IF YOU'RE YOUNG AT HEART

The Bow draws attention to a city’s evolution
By Valerie Fortney
Calgary Herald May 10, 2013

Whenever he needs a dose of inspiration, Michael Brown needs only to glimpse outside his office window.

“I can see the top part of it,” he says of the 58-storey downtown skyscraper known as The Bow. “It’s a reminder for Calgarians to think big — we can do some very creative things in this city.”

For Brown, the presence of the towering structure a few blocks west provides a daily affirmation of his own endeavours of the past two years.

As president and CEO of the Calgary Municipal Land Corporation, it’s his job to oversee the transformation of the East Village from a former derelict area to a vibrant inner-city community.

While the East Village development promises to emerge as a diverse and dense neighbourhood offering everything from a national music centre and hotel to residential living and urban parks, it doesn’t boast a single skyscraper.

Still, Brown sees his project and that of the newly-opened Bow as being inextricably connected — and not because prior to joining the team at CMLC, he was employed by Matthews Southwest, the developer responsible for The Bow’s construction.

“The two projects have changed the way we see the east side of our downtown,” says the native Calgarian, whose grandfather, Fred Brown, was an East Village street cop back in the late 1940s. “They have helped to alter perceptions of our entire city.”

While Brown’s comments might sound hyperbolic to the casual listener, his views regarding the $1.4-billion building, Canada’s first trussed-tube skyscraper and the tallest structure west of Toronto, are gathering an increasing number of converts both here and internationally.

In 2011, the building designed by renowned U.K. firm Foster + Partners won an Alberta Steel Design Award of Excellence, given out by the Canadian Institute of Steel Constructors, which noted that its innovative external structure system helped to make it the country’s second-largest building in floor space.

In January, Azure Magazine — one of North America’s top architectural publications — counted The Bow, along with Calgary’s Peace Bridge, among its Top 10 Projects of 2012.

The two local structures were the only Canadian inclusions on a list that included the London Olympic Park and the iconic CCTV Tower in Beijing. Azure’s judging panel cited The Bow as an important symbol for an “oil-rich city that’s just beginning to pay attention to the look of its downtown core and the quality of its buildings.”

In April, The Bow added the biggest feather in its cap when it joined the likes of Kuala Lumpur’s Petronas Towers and New York City’s Hearst Tower by being named one of the world’s 16 most impressive corporate buildings.

According to a jury of experts gathered by Emporis, a German-based, global provider of building data, the crescent-shaped building located at Centre Street and Sixth Avenue S.E. meets all the criteria for inclusion on this prestigious list: design, visual impact and functionality of “significant corporate architecture.”

Earlier this week, I was taken on a tour by Encana’s MaryAnn Blackman to see if the interior of the gleaming, architectural wonder lived up to its outside billing. As any of the lucky 4,000 or so Calgarians owning a security pass for entry — most of them employees of energy companies Cenovus and Encana — will attest, it succeeds from the get-go.

The steel exoskeleton design allows for a city-within-a-city feel of spaciousness; the glass-filled, south-facing atriums on three higher floors create nothing less than spectacular meeting places; as well, panoramic city and mountain views are available from close to 80 per cent of the building’s offices.

It is, says Jeremy Sturgess, an iconic building that Calgary deserves at this moment in its relatively young life as an urban centre.

“The building of The Bow has helped in the recognition of Calgary as an international city,” says the prominent local architect, hired by Fosters and Matthews Southwest as The Bow’s urban design master planner. “It is one step in a process of steps for Calgary.”

Sturgess feels that having such an internationally recognized skyscraper in the heart of the city’s downtown east core will have lasting impacts in a wide variety of areas.

“I think it raises the bar for the City of Calgary and it sets a new tone for what is expected of developers,” he says, adding it will also inspire both established architects and graduates of design. “The Bow and the Peace Bridge are examples of Calgarians wanting to do something remarkable for Calgary.”

For Bruce Graham, The Bow’s rise on the Calgary skyline, a process 10 years in the making, mirrors that of the city’s ascent on the world scene over that same period.

Back in 2003, says Graham, president and CEO of Calgary Economic Development, Calgary was positioning itself as a centre for Western Canada, “an affordable, low-cost place to do business.”

What a difference a decade makes. Recent accolades, such as the city being named 17th overall on Z/Yen’s Global Financial Centre Index, show how those regional aspirations have evolved into global ones.

The bold statement that The Bow makes to our landscape and our skyline, says Graham, is “a reflection that our city makes to our country and the global marketplace.”

In time, The Bow’s impressive stature will be narrowly eclipsed by a new building at the site of the old Calgary Herald building on Sixth Avenue and First Street S.W. Upon completion within the next five or so years, Brookfield Properties’ 56-storey, 247-metre tower will become the tallest building in Western Canada.

For Calgarians like Michael Brown, though, it won’t replace The Bow as the symbol of what’s possible for the city of his birth.

“This building marks a realization that we don’t have limitations on what’s possible anymore,” he says.

“Twenty years from now, we’ll look back and say that the opening of The Bow was the moment when Calgary changed.”

LILAC FESTIVAL 2013

Sunday May 26th, 2013 marks the 24th Annual 4th Street Lilac Festival. This free one day event is the start up to Calgary's vibrant festival season, and encourages citizens to shake off their winter blues and reintroduce themselves to the thriving creative community in our city.

Each spring, thousands of attendees come out to enjoy the unique and pedestrian friendly 4th Street venue, offering an array of musical talent, artisan vendors, quality entertainment and some perfect people watching.

At the Lilac Festival, there is an activity made for all ages. This could mean a jump in the bouncer for the kids, discovering a great new band, choosing a perfect summer patio or searching for a trendy fashion; there is no shortage of things happening.

The 4th Street Festival Society works diligently to provide an ideal environment for new and emerging local musicians to showcase their talents. There are six stages hosting over 30 performances throughout the day, offering artists exposure to an often brand new audience. A recent new addition to the event programming includes the "Underage Stage", which promotes Alberta's youth in support of their bright future in music.

4th Street is host to over 500 vendors that vary from artisan crafts, to imported wares, to community organizations. 2013 is an exciting year for vendors as well. "Food Truck Lane" will provide a new dimension to the festival and give festivalgoers a chance to check what the entire buzz is about.

The 4th Street Lilac Festival looks forward to another great year, hosting the best and brightest in Calgary's cultural community!

Sources: http://www.4streetcalgary.com/Lilac-Festival
http://www.flickr.com/photos/32923741@N07/

LUXURY HOME MECCA

Report finds Calgary a luxury home mecca
Baseline entry point is $2M for upscale residence
By Mario Toneguzzi
Calgary Herald April 22, 2013

Calgary is one of Canada's most robust markets for luxury homes, says a report by Sotheby's International Realty Canada.

The baseline entry point for a luxury single-family home in Calgary is $2 million - in line with the Toronto market - says Sotheby's Top Tier Trends Report.

As Calgary's market for top-tier homes continues to outpace most of Canada, Sotheby's survey findings reveal demand is predominantly driven by younger buyers, age 35 to 40, who have a skew in preference toward inner-city and Beltline living.

The report lists the most desirable neighbourhoods as Mount Royal, Brittania, Bel-Aire, Aspen, Springbank Hill, Elbow Park/Elbow Valley, and Inner City Southwest/ Westside

"According to agents surveyed, top-tier single-family homes start at $2 million dollars with a minimum of 3,500 square feet," the report states. "According to experts surveyed, over 80 per cent of these homebuyers earn an income of $500,000 or higher.

"They are predominantly employed within the finance and investment banking (mining, oil and gas) or medical sectors, or are entrepreneurs," the report continues.

According to the survey, 85 per cent of luxury home purchases in Calgary are made by Canadians - the highest rate among the markets Sotheby's surveyed.

"According to agents surveyed, top-tier single-family homes start at $2 million dollars with a minimum of 3,500 square feet," said the report. "'Must-have' features include access to schools and shopping, views of downtown, park, river or mountains," the report says.

"Most buyers own multiple homes and mortgages are commonly used within this segment of the market."

According to the Calgary Real Estate Board, there have been 204 MLS sales over $1 million in Calgary this year to April 17.

The city set a record for luxury home sales during 2012, with 544 sales. The previous record was 458, set in 2007.

Richard Cho, senior market analyst in Calgary for Canada Mortgage and Housing Corp., said that demand for luxury homes has been robust.

"Low mortgage rates combined with a healthy selection of higher-priced homes have also helped luxury homebuyers."

CALGARY TOPS

Calgary tops global list for real estate performance
Total annual return on investment of 19%
By Mario Toneguzzi
Calgary Herald April 19, 2013

CALGARY — Calgary’s commercial real estate market was the best performing one in 2012 among 32 cities analyzed in a report by the Investment Property Databank.

Calgary’s total annual return on investment was 19.0 per cent, outperforming San Francisco (18.0 per cent), Houston (16.0 per cent) and Perth (13.7 per cent).

In 2011, Calgary’s return of 21.6 per cent was also best among 60 international cities surveyed by the IPD.

ON THE HUNT

Get ready condo flippers, Canada Revenue Agency is hunting you
By Garry Marr
Financial Post April 20, 2013

You just sold your condo, you made a hefty profit and know you have to pay your taxes.

The bill might be more than you think.

If it’s your principal residence, there’s no tax, as long as you have the paperwork to prove it. The Canada Revenue Agency is taking a closer look at the condominium sector in what some in the industry have dubbed the “Condo Project.”

Even if you own up to it being an investment property, you may not be allowed the capital gains tax break and that means a bigger hunk of your profit going to Ottawa.

Let’s say your gain is $100,000 and your tax bracket is 46%. Capital gains are taxed at 50% so you would only owe $23,000 on that profit.

Not so fast! If the CRA says you are in the business of flipping condominiums, get ready to pay based on the gain being counted as income for a tax bill of twice the amount at $46,000. And, it gets worse. You could also face a fine of up to 50% of the tax owed for making a false disclosure.

With the deadline for filing taxes coming up April 30, you might want to think very carefully about how you record that housing sale you made in 2012.

Sam Papadopoulous, senior public affairs advisor-manager with CRA’s Ontario region, acknowledges that the strength of the condo sector has attracted the attention of the taxman.

“We do from time to time target some sectors more closely than others,” he said. “We look at the real estate market in general. Of course, [there is more focus], it’s a hot market.”

People in the industry have a different view.

Some suggest it fits in with the recent budget when Jim Flaherty, the finance minister, announced his government was taking a closer look at loopholes and tax cheats — hoping to shrink its deficit in the process.

One of the issues attracting the attention of the CRA is assignment clauses, where one person agrees to purchase a condo before it is built but ultimately sells his or her right to buy that condo before the building is even registered.

Builders usually collect a fee for that privilege but ultimately when title is registered at the land registry office the original purchaser’s name is nowhere to be found.

While most builders are unlikely to voluntarily supply a list of properties in their building that were assigned, they could be forced to cough it up if they are audited by the CRA.

Those people who have assigned their units to another buyer are going to be hard pressed to prove they planned to use the unit as an investment property rather just flipping — meaning the CRA is highly unlikely to allow them to count money made at the lower capital gains rate.

“If you keep [assigning property] then it is not capital gains, that’s trade and that’s income,” said Mr. Papadopoulous, adding you do it a “couple of times” and it’s income. “Of course, that’s part of [what they are investigating].”

The warning to people flipping property and thinking they can get away without reporting the gain is pretty clear.

“We live in the information technology age,” said Mr. Papadopoulous, who wouldn’t get into how CRA is tracking down the tax evaders. “We are putting our resources to work and following the trail where we can.”

Robert Kepes, a Toronto tax lawyer at Morris Kepes Winters, said he’s seen the CRA go after people who have been living in a property and still question it as a principal residence.


CRA starts with a letter to a taxpayer asking them for details about when and why they sold their property and people often fill out the questionnaire without legal advice.

The issue goes all the way back to 1971 when there was no tax at all on capital gains so everybody tried to avoid counting gains as income.

Mr. Kepes says the distinction between income and capital is as simple as the difference between a tree and the fruit that it bears.

“The tree is capital and it produces a fruit and the income is the profit that is derived when that fruit is sold,” he says.

If your condo is that tree and your rental income is the fruit and you make a profit from that rental income, that’s taxed as full income. You eventually sell the tree for more money and that’s just a capital gain, taxed at the 50% rate.

If your entire businesses is just trading trees and not producing fruit, that’s business income.

“The Income Tax Act asks what was your intention when you bought that condo,” said Mr. Kepes. “These principles are easy to describe but harder to prove in fact.”

The law is like a civil case, a judge doesn’t have to believe you beyond a reasonable doubt, but a judge does have to conclude you are more believable than the CRA.

“We have to bring all kinds of intrinsic evidence,” says Mr. Kepes, noting some clients will produce something as simple as a change in address on their driver’s licence to show they were using their condo as a principal residence.

If you never actually moved into the condo, it’s going to be tough to prove that it was principal residence.

You may never have produced income from the profit but that’s not to say you didn’t plan to, so perhaps you could get the capital gains exemption.

“The question can be ‘how did they come to sell the property,’” said Mr. Kepes, adding the CRA might look at whether you were advertising the property for sale.

Brian Johnston, chief operating officer of Mattamy Corp., says the CRA has ways to get information on sales.

“They audit real estate companies, look at the name on the contract and look at the final deed and see a difference,” said Mr. Johnston. “They see Bill Smith bought it and Joe Blow is on the deed. They want to know how this happened and follow the paper trail.”

He has some sympathy for consumers confused about the whole process.

“I think the government should make it a little simpler in terms of filing for principle residence exemption,” said Mr. Johnston. “It’s a real gray area of the law. The government has not done a good job for Canadians trying to specifically identify all the rules around [selling homes and paying taxes]. People might have inadvertently made mistakes.”

Condominium developer Brad Lamb, who has been audited several times, said ultimately it’s better to be more conservative when you’re filing — meaning just count the gain as income if you are in doubt.

“If you are prolific buyer or seller of properties, whether it’s condos or not, you have to govern yourself accordingly. If you don’t, you’ll get caught and be fined,” said Mr. Lamb. “I decided many years ago when I started buying condominiums, after talking with my accountant, you can pay [lower tax] or you can fight 50 years with Revenue Canada.”

http://business.financialpost.com/2013/04/20/get-ready-to-pay-income-tax-on-your-condo-profit/

MONDO CONDO

Pace increases for condo sales
By Josh Skapin
Calgary Herald April 11, 2013

Sales of resale condos were on the upswing in March compared to a year earlier, says the Calgary Real Estate Board.

Sales climbed to 630 deals, up 6.6 per cent from 591 transactions during the same month last year.

Townhomes led the charge in sales with 283 moves after 235 units changed hands a year earlier, marking a 20 per cent change.

That came with a 10.3 per cent climb in new listings with 395 after there were 358 last March.

The apartment market, on the other hand, saw little change, easing 2.5 per cent.

“The condominium apartment market remains in balance,” says CREB chief economist Ann-Marie Lurie, in a news release.

Last month 347 apartments were sold after 356 deals during the same time in 2012.

New listings of apartments eased 13 per cent at 560 after there were 644 during the same time last year.

“While it has moved to the lower end of the spectrum, it remains better supplied than the single-family market and the majority of product available is in an affordable price range,” says Lurie.

While condo apartments dipped in sales, the benchmark price went up six per cent. The benchmark price is that of a typical home based on a formula that uses various factors to ensure accurate comparisons.

For condo apartments, the benchmark price was $257,700 last month, up six per cent from $243,000 a year earlier.

The townhome benchmark price also increased last month compared to a year earlier.

It reached $286,800 for a four per cent step up from $274,600 this time in 2012.

A TEXTBOOK MARKET?

What happened to the expected Alberta real estate boom?
Market influencers tempering demand
By Mario Toneguzzi
Calgary Herald April 11, 2013

CALGARY — Several ‘market influencers’ have kept the reins on the expected Alberta real estate boom, says a new report on the housing market.

The report, by Don Campbell, senior analyst and founding partner of the Real Estate Investment Network, said debate is raging about why the market isn’t booming like it did in 2006 and 2007 when the job market and population in the province were growing at the same rates as they are today.

“The real difference this time is hidden in the strong forces of today’s market influencers. It is very true that the market drivers are all in place to support a large growth in housing purchase demand and price increases, in fact it is a textbook market for a boom,” said Campbell.

“In Alberta, the GDP and job growth have driven very strong population growth which has led to low vacancy rates not experienced in this province for many years. Street rents are jumping due to the rental supply/demand inequality. So, on the surface that means Alberta should be experiencing another one of those unsustainable booms. Well why isn’t it? And is there one still in the works?”

He said certain wild cards can throw a market off its prescribed cycle for periods of time.

“So, despite all of the market drivers being in place to push the Alberta real estate market into its next boom cycle the market continues to underperform its economics. Why? Simply, there are market influencers in play and that is why we are not yet seeing the expected rush into the market demand,” he said.

They include the once-bitten, twice-shy attitude equating into a local lack of confidence in the market. Many Albertans made their first home purchases during the previous boom. They were hit hard when the financial crash came. This has tempered enthusiasm for the market now.

Tighter mortgage qualification rules have also tempered market demand.

Overall consumer confidence in real estate is taking a hit with many recent reports and headlines on the state of the Canadian market saying it may be over-priced or overvalued.

A large portion of Alberta population growth is from two key demographics who are less likely to buy a house immediately — immigrants and ‘Echo-boomers’.

According to the Calgary Real Estate Board, total MLS sales year-to-date in the city until April 10 were 5,798 transactions, up 3.72 per cent compared with the same period last year.

The average sale price this year has risen by 8.08 per cent to $451,246 while the median price is up by 5.92 per cent to $397,000.

Ann-Marie Lurie, CREB’s chief economist, said the organization never felt the economy was about to boom, based on several factors.

“The first consideration is the economy,” she said. “In the 2005-2007 period, we had significant growth in both the oil and natural gas sector, economic growth as of late has only been driven by the oil sector. While this has helped support growth, there have been some challenges regarding bottlenecks and price discounts which has impacted employment growth prospects in the province. We also shouldn’t forget that the natural gas market continues to struggle. Our economic growth is progressing but at a slower pace, and forecasters also estimated that employment growth and net migration would ease this year, two factors pointing towards slower demand growth in housing.

“The next consideration is fundamentals in the housing market. Inventory levels were generally more elevated in the resale market, and it has taken some time to absorb some of the excess in the market. While this has occurred primarily in the single-family market, it has only started to spillover into the surrounding areas, the condominium market, and the new home market. When considering all the options available to consumers, there was sufficient choice to prevent any significant shortage in the entire housing market, which was the case in 2006-2007, causing a unsustainable jump in home prices.”

She said she is not surprised that the market didn’t boom, given the economic backdrop and current supply in the market.

Lai Sing Louie, regional economist for the Prairies and Territories for Canada Mortgage and Housing Corp., said market conditions in Alberta’s housing markets today are different from the boom.

“Some of the differences include higher household debt as well as more prudent lending conditions today. Also, some of the transactions in that period were investor driven and we have not experienced that to the same extent today,” he said.

The underlying economics and Market Drivers state that the market should be on fire, just like it was back in 2006 and 2007 – that is unless you begin to factor in these influencers, said Campbell.

“Let us make sure we are analyzing today’s markets with today’s conditions and not compare them to previous boom-bust cycles. Each cycle has its own influencers that either heat up or cool down a market and this current cycle from 2006 until today is the perfect proof of that,” he said.

“As long as the drivers are strong, the market is structurally strong, no matter what the influencers are doing. The concern should arise when the drivers are weak and the influencers are pushing the market upwards with no support. That is not what is happening in Alberta right now; in fact, the drivers remain strong despite the headlines.”

Ben Brunnen, chief economist with the Calgary Chamber of Commerce, said the province is definitely seeing all of the signs of strong economic and potentially housing growth.

“Net inter-provincial migration, population growth is up. Unemployment is low and GDP growth is relatively high,” said Brunnen. “I think we’re seeing probably a bit more of a cautious consumer out there. I do think we’ll see some strong real estate activity happening in Calgary but not like in the boom.

“I think there continues to be some caution in the market for a number of reasons. While Alberta’s economy is good, the global economy continues to be shaky, especially Europe and the United States. So people don’t have that strong confidence per se that this economic activity is going to be sufficiently robust that they should buy a house.”