Though the video game industry probably comes to mind first when you hear the term vaporware, it is increasingly being used to describe announcements and predictions that never come to pass in other industries too. Like construction. The construction of, for instance, big “transformative” projects that will unfold over a number of years. Sound familiar?
As you know, Edmonton’s shiny new downtown arena is being funded in part through a Community Revitalization Levy (CRL). The idea is that “projects funded by the CRL spark new developments, and property values rise on existing developments.” From the beginning, the arena was sold to Edmontonians as a catalyst for additional downtown development. It was clear that additional development would be part of the success of any deal. Here’s what the Katz Group’s Bob Black told the Journal in February 2010:
“In order for citizens of the city to have a reasonable assurance that the community revitalization levy debt will be retired by the city, then you have to have that collateral development.”
Even earlier than that, in September 2009, the Downtown Business Association’s Jim Taylor was arguing for ensuring that surrounding development took place:
“Somebody has to say that they’re building a casino or a hotel there, and you don’t get any money from the CRL unless those projects are part of it. So that funding is only available if those projects are there. It’s not, ‘We’ll do a CRL and hope that those projects are there. It’s: ‘The CRL is not available, the money is not borrowed, unless those specific developments are there too.'”
Of course, he and many other business leaders softened their stance over the years and no such requirement was ever put in place. In fact, I’d say the volume about what would be built was turned up, though details and commitments were always lacking.
In January 2011, U of A provost Carl Amrhein talked about the creation of “a university village” for student housing as part of the district. Also that month, local realtor Terry Paranych said if the arena goes ahead, he’d “build two condo towers, one 40 storeys, one 50 storeys.”
In December 2012, the Katz Group and its partner WAM Development Group stopped talking about individual projects and promised something much grander:
“If a new arena is approved, the Katz Group and partner WAM Development Group hope to push ahead this spring with $2-billion worth of nearby development, including 28 and 32-storey office towers. Plans also include two 35-storey or taller condominium highrises, a 10-storey condo building, a 26-storey luxury hotel and other commercial space along with a proposed open-air Oilers Plaza.”
Another article discussed potential tenants:
“Main anchor tenants are expected to include a VIP theatre complex, a grocery store and the headquarters of a major telecommunications company, according to a 60-page overview of the district by the Katz Group and partner WAM Development Group.”
Yet despite all the hype, there have been no commitments. It’s all just talk. Just vaporware.
In March 2011, the Journal’s Gary Lamphier made this clear:
“Not a single other developer has been willing to publicly commit hard cash toward the project. Despite recent talk from the city’s chief financial officer about proposed hotels, a casino and other projects, she hasn’t identified a single one by name. I’ve talked to roughly a dozen developers, consultants and commercial real estate brokers over the past 15 months in an attempt to flush out anyone who is willing to stand up and be counted as a participant in the arena redevelopment. I haven’t found one.”
The arena deal was finally approved, but still there have been zero commitments. And so we find ourselves in January 2014, clinging to the hope that a new tower for City of Edmonton employees will finally kickstart the development:
“Jim Taylor, executive director of the Downtown Business Association, said putting up an office tower a block from the arena would likely stimulate other development.”
Avison Young’s Cory Wosnack is even more optimistic:
“If WAM and Katz Group are successful (with the office tower proposal) — and I believe there will be an announcement within days — then the hotel deal can be announced, the retail can be announced and the domino effects begin.”
Is anyone still buying this nonsense?
Perhaps the worst part about the proposed tower is that municipally-owned or leased properties do not pay property tax. Which means that all or most of the tower would not contribute to a lift in taxes within the CRL boundary. That land could have been used for a revenue-generating property instead, one that would actually help to pay down the CRL debt.
What about the Ultima Tower, you say? It was going to go ahead with or without the arena. What about the proposed, 71-story Edmontonian tower? Like the Aurora project before it, The Edmontonian has been vaporware since at least 2007, so there’s no reason to expect anything different now.
We’re being played, and the sad thing is, we’ve seen this story before.
In the world of video games, some have managed to shed their vaporware status and go on to be quite successful. Maybe that should give us hope that the arena district in Edmonton can do the same. Maybe there really is a master plan and an order in which these projects will unfold. But I’m not holding my breath.
UPDATE 2: There was some confusion about the paragraph above on taxation, as you’ll see in the comments below. I received clarification from the City. If the City of Edmonton leases space inside a building owned by a private entity, the space leased by the City is exempt from taxation. The remainder would be assessed and taxed as any other property would be.
MasterMaq's Blog 
You forgot …
“This proposed project will finally put Edmonton on the map.”
Sigh.
We will be a “World Class City” when it’s built….. Maybe a world class city of idiots….
You have SO nailed it! World class vapourware.
Edmonton sucks, the oilers will leave soon. Don’t bother.
Actually the office building will be privately owned and the City will be a tenant. A longterm lease will be negotiated that will set out lease rates that are to be paid over the term. Commercial property taxes will be paid by the owner, much like all of the other office buildings that are privately owned and occupied by City departments.
I can also say that there is a lot happening behind the scenes as it pertains to the surrounding retail, hotel and residential developments. Given my involvement in development I can tell you that these things take time to put together. A project of this size takes even longer.
I can understand that these things take time, it’s a complex project. But we’ve been hearing that there’s a lot happening behind the scenes for years now. When is any of it going to come to pass?
I’m certainly no expert on property taxation, but my initial read of the MGA and the Guide to Property Assessment and Taxation in Alberta suggest that at least part of the building, the parts leased by the City, would be exempt. Anything you could point to that might clarify would be appreciated!
Frankly, Mack, I think the onus is on you to find this out before you blog about it. Try contacting someone in the City of Edmonton Taxation Branch. Section 362(1) of the MGA is what governs property tax exemptions, and I don’t see anything in there that suggests a privately-owned office building leased in whole or in part to a municipality would be tax exempt.
Re: your skepticism about the arena development. I sympathize with this. It might end up being less than the sky-high promises that have been made. But land development is an incredibly complex process. It can take years and years to take a project from concept to approval to completion. Your expectation that everything fall into place within a few months of an arena decision being made is unrealistic.
If nothing much has been announced a year from now, then lets talk…
Tom is correct. City-owned facilities (recreation centres, maintenance yards, office buildings, etc) are exempt from paying property taxes, but privately owned office buildings aren’t even with government tenants. Taxes are rolled into the operating costs which are paid indirectly by the tenant.
When I read the guide, I was looking at Municipal Properties and it said “Exempt, in whole or in part, when owned or leased by a municipality.” I realize now that probably doesn’t refer to a privately owned building, but will seek clarification.
“Your expectation that everything fall into place within a few months of an arena decision being made is unrealistic.”
I’m not expecting everything to fall into place, with all the contracts signed, funding secured, and plans underway. I am expecting something more than what we have, which is absolutely nothing but ideas.
Although the interested public may want details at every step of the process, developers don’t have any need, nor would it provide them any benefit, to make announcements midway through their negotiation and planning processes. Why would a landowner want the media chattering about their attempts to woo an international hotelier, or a major local employer? And why would the entity they are trying to woo want to be in the public eye until they are certain about what they are going to do? There are good reasons why these sorts of things are kept vague until everything is nailed down.
And again, as per Tom, despite your comment above, you are being unrealistic and betraying your lack of knowledge on how this process works. We are still one city council vote away on final approval on the budget. That happens in the next few weeks. Things will roll out after that.
There are billions of dollars at stake here. Announcements will be made in a measured, validated manner – and not in the cavalier way that you propose.
Where did I propose making announcements in a cavalier way?
There is no going back. The arena is going ahead one way or another. It would be comforting as a taxpayer to know that it is going ahead with some additional development.
So far we know the City and the Katz Group will build an arena and some infrastructure stuff. That’s it. We’re supposed to just take all of the various insiders at their word that more is coming?
Something doesn’t add up. I’m not asking for the Katz Group to talk about its attempts to attract hotels or employers – their dirty laundry should be kept private. I’m asking for some validation that something is indeed happening. Why won’t anyone commit to anything? If a hotelier is on board, why aren’t they expressing how happy they are to be part of the development? Why isn’t the Katz Group trumpeting their new partner to help attract others? Is it because the Katz Group is afraid it could fall apart? How would that be any worse than the perception that nothing is coming and nothing is happening?
There’s a lot at stake here. Millions of dollars. Huge impacts on downtown development. “Trust us” isn’t good enough.
“Trust us” is all you get. The City has taken a (calculated) risk on redevelopment happening. But private landowners don’t have an obligation to put everyone’s mind at ease.
I think you’re expecting too much too soon. The funding was finally worked out in the fall. It’s now January. That’s 3-4 months where the fact that the arena is going to be built has felt certain. If the arena doesn’t get built, no one wants to be there; there are better sites for condos and hotels and office towers otherwise. Conversations with potential tenants prior to the decision probably went like this: “That’s great. We’re interested. Get back to us when the arena is a sure thing”. You can’t really expect complex, big money land development agreements to be completed and announced a few short months later. The arena deal itself took over 4 years! 4 months in the development world is essentially a blink of an eye…
MGA 362(1)(b) – Municipal properties are exempt, except for utility buildings and revenue-generating buildings.
The exemption guide (www.municipalaffairs.alberta.ca/documents/as/pte_guide_2005.pdf) clarifies that this includes leased properties “in whole or in part.” So, like other office towers where the City rents space, no property taxes are paid on the portions leased by the municipality. Ownership only matters to 362(1)(n) exemptions.
However, the vacated offices will now pay taxes (excluding municipally-owned building if they cannot be sold), so revenues downtown will still increase. I’m not sure how this plays with the CRL formula which redirects education tax from new development to the city isn’t clear to me…probably less favourably than new development being privately leased.
That was my interpretation of the rules as well. I have an inquiry into the City for confirmation and details. Good point about the offset due to vacated offices.
Mack, seven fooderies have had the confidence to invest immediately adjacent to the exact perimeter of the Arena South Block since the Bettman meeting:
– Mercer Tavern
– Roast (since bought-out by Tres Carnales)
and since the arena decision last May:
– Tres Carnales
– Fion MacCools
– La Prep
– Oil City Group have purchased the Grand Hotel
– Joey Bell Tower
– the ex-Canada Trust space on the ground floor of the Bell tower
This is literally hemming in the South Block like a sewing machine.
I challenge you to name even _one_ new foodery movement in the same area in the previous two decades! Do you not see the significance?
Furthermore you can’t be serious about Ultima and Quest being somehow coincidental, as _both_ included proximity to the new arena in their sales literature right from day one. Ultima, opening their sales office after the Bettman meeting, had the first lineup on opening day of a sales office since the suburban Century Park in 2008 – which has “coincidentally” stalled as all momentum has shifted to the core. Even sales at the Pearl and Vision for the Corner – both distant from the arena as well – have seen relatively tepid sales. The shift in momentum to the arena area is _obvious_.
Fox towers I’ll grant could be as much associated with 104 Street, but they too are perfectly aware and frank about the arena as a selling point as well.
You’re absolutely blind if you can’t see action there now.
Received clarification from the City – my initial read was correct:
If the City is leasing space in a building owned by another entity, as in
Scotia Tower or HSBC, the space that is leased by the City is exempt from
taxation, but the remainder would be assessed and taxed as any other
building in Edmonton.
Thanks for the clarification. I’m surprised by this, but good to know.
Interesting comment Mack. But, I never had the impression that everything was going to start construction in unison. IE The arena, hotel, office tower, condo all under construction and then all complete in a relatively close timeline. Rather, it was my impression that only after the ‘catalyst’ was built would we see the associated spin off development. By this metric, we are doing quite well. The arena is not yet even under construction, and there are already rumours of various office proposals, a new restaurant (confirmed) in the Bell tower, the revitalisation of the north part of 104 ST (and the Mercer’s proprietor was quoted as saying part of their decision to open was due to the arena).
Likewise, I don’t think you can so easily write off the other developments in the area as likely to have happened even without the arena. The Edmontonian tower was significantly increased in scope, arguably due to the arena, from the original iteration. The Ultima tower probably sold their units with the assumption of the arena district proceeding. In this way, the Arena is already making a big difference even without being built. And for any downtown resident, the implementation of a CRL for the whole area should be exciting, Arena development or not. The local improvements possible with it will be significant. The arena was merely the impetus to implement such improvements, and thus could be considered successful on this front as well.
So I guess we should give the arena credit for the closure of Roast Coffee too. Don’t get me wrong, I am a downtown resident, and I’m cautiously optimistic about the CRL. I think we should have been willing to fund those projects with or without an arena, but that decision has been made. But funding those projects via the CRL today, most of which are non-revenue generating like streetscape improvements and drainage, only makes sense if we aren’t burdened by the cost of them in the future. That means we need the private development to come through!
Roast had their lease bought out by another retailer who valued it higher than Roast felt they could profit by staying open.
Yet you call it a problem?
there are currently 3 condominium towers being built within 3 blocks of the arena, 2 more have made announcements. Plus there was an announcement for an office tower.
have you been downtown lately ?
Hi Tom! I’m a different Tom. I write comments about the MGA and other nerdery.
Did you even read the post? All of those condominiums were announced before the arena deal was completed. If it was really the arena that made them possible, why wouldn’t the developers have waited until the arena was a done deal? Ultima went ahead with sales and sold out, with or without the arena.
Mack,
I think your expectations are completely unrealistic. We
are talking about projects with values in the 100’s of millions of
dollars whose success and timing on an individual basis will be
determined in a competitive fashion. There is absolutely no way you are
going to see the sort of detail you expect in the public forum in a
time frame that doesn’t disappoint you for two reasons. Firstly, you
would be in breach of your confidentiality agreements in many instances
and secondly you would simply be providing your competition with
information that could only be used to your disadvantage whether that
information is financial or architectural or floor plate size or project
timing or… Apple doesn’t share their development plans in public
forums with Samsung or Sony or Blackberry. Same goes for GM and Ford
and BMW and Mercedes. Neither does CN and CP or Boeing and Airbus. You
seem to expect concept to completion to happen in less time than it
takes to acquire a development permit, never mind actually start –
never mind complete – construction. 200 or 300 or 400 million dollar
construction projects are not “vaporware” simply because they can’t be
delivered to the public forum as quickly as the last update for Angry Birds.
Ken Cantor
Thanks for the comment Ken! I think you may have taken my analogy a little too far there – clearly a building is not as quick to deliver as a piece of software could be.
Maybe you skipped over all the other comments, but I’m not looking for intricate, well-defined, floor-plan-level details. I’m looking for some confirmation that there’s a partner, even just one, on board. Restaurants announce expansion plans all the time, and so do hotels.
Here’s a local example – the Courtyard by Marriott at EIA was announced in August 2010. It still isn’t open. And along the way, we’ve even received updates!
http://www.edmontonsun.com/news/edmonton/2010/08/13/15019006.html
http://www.edmontonsun.com/2011/06/15/international-airports-hotel-to-open-fall-2012
What makes the arena district so special? Why does everything need to be perfectly in place before ANY announcements are made?
Also, I don’t know what you’re talking about when it comes to sharing development plans. With the exception of Apple, those other companies absolutely do share plans. Concept cars, rail line expansion proposals, new jetliners – all shared in public, often because they need to garner support from others long before they ever become viable.
Then please accept this as confirmation that there is at least one “partner” who is “on board” with plans and proposals that are further along as a result of the arena project than they would be without the arena projects. But that doesn’t mean i am going to share them with you or with the public at large or that they are “vaporware” because of that even if they don’t come to pass as quickly as i would like.
As for your Courtyard by Marriott at EIA comparision, again you are wrong, it was announced after they were successful in coming to terms with EIA and up until that point neither you nor the public was part of the loop surrounding their negotiations even though EIA’s plans for additional airport development and a hotel being a desired part of that overall development were – just the same as the general plans for the arena district additional development are public. It’s the same with the new retail development that was also just announced by EIA. And now that it is “done and announced”, you’ll get updates from here on in as to its progress. While the deal was still under negotiation however, it was none of your or my business even though EIA is also dealing with “public” monies and infrastructure investment.
The arena district is special but not in the manner you are trying to make it out to be. It is special because of where it is and how large it is and the potential it provides to the City of Edmonton. But past that, it isn’t “special” in terms of being any more private for any longer than most other large real estate development projects remain private whether they are public or private projects. Those of us delivering those projects are not going to share more than we can legally or anything that will leave us in a less competitive situation currently or going forward. We have – and will continue – to share our concept and master planning provided it does not divulge confidential or competitive information. Just as the Katz group and Aimco and Melcor and Procura and Red Bird and others have and will continue to do. If that’s not enough to satisfy your need to know, that’s probably something you will have to deal with without more information than is already out there. If you choose to take that as insufficient information to believe my opening statement, there’s not many options – other than time – that will help you to address that.
Another example is the hotel in The Quarters, where it is going ahead but they don’t have the details or a brand figured out.
Anyway, we aren’t going to agree. It is all vaporware because nothing has come to pass yet, that’s the definition of vaporware.
I’d like nothing more than to write a blog post talking about how exciting the district is going to be. Until then, I guess I’ll just assume nothing has or will happen and hope, for yet another year, to be pleasantly surprised.
I would bet you $500 you won’t say this in 2019.
Construction takes a little longer than video game development.
You are the one who is being sold a line, Mack.
Construction does, sure. But announcements? Lets hope we don’t have to wait another five years for that!
Mack, actually the deal isn’t even final yet. What do you seriously expect for announcements from the Katz Group? The real point of no-return comes after PCL guarantees the maximum price and council votes to accept it.
In the meantime, see what I posted about restaurants and condos though, earlier projects such as Quest you might argue were only speculating about the arena finality, but that is exactly what their buyers in-turn bought into as well
I am not affiliated with _any_ of the announcements, but perfectly frankly I’ll back this up with $500 of certainty, you will not be disappointed.
Email if interested, we might not quite get LA Live building height, or ACC Condo density, but we’ll definitely get something somewhat comparable.
The reality is that all of the surrounding development is being 100% funded by private money. These owners (may that be Katz/WAM) have no obligation to announce anything about anyone until a deal is in place. I can tell you that the arena has perked the interest of many investors/developers looking at opportunities that could benefit from the AED. Some have already signed cheques and bought buildings and others are sniffing around. So there’s much, much more than just vaporware.
Perked interest and sniffing around? Seriously, that’s your defense? Haha!
My defence is that the office tower(s) and all the surrounding development is privately funded and that no one needs to disclose anything, period. The heighten interest is also a fact, particularly from investors outside of Edmonton. Follow up with some of the folks at Colliers, Avison Young and CBRE and you’ll see what I mean.
And now the biggest lie of all, that nothing was happening downtown before the arena. Keep dreaming!
Mack, seven fooderies have had the confidence to invest immediately adjacent to the exact perimeter of the Arena South Block since the Bettman meeting:
– Mercer Tavern
– Roast (since bought-out by Tres Carnales)
and since the arena decision last May:
– Tres Carnales
– Fion MacCools
– La Prep
– Oil City Group have purchased the Grand Hotel
– Joey Bell Tower
– the ex-Canada Trust space on the ground floor of the Bell tower
This is literally hemming in the South Block like a sewing machine.
I challenge you to name even _one_ new foodery movement in the same area in the previous two decades! Do you not see the significance?
Furthermore you can’t be serious about Ultima and Quest being somehow coincidental, as _both_ included proximity to the new arena in their sales literature right from day one. Ultima, opening their sales office after the Bettman meeting, had the first lineup on opening day of a sales office since the suburban Century Park in 2008 – which has “coincidentally” stalled as all momentum has shifted to the core. Even sales at the Pearl and Vision for the Corner – both distant from the arena as well – have seen relatively tepid sales. The shift in momentum to the arena area is _obvious_.
Fox towers I’ll grant could be as much associated with 104 Street, but they too are perfectly aware and frank about the arena as a selling point as well.
You’re absolutely blind if you can’t see the change in momentum now.
I don’t know where I made such statements, perhaps you can point this out to me. No doubt there was growing interest and development in our downtown well before the arena. However, since the arena deal was approved there has been even greater interest from investors. I don’t know how much clearer I can be aside from drawing pictures.
That wasn’t in response to you, actually, but to VeryFedUpWithMisinformation’s comment about Tres Carnales, Mercer Tavern, etc. Sorry it looked that way, was commenting from mobile. Thanks for your earlier comments!
Alright, you can’t answer, so for anyone who wants to read (hopefully including you):
Before the Bettman meeting, the last thing that opened on that entire perimetre was Staples, for crying out loud. (Note, I know they didn’t sell food.) Before that was Elephant and Castle, and we are now talking 19freaking88. Before that was the lovely A&W in the Greyhound station, which I believe was around 1983.
In 2008 when we were in the midst of a completely unadulterated boom? – not a single zipping thing, Mack.
It’s like you seem to think that empty parking lots magnetise a perimetre full of restaurants and condos every year. “Oh look at the lovely gravel, wouldn’t this be a great place for a beer” – does not a business case make.
Believe it or not Mack, those seven food moves did not happen because they’re conveniently halfway between Cavern and the George Spady Centre.
You’re perfectly welcome.
‘And now the biggest lie of all, that nothing was happening downtown before the arena. Keep dreaming!’
Idiotic statement, of course downtown development was happening, BUT HOW MUCH WAS HAPPENING IN THE RING AROUND THE SOUTH BLOCK WAS THE QUESTION.
And again, the answer which you could not provide was:
– Staples around 1992
– Elephant and Castle around 1988
– A & W around 1983
Where do you think you get off calling me a liar?
Believe it or not, Mack, some people know things that you don’t.
I can’t get why you don’t get this, and you won’t say, so I’m going to go out on a limb and actively suspect it has something to do with that perfectly accurately written 555 Eaton Centre (now called City Centre West with yellow paint on it) thing you linked.
Now don’t get me wrong, I don’t see a real problem within that document.
The problem is it has nearly zero relevance to the arena discussion.
Why not:
– Retail is always a necessity, but the location of retail follows the market more than it leads
– Eaton Centre needed to compete with Kingsway and WEM which could both build cheap surface parking, and offer it for free.
– around two thirds of the former downtown residents had their homes bulldozed for parking lots (and a few commercial buildings) and rebuilt in places like Castledowns
– the only significant evening attraction downtown was the Eaton Centre Cinemas themselves, which had very little to distinguish them from suburban cinemas other than, again, the disadvantage of no free parking.
Some ways an arena is different than a standard mall with cinemas:
– Arenas lead because they have no competitors elsewhere in the city for the talent they put on stage (unless Northlands keeps the coliseum open…) while cinemas, suzy shier and The Bay are everywhere
– Northlands also charges for parking – that is their entire business plan in a nutshell
– Arenas do not draw people at the same time as office towers, thus shared parking and roads and rails and importantly in our present argument, restaurants and retail is possible
– Arenas when they’re full draw something like 10 times the number of seats in City Centre’s Cinemas, and nearly one third as much as the present office towers, thus they can bring a solid evening balance downtown.
Just about the only thing Eaton Centre had in common with the arena is superficially its scale (two blocks), and I have seen people in this debate concluding that “big is somehow unhelpful (in part because Jane Jacobs rightly disses megaprojects)”, but it’s a completely baseless conclusion. The arena isn’t a mega project like a 200 story building. Arenas just can’t help their size, they are normal projects, of which in accorded scales any Canadian settlement over 100 people builds in their community.
And drawing people downtown in the evenings is a key component both in creating a healthy environment for retail and restaurants, as well as enhancing the saleability of condos.
video game…. hmmmm…….
i love to play it on my smart phone.
I used to have my smart phone by the John’s Little Gadget Store who were the best dealer of mobile gadget in Australia.
http://www.mobilegadgetcity.com.au/
http://www.mobilephoneaccessoriesworld.com.au/
http://www.mobilephonegadgets.com.au
This opinion blog did not age well.
Well thank goodness for that! It has been great to see some of the proposed projects under active construction.