While it isn’t the sort of thing that would make the front-page news, Calgary has real challenges when it comes to our competitiveness in industrial development growth and attracting as well as retaining companies within the city. For reference, industrial spaces are used for things like manufacturing, supply chain management (think warehouses for retailers like Amazon and Sobeys), fabrication shops, storage and more.
Our neighbour to the north, Balzac in Rockyview County, has developed an industrial-friendly reputation in the province and at national and international levels. In the last 10 years, Balzac has seen immense industrial property growth, with a number of businesses leaving Calgary to move there. This year Rockyview County’s industrial growth will surpass Calgary’s. The ripple effect of this affects all Calgarians.
What’s the problem? Why aren’t we competitive?
Industrial property tax puts Calgary at a disadvantage in terms of getting companies to locate within the city's boundaries. While Calgary is competitive across Canada; in the region Calgary had the highest non-residential mill rate in 2020 at 0.019407. In simpler terms, that’s almost $20,000 in taxes a year per $1 million of assessed value. In Rockyview County it works out to about $11,000 for the same amount of space.
In addition to that, development charges (including off-site levies) are high. Prospective Industrial tenants also do not see the levies as providing a corresponding value in amenities and services.
In general, the cost of building out industrial space in Rockyview County is substantially lower than Calgary, leading new businesses to locate their facilities in the region. It takes less time to move a project through the approval process, and Rockyview (in most cases) has less rigid policies governing land use and other requirements. Land is typically cheaper outside of the city as well (which is understandable).
Why does this matter to the average Calgarian and Ward 11 resident?
When businesses leave the city, so do the jobs. While Balzac is not a huge distance away, it does not have the same transit accessibility as it would in Calgary, meaning many workers opt to look elsewhere for employment. This also means considerably longer commutes for drivers.
Vacancies and landlords needing to lower lease costs to keep tenants in Calgary has also resulted in less revenue for the City in property taxes – which then contributes to increased residential taxes.
It also means there are fewer companies that choose to relocate or set up shop in the City, reducing new investment. We should want to be seen as a business friendly city, and these issues can be negatively affecting our image in that regard.
What can we do to improve this?
As a start, we need to provide more flexibility in land use options for prospective industrial businesses/developers. Right now land-use can be over prescriptive. While I appreciate the need for planning guidelines and regulation, there can be unnecessary red-tape that slows investment down. As a municipality, we are not seen as an easy city to deal with compared to other regions - I think it's important we are (and are perceived) as "business friendly" across sectors.
There is currently a Direct Control District pilot under way to try to address the land use challenges. Should the pilot demonstrate successful outcomes, I would want to see the City of Calgary update related policies as quickly as possible to reflect the new, more streamlined approach. We should also look at other incentives like adjusting transit routes and timing to better service industrial areas, this would benefit multiple companies across the city.
Off-site levies are a larger conversation – and likely a topic for another post as there are many issues and opportunities there that will become a focus for the new council heading into 2022.
Having a more competitive industrial market in Calgary is one of the many pieces of our economic recovery and long term economic health. While we cannot control all the market challenges, as a Council we can make sure we aren’t adding obstacles unintentionally.