Industry denounces city's profit-making development plan
Edmonton developers say the city's plan to get into their business as a competitor is a conflict of interest.
The city plans to start a for-profit municipal development corporation (MDC) to develop its own vacant properties, many of which are contaminated or unattractive to mainstream developers.
It's an idea that's been tried in Toronto and Calgary with great success, according to the delegation of real-estate experts studying the idea on the city's behalf.
But nearly a dozen developers protested the idea before council Thursday, saying the city can't regulate the industry, and be part of it.
"It boils down to a discussion about fairness and a level playing field," said Janet Riopel, president of the Edmonton Chamber of Commerce.
Before Mayor Don Iveson gets on board with the MDC, he wants to make sure it's not able to grow so large that it starts interfering with the market.
"We don't want to eat their lunch; we want to cook more for everybody."
The city is responsible for regulating and approving developments. Developers said the city's corporation could have an unfair advantage over mainstream developers.
"It represents a conflict of interest for the city," Daniel Eggert, regional manager of Melcor Developments.
Seed money would be provided for three years
If council goes ahead the city will give the corporation $1.25 million per year for the first three years as seed money. After that, it's expected to be self-sustaining, providing revenue to the city.
The city has hundreds of undeveloped parcels of land it is paying to maintain, and they aren't generating any tax revenue. The MDC is designed to help the city make money from that land.
John Macintyre of Cresa Toronto Real Estate is a proponent of the plan. He said it will not compete with other Edmonton developers. If council agrees, the city would create a small arms-length organization with its own board of directors, which would focus mainly on getting land ready for sale and joint-venture developments with the private sector.
Macintyre added the plan could be ramped up as needed, but that's what other developers fear.
The city has dabbled in for-profit corporations before with Epcor. But Eggert said there are many barriers to overcome in the utilities business, unlike the development sector, which is quite healthy in Edmonton.
The city will also look into alternative solutions proposed by developers, such as creating an advisory board rather than a new corporation.
Council's executive committee will return to the debate in April.
