Alberta’s Community Revitalization Levy: Proposed Downtown Edmonton Arena District

By Mack D. Male · December 17, 2010 at 9:00pm

This is the third part in a three-part series on Alberta’s CRL.

In the first part of the series, we looked at Alberta’s CRL legislation, identifying how it works and what the process is for creating a new CRL. In the second part of the series, we looked at Alberta’s three existing CRL projects, to get an understanding of how the funding mechanism has been used in the province thus far. Now we’ll look at the proposed downtown Edmonton Arena District, to see how a CRL might be used for that project.

Introduction

I am by no means the first to write about a CRL in relation to the proposed arena. Last month, Andy Grabia of Why Downtown? wrote a popular post on the proposed CRL. The use of a CRL has been a frequently cited potential source of funding since at least August 2009, but it was mentioned long before that actually. Notably, in the City Shaping: Summary Report of the Leadership Committee for a New Sports/Entertainment Facility for Edmonton (PDF) from March 2008, there’s this statement:

There is precedent in Alberta for the use of a community revitalization levy (CRL) for enabling projects such as this.

At the time that statement was made, the Rivers District CRL (the first in Alberta) was less than a year old. The three current CRLs are being used to revitalize large areas, and they are not centered around any specific development like an arena. Only one of them has received full approval and moved on to full implementation. I don’t think it’s fair to say there’s precedent for the use of a CRL to enable the arena project now, and it certainly wasn’t an accurate statement three years ago.

I point this out, because it seems as though that report has formed the basis of many other related decisions in the intervening years. It treats the CRL as if it is a well-known, well-established funding mechanism, which I don’t believe is true. Certainly TIFs have been used elsewhere in North America, but our context here is different.

What’s the potential?

As we saw in part one, there can be significant upside to a CRL, assuming development does occur and property values do rise. We also learned that there are a variety of factors that can affect this.

That same City Shaping report offered some financial estimates on the proposed arena CRL:

We have estimated the potential for $2.5 billion in additional assessment growth representing $20 million in incremental municipal and provincial property tax revenue annually. This estimate was reviewed for reasonableness by the City Assessor.

Back in February, Gary Klassen, GM of Planning & Development at the City of Edmonton, estimated that $1 billion in investment would generate $14 million a year in taxes.

Given that we don’t have another Alberta-based example of a CRL like the one being proposed for the arena, I asked the Katz Group to help me out. Can we really get the economic lift that proponents of the arena suggest? They pointed me in the direction of Columbus, which is the focus of a case study on their website. Nationwide Arena, home of the Columbus Blue Jackets, opened adjacent to the city’s downtown in 2000, in an area that once housed a state prison. A report published in July 2008 by the John Glenn School of Public Affairs found that the Arena District was responsible for stimulating more than $1 billion in investment:

"This is really a model of ways to use an arena to help revitalize downtowns," said Glenn School professor Robert Greenbaum.

The report suggests that the Arena District had a significant impact on jobs in the area:

An increase of more than 50 percent in the number of businesses in the Arena District since 2000. In addition to the Blue Jackets, the district’s 172 businesses include coffee shops, a movie theater and professional service firms. These businesses employed more than 5,000 full- and part-time workers in 2006, and between 2000 and 2006 they generated $1.46 billion in payroll and $6.13 billion in revenue.

And on property values:

Appraised property values in the Arena District increased by 267 percent between 1999 and 2008, compared to a 22 percent increase in property values for the entire downtown area.

I encourage you to read through the report. Of course, the findings are not without dispute. You can read another perspective on Columbus here.

Hypothetical CRL Boundary

Though the City of Edmonton has been working with a conceptual model for the arena CRL, they haven’t shared it publicly. In response to Council’s questions, they did offer some insight, however. The model includes:

300,000 square feet or retail built over 20 years
370,000 square feet of hotel built over 6 years
95,000 square feet of casino built in the first year
1,500,000 square feet of office built over 20 years
1,800,000 square feet of residential built over 10 years

The model assumes natural assessment appreciation of 3% per year, and a 3% increase in municipal and educational taxes per year.

The model suggests that $160 million in incremental taxes could be garnered, $125 million of which could be dedicated to the arena while the remaining $35 million would go to other public infrastructure.

You can download the relevant spreadsheets in PDF here.

As for the conceptual boundary, which also remains private, the following information was shared:

The boundary includes the Aurora project, which they estimate could generate $4.1 million in tax revenue
The boundary includes a redeveloped casino, which they estimate could generate $0.8 million in tax revenue
The boundary includes the EPCOR Tower, which they estimate could generate $5.0 million to $6.8 million in tax revenue

That shows how much more lucrative commercial development like an office tower can be. There’s a risk, however, in that it is quite likely the EPCOR Tower will be completed before a CRL is approved, which means it would generate very little or no lift in property taxes. Remember the baseline assessment is set to December 31 of the year in which the CRL is approved.

I have absolutely no inside information on what the CRL boundary for the proposed arena district might look like, but here’s a hypothetical example:

View Larger Map

You can see the proposed Edmonton Arena District in the middle (the dark part), and the red is the hypothetical CRL boundary. Why did I choose that boundary? A few reasons:

The hypothetical boundary covers an area of 1.4 square kilometers, which is right in the middle of the three existing CRL boundaries.
The hypothetical boundary includes the Aurora project, as well as the EPCOR tower.
It highlights a risk, that the CRL might be located adjacent or very close to the Quarters CRL, potentially affecting the success of both projects.

We should learn more about the City’s model and boundary when City Council meets on January 17, 2011.

Is the timeline realistic?

The Oilers’ lease at Rexall Place expires on June 30, 2014, and the Katz Group has said it has no intention of renewing that agreement. That gives the project a deadline of less than four years. As we learned in part one, the ideal process for obtaining a CRL takes roughly two years, and in part two, we found out that only the Rivers District CRL happened that quickly. Mayor Mandel recently suggested a decision could be made by April 2011, which makes the window of time to obtain funding and complete construction more like three years. It just doesn’t seem likely to happen. Here’s the response from Administration when asked about the timeline:

The Katz group has identified that if an arena project goes ahead it will happen concurrently with development of an office tower in the district. The expected construction window for both the office tower and arena is 18 – 24 months. This schedule for concurrent development is aggressive. For comparison, the current EPCOR office tower project is scheduled to be constructed over 36 months.

It’s certainly possible that a CRL could be approved in the given timeframe, but rezoning, building permits, design, and all the other elements of construction would likely take more time than is available (given the Katz Group’s deadline).

What are the risks?

In Administration’s answers to Council’s questions, they addressed one of the bigger risks of using a CRL to fund the project – the current economy. The answer notes rising office vacancies downtown and declining lease rates, and goes on to say:

A significant component of the Katz Group proposal is the construction of new office and commercial space. This type of space would contribute considerably to the front ending of a CRL area, however, the current market conditions suggest that there is considerable risk if anchor tenants are not committed to the space before construction. The Katz group intent is to attract new business to the City that currently does not have a place in the market. If this is not possible it may result in existing businesses moving from other parts of Edmonton to the new development.

Another answer gave similar information:

A faster assessment lift would occur if the Katz Group was to construct certain developments (i.e. in advance of natural demand) that could increase incremental taxes within the boundary. Unless new tenants are coming from outside Edmonton that otherwise would not locate here, then these incremental taxes (in advance of natural development) may only reflect a shift in tenants from one area of downtown to the other.

Those answers highlight an issue that Scott Hennig of the Canadian Taxpayers Federation has frequently pointed out – the potential that the resulting development isn’t actually new, and is just a shift from other areas of the city. That would have the side effect of taking taxes that would have been in general revenue and locking them into the CRL. Scott told me:

The only way a new hotel (or bar) will get built next to the arena and not just shift demand is if all of a sudden people’s incomes go up (in aggregate, not just say, construction workers) as a result of the new arena and development and therefore they want to use that money to purchase additional products, or if it can be shown that Edmonton’s population will grow faster as a result of the new development, or if you can increase tourism.

It’s an issue that is certainly worth thinking about. How can you prove that a business located in the area specifically because of the arena? How can you prove it wouldn’t have been built elsewhere in the city were it not for the arena? How can you show that tourism increased as a result? How can you show that the arena caused population to grow faster than it would have normally? All of these things are hypothetical benefits that are difficult to prove in practice.

Scott also made a good comment on demand, in response to a question about the arena potentially inducing a housing development that would not have occurred in Edmonton otherwise:

You can be sure that if there was a demand for additional housing to be built, it would get built. The city didn’t use a CRL in anywhere else in the city and houses, condos, apartment buildings, townhouses and other housing still got built over the past 100 years.

Another risk, of course, is that not enough development takes place over the 20 year timeframe of the CRL, leaving the City burdened with the remaining debt.

Sharing The Risk

Both Mayor Mandel and the Katz Group have repeatedly said they want to negotiate a deal that is fair to all parties involved. More specifically, the Katz Group has said:

We seek a functional partnership with the City and a fair balancing of risk between the parties. Neither the City nor the Katz Group should bear risk disproportionately.

Could that sharing of risk apply to a CRL? We know that an important part of the plan for a CRL is to outline how any potential shortfall would be covered. By default, the City would have to cover the debt out of general revenues, taking on all the risk and potentially impacting the services it provides to citizens. Perhaps the Katz Group and the City could agree to share that responsibility, something that Administration has confirmed is an option:

An agreement can be attempted to be negotiated between the parties with respect to the issue of a guarantee to cover debt servicing if projected development does not occur in the CRL area.

Paula Simons has noted in the past that a similar deal in San Diego took place, but at the time the Katz Group wasn’t interested in such an arrangement. More recently they have indicated that such an arrangement could be a part of any negotiations with the City.

Sharing the risk could also refer to the resulting ownership of the project. It is important to recognize that a CRL is public money. Mayor Mandel has stated that if public funding was used to build the arena, there would be “big time say by the city and citizens.”

Transparency

I think both the City of Edmonton and the Katz Group have done a poor job of informing constituents about the CRL thus far, and I’d like to see them both address that shortcoming.

On the Katz Group’s Answers page, there’s a question about public investment that states:

The Community Revitalization Levy (CRL) is drawn from the enhanced tax revenue from the developments in and around the district. The CRL would pay down the city’s loan and then create a revenue stream in perpetuity.

No introduction or link to more information on the CRL. It’s as if “public investment” and “community revitalization levy” are one and the same, whereas the CRL is just one of a variety of public funding options. The City of Edmonton is guilty of jumping the gun as well. The questionnaire that was made available last month included a question about the CRL, without explaining what it is. Handouts were made available at the open houses that took place, but just 300 people attended those – compared to nearly 29,000 responses for the questionnaire. The City has since added a page on the funding model.

The City’s findings from that public consultation reinforce the idea that more education needs to be done. Participants noted that more study on the CRL is required, and that the “concept is very hard to understand.”

I asked Scott Hennig a bunch of questions about the CRL, and one of his comments in response stood out for me:

Unquestionably, the city can spend tax dollars to make certain locations more attractive, or using zoning laws or their land ownership to make certain types of buildings mandatory, but they don’t need a CRL to do that.

I think it’s really important that both the Katz Group and the City of Edmonton are transparent about what the CRL is, what the CRL is not, and how it might be used.

If Council decides a CRL is appropriate, the process of obtaining it needs to be much more open as well – when did you first hear about the Belvedere or Quarters CRL? My guess is not until the discussion about using a CRL for the arena started. That’s unacceptable, given that public consultation is a key component of obtaining a CRL.

Transparency on this issue moving forward is key.

Two Basic Assumptions

Let’s revisit the “two basic assumptions” we identified in part one. Is the arena project worth the risks associated with using a CRL to fund it? Public opinion on this seems mixed. Some people feel that a new arena is unnecessary and will do little to revitalize downtown. Others think the arena is a game-changer, an important catalyst project (as identified by the Capital City Downtown Plan). The truth likely lies somewhere in-between. As for the second assumption – is there a sound expectation that development will occur as a result of the arena? The fear is that we end up with another City Centre debacle, where additional development was promised but never built. The Katz group did not provide specifics, but did try to reassure Council that additional development will take place:

Our dialogue with our consultants and prospective tenants and partners leaves us with a high level of confidence that we will be able to develop a vibrant entertainment district around the arena. We have had substantive discussions with 6 major hoteliers and the level of interest in placing two hotels in the Arena District is very high. We have nine written Letters of Interest from a variety of international, national and local hospitality and entertainment providers and have had numerous other verbal expressions of interest. We have also had promising discussions with potential anchor tenants for the proposed office towers. We are confident that there will be a market within the District for both student residences and condominiums.

Final Thoughts

In this three-part series, we’ve looked at how Alberta’s community revitalization levy legislation came into existence, we’ve examined the impact it can have, and we’ve identified the process that must take place for a CRL to be approved. We also explored the three current CRL projects in the province. Finally, we’ve taken all of that information and applied it to help us understand how a CRL might be used for the proposed downtown Edmonton Arena District. There are opportunities and challenges associated with a CRL for the proposed project, and I think it is clear that there’s a need for more specific information.

The arena project is a moving target of course. We’ll learn much more about the City’s business model framework as well as their thoughts on the use of a CRL at the January 17, 2011 City Council meeting.

Alberta’s Community Revitalization Levy:

Alberta’s Community Revitalization Levy: Rivers District, Belvedere, The Quarters

By Mack D. Male · December 15, 2010 at 1:30pm

This is the second part in a three-part series on Alberta’s CRL.

Armed with a better understanding of Alberta’s CRL legislation, I turned my attention to the three active CRL projects in the province. What are the projects for? Why is a CRL appropriate for them? What can we learn from the projects that will help us when exploring the idea of using a CRL in the future? That’s some of what we’re going to look at in this post.

To quickly recap the process: there is some back-and-forth between the city and the province in establishing a CRL. First, the Lieutenant Governor must approve the regulation, which includes the CRL boundary. Second, City Council must approve the plan & bylaw for the CRL (and these can be done separately). And finally, that plan & bylaw must also be approved by the province. The three projects we’re going to look at are at different stages of that process.

Calgary’s Rivers District

The first specific CRL regulation to be passed in Alberta was for the City of Calgary Rivers District, back in 2006. The Rivers District project was the catalyst for the MGA amendment that made CRLs possible in Alberta.

City of Calgary Rivers District Community Revitalization Levy Regulation (AR 232/2006)

The Rivers District is the furthest along of all the CRLs in Alberta – everything has been approved and the City is well into implementation. It was 2007 when everything was finally approved, so the baseline for tax assessments would have been frozen to the values on December 31, 2007.

It’s worth pointing out that the CRL is just a small part of a much larger project known as The Rivers:

The vision for a revitalized Rivers district is more than a place to live, it is a lively urban destination.

This map shows the area the project covers, and as you can see, it is quite expansive. The idea is to reclaim the waterfront, and to make the area more desirable for development. In addition to infrastructure upgrades, a new riverwalk is in the works (phase 1 is now open actually).

The CRL boundary is large, but it is a small part of the overall project. Here’s what it looks like (KML):

View Larger Map

The boundary covers an area of roughly 1.9 square kilometers (478 acres).

One of the big advantages to using a CRL for the Rivers District is that the City of Calgary owned much of the land within the boundary. That’s important because it means the baseline assessment for those assets would be zero, and there’s lots of potential for getting some of that all-important lift.

I spent some time talking with Kathleen Young, Development Manager for The Quarters Downtown at the City of Edmonton, and found out that she actually worked on the Rivers District CRL! Her knowledge and experience on that project was one of the reasons that she came to Edmonton. You know what they say, it’s a small world.

Kathleen pointed out that the CRL boundary for the Rivers District includes some key developments, notably The Bow (here’s a photo of the building I took back in July). When finished, The Bow will become the headquarters for EnCana, and will be the tallest office building in Canada outside Toronto. Groundbreaking for the project took place in June 2007, around the same time that the Rivers District CRL was approved, which means almost all of the incremental value realized through the development of the building will be captured by the CRL.

To work on The Rivers, the City of Calgary created a wholly owned corporation called the Calgary Municipal Land Corporation (CMLC). They have some great information on the various aspects of the project if you’d like to learn more. CMLC was actually awarded a Canadian Urban Institute Brownie Award in 2008 for the CRL:

The Canadian Urban Institute’s annual Brownie Award recognizes leadership, innovation and environmental sustainability in brownfields redevelopment across Canada. CMLC won in the category of "Financing, Risk Management and Partnership" for our work in the creation of the Rivers District Community Revitalization Levy Regulation. A "made in Alberta" version of the U.S. Tax Increment Financing (TIF)— which is a widely used financing mechanism for redevelopment of brownfield sites in the United States—provides a sustainable source of funding to finance the significant infrastructure development required in the Rivers District for a 20-year period.

It sure looks like the Rivers District CRL will be a success!

Belvedere (Fort Road)

The first CRL regulation to be passed for Edmonton was for the Belvedere redevelopment project, commonly known as the Fort Road Redevelopment project. The project has been in the works since at least 2000, and has evolved quite a bit over the last decade. It was very much in the works before CRL legislation came into effect.

City of Edmonton Belvedere Community Revitalization Levy Regulation (AR 57/2010)

The Belvedere CRL isn’t quite as far along as the Rivers District, but it is nearly there. Kathleen clarified that the borrowing bylaw (14883) has been approved, but the plan bylaw is still in the works. Armed with the $34,250,000 specified in the borrowing bylaw, the City has undertaken much of the infrastructure upgrades planned for the area.

Here’s the CRL boundary for the project (KML):

View Larger Map

The boundary covers an area of roughly 1.3 square kilometers (324 acres).

A unique element of the Belvedere CRL is that the City owns almost all of the land within the boundary. As a result, when they sell the land all of the incremental value will be captured by the CRL, making it much less likely that the City would have to fall back on general revenue to cover the debt.

The Belvedere project is an interesting one. It is unlikely that development would have taken place in the area without the City of Edmonton stepping in to try to make the area more attractive and desirable. Through that lens, the use of a CRL makes a lot of sense. If you think back to the two basic assumptions highlighted in part one, the Belvedere CRL certainly passes the first – it’s worth the risk.

As for the second assumption – there’s a sound expectation that development will occur – that one is less certain. Especially given the challenging economy, it could be a while before anything substantial happens. Having said that, the first sale of the Station Pointe lands last year for $5.2 million is hopefully a sign of things to come (that project received $481,000 in federal funding in August). The redevelopment project is still in the early stages, and Rick Daviss at the City of Edmonton confirmed that at least a couple new conditional deals are in place, so there’s movement.

There’s more information on the Station Pointe project here – it won a Brownie Award in 2008.

You can find lots of background and other information on the Fort Road redevelopment project here.

The Quarters

The newest CRL regulation to be passed was for The Quarters Downtown, a redevelopment project here in Edmonton previously known as the Downtown East redevelopment. I wrote about The Quarters a couple weeks ago, and I’d encourage you to look at that post to get an overview of the project.

City of Edmonton The Quarters Community Revitalization Levy Regulation (AR 173/2010)

As the newest CRL project, The Quarters has the furthest to go before it is ready for implementation. The province has approved the regulation and boundary, and Administration is now working on the plan and bylaw to present to Council. That will happen sometime in 2011, according to Kathleen. Her team wants to make sure they get it right.

Here is the CRL boundary for the project (KML):

View Larger Map

The boundary covers an area of roughly 0.93 square kilometers (229 acres).

The Quarters is a large plan that will proceed in phases. Once completed, it is anticipated that the area will accommodate a population of nearly 20,000 people, up from less than 2500 today. The project is made up of five distinct districts, the jewel of which is known as The Armature.

An important part of any CRL plan is the way in which the City will cover the cost of the project if enough development does not occur. The default fallback is always general revenue, but Kathleen said they are looking at additional funding sources as well, such as government grants.

Kathleen told me that among other things, some of the CRL money will be used for streetscape improvements, some will be used for land acquisition to consolidate parcels for resale, and lots would be used to develop The Armature. The goal is to make that part of Edmonton a much more livable area, and the redevelopment focus is on residential assets.

As I have said before, it is an exciting project for our city! You can learn more about The Quarters Downtown here.

The project will be an interesting one to pay attention to if you’re interested in CRLs, because there are still a number of steps in the process to go.

Final Thoughts

If you’ve made it this far, you should now have a better understanding of the three active CRL projects in Alberta. You can draw your own conclusions, but a few things I wanted to highlight include:

All three boundaries are similarly sized
Infrastructure upgrades and improvements are a major part of all three projects
In the Rivers District and Belvedere, and to a lesser extent in The Quarters, an important consideration is the amount of City-owned land

I think it is important to look at what we already have when trying to understand how a CRL could be applied to future projects. In the next part of the series we’ll do just that, using the proposed downtown arena as our future project.

Alberta’s Community Revitalization Levy:

Alberta’s Community Revitalization Levy: Introduction

By Mack D. Male · December 14, 2010 at 10:00am

This is the first part in a three-part series on Alberta’s CRL.

Recently I decided to start learning more about Alberta’s Community Revitalization Levy (CRL), and I was initially struck by how little information was readily available. I searched and searched but didn’t find much. Maybe that’s because what we call the community revitalization levy here in Alberta is known as tax increment financing (TIF) elsewhere. It turns out that TIF has been available as a public financing method for more than 50 years! The State of California first used the approach in 1952, and now Arizona is the only state in the USA without some sort of TIF legislation.

Here’s how Wikipedia describes TIF:

When a development or public project is carried out, there is often an increase in the value of surrounding real estate, and perhaps new investment (new or rehabilitated buildings, for example). This increased site value and investment sometimes generates increased tax revenues. The increased tax revenues are the “tax increment.” Tax Increment Financing dedicates tax increments within a certain defined district to finance debt issued to pay for the project.

The idea is to use the “lift” generated by the increased tax revenues to pay for the debt that financed the project.

Alberta’s CRL

In Alberta, this legislation is relatively new. Bill 28 received Royal Assent on May 10, 2005 and amended the Municipal Government Act (PDF) to include Division 4 under Section 381, which enables municipalities to create a community revitalization levy bylaw (which must be approved by the Lieutenant Governor in Council).

Since that legislation came into effect, there have been three CRLs created in Alberta (as far as I can tell): Calgary’s Rivers District, the project for which Bill 28 was created, and the Belvedere (Fort Road) and Quarters redevelopment projects here in Edmonton. You can read more about all three projects in part two.

There are a few key aspects of the CRL to be aware of:

The CRL only applies to a very specific area (the CRL boundary).
The tax revenue that contributes to the CRL is split between the City and the Province.
The maximum amount of time a CRL can exist is 20 years, starting in the year when the bylaw is approved by the Lieutenant Governor in Council.
The Lieutenant Governor in Council can approve a CRL bylaw in whole or in part or with variations and subject to conditions.

And don’t be mislead by the name “levy” – the CRL is a tax as defined in the MGA. It’s a funding mechanism, nothing more.

From my read of the Municipal Government Act, there are no rules or restrictions on the type of area that a CRL can apply to. In theory a CRL works best in an area that is “blighted” but the legislation does not enforce this. This was the case in California as well, until it became clear that the legislation was being abused.

What’s the potential impact of a CRL?

I asked Rick Daviss, Manager of Corporate Properties at the City of Edmonton, to help me understand the CRL. He was very helpful and pointed me in the direction of some very useful information.

The first thing we looked was a hypothetical example of the impact of a CRL. Here’s the situation:

Current use: 2.0 acre parcel of land improved with a 30,500 square foot warehouse.
Proposed use: 2.0 acre parcel of land improved with a high rise residential condo development (proposed density of 265 units (RA9), FAR of 3.0, unit value assessed at $200/square foot).

So we’ve got an old warehouse on some land and we want to replace it with a condo. Let’s look at the assessed value:

Current use: $1,525,000 (this is known as the assessment baseline)
Proposed use: $44,431,200

Which gives us an increase in value of $42,906,200. Now let’s look at the tax assessment:

	Before	After	Difference
2006 Municipal Mill Rate	5.7484	5.7484	–
2006 Municipal Tax	$8,766	$255,408	$246,642
2006 School Mill Rate	3.6182	3.6182	–
2006 School Levy	$5,518	$5,518	$0
2006 CRL	N/A	$155,243	$155,243

The mill rate is used to calculate the property tax, and you can think of it as the amount of tax required divided by the amount of tax available. So if the City needs $2 billion in taxes but only $1 billion can be generated based on the assessments, the mill rate is 2. The property tax is then calculated by multiplying the assessed value by the mill rate, and dividing by 1000. So to get $8,766 in our example above, $1,525,000 is multiplied by 5.7484 and then divided by 1000.

Let’s look at the Before column first. The total tax assessment there was $14,284, and the two bottom rows are N/A because we don’t have a CRL in the before case. Both the City and School taxes are calculated the same way: assessed value multiplied by the mill rate divided by 1000. The province gets $5,518 and the City gets $8,766, all of which goes into what’s known as “general revenue”.

Now let’s look at the After column. The total tax assessment there is $416,169. The City tax is calculated the same as before, but now that we have a much higher assessed value, we end up with $246,642 in increased tax revenue. All of this will go to the CRL. The School tax is broken into two, because only the incremental tax revenue will go toward the CRL. So the $5,518 is calculated the same as in the Before case, and this goes to the province. The provincial part of the CRL is calculated as follows: the increase in assessed value ($42,906,200) multiplied by the mill rate divided by 1000. That gives us the $155,243, all of which will go the CRL.

So now you see why the CRL is such an attractive proposition: it looks like we have $401,885 in new tax that we can contribute to the CRL. And this could happen with all developments inside the CRL boundary. There are a number of caveats, however. The first is that the CRL amount will vary from year to year based on the assessment (which makes the economy and depreciation relevant) and on the school mill rate which also changes from year to year. The second is that the type of development is important – City owned properties are tax exempt, for instance. A third is that the City tax revenues as well as a portion of the School tax revenues are dedicated to the CRL, where they would otherwise have gone into general revenue.

How is a CRL created?

Rick walked me through the process of creating a CRL, and I can tell you it sure doesn’t sound like a trivial task. In the best case, Rick estimates it would take just less than two years from concept through to the start of implementation to make a CRL reality. Here’s a high-level overview of the process:

Those five steps would include, roughly:

Administration conducts background research, identifies the potential boundary, comes up with preliminary revenue estimates, and prepares for and asks Council for approval to make a request to the Minister of Municipal Affairs.
The Minister of Municipal Affairs considers the request and recommends an Order in Council for an establishment regulation. This step also includes some back and forth to establish the area and other parameters.
The Lieutenant Governor in Council considers and approves the Order in Council for the area to be established.
Administration conducts more research, holds public hearings, drafts the proposed bylaw, has it reviewed by all relevant departments as well as the province, and acquires Council approval of the bylaw.
The Lieutenant Governor in Council approves the bylaw.

After all that is done, the CRL can proceed. It makes sense to plan for the Lieutenant Governor in Council’s final approval as close to the start of construction as possible, in order to get the maximum possible time under the CRL legislation.

What are the risks associated with a CRL?

As others have pointed out, a CRL is not a risk-free proposition. There are a number of issues to consider.

What if a project does not lead to an increase in property values and does not result in any new development? In this case, there would be no “lift” to pay down the debt of the project. Rick noted that a plan for this kind of scenario needs to be in place before the province will approve a CRL. It can be as simple as the City swallowing the cost of the project, as long as it can specify how it will be paid for. Another option is for a third party to backstop the plan.

Another issue is the potential shift in taxes. Will the project really result in new development – development that would not have occurred in the city otherwise – or is it merely a shift in development, from areas outside the CRL to the area inside the CRL boundary? How would you know, one way or the other?

A related issue is the decrease in general tax revenue. If the property tax inside the CRL boundary is no longer going into general revenue, what does that mean for the services the City provides? In the worst case, you can imagine the entire City being covered in various CRL projects. That would result in zero general tax revenue and thus no way for the City to pay for the services it provides to citizens. What is the impact of one or two CRL projects? That’s less clear. Same goes for the school taxes. A common concern for many people is that they don’t want their school taxes going toward the CRL instead of schools. Of course, in reality the province doesn’t come up with education programs based on the amount of school tax it receives – tax revenue does go into the Alberta School Foundation Fund, but that money is combined with whatever amount of general revenues the province deems appropriate.

Can a CRL really work?

For a CRL to work, Rick says you need to make two basic assumptions:

The project the CRL would be funding is a good thing, and is worth the risk.
There’s a sound expectation that development will occur as a result.

If you think the project is worth the risk, and you’re confident that development will occur as a result of taking that risk, then a CRL can be a good funding source. Rick highlighted the Belvedere (Fort Road) project as meeting this basic criteria: it’s an area that needs to be redeveloped and it’s unlikely that anything would happen without some initiative by the City, plus there’s a good chance that other development will occur now as a result of the City going in and cleaning things up.

Final Thoughts

If you’ve made it this far, you should now have a better understanding of how Alberta’s Community Revitalization Levy came to be, how it works, and what the potential impacts and pitfalls of the legislation are.

In the next part of this series, we’ll look at Alberta’s three current CRL projects in more detail.

Alberta’s Community Revitalization Levy:

State of the Calgary Twittersphere – July 2010

By Mack D. Male · September 2, 2010 at 10:00am

Welcome to the seventh State of the Calgary Twittersphere of 2010, my look at the intersection of Twitter and Calgary, AB. You can see last month’s stats here.

For information on the data, definitions, and other background, click here.

For July 2010:

# of local users: 10501 (a decrease of 125 from June)
# of tweets by local users: 501941
# of tweets by local users containing #yyc: 22956 (4.6%)
# of tweets by local users that were replies: 153421 (30.6%)
# of tweets by local users containing links: 148567 (29.6%)
# of tweets by local users that were retweets: 21291 (4.2%)
# of tweets by local users that were twooshes: 16440 (3.3%)

Here are the numbers above in graphic form:

Here are the top clients used by local users for posting updates:

Some other interesting stats for the month:

Just over 50% of all local tweets were posted between 9 AM and 5 PM.
Local users posted roughly 11.3 tweets per minute in July (compared to 11.7 tweets per minute in June).
The day with the most local tweets posted was July 30 at 19863. On average, 16821 local tweets were posted each day (compared to 16821 in June).
Of the 153421 replies posted by local users this month, 47364 or 30.9% were to other local users.
A total of 1960 users posted 50 times or more in July. In comparison, 1587 users posted just once.

Here are the top ten most followed local users:

Here are the top ten most listed local users:

Here are the top ten most active local users (not including bots):

Here are the top ten most active local users using #yyc (not including bots):

Here are the top ten most replied to local users:

Here are the top ten most retweeted local users (by other local users):

Final Thoughts

A small decrease in users in July, maybe because everyone was outside doing things! No surprise that the Calgary Stampede was among the most retweeted for the month. Chinook Centre celebrated its 50th birthday on August 1, and made a big push for followers during the month of July which likely explains why it was retweeted so much. With the Calgary election heating up, it’s interesting to see that mayoral candidate Naheed Nenshi was the 6th most retweeted user. I wonder if we’ll see more election-related stats as October 18 draws near.

State of the Calgary Twittersphere – June 2010

By Mack D. Male · August 27, 2010 at 11:30am

Welcome to the sixth State of the Calgary Twittersphere of 2010, my look at the intersection of Twitter and Calgary, AB. You can see last month’s stats here.

For information on the data, definitions, and other background, click here.

For June 2010:

# of local users: 10626 (an increase of 79 from May)
# of tweets by local users: 504633
# of tweets by local users containing #yyc: 22382 (4.4%)
# of tweets by local users that were replies: 156128 (30.9%)
# of tweets by local users containing links: 148101 (29.3%)
# of tweets by local users that were retweets: 22445 (4.4%)
# of tweets by local users that were twooshes: 17296 (3.4%)

Here are the numbers above in graphic form:

Here are the top clients used by local users for posting updates:

Some other interesting stats for the month:

Just under 50% of all local tweets were posted between 9 AM and 5 PM.
Local users posted roughly 11.7 tweets per minute in June (compared to 11.4 tweets per minute in May).
The day with the most local tweets posted was June 17 at 20079. On average, 16821 local tweets were posted each day (compared to 16355 in May).
Of the 156128 replies posted by local users this month, 49139 or 31.5% were to other local users.
A total of 1978 users posted 50 times or more in June. In comparison, 1600 users posted just once.

Here are the top ten most active local users (not including bots):

Here are the top ten most active local users using #yyc (not including bots):

Here are the top ten most replied to local users:

Here are the top ten most retweeted local users (by other local users):

Final Thoughts

First off, my apologies to those of you who have been waiting for a stats update! I’ve been a little behind this summer.

There was a slight increase in the number of users in June, and a slight decrease in the number of tweets posted. I think that decrease is due to two things: one less day than in May, and the large amount of downtime that Twitter experienced in June (it was their worst month since August 2009).

State of the Calgary Twittersphere – May 2010

By Mack D. Male · June 23, 2010 at 10:30am

Welcome to the fifth State of the Calgary Twittersphere of 2010, my look at the intersection of Twitter and Calgary, AB. You can see last month’s stats here.

For information on the data, definitions, and other background, click here.

For May 2010:

# of local users: 10547 (an increase of 439 from April)
# of tweets by local users: 507017
# of tweets by local users containing #yyc: 21053 (4.1%)
# of tweets by local users that were replies: 152349 (30.0%)
# of tweets by local users containing links: 153152 (30.2%)
# of tweets by local users that were retweets: 22158 (4.4%)
# of tweets by local users that were twooshes: 16966 (3.3%)

Here are the numbers above in graphic form:

Here are the top clients used by local users for posting updates:

Some other interesting stats for the month:

Just over 48% of all local tweets were posted between 9 AM and 5 PM.
Local users posted roughly 11.4 tweets per minute in May (compared to 11.6 tweets per minute in April).
The day with the most local tweets posted was May 27 at 19816. On average, 16355 local tweets were posted each day (compared to 16661 in April).
Of the 152349 replies posted by local users this month, 47020 or 30.9% were to other local users.
A total of 1959 users posted 50 times or more in May. In comparison, 1610 users posted just once.

Here are the top ten most followed local users:

Here are the top ten most listed local users:

Here are the top ten most active local users:

Here are the top ten most active local users using #yyc:

Three are clearly bots so here are the next three:

Here are the top ten most replied to local users:

Here are the top ten most retweeted local users (by other local users):

Final Thoughts

A decent jump in users and Calgary has finally broken the 500,000 tweets per month mark! There was a noticeable increase in the number of tagged tweets this month too. As with Edmonton, the official Twitter clients are climbing the charts.

State of the Calgary Twittersphere – April 2010

By Mack D. Male · May 28, 2010 at 10:00am

Welcome to the fourth State of the Calgary Twittersphere of 2010, my look at the intersection of Twitter and Calgary, AB. You can see last month’s stats here.

For information on the data, definitions, and other background, click here.

For April 2010:

# of local users: 10108 (an increase of 194 from March)
# of tweets by local users: 499825
# of tweets by local users containing #yyc: 18291 (3.7%)
# of tweets by local users that were replies: 148981 (29.8%)
# of tweets by local users containing links: 147895 (29.6%)
# of tweets by local users that were retweets: 27169 (5.4%)
# of tweets by local users that were twooshes: 16932 (3.4%)

Here are the numbers above in graphic form:

Here are the top clients used by local users for posting updates:

Some other interesting stats for the month:

Just under 49% of all local tweets were posted between 9 AM and 5 PM.
Local users posted roughly 11.6 tweets per minute in April (compared to 10.6 tweets per minute in March).
The day with the most local tweets posted was April 28 at 20061. On average, 16661 local tweets were posted each day (compared to 15259 in March).
Of the 148981 replies posted by local users this month, 41125 or 27.6% were to other local users.
A total of 1883 users posted 50 times or more in April. In comparison, 1502 users posted just once.

Here are the top ten most followed local users:

Here are the top ten most listed local users:

Here are the top ten most active local users:

Here are the top ten most active local users using #yyc:

Here are the top ten most replied to local users:

Here are the top ten most retweeted local users (by other local users):

Final Thoughts

Calgary crossed the 10,000 active user mark this month! And came tantalizingly close to breaking the 500,000 tweets per month mark too. User growth was smaller than the month before, at least partially due to improvements I made in my algorithm for identifying local users.

I think the “most retweeted” list is useful for measuring influence, though it alone doesn’t tell the whole story. Just to clarify, the most retweeted list only accounts for standard-style retweets (those using Twitter’s retweet feature or those starting with RT @) made by other local users. I hope to improve this over time.

State of the Calgary Twittersphere – March 2010

By Mack D. Male · April 27, 2010 at 10:30am

Welcome to the third State of the Calgary Twittersphere of 2010, my look at the intersection of Twitter and Calgary, AB. You can see last month’s stats here.

For information on the data, definitions, and other background, click here.

For March 2010:

# of local users: 9914 (an increase of 1724 from February)
# of tweets by local users: 473003
# of tweets by local users containing #yyc: 16273 (3.4%)
# of tweets by local users that were replies: 143512 (30.3%)
# of tweets by local users containing links: 145927 (30.9%)
# of tweets by local users that were retweets: 24607 (5.2%)
# of tweets by local users that were twooshes: 15013 (3.2%)

Here are the numbers above in graphic form:

Here are the top clients used by local users for posting updates:

Some other interesting stats for the month:

Just over 49% of all local tweets were posted between 9 AM and 5 PM.
Local users posted roughly 10.6 tweets per minute in February (compared to 9.7 tweets per minute in February).
The day with the most local tweets posted was March 25 at 17829. On average, 15259 local tweets were posted each day (compared to 13937 in February).
Of the 143512 replies posted by local users this month, 39809 or 27.7% were to other local users.
A total of 1732 users posted 50 times or more in January. In comparison, 1606 users posted just once.

Here are the top ten most followed local users:

Here are the top ten most listed local users:

Here are the top ten most active local users:

Here are the top ten most active local users using #yyc:

Here are the top ten most replied to local users:

Final Thoughts

First off, apologies for the late stats this month. I think the increased numbers in March reflect three more days in the month than we had in February, but also some steady growth (and perhaps some modifications I made to my code). More than 11,000 tweets were posted each day in March.

State of the Calgary Twittersphere – February 2010

By Mack D. Male · March 18, 2010 at 10:00am

Welcome to the second State of the Calgary Twittersphere of 2010, my look at the intersection of Twitter and Calgary, AB. You can see last month’s stats here.

For information on the data, definitions, and other background, click here.

For February 2010:

# of local users: 8190 (an increase of 819 from January)
# of tweets by local users: 390224
# of tweets by local users containing #yyc: 11486 (2.9%)
# of tweets by local users that were replies: 116346 (29.8%)
# of tweets by local users containing links: 112937 (28.9%)
# of tweets by local users that were retweets: 20679 (5.3%)
# of tweets by local users that were twooshes: 13422 (3.4%)

Here are the numbers above in graphic form:

Here are the top clients used by local users for posting updates:

Some other interesting stats for the month:

Just under 48% of all local tweets were posted between 9 AM and 5 PM.
Local users posted roughly 9.7 tweets per minute in February (compared to 7.9 tweets per minute in January).
The day with the most local tweets posted was February 28 at 21292. On average, 13937 local tweets were posted each day (compared to 11334 in January).
Of the 116346 replies posted by local users this month, 31507 or 27.1% were to other local users.
A total of 1434 users posted 50 times or more in January. In comparison, 1319 users posted just once.

Here are the top ten most followed local users:

Here are the top ten most listed local users:

Here are the top ten most active local users:

Here are the top ten most active local users using #yyc:

Here are the top ten most replied to local users:

Final Thoughts

As with Edmonton and Victoria, the busiest day of the month was February 28 at 21292 tweets thanks to the gold medal hockey game. Calgary actually broke the 20000 mark twice this month – the other day was February 12, the day the opening ceremonies took place. It was a pretty impressive month for stats, especially given that it was three days shorter than normal!

State of the Calgary Twittersphere – January 2010

By Mack D. Male · February 18, 2010 at 10:30am

Welcome to the first State of the Calgary Twittersphere of 2010, my look at the intersection of Twitter and Calgary, AB. You can see last month’s stats here.

For information on the data, definitions, and other background, click here.

For January 2010:

# of local users: 7371 (an increase of 249 from December)
# of tweets by local users: 351342
# of tweets by local users containing #yyc: 13259 (3.8%)
# of tweets by local users that were replies: 105309 (30.0%)
# of tweets by local users containing links: 112342 (32.0%)
# of tweets by local users that were retweets: 24998 (7.1%)
# of tweets by local users that were twooshes: 19721 (5.6%)

Here are the numbers above in graphic form:

Here are the top clients used by local users for posting updates:

Some other interesting stats for the month:

Just under 50% of all local tweets were posted between 9 AM and 5 PM.
Local users posted roughly 7.9 tweets per minute in January (compared to 7.3 tweets per minute in December).
The day with the most local tweets posted was January 27 at 13935. On average, 11334 local tweets were posted each day (compared to 10472 in December).
Of the 105309 replies posted by local users this month, 28981 or 27.5% were to other local users.
A total of 1274 users posted 50 times or more in January. In comparison, 1182 users posted just once.

Here are the top ten most followed local users:

Here are the top ten most listed local users:

Here are the top ten most active local users:

Here are the top ten most active local users using #yyc:

Final Thoughts

Slight increase in the number of active users this month, no doubt thanks to the holidays ending and everyone getting back to work. The number of tweets posted per day increased throughout the month as well, breaking the 13,000 mark twice. There was also a slight increase in the number of tagged tweets.