jeff fielding city manager calgary presentation april 2016
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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
V04 13/04/2016 Glencoe Business Speakers Series 2016 4
Calgary is the only City in North America that will grow from adolescence to adulthood in my lifetime
Jane Jacobs
“
”
V04 13/04/2016 Glencoe Business Speakers Series 2016 5
State of Calgary’s Economy
V04 13/04/2016 Glencoe Business Speakers Series 2016 6
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)
13/04/2016 Glencoe Business Speakers Series 2016 8
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
13/04/2016 Glencoe Business Speakers Series 2016 9
• 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
V04 13/04/2016 Glencoe Business Speakers Series 2016 10
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)
Source: Centre of Spatial Economics, Corporate Economics
Housing Starts Household Formation
V04
Total Value of Building Permits (City of Calgary)
13/04/2016 Glencoe Business Speakers Series 2016 11
0
400
800
1,200
1,600
2000 2002 2004 2006 2008 2010 2012 2014 2016
$millions
• The spike in October 2015 was caused by a change in the Alberta Building Code effective November 2015.
Source: The City of Calgary Building Permit Application Statement April 2016
V04
Building permit Values Compared to Past 10 Years
13/04/2016 Glencoe Business Speakers Series 2016 12
• Total building permit values year-to-date (Jan – March 2016) in Calgary Metropolitan Area
Residential 505 809 685 759 257 625 557 807 882 1053 920 481
Non-residential 452 431 678 626 361 319 672 504 722 610 574 386
Total 957 1,240 1,363 1,385 618 944 1,230 1,311 1,604 1,663 1,494 867
($million)
($million )
-
300
600
900
1,200
1,500
1,800
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
2005-2015 Average
Source: Statistics Canada, The City of Calgary
V04
Recessions and Growth Trends
13/04/2016 Glencoe Business Speakers Series 2016 13
-5 0 5
10 15 20 25 30 35 40
1976
19
79
1982
19
85
1988
19
91
1994
19
97
2000
20
03
2006
20
09
2012
20
15
Population Natural Increase
Net Migration
City of Calgary – Trends in Population Growth (1976-2015)
Calgary Economics Region – Trends in Job Growth (1977-2015)
0
5
10
15
20
25
30
35
1977
19
79
1981
19
83
1985
19
87
1989
19
91
1993
19
95
1997
19
99
2001
20
03
2005
20
07
2009
20
11
2013
20
15
Population Jobs
Source: City of Calgary Civic Census, Statistics Canada, Corporate Economics
V04
Higher Disposable Income Per Capita
13/04/2016 Glencoe Business Speakers Series 2016 14
Source: Conference Board of Canada
($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
V04
Better Affordability
13/04/2016 Glencoe Business Speakers Series 2016 15
(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.
V04
Interprovincial Migration Highest in Calgary
13/04/2016 Glencoe Business Speakers Series 2016 16
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
13/04/2016 Glencoe Business Speakers Series 2016 17
-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
Source: Statistics Canada
(‘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
13/04/2016 Glencoe Business Speakers Series 2016 18
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
13/04/2016 Glencoe Business Speakers Series 2016 19
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
20 13/04/2016 Glencoe Business Speakers Series 2016
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
V04 13/04/2016 Glencoe Business Speakers Series 2016 22
Opportunities Through Strategic Infrastructure Investment
V04
• Capital Budget in Action Plan 2015 to 2020: $8.2 Billion
City of Calgary Capital Investment
13/04/2016 Glencoe Business Speakers Series 2016 23
Maintenance 28%
Source: Corporate Budget Office, The City of Calgary
Growth 58%
Maintenance 25%
Service 4% Upgrade
13%
V04
Federal Budget – March 22, 2016
13/04/2016 24 Glencoe Business Speakers Series 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
13/04/2016 25 Glencoe Business Speakers Series 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
13/04/2016 26 Glencoe Business Speakers Series 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
29 13/04/2016 Glencoe Business Speakers Series 2016
V04
Views About The City’s Role in Supporting the Local Economy
30 13/04/2016 Glencoe Business Speakers Series 2016
V04
Views About The City’s Role in Supporting the Local Economy
31 13/04/2016 Glencoe Business Speakers Series 2016
Discussion & Questions
13/04/2016 32 Glencoe Business Speakers Series 2016
V04 13/04/2016 Glencoe Business Speakers Series 2016 33
Additional Slides – Added April 14, 2016
V04
WTI and WCS Oil Prices
13/04/2016 Glencoe Business Speakers Series 2016 34
• 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)
13/04/2016 Glencoe Business Speakers Series 2016 35
-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.
Source: Statistics Canada
V04
Employment Insurance Recipients (Calgary)
13/04/2016 Glencoe Business Speakers Series 2016 36
-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.
Source: Statistics Canada
V04
Survey of Employment (Alberta)
13/04/2016 Glencoe Business Speakers Series 2016 37
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
Source: Statistics Canada
V04
Increasing Employment Share
13/04/2016 Glencoe Business Speakers Series 2016 38
(per cent) (per cent)
• Above average employment growth is transforming Calgary to an important economic hub in Canada.
Source: Statistics 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)
13/04/2016 Glencoe Business Speakers Series 2016 39
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
13/04/2016 Glencoe Business Speakers Series 2016 40
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)
13/04/2016 Glencoe Business Speakers Series 2016 41
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.
Source: Statistics Canada
V04
Age Distribution in 2015
13/04/2016 Glencoe Business Speakers Series 2016 42
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
13/04/2016 Glencoe Business Speakers Series 2016 43
• 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
V04 13/04/2016 Glencoe Business Speakers Series 2016 44
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)
Source: Centre of Spatial Economics, Corporate Economics
V04 13/04/2016 Glencoe Business Speakers Series 2016 45
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)
Source: Centre of Spatial Economics, Corporate Economics