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Office Space Conversion

CalgaryTiger said:
They need to find funding for this until there are no more empty office tower to be converted. We haven't seen a lot completed, so we're still in the early days. IMO this is more economical than funding new builds and almost any other form of city centre affordability.
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Is it? If that was the case, why would building owners need the subsidy? If we were to provide the same subsidy to new builds (especially greenfield woodframe apartments) I bet it would leverage a LOT more units.

I feel the best way to judge it is, look at the pre-conversion assessed value (and tax roll contribution), then look at the same for post conversion. How much more in property taxes is the address now contributing? And, how long will it take to recoup that investment for The City?

The whole point of this program was because we had too many vacant towers, that were dragging down our assessed values, right? Or, was there a different main objective?
 
IMO it is little different than the subsidies in the East Village, just that instead of public infrastructure, the subsidy is required on the private side.

Now I don't know what the East Village subsidy would work out to full build out, and I know a good portion of that subsidy has paid for 'city wide' facilities, so it is messy.
 
MichaelS said:
Is it? If that was the case, why would building owners need the subsidy? If we were to provide the same subsidy to new builds (especially greenfield woodframe apartments) I bet it would leverage a LOT more units.

I feel the best way to judge it is, look at the pre-conversion assessed value (and tax roll contribution), then look at the same for post conversion. How much more in property taxes is the address now contributing? And, how long will it take to recoup that investment for The City?

The whole point of this program was because we had too many vacant towers, that were dragging down our assessed values, right? Or, was there a different main objective?
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To me, it is bigger than raising assessed values and thus taxes. If you're looking at it on the city's potential of breaking even on their investment; it is a bad investment. If you're looking at it as a unit per dollar spent invest; it is a bad investment.

This is city building. A green field wood frame apartment is not improving eyes on the street downtown. Government has been forced to step in and stop the bleeding. For lack of a better term the main objective, I think, was "vibes improvement". You facelift some buildings (good vibes), get more people living downtown (good vibes), and start to eat away at your office vacancy issue (good vibes).

Now, downtown vacant lot/parking lot/greenfield subsidy, I don't think that's the worst idea either but you only do that if you get a chunk of below market housing (carrot). That would also need to be coupled with a penalty for holding on to a vacant lot (stick). The feds are eating the GST, you give a developer a fork in the road; a subsidy to actually build something and avoid the penalty. Doesn't help the labour issue, but you're a city government, do what you can.
 
MichaelS said:
The whole point of this program was because we had too many vacant towers, that were dragging down our assessed values, right? Or, was there a different main objective?
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From what I recall, the tax situation was the impetus for this program. How it long it takes to pan out is hard to say, time will tell. I supported this program, and I still think there are benefits to it, but I'd like to see the pause on it until we see what kind of results come from this first round. Once the projects are done, and residents have settled in we can get a better idea of the success.
 
CalgaryTiger said:
raising assessed values and thus taxes.
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Raising assessed values does not raise tax revenues. It can reallocate tax responsibility within the tax class. The expressed aim is not to raise the values of the converted properties, in fact the properties change tax classes to residential which pays 1/5th the taxes per value.

The goal was to reduce inventory of offices, especially low end ones which can act as a low 'anchor' for the valuation models of other buildings.
 
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darwink said:
Raising assessed values does not raise tax revenues. It can reallocate tax responsibility within the tax class. The expressed aim is not to raise the values of the converted properties, in fact the properties change tax classes to residential which pays 1/5th the taxes per value.

The goal was to reduce inventory of offices, especially low end ones which can act as a low 'anchor' for the valuation models of other buildings.
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Has there been a catchment area drawn to measure this against?

CalgaryTiger said:
To me, it is bigger than raising assessed values and thus taxes. If you're looking at it on the city's potential of breaking even on their investment; it is a bad investment. If you're looking at it as a unit per dollar spent invest; it is a bad investment.

This is city building. A green field wood frame apartment is not improving eyes on the street downtown. Government has been forced to step in and stop the bleeding. For lack of a better term the main objective, I think, was "vibes improvement". You facelift some buildings (good vibes), get more people living downtown (good vibes), and start to eat away at your office vacancy issue (good vibes).

Now, downtown vacant lot/parking lot/greenfield subsidy, I don't think that's the worst idea either but you only do that if you get a chunk of below market housing (carrot). That would also need to be coupled with a penalty for holding on to a vacant lot (stick). The feds are eating the GST, you give a developer a fork in the road; a subsidy to actually build something and avoid the penalty. Doesn't help the labour issue, but you're a city government, do what you can.
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9 figures is an awful lot to spend on "vibes".
 
darwink said:
Raising assessed values does not raise tax revenues. It can reallocate tax responsibility within the tax class. The expressed aim is not to raise the values of the converted properties, in fact the properties change tax classes to residential which pays 1/5th the taxes per value.
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I thought the idea was to fill up the empty office buildings with residents (even though they would pay less tax), so as to bring down the office vacancy rate and be able to keep office building taxes at a higher level?
 
CalgaryTiger said:
Building by building wouldn't it increase what the city gets from that specific building? I understand the city doesn't get more taxes overall.
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Probably not.
Surrealplaces said:
I thought the idea was to fill up the empty office buildings with residents (even though they would pay less tax), so as to bring down the office vacancy rate and be able to keep office building taxes at a higher level?
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That is the theory. Edmonton recently did some math on payback, and it is more than half a century.

Doesn't mean that that is bad. Just that there isn't some brilliant move that makes sense on its own.
 
MichaelS said:
Has there been a catchment area drawn to measure this against?


9 figures is an awful lot to spend on "vibes".
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I guess to get more high-level... what were the alternatives? Do nothing?

There has been a lot of ink spilled on what to do about downtowns. I credit the city with trying something and actually getting something out of it. A pause isn't a bad thing but I think what they've done has been successful. Maybe I'm wrong about the outcome not being worth the money spent but public money gets lit on fire all the time; I personally don't think this was such a bad thing.
 
I'm okay with the money being spent on this, as often times things of benefit don't make financial sense. That said, it's a good time for a pause. The money has been spent, and now we wait for the conversions to finish up and people to settle in. The city needs to keep trying to improve downtown, and can look at some of the other options. If the vacancy stays the same or gets worse, they can always come back to another round later.

One good thing about this program, is that once the units are converted they'll likely stay residential permanently.
 
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CalgaryTiger said:
I guess to get more high-level... what were the alternatives? Do nothing?
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Subsidize other things with similar money or more (but different) money which generates outcomes alongside reducing office inventory. Edit: I don't count adding market housing as an 'outcome' given the subsidy per square foot.
 
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