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As the country's finance ministers meet to plot an economic course, Premier Ed Stelmach warned Tuesday that deflated energy prices may technically send debt-free Alberta into deficit this fiscal year and force the province to tap its $7.7-billion rainy-day fund. The premier's economic forecast is a startling reversal of fortune for petroleum-rich Alberta, which analysts predicted only six months ago was on pace for a record surplus of nearly $12 billion this year. Stelmach said the provincial treasury is being depleted by crashing commodity markets and loss of tax revenue, which could see spending outstrip revenues for the fiscal year -- technically producing a deficit that is illegal under provincial law. To officially avoid red ink in the books and ensure key programs aren't affected, the province's only option may be to draw cash from Alberta's Sustainability Fund, which is designed to cushion Alberta from precipitous drops in resource revenue. The legislation allows the province to transfer cash from the fund to general revenues for various reasons, including if actual resource dollars are less than what was planned for "fiscal policy purposes." In a year-end interview Tuesday, Stelmach told The Calgary Herald: "We might have to dip into it because that's the purpose it was set up for." Calgary Herald © Copyright (c) The Regina Leader-Post By Jason FeketeDecember 17, 2008
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Federal officials told CMHC it could overburden borrowers Canada Mortgage and Housing Corp. officials ignored warnings from senior Finance Department and Bank of Canada officials during the past two years that its active business in high-risk mortgage insurance could overburden consumers. According to sources familiar with the discussions, CMHC executives did not heed the warnings and continued to underwrite larger volumes of insurance policies for risky home loans with 40-year amortizations and minimal down payments. The sources said the federal agency's executives disagreed about the potential risks and defended the creditworthiness of borrowers who were granted insurance for the riskier mortgage products. One senior Ottawa official said CMHC was such a significant underwriter of 40-year mortgage insurance polices that it currently accounts for two-thirds of the nearly $56-billion of 40-year mortgages that were approved by banks, trust companies, credit unions and other lenders during the first six months of 2008. In a statement issued last night, CMHC said it discussed mortgage risks with central bank officials in 2006 after former bank governor David Dodge raised concerns about the new breed of long-term home loans. “CMHC officials took the governor and senior bank officials through the materials and discussed how the product was administered. The Bank of Canada was reassured by the fact that CMHC's product includes no change in mortgage qualification criteria and as such would not be of significant concern to the Bank. We know of no other concerns that the Bank of Canada or the Department of Finance had with our activities that in their view would threaten financial stability,” the statement said. The agency said only a “relatively small” proportion of the $334-billion in mortgages it insures are either 40-year or zero-down-payment mortgages. A spokeswoman declined to put a figure to “relatively small.” Finance Minister Jim Flaherty announced in July that the federal government was cancelling its policy of guaranteeing 40-year mortgages as of Oct. 15 in order to shield Canada from the kind of housing crash that has devastated the U.S. economy. However, according to sources, bank executives had been warning Mr. Flaherty and central bank officials since the beginning of 2008 about a dramatic and unexpected increase in demand from consumers for 40-year mortgages with small down payments. Lenders, insurers and government officials interviewed by The Globe characterized the first half of 2008 as a period of apparent paralysis by federal decision makers. These sources said bank and insurance executives and finance officials disagreed over how to pull the plug on popular and risky mortgage products. One of the few things they did agree about, according to sources, was that there was insufficient monitoring of CMHC, which accounts for about 70 per cent of the total value of mortgage insurance underwritten in Canada. “There is an accountability issue at CMHC,” said one senior Ottawa official, who declined to be identified. CMHC is a federal agency that has been supplying mortgage insurance since 1954, and is currently overseen by Human Resources and Social Development Canada. In response to a question about its accountability, CMHC said in its statement: “The lines of accountability are very clear, like all Crown corporations CMHC is accountable to Parliament through its minister.” When The Globe contacted Human Resources Minister Diane Finley, her spokeswoman replied: “We will have to decline and allow CMHC to respond to the questions applicable.” According to people familiar with CMHC, the agency imported U.S.-style mortgage products to protect its dominant market position from large U.S. insurers who were allowed into the Canadian market in 2006. Canadian laws require borrowers with less than a 20-per-cent down payment to obtain insurance for their mortgages. “They felt they were pushed into to this because of the new competition,” said a person familiar with CMHC. Underlying these concerns, sources said, was a federal internal study launched by the new Conservative government in 2006 to review the possible privatization of a number of agencies, including CMHC. The prospect of privatization, one source said, fuelled concerns that the agency needed to be seen as an effective competitor. CMHC said in its statement that its decision to insure longer-term and lower-down-payment loans in 2006 “reflected the market trends for the period.” Until 2006, the agency and its only rival, Genworth Financial Inc., did not insure mortgages that were amortized beyond 25 years. In February of 2006, several months before four U.S. insurance giants were allowed into Canada, CMHC introduced the country's first 30-year mortgage insurance product. What followed was a ferocious battle for market share between CMHC, Genworth and American International Group, the first of the new insurance entrants. JACQUIE MCNISH AND GREG MCARTHUR From Thursday's Globe and Mail December 18, 2008 at 2:00 AM EST http://business.theglobeandmail.com:80/servlet/story/RTGAM.20081218.wrmortgage18/BNStory/Business/?cid=al_gam_nletter_maropen
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Oh, the weather outside is frightful. The economy isn't much better, and both are bad news for realtors, who generally suffer a slowdown at this time of year, but are now facing a surplus of unsold real estate. Today would appear to be a great time to buy as selection is very good, interest rates have dropped, and it is definitely a buyer's market before inventory gets taken up. In 2008, sales to the end of November have dropped significantly. There were a total of 23,000 units sold--including single-family, multi-family, condos and acreages within the Calgary area--versus 31,000 in 2007. All things considered, that doesn't seem too drastic, although around five per cent of Calgary realtors have decided not to renew their licences. But it is slower at this time of year and some decide to take winter holidays; many deserve a good rest after working extra hard in a down market to earn a living. Others plod on because there are people moving into the city or changing homes for a number of different circumstances. In the past, offers have even been written up on Christmas Eve so realtors that leave the city make sure someone is backing them up. And some are taking the time to become more knowledgeable about the business. One of the interesting courses being made available to realtors focuses on doing businesses with those of different cultures. "Cracking the Code of Diversity - Selling More Homes in Alberta's Changing Marketplace" runs next Thursday, Dec. 18, and is a partnership between Tina Varughese, principal owner oftWorks, and the Calgary Real Estate Board. Varughese, who was formerly with Alberta Employment, Immigration and Industry before launching her own company, says because 25 per cent of Calgary's population comes from outside of Canada, it is important for anyone working in sales or marketing, who wants to become more profitable, needs to understand cultural differences. "Bang on; our realtors need a better understanding of how to relate to our immigrant population," says Ron Esch, executive vice-president of CREB, who has sat throughatWorks seminar. Bill Fowler, director of industry and government relations for the Alberta Real Estate Council and also a seminar participant added, "It is a must for anyone in real estate, health care, banking and the public sector. In the first 10 minutes I learned something that will make my work more productive and make it easier for others to relate to me." It's a course that goes beyond being politically correct; it's good business to be able to communicate cross-culturally. Esch says CREB's mandatory courses have finished for this year and none are required for 2009, although he stresses it is important for realtors to continue their learning process and the board is providing a number of training sessions and workshops. Ken Lamb, broker owner of Real Estate Professionals, redesigned his business model to flourish as the market became more competitive-- offering his realtors a low monthly fee and a deal fee only. His company spends a lot of time on education and since 1993 has worked with a real-estate training group based in the U. S. He and his wife Maria attended a Star Power Group course in Chicago that focused on how to survive in a challenging market, took a seven-day learning cruise featuring 22 world-class speakers including Mark Victor Hansen of Chicken Soup for the Soul fame, and another session by a Newport Beach real estate marketing group. "There's a big difference between just having a real estate licence and acting as a real estate professional," Lamb says. His company has grown to more than 165 realtors in its two offices; all get to learn from in-house seminars. A couple of years ago there was a shortage of homes to buy. Now with fewer new houses being built, a sizable inventory and the expectation that the market will balance out next year, I hope that the realtors who are still out there working hard will have a good run before the Christmas break. David Parker, Calgary HeraldPublished: Saturday, December 13, 2008
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checkCookie(); Pricey plans for the city to acquire the Cecil Hotel have some critics cringing. The Sun has learned the cost for the notorious watering hole is more than $10 million, a deal that aldermen will debate behind closed doors Monday. A tentative deal to acquire the 96-year-old building at 401 4 Ave. S.E. was approved by a city committee earlier this week and the only hurdle is for a majority of council members to sign off on it. But the plan is already under fire. Scott Hennig of the Canadian Taxpayers Federation said with the city paring down next year's tax hike to 5.3% after a wave of taxpayer outrage, it doesn't appear council has learned any restraint when it comes to handling the public purse.
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"I don't think most Calgarians expect that when they pay their taxes the city will use it to buy old hotels," he said. "Most Calgarians expect that money is going to police and fire and transit and that's what aldermen and the mayor told them this money was being spent on in the budget debate. "It's the old bait and switch." The city is considering a number of options for the property, which this week also saw its business licence for the tavern portion suspended following a ruling from the city's chief licence inspector in response to numerous safety complaints. If the deal moves forward, plans for the site would likely include a parkade and a mixed-use development with both residential and commercial facilities. Ald. Ric McIver is anticipating a lively debate when it comes to council and noted with Calgary facing a number of new funding challenges and a faltering economy, getting into business better left to the private sector is a mistake. "To put taxpayers through this at a time when money's an issue and there are other infrastructure needs that need to be financed is a problem," he said. "It's an important corner and it's a building with historic character but this is something that should be led by the private sector." But Ald. Joe Ceci noted the city isn't acquiring a run-down hotel but a strategic parcel of land that will help transform the blighted east side of downtown. "This is an important gateway into the eastern part of the downtown and we have an opportunity here," he said. "The Calgary Parking Authority is always on the lookout for land to do parkades and what better place is there to operate a mixed-use zone?" By SHAWN LOGAN, SUN MEDIA http://calsun.canoe.ca/News/Alberta/2008/12/13/7739581-sun.html
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New house prices in Calgary declined by 1.6 per cent in October on a year-overyear basis--the largest decline for the metropolitan area since November 1991, said Statistics Canada. The New Housing Price Index, released Thursday by the federal agency, showed that, on a national level, new home prices year-overyear increased by 1.5 per cent, a slower pace than the 2.1 per cent advance recorded in September and the smallest annual increase since October 1999. On a monthly basis, prices decreased 0.4 per cent between September and October, the first monthly decrease across the country since September 1998. Prices declined by 0.6 per cent in Calgary on a monthly basis. The largest year-over-year increases were in Regina (22.8 per cent) and St. John's, N. L. (22.3 per cent). Edmonton recorded a 12-month drop of 7.7 per cent, which was the largest annual decline since May 1985. Prices declined by 1.7 per cent in Edmonton from September to October 2008. At the national level, the overall year-over-year increase was comprised of a 0.7 per cent rise in the house-only component and a 3.4 per cent jump in the land only component. For the Calgary census metropolitan area, the house-only component dropped by five per cent on an annual basis while the land-only component increased by 5.9 per cent, said Lai Sing Louie, senior market analyst in Calgary for Canada Mortgage and Housing Corp. "Builders are telling us it's a little cheaper to build a new house than a year ago," said Louie. The Calgary CMA includes the city, Airdrie, the Municipal District of Rocky View, Chestermere, Cochrane, Irricana, Beiseker and Crossfield. Statistics Canada said prices were down 0.4 per cent in Vancouver on a year-over-year basis, the first annual drop since April 2001. Vancouver was also down 1.1 per cent on a monthly basis. In Victoria, contractors' selling prices decreased 1.1 per cent year-over-year, down from an annual increase of 0.2 per cent in September. New housing prices year-overyear fell in only three markets in October--Calgary, Edmonton and Victoria. The dip in new home prices has been mirrored in the resale market as well. According to the Calgary Real Estate Board, MLS average sale prices for single-family homes in Calgary metro in November were$435,471,a drop of 5.8 per cent compared with November 2007. In the condo market, the average sale price fell by 8.6 per cent from a year ago to $285,820. Prices have also fallen in other segments of the MLS market in the Calgary area. For towns outside of Calgary, residential properties sold for an average of $359,400 last month, down 6.2 per cent from November 2007. The biggest drop in price in the past year in the Calgary region was in the country residential (acreage) MLS market, as average sale prices have plunged by 30.5 per cent to $565,889. Mario Toneguzzi, Calgary Herald Published: Friday, December 12, 2008 http://www.canada.com/calgaryherald/news/calgarybusiness/story.html?id=34d35749-af6c-49e1-9781-3f493e3052a9
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People are territorial by nature. So it comes as no surprise when residents who might in principle support a concept that makes our city a better place to live rise up in protest when they find out it might be coming to their neighbourhood. Such was the case with the west leg of the LRT. And it is happening again with a plans for development that would increase population density near C-Train stations. Nearby neighbourhoods are up in arms at a proposal to build a high density hub around the Brentwood LRT station. http://calsun.canoe.ca/News/Columnists/Cla...7694351-sun.php
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Global centre to open in Calgary
Calgary Economic Development is establishing a Global Business Centre to increase international trade activity in southern Alberta. The 7,000-square-foot centre, which is scheduled to open in the second quarter of 2009, will be located along Stephen Avenue between the Hyatt Hotel and the Telus Convention Centre. The centre will be a "ground-floor, open and accessible focal point for international trade and business development activity that will contain services and information for companies that are looking to expand their markets globally," Bruce Graham, president and CEO of Calgary Economic Development, told the Herald. http://www.canada.com/calgaryherald/news/c...94-7fe0e7b03246
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Calgary home starts plunge
Housing starts in the Calgary census metropolitan area continued their downward spiral in November, falling by 26 per cent compared with the same month a year ago. Those numbers, released by Canada Mortgage and Housing Corp. on Monday, were fuelled by a 42.8 per cent plunge in single-detached starts, which fell to their lowest November level in 18 years, while multiple starts increased by 28.1 per cent on a year-over-year basis. http://www.canada.com/calgaryherald/news/c...49-070fcf42507a
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Alberta still ranked No. 1 for investors
Alberta continues to have the best investment climate of any province and Ontario, which historically has ranked first or second, has slipped to fifth spot, the Vancouver-based Fraser Institute said in releasing its annual ranking. Alberta was Canada's top province, with a score of 8.5 out of a possible 10 in the institute's annual index that evaluates the public policies it says create and sustain a positive investment climate. http://www.canada.com/edmontonjournal/news...05-fbebce34f5f8
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Mayor fears province will increase property tax take
Mayor Dave Bronconnier used a report examining funding options for municipalities to once again pitch that the province should stop collecting the education portion of property taxes. "We fully expect, with some of the rumblings coming out of Edmonton, that they are once again going to take advantage of picking up more money from Calgarians on their property tax,"Bronconnier said Thursday, adding he believes there could be a five per cent increase on the $542 million collected in 2008. http://www.canada.com/calgaryherald/news/c...31-1ba30e35ed79
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City running out of cash, land for burials
With municipal cemeteries facing both a land and a cash crunch, a Calgary alderman believes he has a solution for one of the problems. Ald. Ric McIver said Wednesday he'll soon propose skimming off some of the budget surpluses over the next 10 to 15 years and putting that cash into a fund dedicated to maintaining the city's cemeteries. http://www.canada.com/calgaryherald/news/c...2e-7800fa8295ee
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French oilsands player readying $19B bid for Nexen: report
CALGARY - Shares in Nexen Inc. rose 11 per cent Tuesday after a report said that French oil major Total SA is poised to make a $19.7-billion takeover offer for Canada's No. 4 independent oil explorer. Nexen earlier jumped 33 per cent for its steepest intraday gain in 21 years. The Financial Times reported on its website Tuesday that Total's board of directors was meeting to approve a $38-per-share offer for Nexen. http://www.canada.com/edmontonjournal/news...3b-9702ea4d49ba
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MLS sales fall below pre-boom levels amid downturn
It is becoming increasingly difficult to sell a home in the Calgary residential real estate market. Statistics released by the Calgary Real Estate Board on Monday show that MLS sales in November plunged compared to a year ago--and they've even dropped below levels prior to the real estate boom of the past two years. As well, average and median sale prices continue to slide as listings remain at elevated levels. http://www.canada.com/calgaryherald/news/c...6a-9f6fd128c170
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Calgary business leaders fret
The deepening political battle in Ottawa has unnerved Calgary's business leaders, who say uncertainty in the midst of an ongoing economic crisis jeopardizes Canada's status as a safe-haven. But environmentalists welcomed the potential power shift, hoping it could mean tougher federal rules for greenhouse gas emission reductions. http://www.canada.com/calgaryherald/news/s...dd-7fc72ee33f71
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Calgary MPs fear fallout in Alberta
Bewildered Calgary Tory MPs girded Monday for the distinct possibility their party could be relegated back into opposition within days, and lamented how a newly elected government could fall victim to an unprecedented "coup." Indeed, the high political drama unfolding in Ottawa -- which could see the Liberals, NDP and Bloc Quebecois defeat the Tories and form a coalition government headed by Grit Leader Stephane Dion -- left MPs and observers scratching their heads. http://www.canada.com/calgaryherald/news/s...57-c07019797849
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