Summary#

Council approved revised terms for the existing Downtown Calgary Development Incentive Program, now called the Downtown Office Conversion Program. The goal is to encourage conversions of vacant downtown office space to other uses; the changes do not guarantee that projects will proceed or receive grants.

• City staff administer the grant program. Grants remain tied to the amount of office space removed.
• City staff may approve up to $12 million per project; projects over $12 million require Council approval. The previous staff approval threshold was $15 million.
• The multi-residential rate stays at $75 per square foot. The hotel rate rises from $60 to $75 per square foot.
• A new “Other Uses” category allows competitive incentive rates up to $75 per square foot for non-residential conversions, such as seniors’ living, educational and institutional uses.
• Applications that include affordable housing or innovative commercial uses that keep the property in the non-residential assessment class receive more weight in the application review.
• Council did not adopt a base rate of return threshold. City staff say the review instead added an impact section to the application review.

What it means for you#

• Building owners and project applicants: The grant rates and review criteria have changed. The decision does not guarantee a grant or set out a process requiring every conversion project to apply.
• Downtown residents and businesses: The program continues to support office conversions, but Council did not require that the resulting space be housing. Eligible uses now include a broader range of non-residential conversions.
• Taxpayers: The decision does not change taxes. The report says the revised terms will use existing program funding.
• General public: Council approved the changes on the consent agenda. The committee had recommended them; two councillors opposed that recommendation, but Council’s final vote was 15–0.

Money#

City staff report no anticipated financial impact and say the changes fit within existing Council-approved funding.

• The report does not give the program’s total available funding or estimate how much will be paid under the revised terms.
• The new rates change the potential grant amount for hotel and “Other Uses” projects; actual amounts depend on eligible space and project approval.

What is unclear#

• The revised terms themselves are not included in the supplied material, so detailed eligibility rules and application steps could not be checked.
• The material does not explain how competitive rates for “Other Uses” will be set or how that competition will work.
• It does not state how many projects may receive grants or how much funding remains available.
• The program is expected to continue toward a target of removing six million square feet of downtown office space by 2031, but the material does not say how the revised terms will affect the timing of that target.

Case for#

• City staff say grants tied to office space removed provide a direct link between public funding and reducing office vacancy.
• City staff say giving more weight to affordable housing and innovative commercial uses could help advance those priorities while broadening the kinds of conversions supported.
• Calgary Economic Development and the Calgary Construction Association support continuing the program. The Construction Association says 21 projects were complete or underway, representing about 2.68 million square feet being repurposed.

Case against#

• City staff identify a risk that changing the terms could make some projects less viable or slow conversions, prolonging high office vacancy.
• The review considered a base rate of return threshold but did not adopt one. Without that threshold, the terms do not set a minimum return the City is expected to generate after conversion.
• City staff say the program’s grant model remains the best fit, but the supplied material does not show a cost estimate for the revised rates or explain how the City will assess value for money project by project.