What will Calgary do about this unprecedented problem?

[MrMustard]

There are many projects on hold in Calgary right now. Notably, the Manchester Station high-rise had to have remedial work conducted by the city (on the owner's behalf).

Is this a result of the global economic crisis? Are the companies funding these projects unable to get sufficient loans from the banks, are people opting out of buying condo/apartment space, etc? What's at the root?

What does it mean for the city if a number of projects can't even afford to continue their proposed ideas? Can't even conduct the remedial work to keep it safe?

People at the city tell me it's, in the end, the responsibility of the landowner. What if the landowner is bankrupt, though?

I realize the money comes from the Development and Building Approvals Sustainment Reserve Fund, but what happens when that money runs out? I'm told the amount fluctuates and the public doesn't have access to numbers, but I do know it maxes out at $30-million...

Last year, the city had zero expired permits; this year, I believe there are already six. What does this mean? I think firstly, there are safety risks, risks to the surrounding infrastructure of projects that stopped during the excavation phase, water build up (mosquitos, rotting).

I'd like to start a conversation about what the implications of such issues are, condisering the scale is unprecedented in this city.

[Distill3d]

it means that Calgary goes through what it did when the boom went bust in the 80's. it deals with it.

keep in mind, the Catholic School Board building on 10 Street and 5 Avenue SW sat as a skeleton for years before being finished.

[Bigtime]

Originally Posted by MrMustard

I'd like to start a conversation about what the implications of such issues are, condisering the scale is unprecedented in this city.

We have discussed this quite a bit before, but I would hardly call the scale of the situation unprecedented.

Here are the current holes in the ground that don't appear to be moving forward and a bit of information that I have about them from all sorts of sources:

-Manchester Station

-Strategic on 4th: Apparently renegotiating construction/labour pricing with all the changes in the market.

-Gateway Midtown: The word going around is that Point of View developments has purchased the site and will build on it.

-Astoria: All quiet, however most of the underground parking has been completed to grade.

-Centuria: Another quiet one, we keep hearing water table issues are the biggest factor in this one not moving fast.

-Skytower/OneTen: The hole and crane remain, the newest rumour is that it could become a hotel site now.

-Oslo/Copenhagen: It may be a hole right now, but Homburg-Centron are a solid company and will continue to move forward when the time is right. This one should be no concern.

-Eight Avenue Place: We know this two tower project is at least going to hit grade, after that it is anyones guess. But we won't be left with a hole.

So really the sites that could potentially become the problem of the city are:

-Manchester (already has)
-Skytower/OneTen
-Centuria

[wild wild west]

/\And with regard to Eighth Avenue Place, construction is proceeding at a fairly rapid pace, particularly on the east side of the site where the first tower is supposedly being built on spec. Unlike those other projects listed there are large construction crews plugging away daily on site. The core for the east tower is now poking a few feet above grade.

[ScottFromCalgary]

I agree that "unprecedented" is overstating Calgary's current real estate concerns. The situation will probably continue to deteriorate, but it sounds like the housing bust in the 80s was much worse.

Originally Posted by Bigtime

-Oslo/Copenhagen: It may be a hole right now, but Homburg-Centron are a solid company and will continue to move forward when the time is right. This one should be no concern.

I'm not sure if I agree with continued sentiment that Homburg is an untouchable developer. Their share price has been tanking (down 50% since Jan 1), meaning the market is placing a value of only $130 million on the equity of the company, which doesn't stack up well with the $3 billion in debt on their balance sheet as of September 30, 2008, the most recent financial statements. They have $2.5 billion in long term debt, with an annual interest and principal repayment of $43 million in 2009 rising to $193 million in 2012. With earnings of only $7.5 million in Q3 2008, the rising debt service costs forecast over the next several years pose a serious concern towards profitability. Their largest tenant, which in Germany, is now also in danger of bankruptcy. They have been on an acquisition binge over the last year and have continued to try and raise more capital lately through the issuance of debt securities.

The issues to consider about whether or not Oslo and Copenhagen will proceed are:

1. Is the project expected to be profitable (positive NPV)? With condo prices declining faster than construction costs and the cost of capital rising, this is not moving in their favour.

2. If the project does have a positive NPV, can the company raise the capital required to begin construction? We all know the difficulties that are being felt throughout the debt and equity markets, and clearly this issue is not moving in the company's favour either.

I'm not saying Oslo and Copenhagen are dead, I'm just saying that blind faith in the developer is surely not warranted. Centron is a private company, so we don't have publicly available financial information for them.

[wild wild west]

Wow, did not realize Homburg-Centron were in such dire straits. Yikes.

[Vascilli]

Originally Posted by Bigtime

Here are the current holes in the ground that don't appear to be moving forward and a bit of information that I have about them from all sorts of sources:

Add Casel to the list. It's been a graveyard for months.

[defaultuser]

Casel isn't a hole in the ground though, just pilings around three sides of the site.




Has there been any activity on the abandoned "Grand" projects that CFCN reported on months ago?

http://calgary.ctv.ca/servlet/an/loc...ub=CalgaryHome

http://calgary.ctv.ca/servlet/an/loc...ub=CalgaryHome

[unibrain]

-Manchester Station. This one is lost for now.. it's location doesnt help.

-Strategic on 4th: Apparently renegotiating construction/labour pricing with all the changes in the market. Trucking along slowly...

-Gateway Midtown: The word going around is that Point of View developments has purchased the site and will build on it. Renewed permits, and heating up the shoring, this one is in the works somewhere, I'm sure.. They've sold the Gateway Beltline site, so I'm sure there's still money out there to keep it alive until someone else can take over.

-Astoria: All quiet, however most of the underground parking has been completed to grade. This one is trucking along slowly as well.

-Centuria: Another quiet one, we keep hearing water table issues are the biggest factor in this one not moving fast. This one has had it's problem with construction/trades. Look for it to turn into a hotel/rental perhaps due to the economic situation.

-Skytower/OneTen: The hole and crane remain, the newest rumour is that it could become a hotel site now. This one is toast for now.

-Oslo/Copenhagen: It may be a hole right now, but Homburg-Centron are a solid company and will continue to move forward when the time is right. This one should be no concern. Moving along slowly.. has had MAJOR problems with dewatering.

-Eight Avenue Place: We know this two tower project is at least going to hit grade, after that it is anyones guess. But we won't be left with a hole. This one should finish... at least Phase I. There's just so much tied into this project.. It relies heavily on the new Core mall to draw it's tenants. With Encana moving out of the area in the next few years, now is the time to lure tenants into the Home/Dome and EAP.. consider the mall as the "atrium lobby".

My fiance works in commercial real estate, and you wouldnt believe how some of these projects are tied into one another somehow.

[Vascilli]

Originally Posted by defaultuser

Casel isn't a hole in the ground though, just pilings around three sides of the site.

Which looks really weird, may I add. I wondered briefly if there actually was a hole and the snow and dirt managed to fill it up.

[canlefty]

Speaking of problems / Centuria... what, if anything, is the status of their commitment to the remake of central park? I thought part of their deal with the city was to contribute to the restoration...but I could be wrong.

[unibrain]

Originally Posted by canlefty

Speaking of problems / Centuria... what, if anything, is the status of their commitment to the remake of central park? I thought part of their deal with the city was to contribute to the restoration...but I could be wrong.

Depends on how it was worked in, I suppose it could have been a prior to release condition that they fronted the money up front or a line of credit perhaps.

[shogged]

Originally Posted by Bigtime

-Astoria: All quiet, however most of the underground parking has been completed to grade.

i spoke with one of the foreman at montana and he made it pretty clear that astoria would be moving ahead no matter what. it'll be a slow pace though, because hes not slated to begin work on the inside until the end of 2009.

[shreddog]

Originally Posted by defaultuser

FYI, the hole for "Grand Park" is being filled in while I type.
Interestingly they're removing the shoring. (Piles are being left in place)

[Dafunk]

Originally Posted by shogged

i spoke with one of the foreman at montana and he made it pretty clear that astoria would be moving ahead no matter what. it'll be a slow pace though, because hes not slated to begin work on the inside until the end of 2009.

Its nice to hear that Astoria will continue, although not as planned.
________
essential vaaapp

[WhipperSnapper]

Interestingly they're removing the shoring, but not the piles.

Why would they remove the piles? I can't even imagine how much that would cost ... 10 times the cost of the pile?

This one should finish... at least Phase I.

I'd replace "should" with "could".

[03SVTcobra]

Calgary will be fine

[shreddog]

Originally Posted by Sacamano

Why would they remove the piles? I can't even imagine how much that would cost ... 10 times the cost of the pile?

My intent was not to imply that the piles should be removed (given the current price of steel, I would expect that the cost to remove them would more likely be 100 times value) but rather why was the shoring being removed? This was simple wooden shoring that ranged in height from a few feet to less than 20 (1-6 m) and while I do know that shoring will inhibit the soil flow, in this particular case I don't see that as being a big issue. I would have expected that the city would have simply required the builder to back fill the hole to provide structural integrity and not mandate remedial work to address concerns related to lateral flows.

BTW, the shoring appears to be being destroyed during its removal thus adding even more confusion since it is not being removed to reclaim construction material for reuse.

Changed the text to read ...

Interestingly they're removing the shoring. (Piles are being left in place)

[mjl]

Don't believe everything you have heard on the news....
I work for Lake Placid, and not only are we still moving forward, but we have secured financing!
We have however, converted most of the building into a 150 room boutique hotel, with 24 residential units on top.
We have never made any commitments to redo the park as the City already is putting $10mm into it, however you might be thinking of Union Square on Haultain Park.
We have experienced some delays to due water table issues, however with our new contractor (Dominion Construction) we are confident that we will be at grade by fall. Please look for our sales launch in the coming year.
Let’s all stick together and keep Calgary positive and growing!

[Jimby]

Originally Posted by mjl

Don't believe everything you have heard on the news....
I work for Lake Placid, and not only are we still moving forward, but we have secured financing!
We have however, converted most of the building into a 150 room boutique hotel, with 24 residential units on top.
We have never made any commitments to redo the park as the City already is putting $10mm into it, however you might be thinking of Union Square on Haultain Park.
We have experienced some delays to due water table issues, however with our new contractor (Dominion Construction) we are confident that we will be at grade by fall. Please look for our sales launch in the coming year.
Let’s all stick together and keep Calgary positive and growing!

That is great news. Centuria is one of the more interesting looking projects so it will be good to see it move forward.