City taking pulse of weakening economy

Mayor doubles number of updates

By Kim Guttormson And Joel KomJanuary 2, 2009 7:02 AM

Economic uncertainty will keep the city on the edge of its seat this year, watching for both pitfalls and opportunity in a volatile marketplace.

"Two thousand and nine, no doubt, will be dominated by the economy,"Mayor Dave Bronconnier said.

The quickly changing markets have led the mayor's office to double its economic updates to two a week and the city's finance committee will begin receiving a monthly roundup of indicators, including bankruptcies, unemployment rates, the consumer price index and gas and oil prices.

"It gives us a heads-up about what's going on," said Chris Good, the city's general manager of finance and corporate services.

Todd Hirsch, senior economist with ATB Financial, said it's become apparent Calgary won't be immune from the slumping economy.

Hirsch said the question everyone will be asking is, when that trend will reverse.

"There will be some projects that may be delayed, there may be some that will be cancelled, but that pendulum will swing back," he said. "For many new Albertans, this will be the first time they've experienced a slowdown, but they shouldn't be alarmed."

Calgary is in a pretty good position going into a downturn because the job market is still strong, Hirsch added.

In the midst of the volatility, Bronconnier anticipates both a positive and negative fallout for the city.

Construction on a number of buildings has stopped work, notably condo projects. He said the city needs to work with developers to make sure there aren't empty holes throughout Calgary.

"We need to see some of those projects put to potentially alternative uses," Bronconnier said. "Temporary permits for parking structures, for example.Using them for everything from surface parking lots to maybe another alternative.

"I think our role as a regulator is going to be to help some of the industry through some of the difficulties."

Michael Flynn, executive director of Calgary's Urban Development Institute, was glad to hear the mayor is pondering ways to deal with stalled commercial developments. As for residential building, Flynn said homebuilders are already facing a fall-off.

"They're already seeing very negative numbers coming at them," he said. "I think 2009 is going to be a very challenging year for developing new communities in the city."

Flynn hopes the city will use the slow-down to boost how quickly and efficiently it deals with new developments, saying the next year offers an opportunity to prepare for the next upswing comes.

City staff had been overwhelmed by record numbers of development permits and community plans submissions.

Ald. Gord Lowe, chairman of the city's finance committee, said the city will also be the first stop for increased social service demands.

"Every time something like this happens, it impacts Calgarians and council will have to respond to that," he said. "It's going to be a really, really challenging year."

The city is often a last resort for desperate people, said Chris Branch, director of community and neighbourhood services.

"When they're starting to run out of options and they hear 'No' elsewhere, it's what can my alderman do for me?" Branch said, adding it has added a few more front-line workers to try to assist with the expected increase in demand. "I think we'll see more of this as (layoffs) trickle down."

On the plus side, Bronconnier said a slowdown will mean more competitive bidding on infrastructure jobs, leading to lower prices to get work done.

"We do have capital dollars available to invest in projects, but there's been such inflationary pressures on the city budget and on capital projects that we haven't gotten quite as good value for money as we'd hoped to," he said.

"The city will be able to get some better prices on its construction activity."

Bronconnier said the city will be keeping a close eye on its budget, and whether the economic climate necessitates changes in April.

"Calgary is still in an enviable position, but we should never take lightly the changing economic circumstances because we are looking at a global meltdown in a number of sectors," he said.

But his colleague, Ald. Diane Colley-Urquhart, doesn't believe the city has adequately prepared itself.

"To me, there was no serious recognition that we were heading into a big-time recession and Calgarians will feel the impact of that," she said of November's budget debate. "To me, there was, and continues to be, a disconnect between thinking it's business as usual and the reality of day-to-day living in Calgary."

Bronconnier said the city has a role to play and will step up.

"Calgarians are feeling stressed, and when that happens, they are looking for support and they come to the closest door they find, which, of course, is local government," he said

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