Quote:
Originally Posted by Shodan
Galleria project faces unanswered questions
Foolhardy to endorse project until city knows risks, responsibilities
Paula Simons
Edmonton Journal
Tuesday, April 15, 2014
At first blush, the Galleria project looks like a great deal. The city is only being asked to contribute $50 million in money and land to a billiondollar cultural and commercial megaproject, with potential to revitalize the area around the CN Tower. But a new report to be discussed at City Council Tuesday suggests the Edmonton Downtown Academic and Cultural Centre Project, to give it its formal name, should be approached with caution...
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from a letter to council:
Dear Mayor and Councillors,
The above noted project is – once again – coming in front of City Council later today, April 15th, under Items 6,5, 6.6 and 6.7.
That inevitably means it is also – once again – in the media and the subject of news reports and newspaper columns.
Unfortunately, some of the “too many unanswered questions” appearing in the media are questions that simply demonstrate a misunderstanding of the project. When the questions are “who will pay to heat the space and shovel the snow”, how does one answer the first question when the space in question is not heated? As for the second question, the answer is exactly the same as it for every other property in the City of Edmonton - the responsibility for shoveling the snow rests on the owner of the property, not the City of Edmonton, when the owner of the property is not the City of Edmonton.
...
The report appears to link the sale of the above lands to EDACC with the City’s acquisition of public access to the Galleria gathering space. In fact these are only indirectly linked. The noted public access to the Galleria gathering space is being donated by Qualico out of our Station Lands development to facilitate the development and ensure the success of EDACC’s stated goals and objectives which are more than the provision of needed theatre facilities. In partnership with the Arts Community, the University of Alberta, the private sector – including Qualico – the Galleria Project is not about short term project development, it is about long-term city building.
...
I am not in a position to comment on EDACC’s existing or proposed tenant’s for the office components of the Galleria Project but I am happy to comment on the University of Alberta’s commitment not only to the Galleria Project but to downtown Edmonton as a result of that commitment is without question. The additional critical mass as well as the additional diversity that 5,000 staff and students will bring not only to downtown but to the North Edge and the Quarters is simply not available without EDACC. I am also happy to comment on the report’s note that “the most significant risk is the ability to generate the revenues that have been identified.” It goes on to state that “critical assumptions have been made relative to office and retail lease rates, rate of office space absorption, retail market demand, financing costs, construction costs, fundraising commitments and availability of government grants”. It concludes by stating that “should any of the assumptions made in the business case not be realized, there is a risk that the funding to build, operate and maintain the theatres will not be sufficient to achieve the goal of providing affordable space to the arts community”. The problem with that conclusion is that it assumes that any of these things could fail at any time when they are all integrally related to each other. All of them need to fall in to place in order for the project to commence in the first place. At that point in time, the risk virtually disappears because each and every one of the pieces has been secured – they come as a complete package. EDACC has been criticized for not having a contingency plan for each of these elements but that fails to recognize that it is that very interconnectivity between each of the development components – costs and equity and financing and tenants etc. – is what makes up a contingency plan that ensures completion.
As for the “concern as to the potential impact on the market of building additional new office and retail space in the downtown”, that strikes me as quite the straw man argument. “Given the existing vacancy within the EPCOR Tower” and the possibility that “lease rates may drop in the event than an oversupply of office space is realized” can hardly be a reason not to support EDACC, or any developer that wants to proceed at their own risk, particularly when it was not a reason for the City of Edmonton to support the construction of new tower for the consolidation of its own office requirements. The City has no business deciding what the market should be able to do whether that relates to potential tenant’s having the same rights to reach the same conclusions as the City did or the right for developers to make their own decisions on when and what to develop.
...
Yours Truly
Ken
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