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Thread: The City's Skyrocketing Debt

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    Default The City's Skyrocketing Debt

    According to financial information being provided to City Council on March 13, 2012, the City will have tax-supported debt of almost $2 Billion by the end of 2014 based on currently approved borrowing. See Appendix 7 of attachment to Agenda Item 6.4 for details here: http://sirepub.edmonton.ca/sirepub/m...doctype=AGENDA

    In only 11 years, this represents an almost 100 fold increase in the City's debt (from $24 million in tax supported debt at the end of 2003).

    Moreover, this $2 billion only includes currently approved borrowing. Not yet budgeted for are major expenditures like the DT Arena ($525m), SE LRT ($800m), a new transit garage ($128m - see Agenda Item 6.9), and the upfront development costs for the City Centre Airport redevelopment (cost unknown).

    Am I misunderstanding something? No one would be happier to be corrected on this debt tally than me.

    To use a topical metaphor, the City's borrowing binge is a bit like OxyContin. It alleviates some immediate pain, but in the long-term is highly addictive and expensive.

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    Quote Originally Posted by East McCauley View Post
    According to financial information being provided to City Council on March 13, 2012, the City will have tax-supported debt of almost $2 Billion by the end of 2014 based on currently approved borrowing. See Appendix 7 of attachment to Agenda Item 6.4 for details here: http://sirepub.edmonton.ca/sirepub/m...doctype=AGENDA

    In only 11 years, this represents an almost 100 fold increase in the City's debt (from $24 million in tax supported debt at the end of 2003).

    Moreover, this $2 billion only includes currently approved borrowing. Not yet budgeted for are major expenditures like the DT Arena ($525m), SE LRT ($800m), a new transit garage ($128m - see Agenda Item 6.9), and the upfront development costs for the City Centre Airport redevelopment (cost unknown).

    Am I misunderstanding something? No one would be happier to be corrected on this debt tally than me.

    To use a topical metaphor, the City's borrowing binge is a bit like OxyContin. It alleviates some immediate pain, but in the long-term is highly addictive and expensive.
    it's not nearly as simple as your topical but completely wrong metaphor represents. unless you identify where the borrowed money was spent, any subsequent "analysis" is worthless.

    if you want a better metaphor that illustrates that, take someone who didn't own a house last year but bought one this year. the money borrowed as a result could easily increase that individuals total debt load by that same factor of 100 or more. that on its own does not mean it is unwarranted debt.

    for the city, if that money primarily purchases hard assets and infrastructure that are necessary to or improve the quality of life of its citizens it's money well borrowed. this is even moreso when the question surrounding those expenditures is not even "if" but "when" in which case borrowing costs in the last decade have been substantially lower than the escations in pricing that would have been incurred without that borrowing.

    if only things were as simple as you represented...
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    ^kcantor, the problem with your metaphor is that - unlike owning a house that appreciates in value over time- the City's borrowing is for assets that depreciate and will need to be replaced over time.

    It's not like the City didn't get anything built during the 20 years the pay as you go capital financing and debt retirement policy was in effect. For example, renovations to Commonwealth Stadium for the 2001 World Track and Field Championships, construction of Telus Field for Triple A baseball, extension of LRT to the University, renovations to Rexall Place, interchanges on the Yellowhead and the Whitemud, etc. All in a fiscal environment much more challenging than today's.

    Don't get me wrong. I'm not opposed to some prudent borrowing for capital projects. What concerns me is the unprecedented escalation in tax supported debt. Borrowing costs are low at the moment. However, since most of this borrowing is over a 25 to 30 year timeframe there is no guarantee that these costs will remain this low in the future.

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    To be fair $24 million in debt was far to low for a city the size of Edmonton (which it sounds like you agree with, unless I misunderstand). It's tough to determine what the right amount of debt is.

    I believe Calgary is over $2.5 billion in debt - although that number might be a few years old. I wonder how Edmonton compares to Ottawa, Hamilton, etc?

    At the end of the day, I have no issue with using debt to fund capital projects - so long as we are ensuring that the city will have sufficient cash flows to cover the projected debt repayments without significant tax increases.

    edit: According to the Ottawa Citizen Ottawa will be at $1.78 billion by the end of 2012.
    Last edited by christopherj; 09-03-2012 at 08:49 PM.

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    ^^Your house does not appreciate in value over time it is the land that is appreciating.

    Another way at looking at the city borrowing is this: Why should I pay for all the infrastructure now for people who are going to be using it 25 years from now?

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    The city didn't spend on infrastructure for close to 30 years... This is what happens when you don't do things and don't raise taxes to sustainable levels...

    Sigh..

    The debt isn't the issue it's the debt to income ratio that matters. We are fine... Our city is fine.. Things at fine.
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    Many people take out loans to invest in their future - RSPs, investments and other retirement nest eggs. A municipal government borrows money to invest in its future. Also, interest rates have been dirt cheap for many years now, and will likely stay that way for a while. Now's the time to borrow, not 30 years ago when the prime interest rate was like 12% - 15%.
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    Quote Originally Posted by edmonton daily photo View Post
    The city didn't spend on infrastructure for close to 30 years... This is what happens when you don't do things and don't raise taxes to sustainable levels...

    Sigh..

    The debt isn't the issue it's the debt to income ratio that matters. We are fine... Our city is fine.. Things at fine.
    Under the previous pay as you go financing policy, the city did invest in infrastructure. A number of examples were provided in my previous post. There is a virtuous circle whereby existing debt is paid down to free up monies for new infrastructure investment while keeping property tax increases low.

    Since 2004, the City has enmeshed itself in a vicious cycle. Keep piling new debt on top of old debt, paid for by locked in property tax increases for the next 20 to 35 years (depending on the project). Particularly concerning is the recent borrowing for projects that are not fully funded. For example, borrowing $56 million to buy land and design the proposed DT arena, and borrowing $102 million to buy land and design SE LRT.

    Again, I am not opposed to prudent borrowing for necessary infrastructure such as LRT. My concern is the rapid run up of tax supported debt, and borrowing for projects before there is even a reasonable assurance they will be fully funded.
    Last edited by East McCauley; 10-03-2012 at 10:28 AM.

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    If city wants to slow down huge debts, property tax will have to stay high like 12 % for few yrs.
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    according to the municipal government act, i believe cities can carry debt up to a maxiumum amount (which varies according city size, i think) i see the debt as a mortgage. the bank approves how much i can borrow and i pay it off over time. the city is paying off it's debt- a plan is in place. also, future generations of edmontonians will benefit, so they too should pay. businesses borrow to remain competitive. so, too, should cities (within the limits set out by the mga)

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    Quote Originally Posted by East McCauley View Post
    Quote Originally Posted by edmonton daily photo View Post
    The city didn't spend on infrastructure for close to 30 years... This is what happens when you don't do things and don't raise taxes to sustainable levels...

    Sigh..

    The debt isn't the issue it's the debt to income ratio that matters. We are fine... Our city is fine.. Things at fine.
    Under the previous pay as you go financing policy, the city did invest in infrastructure. A number of examples were provided in my previous post. There is a virtuous circle whereby existing debt is paid down to free up monies for new infrastructure investment while keeping property tax increases low.

    Since 2004, the City has enmeshed itself in a vicious cycle. Keep piling new debt on top of old debt, paid for by locked in property tax increases for the next 20 to 35 years (depending on the project). Particularly concerning is the recent borrowing for projects that are not fully funded. For example, borrowing $56 million to buy land and design the proposed DT arena, and borrowing $102 million to buy land and design SE LRT.

    Again, I am not opposed to prudent borrowing for necessary infrastructure such as LRT. My concern is the rapid run up of tax supported debt, and borrowing for projects before there is even a reasonable assurance they will be fully funded.
    it's interesting that the two examples you note as concerning you because they relate to projects that are not yet fully funded involve the acquisition of raw land which has ongoing realizable/redeemable value in the market if the projects do not proceed and that will presumably have been acquired at less than it would take if the projects were fully committed and that requires site specific expenditures and commitments that can't take place without ownership and control...
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    I had $0 of debt, then I bought a house. Now I have hundreds of thousands of $ of debt. I must also be in a vicious cycle of piling on debt. Oh wait, I can afford this debt, just like the City can afford the debt it's taking on to fund projects.
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    ^^Ken, on the other side of the ledger, there are carrying costs associated with City owned land as well as foregone property tax revenue.

    Look at the Station Pointe development along Fort Road. The City bought out several businesses on the south side of Fort Road 10 years ago and has yet to receive a dime from the re-development.

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    Quote Originally Posted by East McCauley View Post
    Look at the Station Pointe development along Fort Road. The City bought out several businesses on the south side of Fort Road 10 years ago and has yet to receive a dime from the re-development.
    ergo, they never will?

    It wouldn't be much of an investment if you bought something for $1000, then sold it for $1000 the next day.

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    Quote Originally Posted by East McCauley View Post
    ^^Ken, on the other side of the ledger, there are carrying costs associated with City owned land as well as foregone property tax revenue.

    Look at the Station Pointe development along Fort Road. The City bought out several businesses on the south side of Fort Road 10 years ago and has yet to receive a dime from the re-development.
    we've had much more land than that in our inventory for much longer than that. funny thing is, it's still worth more today than our total book cost. it's what you do, not necessarily how quickly you do it, that's important. in both cases we're talking about city building, not just making a quick buck on a long term investment.
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    Quote Originally Posted by East McCauley View Post
    ^^Ken, on the other side of the ledger, there are carrying costs associated with City owned land as well as foregone property tax revenue.

    Look at the Station Pointe development along Fort Road. The City bought out several businesses on the south side of Fort Road 10 years ago and has yet to receive a dime from the re-development.


    that's because no one have bought the land and developed housing yet.
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    Quote Originally Posted by East McCauley View Post
    Quote Originally Posted by edmonton daily photo View Post
    The city didn't spend on infrastructure for close to 30 years... This is what happens when you don't do things and don't raise taxes to sustainable levels...

    Sigh..

    The debt isn't the issue it's the debt to income ratio that matters. We are fine... Our city is fine.. Things at fine.
    Under the previous pay as you go financing policy, the city did invest in infrastructure. A number of examples were provided in my previous post. There is a virtuous circle whereby existing debt is paid down to free up monies for new infrastructure investment while keeping property tax increases low.

    Since 2004, the City has enmeshed itself in a vicious cycle. Keep piling new debt on top of old debt, paid for by locked in property tax increases for the next 20 to 35 years (depending on the project). Particularly concerning is the recent borrowing for projects that are not fully funded. For example, borrowing $56 million to buy land and design the proposed DT arena, and borrowing $102 million to buy land and design SE LRT.

    Again, I am not opposed to prudent borrowing for necessary infrastructure such as LRT. My concern is the rapid run up of tax supported debt, and borrowing for projects before there is even a reasonable assurance they will be fully funded.

    "Here come the Sevnties!". Fascinating isnt it. In the 1980s and 90s everything was about getting out of debt and not raising taxes. From the 1970s to 2000 it was Manic Depressive behavior. I guess we've gone manic again, making up for the 1990s depressive behavior.

    I remember all kinds of Journal articles and editorials complaining about hikes like 3 and 4% in property taxes. Jan Reimer and Bill Smith did an excellent job of minimizing costs. The City laid off staff, reposted manager jobs making employed managers reapply for their jobs while cutting upwards of 20%. It delayed projects and spending. Debt was seen as bad.

    Places like Calgary (under Klein I believe debt exploded upwards) and Vancouver had per capita debt multiples higher Han Edmonton. We were ultra CONSERVATIVES.

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    Quote Originally Posted by nobleea View Post
    Quote Originally Posted by East McCauley View Post
    Look at the Station Pointe development along Fort Road. The City bought out several businesses on the south side of Fort Road 10 years ago and has yet to receive a dime from the re-development.
    ergo, they never will?

    It wouldn't be much of an investment if you bought something for $1000, then sold it for $1000 the next day.
    If you look at the history of that project, the administration painted it a a slam dunk profit making little Transit Oriented Development in 2002. The project is more than 10 times over the original budget and still a waste land.

    Now some of those same geniuses are responsible for the airport lands redevelopment.
    Last edited by Edmonton PRT; 10-03-2012 at 09:15 PM.
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    Quote Originally Posted by Chmilz View Post
    I had $0 of debt, then I bought a house. Now I have hundreds of thousands of $ of debt. I must also be in a vicious cycle of piling on debt. Oh wait, I can afford this debt, just like the City can afford the debt it's taking on to fund projects.
    No. You borrowed prudently to buy an asset that will appreciate in value over time while the amount of mortgage debt owing will decrease over time.

    If you wish to use a household analogy, the City's borrowing binge is more equivalent to constantly increasing the amount owing on a home equity line of credit resulting in ever greater costs to service the growing debt.

    Interest rates are at historically low levels today. But since the City's borrowing is for terms from 20 to 35 years, the City is exposed to financial risks should interest rates rise. The provisions of the borrowing bylaw for land purchases and design of West to SE LRT states that the money will be repaid in 25 years at interest rates that could go as high as 9%.

    The bylaw further states: "There shall be levied and raised in each year of the currency of the debentures a rate or rates, sufficient to pay the principal and interest falling due in such year on such debentures by a rate sufficient therefore on all the taxable property in the City and collectible at the same time and in the same manner as other rates."

    In other words, every time the City adds to its debt load, property taxes go up to service the debt.

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    Quote Originally Posted by East McCauley View Post
    Quote Originally Posted by Chmilz View Post
    I had $0 of debt, then I bought a house. Now I have hundreds of thousands of $ of debt. I must also be in a vicious cycle of piling on debt. Oh wait, I can afford this debt, just like the City can afford the debt it's taking on to fund projects.
    No. You borrowed prudently to buy an asset that will appreciate in value over time while the amount of mortgage debt owing will decrease over time.

    If you wish to use a household analogy, the City's borrowing binge is more equivalent to constantly increasing the amount owing on a home equity line of credit resulting in ever greater costs to service the growing debt.

    Interest rates are at historically low levels today. But since the City's borrowing is for terms from 20 to 35 years, the City is exposed to financial risks should interest rates rise. The provisions of the borrowing bylaw for land purchases and design of West to SE LRT states that the money will be repaid in 25 years at interest rates that could go as high as 9%.

    The bylaw further states: "There shall be levied and raised in each year of the currency of the debentures a rate or rates, sufficient to pay the principal and interest falling due in such year on such debentures by a rate sufficient therefore on all the taxable property in the City and collectible at the same time and in the same manner as other rates."

    In other words, every time the City adds to its debt load, property taxes go up to service the debt.
    weren't the examples you objected to the acquisition of assets that should appreciate over time?
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    Even if the return on public infrastructure is not positive, there are indirect returns like increased property values, long-run cost savings from deferred urban sprawl, improved traffic flow and other benefits.
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    Quote Originally Posted by Edmonton PRT View Post
    If you look at the history of that project, the administration painted it a a slam dunk profit making little Transit Oriented Development in 2002. The project is more than 10 times over the original budget and still a waste land.

    Now some of those same geniuses are responsible for the airport lands redevelopment.
    It is these sort of grand projects that concern me, those former owners of the Fort road lands I'm sure did much better with the capital they got from the City, than the City has having to pay interest on the debt that could have been released if the land had not been purchased. The Olympic village in Vancouver is another example, and I fear the Muni lands are going to turn into an expensive mess.

    I'm OK with government debt for infrastructure though (and for me, that includes an Arena). I just think with more commercial projects, the land should just be sold to developers (or never purchased) - let them take the risk. I don't like all these acquisitions of bars and hotels either, seems to me one of the simplest ways to make money in Edmonton is to turn your land into a dump, perhaps make some friends in power, and wait for the COE cheque.
    Last edited by moahunter; 11-03-2012 at 09:54 PM.

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    What's that... Edmonton not being frugal for once? I like it
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    Quote Originally Posted by East McCauley View Post
    Quote Originally Posted by edmonton daily photo View Post
    The city didn't spend on infrastructure for close to 30 years... This is what happens when you don't do things and don't raise taxes to sustainable levels...

    Sigh..

    The debt isn't the issue it's the debt to income ratio that matters. We are fine... Our city is fine.. Things at fine.
    Under the previous pay as you go financing policy, the city did invest in infrastructure. A number of examples were provided in my previous post. There is a virtuous circle whereby existing debt is paid down to free up monies for new infrastructure investment while keeping property tax increases low.

    Since 2004, the City has enmeshed itself in a vicious cycle. Keep piling new debt on top of old debt, paid for by locked in property tax increases for the next 20 to 35 years (depending on the project). Particularly concerning is the recent borrowing for projects that are not fully funded. For example, borrowing $56 million to buy land and design the proposed DT arena, and borrowing $102 million to buy land and design SE LRT.

    Again, I am not opposed to prudent borrowing for necessary infrastructure such as LRT. My concern is the rapid run up of tax supported debt, and borrowing for projects before there is even a reasonable assurance they will be fully funded.
    I'm sorry I disagree. The city did not get anything done relative to what needed to be done... Te state our city was allowed to detriment too was unacceptable.. Just loom at the number of neighborhood that require new sidewalks, curbs and street lights and the half a decade long waiting list for Oliver.
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    Quote Originally Posted by The_Cat View Post
    Even if the return on public infrastructure is not positive, there are indirect returns like increased property values, long-run cost savings from deferred urban sprawl, improved traffic flow and other benefits.
    Even if City assets go up, it is not the same as investing in a house. Yes the City has a mortgage and can leverage that investment like a home but if money runs short you can always sell a home if taxes are too much to service. In comparison, can you sell a City?
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    Quote Originally Posted by IanO View Post
    What's that... Edmonton not being frugal for once? I like it
    Of course you do.

    Accumulation of present debt to pay for present lifestyle improvements for instance an arena, is something you can benefit from in the relative short term.

    Of course once a city starts to take on unserviceable debtload(and I'm wondering where this stops) an eventual decline in services to continually service debtload usually occurs.
    With the real hit of any and all of our largesse being serviced in 10, 20, 30 or more yrs by a future generation who may not be similarly predisposed to your:
    "I like it" opinion.

    Similarly I don't much like the federal govt incurring massive debts decades ago while any present taxpayer experiences increasing tax to pay for lesser services and previous unseen benefits.

    Incurring debt should always be considered ethically and responsibly and with a view to what it results in for not only present but for future citizens.
    "if god exists and he allowed that to happen, then its better that he doesn't exist"

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    ^of course, but as mentioned, we underfunded/built so much around this city for a long period of time due to economics and perhaps a different view on what kind of city we want here.
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    Getting a second mortgage on a house to build on an addition may not be the wisest choice when the drain is backing up, the roof is leaking and the furnace needs replacing (sewers, potholes and infrastructure in the City example). Maintaining what you have may not be sexy but it in necessary and we should ensure that we maintain what we have before we spend money we don't have on fancy projects.
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    Who's saying we aren't doing the above?

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    Neighbourhood renewal was - if my recollection is correct - the reason the City starting a limited amount of borrowing back in 2004 instead of relying solely on pay as you financing. Prudent. Existing infrastructure has to be renewed.

    Moreover, it is prudent to borrow when a clearly identified funding source is available to help retire the debt (e.g. federal gas transfer for South LRT, Green TRIP for North LRT).

    In recent years, borrowing has become the default option (repaid from property taxes or through unproven financing schemes like CRLs). Not enough money within existing budgets to pay for the new Walterdale Bridge? No problem, borrow the money. Spend the money that was found on other projects. Even worse, borrow to partly fund projects for which there is no assurance that full funding will materialize (e.g. DT Arena, SE LRT). Not prudent.

  31. #31

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    Different views for different folks.

    To others, it doesn't make sense to pay 100% for a project now when it will be used for the next 20 years. Why not spread the payments out over the 20 years it is used? (or 5, or 10, or however long)

    I've said it before, as long as we're not borrowing to fund day to day services (police, etc) I have no concerns.

  32. #32

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    Quote Originally Posted by Replacement View Post
    Quote Originally Posted by IanO View Post
    What's that... Edmonton not being frugal for once? I like it
    Of course you do.

    Accumulation of present debt to pay for present lifestyle improvements for instance an arena, is something you can benefit from in the relative short term.

    Of course once a city starts to take on unserviceable debtload(and I'm wondering where this stops) an eventual decline in services to continually service debtload usually occurs.
    With the real hit of any and all of our largesse being serviced in 10, 20, 30 or more yrs by a future generation who may not be similarly predisposed to your:
    "I like it" opinion.

    Similarly I don't much like the federal govt incurring massive debts decades ago while any present taxpayer experiences increasing tax to pay for lesser services and previous unseen benefits.

    Incurring debt should always be considered ethically and responsibly and with a view to what it results in for not only present but for future citizens.
    It should be noted that the single largest new costs operationally and for servicing borrowing costs for the City are the new rec centres, and all our new suburban infrastructure (ie. 23 avenue overpass). Suddenly the City is on the hook for Terwilliger Rec Centre staffing and lots more stuff (fire halls, etc).

    I don't feel like my downtown tax dollars are being used very well. Especially since they're not staying downtown. IF the arena goes ahead, it would be the first major downtown project that competes with suburban funding in the last 5 years. What would suburbanites say about spending if we took these new things away or hadn't built them at all. After all, 23 Avenue overpass only passed by 1 vote on Council, and Mandel never supported it.
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    Quote Originally Posted by East McCauley View Post
    ^^Ken, on the other side of the ledger, there are carrying costs associated with City owned land as well as foregone property tax revenue.

    Look at the Station Pointe development along Fort Road. The City bought out several businesses on the south side of Fort Road 10 years ago and has yet to receive a dime from the re-development.
    The City just applied for the CRL like 2 weeks ago. These things take time. Similarly, there are lots of projects around Edmonton that Development community is waiting on until the market conditions are right. Much of that has nothing to do with the City, and the infrastructure needs to be in place once developers want to get going. In the past, that hasn't been the case and certain core neighbourhoods suffer as a result of poor planning and lack of vision and investment by the City
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    Quote Originally Posted by GreenSPACE View Post
    . IF the arena goes ahead, it would be the first major downtown project that competes with suburban funding in the last 5 years.
    While I agree with your sentiment, I think that is a stretch. Take for example the NAIT lrt line. Or, the purchase of the York Hotel.

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    Quote Originally Posted by GreenSPACE View Post
    It should be noted that the single largest new costs operationally and for servicing borrowing costs for the City are the new rec centres, and all our new suburban infrastructure (ie. 23 avenue overpass). Suddenly the City is on the hook for Terwilliger Rec Centre staffing and lots more stuff (fire halls, etc).

    I don't feel like my downtown tax dollars are being used very well. Especially since they're not staying downtown. IF the arena goes ahead, it would be the first major downtown project that competes with suburban funding in the last 5 years. What would suburbanites say about spending if we took these new things away or hadn't built them at all. After all, 23 Avenue overpass only passed by 1 vote on Council, and Mandel never supported it.

    Way to take a topic talking about the total debt (which includes downtown and not downtown spending supported by downtown and not downtown residents and buisnesses) and try to turn it into a suburbs vs downtown argument.

    you sound like a spoiled child in a "but mommy billy got a new toy and it's not fair" kind of way. I can truly picture you stamping your feet in your downtown living room.

    I don't think that East MacCauly or Replacement would disagree that borrowing for rec centres and overpasses is not the best plan. However to try and say that because we have made (arguably) poor decicions in the past that have benefitted some areas we need to make more (arguably) poor decisions to benifit my area is a path towards financial trouble.

  36. #36

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    We cannot install our personal beliefs about debts.. how we manage our personal finances which have a definitive end are unlike the city which will not die, cannot become disabled, does not need to "save for retirement"

    The debt we occured should have been made years ago... a) we would have gotten way more ang for our buck and b) we would be better off as a city today.

    Besides we should mortgage to the hilt... do you really think the wealthiest areas in North America is going to let us fail... no.. It's time we get a nice big fiscal bailout.
    "Do you give people who already use transit a better service, or do you build it where they don't use it in the hopes they might start to use it?" Nenshi

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    Quote Originally Posted by jagators63 View Post
    Quote Originally Posted by East McCauley View Post
    ^^Ken, on the other side of the ledger, there are carrying costs associated with City owned land as well as foregone property tax revenue.

    Look at the Station Pointe development along Fort Road. The City bought out several businesses on the south side of Fort Road 10 years ago and has yet to receive a dime from the re-development.


    that's because no one have bought the land and developed housing yet.

    That is exactly the problem.

    Those roads and streetlighs and firehydrants not only have been paid for (time value of money anyone) they also are deteriorating in the way that infrastrucure deteriorates meaning that there is less time that the taxes that come in after the properties are bought are available to pay for the infrastructure that we have paid for before they have to be replaced.

    contrast this with a "traditional" suburban development where the developer takes the risk associated with puting in the water and sewer and roads and streetlights etc...

    This project is one that we are likely going to subsidize through general tax revenue.

    Please don't take my word for it, just look at the buisness case that the city administration used to get the project approved:

    http://www.edmonton.ca/city_governme...n%20Report.pdf

    look at section C (page 24) for cash flows.

    now when you are looking at that page notice that the big swing in repaying the costs of development are in the selling of the land (which has yet to occur)

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    Quote Originally Posted by edmonton daily photo View Post

    Besides we should mortgage to the hilt... do you really think the wealthiest areas in North America is going to let us fail... no.. It's time we get a nice big fiscal bailout.

    I hope you know what sarcasm is and this is an example of it.

  39. #39

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    ^he has a point, Province of Alberta won't let COE go bankrupt (if they did, the government would never be re-elected).

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    Quote Originally Posted by East McCauley View Post
    ^kcantor, the problem with your metaphor is that - unlike owning a house that appreciates in value over time- the City's borrowing is for assets that depreciate and will need to be replaced over time.

    It's not like the City didn't get anything built during the 20 years the pay as you go capital financing and debt retirement policy was in effect. For example, renovations to Commonwealth Stadium for the 2001 World Track and Field Championships, construction of Telus Field for Triple A baseball, extension of LRT to the University, renovations to Rexall Place, interchanges on the Yellowhead and the Whitemud, etc. All in a fiscal environment much more challenging than today's.

    Don't get me wrong. I'm not opposed to some prudent borrowing for capital projects. What concerns me is the unprecedented escalation in tax supported debt. Borrowing costs are low at the moment. However, since most of this borrowing is over a 25 to 30 year timeframe there is no guarantee that these costs will remain this low in the future.

    Not to disagree with the topic of your post however to help put your mind at ease a little bit the city borrows from the alberta capital Finance Authority (http://www.acfa.gov.ab.ca/) and as such they do not have to refinance their 30 year debt every five years like you or I do.

    The risk due to higher interest rates occurs if in the future we need to borrow money to make our debt payments. (like the federal government does now.)

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    Quote Originally Posted by moahunter View Post
    ^he has a point, Province of Alberta won't let COE go bankrupt (if they did, the government would never be re-elected).

    That's why the province sets the debt limit.

    and last time I checked the tories didn't need our votes to form a government.

  42. #42

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    ^The greater Edmonton metro region is more than a third of the population of the province. Whatever the debt limit is, Edmonton should fully borrow to it, Calgary isn't shy about doing the same.

  43. #43

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    Quote Originally Posted by kjh View Post
    Quote Originally Posted by GreenSPACE View Post
    It should be noted that the single largest new costs operationally and for servicing borrowing costs for the City are the new rec centres, and all our new suburban infrastructure (ie. 23 avenue overpass). Suddenly the City is on the hook for Terwilliger Rec Centre staffing and lots more stuff (fire halls, etc).

    I don't feel like my downtown tax dollars are being used very well. Especially since they're not staying downtown. IF the arena goes ahead, it would be the first major downtown project that competes with suburban funding in the last 5 years. What would suburbanites say about spending if we took these new things away or hadn't built them at all. After all, 23 Avenue overpass only passed by 1 vote on Council, and Mandel never supported it.

    try to turn it into a suburbs vs downtown argument.

    you sound like a spoiled child in a "but mommy billy got a new toy and it's not fair" kind of way. I can truly picture you stamping your feet in your downtown living room.
    There is a reality about funding the suburbs vs downtown, so it's worth discussing. Council knows, everyone does. My point was that let's not fund any of this stuff if we can't do it fairly. For example, does the Meadows really need a new rec centre that we can't afford if other projects in the core are off the table? Probably not.
    www.decl.org

  44. #44

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    Quote Originally Posted by moahunter View Post
    Quote Originally Posted by GreenSPACE View Post
    . IF the arena goes ahead, it would be the first major downtown project that competes with suburban funding in the last 5 years.
    While I agree with your sentiment, I think that is a stretch. Take for example the NAIT lrt line. Or, the purchase of the York Hotel.
    LRT is not included in the funding, and has yet to benefit downtown. I look at that as a more overall project benefiting Edmontonians as a whole, as does administration.

    When we're talking about actual projects for downtown, the total percentage of funding for downtown the last 5 years is much lower than other communities and the average for the City as a whole.
    www.decl.org

  45. #45

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    Quote Originally Posted by moahunter View Post
    ^he has a point, Province of Alberta won't let COE go bankrupt (if they did, the government would never be re-elected).
    Calgary has done it for years...Capital health constantly worked within it's budget (give or take) City of Calgary always went over budget...

    sorry that may be school divisions...

    One of the two main services regardless....
    "Do you give people who already use transit a better service, or do you build it where they don't use it in the hopes they might start to use it?" Nenshi

  46. #46

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    Quote Originally Posted by moahunter View Post
    ^The greater Edmonton metro region is more than a third of the population of the province. Whatever the debt limit is, Edmonton should fully borrow to it, Calgary isn't shy about doing the same.
    I think as a ratio of income to debt Calgary and Edmonton are about equal...
    "Do you give people who already use transit a better service, or do you build it where they don't use it in the hopes they might start to use it?" Nenshi

  47. #47

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    Quote Originally Posted by GreenSPACE View Post
    Quote Originally Posted by Replacement View Post
    Quote Originally Posted by IanO View Post
    What's that... Edmonton not being frugal for once? I like it
    Of course you do.

    Accumulation of present debt to pay for present lifestyle improvements for instance an arena, is something you can benefit from in the relative short term.

    Of course once a city starts to take on unserviceable debtload(and I'm wondering where this stops) an eventual decline in services to continually service debtload usually occurs.
    With the real hit of any and all of our largesse being serviced in 10, 20, 30 or more yrs by a future generation who may not be similarly predisposed to your:
    "I like it" opinion.

    Similarly I don't much like the federal govt incurring massive debts decades ago while any present taxpayer experiences increasing tax to pay for lesser services and previous unseen benefits.

    Incurring debt should always be considered ethically and responsibly and with a view to what it results in for not only present but for future citizens.
    It should be noted that the single largest new costs operationally and for servicing borrowing costs for the City are the new rec centres, and all our new suburban infrastructure (ie. 23 avenue overpass). Suddenly the City is on the hook for Terwilliger Rec Centre staffing and lots more stuff (fire halls, etc).

    I don't feel like my downtown tax dollars are being used very well. Especially since they're not staying downtown. IF the arena goes ahead, it would be the first major downtown project that competes with suburban funding in the last 5 years. What would suburbanites say about spending if we took these new things away or hadn't built them at all. After all, 23 Avenue overpass only passed by 1 vote on Council, and Mandel never supported it.
    Personally I could care less that the 23rd overpass was built. I think Henday at least offers an alternative access, throughway. I imagine though if I was close to the nightmare of SEC I'd possibly think differently.

    But as far as the recreational facilities when downtown has a population of say 100K that warrants such facility let me know. Also downtown has the Don Wheaton, GMCC gym, two WHC's and is a highly serviced population. You also have immediate local access to say Kinsmen rec center or Commonwealth Stadium rec center. Still not enough facilities? c'mon.

    The problem being far too little population. Meanwhile millwoods/meadows(125K) is waiting for promised LRT for close to 40yrs, has one old rec centre, no YMCA, and will wait till 2014 to get anymore.(Meadows) With a rapidly expanding population base.
    Try going to the workout area at MWRC sometime. That facility is all pool, all skating rink, and very little else as far as sq footage. I've seen hotels with better work out areas. Its not even a workout option for me.
    Last edited by Replacement; 13-03-2012 at 03:32 PM.
    "if god exists and he allowed that to happen, then its better that he doesn't exist"

  48. #48

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    I'm sorry - if you can consider a vast area like Millwoods/meadows, one shouldn't only look exclusively at downtown in isolation, especially when attempting to compare the two. Sure, downtown may only be 12,000 people (but is one of the fasting growing areas in the city). One should include the 20,000 people that live in Oliver/Grandin, the people that live in Riverdale, Rossdale, and all of the North Edge, Westmount, Alberta Avenue, MacCauley, the Quarters, Queen Mary, etc.... as an equivalent area to "millwoods/meadows"... and if one were to do that, one would find the populations have similar demands and needs.

  49. #49

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    Downtown - 11,572
    Oliver - 18,203
    Queen Mary 6,000
    Westmount 6,000
    Boyle Street 7,000
    Rossdale 1,000
    Riverdale 2,300
    Central MacDougall 3,500


    (Not to mention the areas outside of there like Glenora, Governor, and other centrally located neighbourhoods that would benefit from downtown investment.)

  50. #50

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    Quote Originally Posted by Replacement View Post
    But as far as the recreational facilities when downtown has a population of say 100K that warrants such facility let me know. Also downtown has the Don Wheaton, GMCC gym, two WHC's and is a highly serviced population. You also have immediate local access to say Kinsmen rec center or Commonwealth Stadium rec center. Still not enough facilities? c'mon.

    The problem being far too little population. Meanwhile millwoods/meadows(125K) is waiting for promised LRT for close to 40yrs, has one old rec centre, no YMCA, and will wait till 2014 to get anymore.(Meadows) With a rapidly expanding population base.
    Try going to the workout area at MWRC sometime. That facility is all pool, all skating rink, and very little else as far as sq footage. I've seen hotels with better work out areas. Its not even a workout option for me.
    So why hasn't the private sector (WHC, Golds Gym, other operators) recognized the market opportunity in Millwoods/meadows and built in this vast area?
    I think of art, at its most significant, as a Distant Early Warning system that can always be relied on to tell the old culture what is beginning to happen to it. —Marshall McLuhan

  51. #51

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    Quote Originally Posted by Medwards View Post
    Downtown - 11,572
    Oliver - 18,203
    Queen Mary 6,000
    Westmount 6,000
    Boyle Street 7,000
    Rossdale 1,000
    Riverdale 2,300
    Central MacDougall 3,500


    (Not to mention the areas outside of there like Glenora, Governor, and other centrally located neighbourhoods that would benefit from downtown investment.)
    Funny that the downtown boosters only consider "downtown" to be a small sliver of what most consider downtown (ie the spots above + more) when it suits them. For example when the media reports a murder downtown say on 107 Ave. On those occasions the boosters will swear up and down that it is not downtown lol

  52. #52

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    Quote Originally Posted by Dialog View Post
    Quote Originally Posted by Replacement View Post
    But as far as the recreational facilities when downtown has a population of say 100K that warrants such facility let me know. Also downtown has the Don Wheaton, GMCC gym, two WHC's and is a highly serviced population. You also have immediate local access to say Kinsmen rec center or Commonwealth Stadium rec center. Still not enough facilities? c'mon.

    The problem being far too little population. Meanwhile millwoods/meadows(125K) is waiting for promised LRT for close to 40yrs, has one old rec centre, no YMCA, and will wait till 2014 to get anymore.(Meadows) With a rapidly expanding population base.
    Try going to the workout area at MWRC sometime. That facility is all pool, all skating rink, and very little else as far as sq footage. I've seen hotels with better work out areas. Its not even a workout option for me.
    So why hasn't the private sector (WHC, Golds Gym, other operators) recognized the market opportunity in Millwoods/meadows and built in this vast area?
    The chronic problem on the southside is operators that feel putting something smack dab on Gateway or environs is suitable for the entire southside. All the way from Terwillegar to Meadows. That thinking seems to be changing but dying a slow death.

    It is odd that you mention it as any business that does open up shop in Millwoods tends to underestimate demand and ends up always expanding premises and with some of the largest demand found anywhere. For Instance Costco relocated to a larger store thats one of the highest volume stores anywhere. Canadian Tire has had a couple expansions @MWTC.
    As far as fitness clubs we tend to get only the smaller operators here and again with limited facilities that just isn't worth my time. Right now WHC is better than anything in Millwoods. Unfortunately both of their locations are not convenient, at all, to most of the area. Again, if MWRC had any kind of fitness workout area at all worth talking about I wouldn't be complaining. They really undershot that as a need when building the facility decades ago.

    Maybe you want to argue Millwoods isn't a sufficient market in itself for an operator like WHC(or the former Club fit) but it was Club Fit who opened up locations in odd small markets like Sherwood Park while leaving Millwoods untouched, and who suffered duly with decisions like those. The Sherwood Park location was the worst recieved location in the chain which is saying something. Sometimes I think its just some bad corporate decisions combined with a 90's style model of putting up locations exactly where the competition is(like Gateway area) vs putting up locations in markets that are essentially available and waiting.
    Last edited by Replacement; 13-03-2012 at 06:44 PM.
    "if god exists and he allowed that to happen, then its better that he doesn't exist"

  53. #53

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    Quote Originally Posted by Medwards View Post
    I'm sorry - if you can consider a vast area like Millwoods/meadows, one shouldn't only look exclusively at downtown in isolation, especially when attempting to compare the two. Sure, downtown may only be 12,000 people (but is one of the fasting growing areas in the city). One should include the 20,000 people that live in Oliver/Grandin, the people that live in Riverdale, Rossdale, and all of the North Edge, Westmount, Alberta Avenue, MacCauley, the Quarters, Queen Mary, etc.... as an equivalent area to "millwoods/meadows"... and if one were to do that, one would find the populations have similar demands and needs.
    So even with all the additions of surrounding central neighborhoods into a pot you still have severalfold more rec centers and facilities and the best ones anywhere compared to the one facility currently servicing 125K people in Millwoods. I would trade MWRC for any of DonWheaton, GMCC, Kinsmen, Commonwealth Rec. etc.

    You're basically just servicing my point. The Central areas are much more serviced/capita at this point with rec facilities. If you really want to add all of those areas into the equation I could equally add all the additional facilities found in those areas.
    Last edited by Replacement; 13-03-2012 at 06:52 PM.
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  54. #54
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    Quote Originally Posted by kjh View Post
    Quote Originally Posted by East McCauley View Post
    Don't get me wrong. I'm not opposed to some prudent borrowing for capital projects. What concerns me is the unprecedented escalation in tax supported debt. Borrowing costs are low at the moment. However, since most of this borrowing is over a 25 to 30 year timeframe there is no guarantee that these costs will remain this low in the future.

    Not to disagree with the topic of your post however to help put your mind at ease a little bit the city borrows from the alberta capital Finance Authority (http://www.acfa.gov.ab.ca/) and as such they do not have to refinance their 30 year debt every five years like you or I do.

    The risk due to higher interest rates occurs if in the future we need to borrow money to make our debt payments. (like the federal government does now.)
    My understanding of Alberta Capital Finance Authority borrowing is as follows. ACFA loans essentially float (interest rates are reset twice a month). These loans are quite sensitive to changes in underlying rates. See the 'Interest Rates' link in the left column of the ACFA website to see what rates have been over the past year for loans ranging from 3 to 30 years. Interest rates on existing loans can float all the way up to 9% depending on the province's borrowing cost.

    For example, the borrowing bylaw for West to SE LRT land acquisition/design contains the following provision: "3. The debentures shall be payable in lawful money of Canada and shall bear interest during the currency of the debentures, at a rate not exceeding nine per cent (9%) per annum payable semi-annually or annually."

  55. #55
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    Quote Originally Posted by East McCauley View Post
    Quote Originally Posted by kjh View Post
    Quote Originally Posted by East McCauley View Post
    Don't get me wrong. I'm not opposed to some prudent borrowing for capital projects. What concerns me is the unprecedented escalation in tax supported debt. Borrowing costs are low at the moment. However, since most of this borrowing is over a 25 to 30 year timeframe there is no guarantee that these costs will remain this low in the future.

    Not to disagree with the topic of your post however to help put your mind at ease a little bit the city borrows from the alberta capital Finance Authority (http://www.acfa.gov.ab.ca/) and as such they do not have to refinance their 30 year debt every five years like you or I do.

    The risk due to higher interest rates occurs if in the future we need to borrow money to make our debt payments. (like the federal government does now.)
    My understanding of Alberta Capital Finance Authority borrowing is as follows. ACFA loans essentially float (interest rates are reset twice a month). These loans are quite sensitive to changes in underlying rates. See the 'Interest Rates' link in the left column of the ACFA website to see what rates have been over the past year for loans ranging from 3 to 30 years. Interest rates on existing loans can float all the way up to 9% depending on the province's borrowing cost.

    For example, the borrowing bylaw for West to SE LRT land acquisition/design contains the following provision: "3. The debentures shall be payable in lawful money of Canada and shall bear interest during the currency of the debentures, at a rate not exceeding nine per cent (9%) per annum payable semi-annually or annually."
    Sorry East McCauley
    I don't think I was clear.

    What I meant to say is money that is already borrowed (eg. SLRT) has a fixed interest rate for the life of the loan meaning that if interest rates increase the current debt servicing costs do not increase.

    For planned debt such as for the Arena or WLRT the interest rate is set at the time the money is borrowed. This means that if interest rates increase substantially we as a city have the option of not borrowing the money. The risk remains for multi year spending on a single project such as the WLRT that the interest costs could increase half way through the project and at that time it would be dificult to stop the project.
    Last edited by kjh; 14-03-2012 at 12:37 PM.

  56. #56

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    ^Regarding SLRT and other loans already borrowed, the City did that at almost essentially 0% rate. That is why they are close to their borrowing limit. It made sense to take advantage of near 30 year low rate and get some long-needed infrastructure done. We are now nearing the end of that interest/infrastructure spending cycle.

    They will have to be much more pragmatic about WLRT/SELRT funding, hence the suggestion of P3 or other options.
    www.decl.org

  57. #57

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    Quote Originally Posted by Medwards View Post
    Downtown - 11,572
    Oliver - 18,203
    Queen Mary 6,000
    Westmount 6,000
    Boyle Street 7,000
    Rossdale 1,000
    Riverdale 2,300
    Central MacDougall 3,500


    (Not to mention the areas outside of there like Glenora, Governor, and other centrally located neighbourhoods that would benefit from downtown investment.)
    And the 60 000 workers that move in and out of the core 5 days a week
    "Do you give people who already use transit a better service, or do you build it where they don't use it in the hopes they might start to use it?" Nenshi

  58. #58

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    Quote Originally Posted by GreenSPACE View Post
    ^Regarding SLRT and other loans already borrowed, the City did that at almost essentially 0% rate. That is why they are close to their borrowing limit. It made sense to take advantage of near 30 year low rate and get some long-needed infrastructure done. We are now nearing the end of that interest/infrastructure spending cycle.

    They will have to be much more pragmatic about WLRT/SELRT funding, hence the suggestion of P3 or other options.
    They are not close to the borrowing limit at all... And as the population increases at 12 % a year the borrowing limit increases with increased revenue
    "Do you give people who already use transit a better service, or do you build it where they don't use it in the hopes they might start to use it?" Nenshi

  59. #59

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    But that’s all right, the city has the borrowing room to do it. In pondering this issue I decided to have a look at the City of Edmonton’s financial reports, compared 2003 to 2010 and found a few interesting figures (see references at the bottom to see where the figures came from):

    2010 Long term debt – $1.484 billion
    2003 Long term debt – $367 million
    2010 Percentage of debt limit – 50.09%
    2003 Percentage of debt limit – 17.45%
    2010 Interest expense – $75.8 million
    2003 Interest expense – $26.8 million
    2010 Revenue – $1.941 billion (Net property & business tax portion $897 million)
    2003 Revenue – $1.58 billion (Net property & business tax portion $493 million)
    Just for comparison sake I decided to have a look at Calgary’s 2010 figures:

    2010 Long term debt – $2.93 billion
    2010 Percentage of debt limit – 56.86%
    2010 Interest expense – $124 million
    2010 Revenue – $2.787 billion (Net property & business tax portion $1.34 billion)
    "Do you give people who already use transit a better service, or do you build it where they don't use it in the hopes they might start to use it?" Nenshi

  60. #60

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    Quote Originally Posted by edmonton daily photo View Post
    Quote Originally Posted by GreenSPACE View Post
    ^Regarding SLRT and other loans already borrowed, the City did that at almost essentially 0% rate. That is why they are close to their borrowing limit. It made sense to take advantage of near 30 year low rate and get some long-needed infrastructure done. We are now nearing the end of that interest/infrastructure spending cycle.

    They will have to be much more pragmatic about WLRT/SELRT funding, hence the suggestion of P3 or other options.
    They are not close to the borrowing limit at all... And as the population increases at 12 % a year the borrowing limit increases with increased revenue
    Ya, I might have gotten that a bit wrong. I think once SELRT/WLRT money is borrowed, they will be closer.
    www.decl.org

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    The question that needs to be asked is what did the city get for it's $2 billion?
    There are a couple of rec centers, 23 avenue and the south LRT. Around 3/4 of the LRT cost was covered by other levels of government.
    The neighbourhood redevelopments are funded by a special tax levy. The province and the feds have either maintained or increased their funding to municipalities,
    Where is your $2 billion?
    The city administration spends money like drunken sailors, the debt policy was like giving them another credit card.
    In ten years the city has ran up $2 billion in debt, that means you are now paying about $50 million per year to service it. If interest rates go to 5% (Historically a low number) service costs go to $100 million.
    If the figures are correct the city is adding $200 million per year to the debt. At 2 1/2% interest it is adding $5 million per year to the debt servicing costs.
    I will just say I'm glad I live in St. Albert, If I lived in the city I would be praying interest rates stay at their historic low levels.
    And as a point of reference, Government of Canada 2 year bonds paid about 16% interest in 1982. Do the math.

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    You rather live in St. Albert and pay more property tax on a property than a similar one that is in Edmonton? Does not compute.....

  63. #63

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    Quote Originally Posted by ralph60 View Post
    I will just say I'm glad I live in St. Albert, If I lived in the city I would be praying interest rates stay at their historic low levels.
    Yeah, never any waste in St Albert, or controversy about having to jack up taxes for convention centers, or ... 'ahem', Starbucks:

    An award mocking an Alberta city for spending $280,000 of taxpayer dollars to open a Starbucks has reignited a debate in St. Albert, Alta., over whether the municipality should be competing with private-sector eateries.

    “Police, road clearing, garbage collection, that is what I see municipal governments doing. But providing their residents with access to delicious hot mochas, I don’t think should be high on their list of services,” said Scott Hennig, the Alberta director of the Canadian Taxpayers Federation, which on Wednesday nominated St. Albert for one of its Teddy Waste awards. The awards target government spending the CTF deems wasteful.
    http://news.nationalpost.com/2012/03...ert-starbucks/

  64. #64

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    Quote Originally Posted by GreenSPACE View Post
    Quote Originally Posted by edmonton daily photo View Post
    Quote Originally Posted by GreenSPACE View Post
    ^Regarding SLRT and other loans already borrowed, the City did that at almost essentially 0% rate. That is why they are close to their borrowing limit. It made sense to take advantage of near 30 year low rate and get some long-needed infrastructure done. We are now nearing the end of that interest/infrastructure spending cycle.

    They will have to be much more pragmatic about WLRT/SELRT funding, hence the suggestion of P3 or other options.
    They are not close to the borrowing limit at all... And as the population increases at 12 % a year the borrowing limit increases with increased revenue
    Ya, I might have gotten that a bit wrong. I think once SELRT/WLRT money is borrowed, they will be closer.
    Bowing any amount of money will make them closer to their spending limit...
    "Do you give people who already use transit a better service, or do you build it where they don't use it in the hopes they might start to use it?" Nenshi

  65. #65

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    Quote Originally Posted by ralph60 View Post
    The question that needs to be asked is what did the city get for it's $2 billion?
    There are a couple of rec centers, 23 avenue and the south LRT. Around 3/4 of the LRT cost was covered by other levels of government.
    The neighbourhood redevelopments are funded by a special tax levy. The province and the feds have either maintained or increased their funding to municipalities,
    Where is your $2 billion?
    The city administration spends money like drunken sailors, the debt policy was like giving them another credit card.
    In ten years the city has ran up $2 billion in debt, that means you are now paying about $50 million per year to service it. If interest rates go to 5% (Historically a low number) service costs go to $100 million.
    If the figures are correct the city is adding $200 million per year to the debt. At 2 1/2% interest it is adding $5 million per year to the debt servicing costs.
    I will just say I'm glad I live in St. Albert, If I lived in the city I would be praying interest rates stay at their historic low levels.
    And as a point of reference, Government of Canada 2 year bonds paid about 16% interest in 1982. Do the math.
    The city loans are locked into their interest rates for the full term of their loans...
    You cannot apply your personal money strategies to a body such as the city of Edmonton.

    The rules are different, the products they use are different.. the lifespan of the city is different.

    There is such a thing as good debt..

    We got much much more out of the debt than what you have listed... much much much more.
    "Do you give people who already use transit a better service, or do you build it where they don't use it in the hopes they might start to use it?" Nenshi

  66. #66

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    St Albert never spends its money foolishly? Good grief: Servus Center anyone?!?!??

  67. #67

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    I think the vis a vis discussion don't really add anything and standing around pointing fingers and thumbing our noses at the two communities detracts from any real conversation from occurring.
    "Do you give people who already use transit a better service, or do you build it where they don't use it in the hopes they might start to use it?" Nenshi

  68. #68
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    You can stick your heads in the sand if you want but somebody show me $2billion worth of improvements to the city in the past 10 years.
    Debt is debt, regardless of how you want to manage it, there are still interest costs and principal that eventually need to be paid back.
    You're spending $50 million a year to service $2 billion in debt and not paying back any principal.
    If you continue to increase your debt at $200 million/year it won't be too long before you are borrowing that much to cover the interest.
    As far as the city interest rates being locked in for the term of the loans, so what. Since the debt is increasing, you are, in reality not paying off any principal. This means the debt locked in today will eventually come due and need to be refinanced at whatever the interest rate is at the time of maturity.
    As far as St. Albert goes, our average tax hike has been 3.9% per year over the last 5 years and 2.9% in 2012.
    I moved to St. Albert 20 years ago. My taxes at the time were just over $2000 for a 2100 sq ft house, built in 1967 on a 11,250 sq ft lot. (75' x 150')
    My taxes for 2011 were $3100. Any City of Edmonton property owners want to compare?
    In that time St. Albert has repaved my street, relined my sewer mains and replaced the sewer service to my house.
    St Alberts operating debt will be eliminated next year and it's capital debt is strictly limited to Servus Place and Ray Gibbon Drive.
    http://www.stalbert.ca/uploads/files..._2012-2014.pdf
    I have no problem with debt going to specific capital projects, it's a valid way of financing needed improvements and is morally justified as future taxpayers will benefit from the building legacy.
    That isn't what happened with the City of Edmonton however. They reversed the debt policy and ran up a credit card bill for $2 billion.
    If I'm wrong, then somebody show me a list of $2 billion worth of capital improvements to the city financed by this debt.

  69. #69

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    ^ yer nuts...

    a term loan of x amount payable over 30 years means that at the end 30 years the debt is paid off... I have no idea where you think that the city is paying Interest only...

    Each project is financed via its own term loans... the city doesn't have some sort of mass HELOC

    You were wrong from the word "you"

    Ralph wrote : You can stick your heads in the sand if you want but somebody show me $2billion worth of improvements to the city in the past 10 years.
    Debt is debt, regardless of how you want to manage it, there are still interest costs and principal that eventually need to be paid back.

    When St Albert is dealing with a population of 800,000 people and infrastructure that dates back to the late 1800 - early 1900's Like the dt sewer system..

    Than we can start comparing apples to apples.
    "Do you give people who already use transit a better service, or do you build it where they don't use it in the hopes they might start to use it?" Nenshi

  70. #70
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    show me the $2 billion in improvements

  71. #71

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    O for [email protected] sakes..

    Like really like ANY of us can sit here and list 2 billion dollars worth of projects...

    Get real

    The inability to list every project attached to the debt does not make you right.. it just makes you out of touch with reality.

    How many KM of LRT does st albert have?, how many freeways?, social agencies?, rec centers?, athletic fields?, airports?, bus stations?, Transit depots etc etc etc

    like really go away and stop thinking that some sleepy little suburb is equal to the center of a metropolitan area.. and further to that tell me how you in St Albert are going to afford the massive amounts of infrastructure upgrades you are going to require in the next 20 years as the majority of your major infrastructure comes to the end of it's life span on your current tax base.

    There is a reasons why St Albert is scrambling to build industrial/commercial parks on the outskirts of it's city boundaries.

    P.S. if you can't name every child born on Tuesday of last week in Alberta your wrong.
    Last edited by edmonton daily photo; 22-03-2012 at 04:07 PM.
    "Do you give people who already use transit a better service, or do you build it where they don't use it in the hopes they might start to use it?" Nenshi

  72. #72
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    It absolutely kills me, the typical person on this forum is in their 20's. You are the ones who will be paying this debt. You should be screaming at the city, not defending it.
    If there were $2 billion worth of new roads, sewers and LRT my opinion would be totally different. The fact is that there isn't.
    The city hasn't significantly accelerated the improvements in infrastructure in the past decade, certainly not by $2 billion.
    Go ahead and defend it, you're the ones who will be stuck with the bill, it looks good on you.

  73. #73

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    well maybe.. just maybe...

    If a certain generation had elected officials that invested in cities, infrastructure and services instead of paying down low cost debt during slower economic times and giving themselves ralphbucks, the generation of today wouldn't be quiet as screwed.

    and maybe, just maybe if a certain generation had cared about the environment and designed sustainable cites and not torn out street cars or torn down fantastic historic buildings---- Edmonton would be a fantastic place full of vibrancy and history and soul...

    so if you don't like the 2 billion dollar debt the city has incurred, I'm sorry you don't like the price of your poor urban and financial planning. so go wag your finger at the mirror and leave us alone to fix the steaming pile we inherited.
    Last edited by edmonton daily photo; 22-03-2012 at 04:16 PM.
    "Do you give people who already use transit a better service, or do you build it where they don't use it in the hopes they might start to use it?" Nenshi

  74. #74
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    Sorry, you didn't inherit the steaming pile, you're building it.

  75. #75
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    We inherited decaying and dilapidated infrastructure that we are now trying to improve after many years of neglect. The past city councils did absolutely nothing to make this city livable and its finally being corrected with Stephen Mandel and company in charge.

    It is money well spent and I am thankful you have no control of what will be done in the future as we have seen what your kind of thinking does to a city.

  76. #76

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    Quote Originally Posted by Hilman View Post
    The past city councils did absolutely nothing to make this city livable and its finally being corrected with Stephen Mandel and company in charge.
    I don't think that's fair. Past councils protected the river valley, and Railtown was done by the previous council Bill Smith (there was virtually no "up market" downtown living before that).

  77. #77

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    Previous councils wanted to build a freeway system through the river valley system...It was the people of Edmonotn that protected the river valley.

    2 projects don't make up for the multi billion dollar infrastructure debt us "young people" have inherited and a long history of underfunding the city and inaction such as the Airport close that was LONG overdue and largely supported by a younger, social network using generation.

    When I sit around a city table with multi generations I understand why certain age demographics are very anti city, what I don;t understand is why those generations continue to act like the city hasn't changed and evolved. This is highly generalized of course.
    Last edited by edmonton daily photo; 23-03-2012 at 09:44 AM.
    "Do you give people who already use transit a better service, or do you build it where they don't use it in the hopes they might start to use it?" Nenshi

  78. #78

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    Quote Originally Posted by ralph60 View Post
    Sorry, you didn't inherit the steaming pile, you're building it.
    What we inherited is a bombed out DT that is a sea of gravel surface parking lots based on the poor foresight of your generation.

    Careful with the stones you are lobbing from the balcony of your glass house.

    We are doing the best we can with what we were given just like every generation has done before them.
    "Do you give people who already use transit a better service, or do you build it where they don't use it in the hopes they might start to use it?" Nenshi

  79. #79

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    New "greenfield" developments impose higher costs on taxpayers than their short term economic benefit under our current system. This is a major factor driving the city into poverty.

    Developers are not required to put in their own sidewalks and curbs, for instance, nor are there any methodologies for addressing the increased load on the existing municipal infrastructure which is being tied into. A very good example of hidden taxpayer costs of new development are the costs of road widening to accommodate the new traffic. Road widening projects are 100% born by taxpayers, and are only necessary as a result of new sprawl. Our current development processes need major reform, one of which needs to be a methodology for ensuring that zoning changes have a high bar of public support, rather than mere politician support, which is what we have now. Politicians can be easily bought off. A benchmark of actual public support behind zoning changes would naturally act to maximize our use of what we already have.

    Council's current direction seems to be towards developing our way out of our debts. But it is only causing us to go deeper in.

  80. #80
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    You talk about stopping sprawl in one part of your post, yet you're railing against the development of unused surplus school sites, which would help alleviate this problem. Also, isn't this just a tad bit hypocritical of you considering that your company builds condo buildings out in the suburbs (see Windermere Village)?
    Don't feed the trolls!

  81. #81

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    New developments in the arena district and on the City Center Airport lands will certainly help with this.

    Thank you, Mayor Mandel and City Council.

  82. #82

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    Every development i have ever done it was up to the developer to put in all infrastructure at the location. AND pay for any direct necessary upgrades that go along with that development ( if a road widening is needed strictly for that project). now yes some additional cost ends up on a taxpayer (could very well be the ones that live in the new development) due to not directly attributable infrastructure upgrades. Now if your right and the city pays for sidewalks and that type of stuff, then its City policy that is the issue as other municipalities do force ALL developers to cover their cost of infrastructure.

    Saying that with the NIMBY people out there (a large part of any public population) re-zoneing is more of an issue stopping infill higher density then it is in a greenfield concept. more companies would be re-zoneing for higher density IF they could garentee that the land they bought would be able to be re-zoned. the biggest issue with that is the NIMBY people. (many of whom live in single family housing who want to keep their neighborhood from being condos, Townhouses and other way more efficient forms of housing) with all these people currently able to stop infill developments with ease, no wonder the big city developers do not spend the extra effort to do these more risky, harder and more expensive developments. Greenfield is easy. and will continue to be easier until we eliminate the NIMBY effect or minimize it to the point where it no longer adds unnecessary risk to the developer.

  83. #83

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    Quote Originally Posted by ScottieA View Post
    You talk about stopping sprawl in one part of your post, yet you're railing against the development of unused surplus school sites, which would help alleviate this problem. Also, isn't this just a tad bit hypocritical of you considering that your company builds condo buildings out in the suburbs (see Windermere Village)?
    zing.

  84. #84

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    Quote Originally Posted by ScottieA View Post
    You talk about stopping sprawl in one part of your post, yet you're railing against the development of unused surplus school sites, which would help alleviate this problem. Also, isn't this just a tad bit hypocritical of you considering that your company builds condo buildings out in the suburbs (see Windermere Village)?
    If we are going to densify, we will need our parks all the more. Building on them is akin to a farmer eating his seed corn.

    Developers who purchase serviced land are not to blame for the City's desire to expand. Once the greenfields have been purchased, zoned and developed with municipal services installed, the decision is already complete. Moreover, condominiums are not exactly a low density build-form. I actively built up on what was already built out.

    There are many excellent infill opportunities in Edmonton. Old Petrolia mall is a very good example. And while people like Medwards contend that the City has no ability to shape or influence decisions on what happens within the city, I think this is hogwash and that the City has plenty of options towards stimulating redevelopment and rejuvenation.

    The general thrust of my post, though, was with respect to zoning variances, which should in my opinion be put to a local vote, not a city council one. Local zoning is meant to protect the interests of those who have relied on that zoning. Under this premise, rezoning MR lands to RA is also wrong in that people purchased their property on the basis that it was MR and not RA.
    Last edited by curtispenner; 04-07-2013 at 03:46 PM.

  85. #85
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    it is debt, or use slaves to build your projects.

  86. #86

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    I'm not fully versed in what services the city of Edmonton requires greenfield developers to pay for and what they don,t. I do know that most serveces everywhere else have to be coverd by the developer during development so what costs are there that the city has extra?. And why can't these costs be recovered from levys on the properties in these areas?.

  87. #87

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    ^ the developer pays for a lot actually... it's other services that cost us.. fires stations, ambulance, rec centers, schools, low use transit....

    SNOW REMOVAL.. don't for get about that.
    "Do you give people who already use transit a better service, or do you build it where they don't use it in the hopes they might start to use it?" Nenshi

  88. #88

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    I don't see what the big deal is. Most of the green space Curtis keeps talking about goes completely unused all year. Unless there's some type of sports field on it, or other programming, nobody uses it and it's just lawn to mow.
    "Men never do evil so completely and cheerfully as when they do it from religious conviction" - Blaise Pascal

  89. #89

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    So it seems that the taxes from these greenfeild developments are not enouph to cover the cost.. really even as a developer i believe that tax revenue should cover the operating costs of government services. so increase taxes in these areas seems to be the answer. use a levy system for example RF1 property is taxed at Basic Residential mil rate + 0.00XXX mill rate. ect.

    All this will do is increse the cost on individuals who want to live further out. yet at the same time not restricting the rights of other landowners to develop their lands and most importantly creating a system where the city gains the tax revenue it s missing from the current greenfield developments.

  90. #90

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    ^ the city doesn't have control over how property tax can be used. it''s directed by the province.
    "Do you give people who already use transit a better service, or do you build it where they don't use it in the hopes they might start to use it?" Nenshi

  91. #91

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    What about leveys they use those or are those.excemptions from the regs

  92. #92

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    City funding and debt is much more nuanced than the general public will have information for. Some quick facts I know of to help the discussion:

    - CoE is at only 22% of their debt ceiling, while Calgary is at 96%. Not that we want to go out of our way to incur more debt, but we are borrowing strategically, mostly for projects that serve the public good such as LRT or local infrastructure improvements. Calgary will have a hard time keeping up with growth demand, while Edmonton maintains the ability to borrow while growth is high and interest rates are at historic lows.

    - Our share of the gas tax revenue is currently going to pay off the debt incurred by the South LRT line until 2021. At that point almost $500m will be available to fund other projects. Theoretically this could be used to help pay for the West LRT line (SE line scheduled to be complete in 2019).

    - Areas for annexation in the south and east have been strategically selected to maximize Edmonton's tax base potential.
    Last edited by GreenSPACE; 07-07-2013 at 12:45 AM.
    www.decl.org

  93. #93
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    Quote Originally Posted by GreenSPACE View Post
    City funding and debt is much more nuanced than the general public will have information for. Some quick facts I know of to help the discussion:

    - CoE is at only 22% of their debt ceiling, while Calgary is at 96%. Not that we want to go out of our way to incur more debt, but we are borrowing strategically, mostly for projects that serve the public good such as LRT or local infrastructure improvements. Calgary will have a hard time keeping up with growth demand, while Edmonton maintains the ability to borrow while growth is high and interest rates are at historic lows.

    - Our share of the gas tax revenue is currently going to pay off the debt incurred by the South LRT line until 2021. At that point almost $500m will be available to fund other projects. Theoretically this could be used to help pay for the West LRT line (SE line scheduled to be complete in 2019).

    - Areas for annexation in the south and east have been strategically selected to maximize Edmonton's tax base potential.
    And not forgetting, to save private organizations the bother and inconvenience of having to run up their tab...
    "The only really positive thing one could say about Vancouver is, it’s not the rest of Canada." Oink (britishexpats.com)

  94. #94

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    Quote Originally Posted by edmonton daily photo View Post
    ^ the city doesn't have control over how property tax can be used. it''s directed by the province.
    Huh?

    Of course the city chooses how to spend its money.

  95. #95
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    Quote Originally Posted by GreenSPACE View Post
    City funding and debt is much more nuanced than the general public will have information for. Some quick facts I know of to help the discussion:

    - CoE is at only 22% of their debt ceiling, while Calgary is at 96%. Not that we want to go out of our way to incur more debt, but we are borrowing strategically, mostly for projects that serve the public good such as LRT or local infrastructure improvements. Calgary will have a hard time keeping up with growth demand, while Edmonton maintains the ability to borrow while growth is high and interest rates are at historic lows.
    Your so-called facts are incorrect.

    According to their respective audited financial statements as of December 31, 2012, the City of Edmonton was at 53.44% of its debt service limit and the City of Calgary at 57.17%.

    For City of Edmonton, see p. 59 here: http://www.edmonton.ca/city_governme...ay16_13(1).pdf

    For City of Calgary, see p. 63 here:http://www.calgary.ca/CA/fs/Document...eport-2012.pdf

    Moreover, looking at debt servicing in the same notes, Calgary is repaying its outstanding debt at a much higher rate than Edmonton. This suggests Calgary - not Edmonton - will have greater flexibility to incur future debt.
    Last edited by East McCauley; 07-07-2013 at 10:44 AM.

  96. #96

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    ^These were numbers offered to me by the City. It was obviously given out of context and I'll try to verify them. Also might have something to do with this:

    "these thresholds are conservative guidelines used by Municipal affairs to identify municipalities which could be at financial risk if further debt is incurred. the calculation, taken alone, does not represent the financial stability of the municipality as the financial statements must be interpreted as a whole"

    "Ministerial order nol: 124/11 set out an exception to the calculation of the debt service limit as originally disclosed in section 271 of the Mga, stating the calculation shall not take into account borrowing that is related to Municipal affairs grants regulation (Municipal Sustainability initiative debt) that does not require the repayment of any principal before december 31, 2016."
    Last edited by GreenSPACE; 07-07-2013 at 12:26 PM.
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  97. #97

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    Quote Originally Posted by GreenSPACE View Post
    - Areas for annexation in the south and east have been strategically selected to maximize Edmonton's tax base potential.
    No its not, its to pay back favored land speculators (it wouldn't surprise me if they are heavy donors to Councilor campaigns) by allowing them to create more sprawl which results in more long term infrastructure debt. For example, the idea that COE could compete with Nisku across the road at attracting business, is farcical. I know which side of the road I'd invest in a business, the proof is in the pudding so to speak.

    The only way to stop the debt growth is to stop the sprawl. There is no god-given right for some-one who purchases a piece of farmland to develop into residential, anymore than a city dweller has a right to put a refinery on their property. Its time to say no to outward growth, and yes to filling the multitude of gaps throughout the city in the neighborhoods left behind as the city sprawls (starting with the inner city / downtown). If other towns / cities want that long term debt, let them sprawl at cost to their residents.
    Last edited by moahunter; 07-07-2013 at 01:24 PM.

  98. #98

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    So the issue is costs... And so called infrastructure.debt. not sprawl. While their may be issues.with sprawl on its own. (farmland) blameing sprawl on increased costs is silly. It's a symptom of ineffective tax regimes that greenfield developments cost more money and debt. It's not a symtom of sprawl upon itself.

    Target the right problem. Don't target landowner rights for something they have no control over (inefficient taxation)

  99. #99
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    Quote Originally Posted by moahunter View Post
    Quote Originally Posted by GreenSPACE View Post
    - Areas for annexation in the south and east have been strategically selected to maximize Edmonton's tax base potential.
    No its not, its to pay back favored land speculators (it wouldn't surprise me if they are heavy donors to Councilor campaigns) by allowing them to create more sprawl which results in more long term infrastructure debt. For example, the idea that COE could compete with Nisku across the road at attracting business, is farcical. I know which side of the road I'd invest in a business, the proof is in the pudding so to speak.

    The only way to stop the debt growth is to stop the sprawl. There is no god-given right for some-one who purchases a piece of farmland to develop into residential, anymore than a city dweller has a right to put a refinery on their property. Its time to say no to outward growth, and yes to filling the multitude of gaps throughout the city in the neighborhoods left behind as the city sprawls (starting with the inner city / downtown). If other towns / cities want that long term debt, let them sprawl at cost to their residents.
    Wrong. What we need to do is have smarter growth, including some greenfield. The real issue is making infill less complicated/risky while ensuring it is appropriate/sensitive. The new infill guidelines will help considerably, but we need to market these opportunities better and perhaps provide incentive for those who do infill.
    www.decl.org

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  100. #100

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    I agree with moahunter on this, sprawl and low density communities have high relative costs and low tax base. Simply increasing density on infill using most of the same infrastructure like roads, sewer, snow removal, existing schools, fire services etc while increasing the revenue without all the capital costs. That is the smart in smart growth. Grow inward, not outward.
    Advocating a better Edmonton through effective, efficient and economical transit.

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