in the tank.

And i know the damand will pick up again, i get that. This project is at least 5 years out, but that isn't a very long time to decrease office vacancy to levels where demand for AAAA towers exists.

During the boom, Calgary gets at most 40,000 new comers each year, certainly not all have the desire to live downtown. Is there enough demand to fill WV when other established neighborhoods like beltline, Sunnyside/hillhurst and EV offer a move-in ready product and life style.

I believe this was the original rationale for holding off. Let Calgary grow strong areas rather than diluting all of them. Build up not out mantra in an inner-city style.

Im sure the last thing the city wants is a new arena with nothing around it and no/little demand to develop the area. Nor do they want a massive build up of WV that takes away from the Developments in the other areas around DT.

[Simanium]

Originally Posted by Tyler

What I don't get.. is there not some sort of provincial or federal environmental grant that The City can apply to to help pay for this?

You gotta think that a toxic dump in the 4th largest city in the country's downtown would be something we can get a few bucks for to clean up.

Cripes, a few ducks go swimming in a tailing pond and Fort Mac get's a billion dollars catapulted in with no questions asked.

I may be oversimplifying things..

You would think that this is right up Notley and Trudeau's green agendas. They are already spending us into oblivion, what's another few hundred million to cleanup the creosote. I think part of the problem is that both Notley and Trudeau know that hardly any of their support is from Calgary, so we may get the short end of the stick because of it. CalgaryNext or not, you would think this kind of environmental cleanup would be supported.

[Regorium]

Originally Posted by Simanium

You would think that this is right up Notley and Trudeau's green agendas. They are already spending us into oblivion, what's another few hundred million to cleanup the creosote. I think part of the problem is that both Notley and Trudeau know that hardly any of their support is from Calgary, so we may get the short end of the stick because of it. CalgaryNext or not, you would think this kind of environmental cleanup would be supported.

Slightly offtopic, but the general tone from the environmental ministries is that if it doesn't affect CO2, it's not an environmentally friendly project. CO2 is the political issue du jour and the appetite for other projects really isn't there.

[Bingo]

It may not push things forward though. They approached the developers that handled the East Village recently, so that at suggests they want to get the ball rolling.

Heck maybe the arena/stadium project slows them down somewhat because of the complexity of things ...

Between Sunalta wanting this done, and the damage to basements from the flood they may feel a need to move soon either way.

[Falclore]

Cost aside, do you think the flames would want to wait the 5-10 years just for the cleanup before they could even start building a new arena. With the way these projects seem to escalate in cost every 5 years, that delay alone could add a hundred million dollars to the price of the rink alone and push out the date they would be able to get all the additional revenue from the new building.

[trew]

What I found interesting in the City's reply, was the much lower cost estimates of remediating the Eastern part of the West village. It's the same as the East Village, and I bet probably the same as any near-railway land north of the Stampede.

I think the field house turns this project into a white elephant. It requires near-term remediation of heavily polluted lands in exchange for basically no immediate tax revenue, and a more extensive roadway upgrade. All to get a facility that is not ideally located for its supposed core purpose.

I wonder if anyone has looked at the economics of just putting in the hockey arena on the Greyhound depot and lands to the east? There's more than enough land there for a hockey arena, and this would leave the bulk of the WV land free for development that could mostly follow the original City ARP. This would also allow a much longer timeline for remediation of the Domtar site.

[Enoch Root]

Originally Posted by trew

What I found interesting in the City's reply, was the much lower cost estimates of remediating the Eastern part of the West village. It's the same as the East Village, and I bet probably the same as any near-railway land north of the Stampede.

I think the field house turns this project into a white elephant. It requires near-term remediation of heavily polluted lands in exchange for basically no immediate tax revenue, and a more extensive roadway upgrade. All to get a facility that is not ideally located for its supposed core purpose.

I wonder if anyone has looked at the economics of just putting in the hockey arena on the Greyhound depot and lands to the east? There's more than enough land there for a hockey arena, and this would leave the bulk of the WV land free for development that could mostly follow the original City ARP. This would also allow a much longer timeline for remediation of the Domtar site.

I feel similarly.

I think WV is the perfect location for the arena. I think it is just the catalyst that will get the WV rolling.

I would like to see a new stadium for the Stamps. I would go to games if the experience is better.

However, the sad fact is that it is difficult economics to justify a stadium (especially in the WV). It seems that the fieldhouse idea is all designed in order to end up with a stadium for a price that makes more sense.

Well screw that IMO. I don't want a stadium to get in the way of an arena. I don't want it that badly.

Scale down the project to just an arena. Give us a great facility that will ignite WV.

A smaller project also means a smaller (current) commitment from the city, with respect to cleanup, street re-routing, etc. It would allow for more time to take on those issues more incrementally. It would also result in more remaining WV space, to incorporate more non-project development. In other words, more CRL revenue (which in turn would help aid the incremental projects the area requires).

That is a project that I would think is quite financially achievable for the owners and the city.

Drop the stadium dream and give us an arena already.