The market didn’t save Calgary from its downtown being hollowed out or its housing becoming unaffordable for average citizens, and the mayor now wants council to take “bold” proactive steps to help businesses and homeowners as affordability challenges linger.
Jyoti Gondek urged her fellow councillors to seriously consider shifting the city’s tax burden away from non-residential ratepayers.
Addressing the Calgary Chamber of Commerce, Gondek said the city’s housing market, like the downtown office vacancy crisis, was not “magically resetting” after a market downswing, but was instead stuck in their respective ruts: a dearth of housing and a glut of office spaces.
“We figured it was just the market. You know, the boom and bust cycles that we so often refer to,” Mayor Jyoti Gondek said Thursday. “This time, however, things were not rebounding in the same way.”
She said Calgary had been regarded as an affordable Canadian metropolitan centre that was supported by well-paying jobs, a high quality of life and inexpensive homes, but that recently changed.
“We were exposed to the vulnerability that we had not invested enough in either market or non-market housing, that we had not been able to keep pace with our growth. Once again, our response to this vulnerability was to create a bold new way forward… a housing and affordability strategy that was driven by experts in the field.”
The mayor said housing is the top challenge facing Calgary right now, and it’s vital for the city to execute on all parts of the housing strategy approved by city council last month.
“Housing is a very big concern. And if we are not able to house the people that are coming here, we’re going to lose them,” Gondek said.
The mayor pointed to work already underway in the city, including the sale of city-owned lands for non-market and affordable housing, funding incentives for secondary suite construction, and waiving of municipal taxes for nonprofit housing providers.
Gondek also highlighted the need to provide housing across societal strata, including the roughly 200 Calgarians who tend to repeatedly be in a position of crisis.
“In speaking with Patricia Jones from the Calgary Homeless Foundation, she has told us that these folks, roughly 200 people in Calgary, are going to need supports and supportive housing in perpetuity,” the mayor said. “And I think it’s really important that we find a partner who’s willing to work with us and a site where we can help these people have a great quality of life while they are supported.”
Calgary’s mayor provided some insight on the conundrum facing councillors when it comes to local access fees on electricity bills. Currently, those fees are calculated as 11.11 per cent of the regulated rate option (RRO) price, a price that jumped nearly 250 per cent from January 2021 to September.
She said on the one hand, councillors have to keep the best interest of the city’s operations in mind.
“The conflict, though, is that we also have a responsibility and obligation to take care of Calgarians and to provide them with affordability when it comes to their power,” Gondek said.
Chamber CEO Deborah Yedlin said a recent survey on non-residential taxes showed 90 per cent of respondents indicated they were negatively impacted by rising property taxes.
“Historically, when things were really good and downtown was booming, it wasn’t a big deal to think that 55 per cent of the budget was being covered by non-residential properties. We were in a boom time,” Gondek said.
Following the 2014 oil price shock, that equation became unsustainable, she said.
Calgary’s downtown still faces a greater than one-quarter vacancy rate.
Gondek said in 2019, she learned from city administration that non-residential property tax revenues contribute about 20 per cent of the city’s full stream of revenue.
She said she hopes city council will decide this year to incrementally shift the tax burden more to homeowners, a decision that would happen during November’s budget deliberations.
“Calgary is lagging, badly lagging in terms of how business friendly we are based on our property tax regime and other places,” the mayor said.
She said the tax mix in other cities is around 40 per cent business and 60 per cent residential. Calgary currently has a 48-52 mix.
“I’m hoping my council colleagues realize that if we don’t make this shift, two things could happen: number one, more businesses will close, more businesses will lay off employees, and more Calgarians will suffer. And number two, if we hit a point where the ratio becomes five-to-one, provincial intervention will happen,” Gondek said, noting that ratio currently sits at around 4.6-to-one. “I’m actually quite interested in not seeing that happen.
“As a municipality, we should take care of our own affairs. So to be responsible and fiscal, fiscally responsible, in particular, we need to make that shift this year.”
Gondek also said the municipality is left holding the bag to the tune of $300 million in annual operating and capital costs from areas of provincial and federal jurisdiction.
Yedlin asked whether debt instruments like municipal bonds could be used to help make up that funding gap.
“Municipal bonds is absolutely something that we discussed (with CFO Carla Male),” Gondek said. “But I have to say, orders of government have jurisdiction over particular things, and they need to own that. They need to be responsible for the people that we collectively serve. You cannot simply offload things to the municipalities.”
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