jeff fielding city manager calgary presentation april 2016

V04

The Economy and Strategic Infrastructure Investment

City Manager Jeff Fielding The City of Calgary Glencoe Club April 13, 2016

1 13/04/2016 Glencoe Business Speakers Series 2016

V04 13/04/2016 Glencoe Business Speakers Series 2016 2

V04

Geography

13/04/2016 3 Glencoe Business Speakers Series 2016

• City of Calgary 2015 Population: 1,230,915

• Calgary Census Metropolitan Area (CMA)

2015 Population: 1,439,800

• Calgary Economic Region 2015 Population: 1,569,000

Population updates from the most recent Civic Census


Calgary is the only City in North America that will grow from adolescence to adulthood in my lifetime

Jane Jacobs

“

”


State of Calgary’s Economy


1.20

1.25

1.30

1.35

1.40

1.45

1.50

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Base Low High millions of persons

Population 2015-2024 (City of Calgary)

Source: Centre of Spatial Economics, Corporate Economics

V04

Unemployment Rates (Calgary, Alberta, Canada)

13/04/2016 Glencoe Business Speakers Series 2016 7

• For the first time in the last 16 years, the unemployment rate in Calgary exceeded the provincial and national average due to reduced investment in the energy sector and the trickle-down effect in the broader local economy.

• The unemployment rate for the Calgary Economic Region was 8.8% in March, higher than 8.0% in Alberta and 7.6% in Canada.

Source: Statistics Canada

2

4

6

8

10

2000 2002 2004 2006 2008 2010 2012 2014 2016

Calgary Alberta Canada per cent

V04

Number of New Businesses vs. Business Closures (Calgary)


150

200

250

300

350

400

450

2010 2011 2012 2013 2014 2015 2016

Number of New Businesses Number of Business Closures

number of businesses

• The number of new businesses in Calgary has increased compared to 5 years ago, while the number of business closures did not increase in the last 5 years.

• Calgary small businesses account for nearly 95 per cent of all businesses – they are a driving force within the city’s business community.

• New businesses illustrate strong entrepreneurship and resiliency of Calgary’s economy.

Source: City of Calgary

V04

A More Vibrant Retail Market: Retail Sales Per Capita


• High levels of net migration contributed to strong population growth, driving demand for residential structures. • Rapid population growth along with relatively high average disposable income supported the demand for consumer goods and services. Calgary and Alberta lead the nation in retail sales per capita.

Source: Statistics Canada, Conference Board of Canada Note: The Sub‐Sectors of the Canadian Retail Marketplace are: Motor Vehicle and Parts Dealers, Furniture and Home Furnishing Stores, Electronics and Appliance Stores, Building Material and Garden Equipment and Supplies Dealers, Food and Beverage Stores, Health and Personal Care Stores, Gasoline Stations, Clothing and Clothing Accessories Stores, Sporting Goods, Hobby, Book and Music Stores , General Merchandise Stores, Miscellaneous Store Retailers.

5

10

15

20

25

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Calgary Canada

$ thousands


7.4 7.4

10.2 10.0

13.5

10.4

8.0 8.1 7.6 8.0 8.9 9.5 9.9 10.7 11.2 11.4

0

4

8

12

16

20

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

HStart HForm ‘000 units

Housing Construction 2010-2025 (City of Calgary)


Housing Starts Household Formation

V04

Total Value of Building Permits (City of Calgary)


0

400

800

1,200

1,600

2000 2002 2004 2006 2008 2010 2012 2014 2016

$millions

• The spike in October 2015 was caused by a change in the Alberta Building Code effective November 2015.

Source: The City of Calgary Building Permit Application Statement April 2016

V04

Building permit Values Compared to Past 10 Years


• Total building permit values year-to-date (Jan – March 2016) in Calgary Metropolitan Area

Residential 505 809 685 759 257 625 557 807 882 1053 920 481

Non-residential 452 431 678 626 361 319 672 504 722 610 574 386

Total 957 1,240 1,363 1,385 618 944 1,230 1,311 1,604 1,663 1,494 867

($million)

($million )

-

300

600

900

1,200

1,500

1,800

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

2005-2015 Average

Source: Statistics Canada, The City of Calgary

V04

Recessions and Growth Trends


-5 0 5

10 15 20 25 30 35 40

1976

19

79

1982

19

85

1988

19

91

1994

19

97

2000

20

03

2006

20

09

2012

20

15

Population Natural Increase

Net Migration

City of Calgary – Trends in Population Growth (1976-2015)

Calgary Economics Region – Trends in Job Growth (1977-2015)

0

5

10

15

20

25

30

35

1977

19

79

1981

19

83

1985

19

87

1989

19

91

1993

19

95

1997

19

99

2001

20

03

2005

20

07

2009

20

11

2013

20

15

Population Jobs

Source: City of Calgary Civic Census, Statistics Canada, Corporate Economics

V04

Higher Disposable Income Per Capita


Source: Conference Board of Canada

($thousands)

• Calgarians have higher personal disposable income than the provincial and national average.

0

10

20

30

40

50

60

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Calgary Alberta Canada

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Better Affordability


(percent of income)

Source: RBC Economics. Housing Trends & Affordability, Feb. 29th, 2016

35.3

31.4

33.1

43.0

60.6

81.1

38.3

33.7

36.5

42.8

71.4

109.

0

24.0

20.9

25.7

33.0

36.7

44.1

0

20

40

60

80

100

120

Calgary Edmonton Ottawa Montreal Toronto Vancouver

Aggregate of all categories Single-family detached Condominium

• Calgary has a more affordable housing market compared to other major Canadian cities.

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Interprovincial Migration Highest in Calgary


87,134 77,110

20,908 14,507

-45,154

-73,712

Calgary Edmonton Vancouver Ottawa Toronto Montreal

Total net interprovincial migration Canadian CMAs, 2005-2015

• Calgary has gained the highest interprovincial migration among the major Canadian cities during the past decade.

Source: Statistics Canada, Calgary Economic Development

V04

Total Net Migration in Alberta: International and Interprovincial


-5

0

5

10

15

20

25

30

35

Q4

2009

Q1

2010

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Q4

2014

Q1

2015

Q2

2015

Q3

2015

Q4

2015

Interprovincial International Total


(‘000 thousands)

• Interprovincial migration negative, while international migration remains robust. • In Q4 2015, interprovincial migration was -977. We expect this negative trend to

continue into 2016 as local unemployment rate inches higher.

V04

Changing Source of Immigration


Source: Citizenship and Immigration Canada • Calgary welcomes new comers from all over the world. • Top three source countries are Philippines, India and China.

United Kingdom

13%

People’s Republic of

China 7%

India 7%

Philippines 6%

Vietnam 6%

Hong Kong 5%

USA 5%

Germany 4%

Poland 3%

Former Yugoslavia

3%

Other source countries

41%

2002 Total 8,745

Philippines 24%

India 20%

People’s Republic of China

6%

Nigeria 6%

Pakistan 5%

Syria, 5%

United States of America

3%

United Kingdom and Colonies

4%

Iran 3%

Republic of Korea 2%

United Arab Emirates

2%

Other source countries

30%

2015* (estimate) Total 18,862

V04

Calgary Office Market


0

2

4

6

8

10

12

14

16

-3

-2

-1

0

1

2

3

4

Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16

Absorption (Left) Vacancy Rate (Right)

(millions of sq ft) (per cent)

Source: Altus Insite

V04

Personal Financial Situation


V04

Challenges and Opportunities – Transformational Change

21

• Phenomenal growth/economic downturn

• Preparing for the economic upturn

• New Provincial and Federal governments

• Changing demographics

13/04/2016 Glencoe Business Speakers Series 2016


Opportunities Through Strategic Infrastructure Investment

V04

• Capital Budget in Action Plan 2015 to 2020: $8.2 Billion

City of Calgary Capital Investment


Maintenance 28%

Source: Corporate Budget Office, The City of Calgary

Growth 58%

Maintenance 25%

Service 4% Upgrade

13%

V04

Federal Budget – March 22, 2016


Highlights:

• Strong focus on municipalities and role of cities as centres of growth, prosperity and job creation

• 2016 start of 10-year federal infrastructure plan to deliver significant new funding to provinces, territories and municipalities with $120B in infrastructure investment over 10 years across Canada

• Key priorities focus on public transit, social infrastructure and green infrastructure

V04

Federal Budget – March 22, 2016


Opportunities:

• Phase 1 - $11.9B over five years in addition to existing programs

• $3.4B over three years to upgrade and improve public transit systems across Canada - $347M to Alberta

• $3.4B over five years for social infrastructure across Canada (affordable housing, early learning and child care, cultural and recreational infrastructure, etc.) – Alberta allocation unknown

• $5B over five years for investments in water, wastewater and green infrastructure projects across Canada – Alberta allocation unknown

V04

Provincial Budget – April 14, 2016


• To be released tomorrow • Provincial budget usually released in March – was

delayed to see Federal government budget first

• City will complete a full Provincial budget analysis

V04 13/04/2016 27

1. Infrastructure Investment

2. Growth Management & Development Approvals

3. Real Estate

4. Government Relationships

5. People & Culture

Corporate Priorities 2016 - 2017

Glencoe Business Speakers Series 2016

V04

Views About Calgary’s Economy

28

2%

22%

45%

30%

1%

Very good

Somewhat good

Somewhat bad

Very bad

Don't know

Good March ‘16 | 24%

Bad March ‘16 | 75%

Base: All respondents (n= 1,001) | How would you describe the current economic situation in The City of Calgary? Is it very good, somewhat good, somewhat bad or very bad?

13/04/2016 Glencoe Business Speakers Series 2016

V04

Good or Bad Time for The City to Invest in New Projects


V04

Views About The City’s Role in Supporting the Local Economy


Discussion & Questions



Additional Slides – Added April 14, 2016

V04

WTI and WCS Oil Prices


• Crude oil prices should expect a slow recovery with the over supply from both OPEC and non-OPEC producers and weakening growth in demand from China and other emerging economies.

• Consensus predicts the WTI crude oil prices won’t stabilize at US$50/bbl until 2018, and the price discount between WTI and WCS should remain around US$15/bbl.

Source: U.S. Energy Information Administration (EIA), Bloomberg

0

40

80

120

160

2000 2002 2004 2006 2008 2010 2012 2014 2016

WTI WCS US$/bbl

V04

Employment Insurance Recipients (Alberta)


-100

0

100

200

300

0

20

40

60

80

2000 2002 2004 2006 2008 2010 2012 2014 2016

Number of receipents year-over-year change '000 persons percentage change

• The number of regular EI recipients rose above 60,000 in Alberta by the end of Q1 2016. This is still lower than 2009-2010 level, but it is expected to inch higher later this year.

• Since March 2016, EI benefits have been extended to at most 70 weeks for resource-dependent regions, including Alberta.


V04

Employment Insurance Recipients (Calgary)


-60

0

60

120

180

240

300

360

0

5

10

15

20

25

30

2000 2002 2004 2006 2008 2010 2012 2014 2016

Number of receipents year-over-year change '000 persons percentage change

• The number of regular EI recipients rose above 22,000 in the Calgary area by the end of Q1 2016. • This statistic is hiding the true extent of the issue in Calgary. We estimate between 2,000 and 4,000 people are now unemployed and not eligible for further EI assistance.


V04

Survey of Employment (Alberta)


Jan-15 Jan-16 Change (persons) Change (%)

Total 2,020,950 1,933,510 -87,440 -4.3 Mining, quarrying, and oil and gas extraction 131,619 107,004 -24,615 -18.7 Construction 197,698 178,575 -19,123 -9.7 Manufacturing 138,382 120,560 -17,822 -12.9 Professional, scientific and technical services 130,140 120,161 -9,979 -7.7 Trade 349,536 341,845 -7,691 -2.2 Other services (except public administration) 83,850 77,037 -6,813 -8.1 Accommodation and food services 170,278 163,761 -6,517 -3.8 Administrative and support, waste management and remediation services 91,772 87,979 -3,793 -4.1

Utilities 14,731 13,111 -1,620 -11 Management of companies and enterprises 19,601 18,188 -1,413 -7.2 Transportation and warehousing 104,321 103,539 -782 -0.7 Finance and insurance 62,220 61,835 -385 -0.6 Forestry, logging and support 3,662 3,797 135 3.7 Information and cultural industries 27,328 27,653 325 1.2 Real estate and rental and leasing 42,616 43,354 738 1.7 Arts, entertainment and recreation 28,168 29,026 858 3 Public administration 102,390 103,330 940 0.9 Educational services 140,382 144,766 4,384 3.1 Unclassified businesses 26,816 31,301 4,485 16.7 Health care and social assistance 182,256 187,990 5,734 3.1


V04

Increasing Employment Share


(per cent) (per cent)

• Above average employment growth is transforming Calgary to an important economic hub in Canada.


36.4

36.7

37.0

37.3

37.6

37.9

38.2

4.0

4.2

4.4

4.6

4.8

5.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Canada (Left) Alberta (Right)

V04

Number of Business Bankruptcies (Alberta)


0

40

80

120

160

200

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

number of cases

• Monthly business bankruptcies have been constantly decreasing in the past decade, including 2015.

• We expect the number to pick up in 2016, due to the lag effect of bankruptcies preparation, filing and approval process.

• Many businesses are still making profits, though lower than in prior years.

Source: Office of the Superintendent of Bankruptcy Canada

V04

Calgary Metropolitan Area Business Bankruptcies


579

419

267

190 176 147

116 95 86 74 41

0

100

200

300

400

500

600

700

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Number of cases

Source: Industry Canada

V04

Wholesale, Manufacturing and Retail Sales (Alberta)


2

3

4

5

6

7

8

2000 2002 2004 2006 2008 2010 2012 2014 2016

Manufacturing Wholesale Retail $billions

• Downward trends continue for wholesale, manufacturing and retail sales in 2016.


V04

Age Distribution in 2015


0

2

4

6

8

10

0 to

4

5 to

9

10 to

14

15 to

19

20 to

24

25 to

29

30 to

34

35 to

39

40 to

44

45 to

49

50 to

54

55 to

59

60 to

64

65 to

69

70 to

74

75 to

79

80 to

84

85 to

89

89 p

lus

Canada Calgary (per cent)

Source: Statistics Canada, Corporate Economics

*(estimate)

V04

Changes in Demand for Housing


• Single/semi unit compared to multi-unit

Source: The City of Calgary

Waiting for new data

0%

20%

40%

60%

80%

100%

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Multi-UnitSingle/SemiTrendline for Multi-Unit DemandTrendline for Single/semi Unit Demand


35.9

15.2 15.2 16.7 16.9 17.1

19.0

25.9

22.6 21.1

3

8

13

18

23

28

33

38

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Total ‘000 persons Net Migration Natural Increase

Sources of Population Growth 2015-2024 (City of Calgary)



420

440

460

480

500

520

540

560

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Base Low High ‘000 units

Households 2015-2024 (City of Calgary)


jeff fielding city manager calgary presentation april 2016

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