City council approves downtown plan with $200M investment

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City council approved a new plan Monday to halt downtown Calgary’s decline.

The Greater Downtown Plan is a strategy to find a long-term fix for the vacancy problem in the core, where nearly one-third of available office space is currently empty. It aims to create a better mix of residential and business space, draw in more private investment and create more opportunities for amenities and entertainment in central neighbourhoods.

Council voted 10-3 to approve an initial $200-million investment in the plan, with $123 million coming from city reserves and an additional $77 million coming from anticipated federal infrastructure funding. Officials said that’s just a start, and over the next decade, central neighbourhoods need $1 billion of investment, with the private sector, province and feds coming to the table.

Coun. Sean Chu, Jeromy Farkas and Joe Magliocca were opposed to the plan. Coun. Peter Demong was absent Monday.

The majority of council said it was time to act to change downtown’s fate, languishing as a shell of its former bustling business district designed for little beyond a nine-to-five workday. The new city plan envisions the next iteration of the core with a better mix of office and residential buildings, and more interesting and welcoming public spaces.

Planning and development general manager Stuart Dalgleish said Calgary’s downtown transformation might be more extensive than any other North American city.

Coun. Druh Farrell said reimagining downtown will take years of sustained work and Calgarians will need to hold future councils’ feet to the fire.

“We’ve heard that hope is not a strategy. I would also say nostalgia is not a strategy,” she said. “With our downtown, let’s move confidently beyond the naysayers and listen to the believers.”

Downtown’s vacancy plight has been evident for years, and it’s thrown a wrench into municipal budgets, too. As office tower property values plunge, so do property tax revenues the city collects from those buildings. But the hole in city coffers has to be made up somehow, and business owners outside the core have seen the results: major tax increases as the system tries to compensate.

City manager of urban initiatives Thom Mahler said that makes fixing downtown a city-wide issue.

“There is no forecast that shows those property values will ever come back on their own without significant and sustained action,” he said.

The money allocated for the plan is split into several areas.

The largest share, $80 million, is mostly federal money that makes up the final piece of funding for the Arts Commons transformation. The first phase of the $240-million project will create a new building with additional performance venues. There are future plans to also renovate the existing building.

A $45-million chunk will be used for incentives for companies to convert existing office buildings for other uses, including residential, with a $10-million limit per project. Council authorized an additional $5.5-million grant for HomeSpace to convert an empty office building into affordable housing units at 7th Street and 7th Avenue S.W.

“The private sector cannot do this on their own. The math just doesn’t work in the current environment,” Mahler said.

The city will also put $55 million toward specific capital projects downtown, for improvements in areas like Stephen Avenue and 8th Street S.W. — the hope is to work on ideas like a downtown market and create space for arts and culture. An additional $5 million will be put toward programming to bolster projects to make the streets more lively.

Lastly, $10 million will support a group of city employees specifically dedicated to the downtown, to make sure the work that’s been promised keeps moving forward.

Council debate

Before the vote, business, real estate and planning officials urged council to start work on the plan as soon as possible.

Calgary Economic Development CEO Mary Moran called it a “watershed moment” for Calgary, and said the plan will need continuing support.

“It’s important that it’s sustainable through the political cycle that we’re going to experience this year,” she said. “We also have to manage expectations that it’s not an overnight, instant-coffee solution. It’s going to take the better part of a decade.”

Hannes Kovac, the co-chair of CED’s real estate sector advisory committee, said an analysis of city assessment data shows a $450-million investment in office conversion incentives over the next 10 years will return $600 million in property tax revenue.

“In a business world, we call this a no-brainer,” he said.

“There is a very clear correlation between public investment, which leads, and private investment will follow.”

Scott Hutcheson, the executive chair of real-estate company Aspen Properties, said Calgary has become a “no-fly zone” for capital investment from large institutions, and the city must rehabilitate its image by taking the steps in the downtown plan.

Coun. Sean Chu was skeptical about the value of sinking more public money into downtown, referencing a list of projects that have already received funding in the core over the last several years.

“It is important that we do something, obviously. But saying that if I don’t support this $200 million, I don’t support business, that’s not true,” he said. “Here’s the solution: cutting red tape, not charging and waiving fees and most importantly, lower taxes.”

Mayor Naheed Nenshi called that argument “magical thinking.”

“What doesn’t work is folks who say, ‘Well if our taxes or our rent were just a little bit lower, then all of this would magically flow.’ We heard from business today that it just ain’t happening,” he said.

“It’s the same thinking that says if we approve tons of greenfield development, then more people will move to Calgary. That’s not how it works.”

Coun. Ward Sutherland added he was exasperated with some of the rhetoric he heard about spending money on the downtown strategy.

“This is not the left, the right, a political party. This is choosing survival and a future for our city. It’s that simple,” he said.

masmith@postmedia.com

Twitter: @meksmith