It's now 2013 and I'm just going to say it flat out, as there is more than enough supporting evidence, that while it may appear as though the city's debt capacity can handle this project today this is not so certain for tomorrow. Of course by tomorrow I mean figuratively, sometime in the near-medium time future, certainly much sooner than the expiry of our 30 year payment plan.
First let's talk about the big surprise: $15M fat ones from uncle Katz. Oh boy! Err.. wait, just $15M? it's taken you THIS long to come up with some private money? What about all that whining about how long the deal was taking to complete and more importantly all of the whining about the increased cost of the future? I wonder how many paid hours city council has had to put into figuring exactly what it is you plan to do next between scrounging the debt-couch for money? The money the city put in for land? $15M big ones, that's simply amazing.
The other big development? Instead of leveraging the MSI fund which isn't going to exist for the duration of our loan(s) we're going to leverage the CLR money from developments which don't yet exist, have no profit projections, don't know how expensive the area is going to be nor whether people will be able to afford their establishment. Because arenas don't crap out new people or any sort of meaningful production (they are a service, for consumption) all of the money being predicted for the downtown area will either come from somewhere else or won't exist at all.
Long-term outlook hasn't changed
My long-term economic outlook hasn't changed and so far I think I've been pretty accurate. France "re-entered" recession today (as though any of us ever actually left it). To be quite blunt: Canada, Alberta, and the City of Edmonton are all over-estimating their debt capacity as it is still being based on assumptions that were established as normal before the collapse of 2008 particularly to do with rates of growth. We're basing all of the assumptions around this project on ideological economic theory; theory which under the rules of today no longer applies. There is a reason why major economists and political figures are having trouble estimating the future. We're going to regret this, apparently the vote just passed: 10-3.
In other news we may be supporting a covert war of aggression under false pretense. So.. ya know, there's that.
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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading.