July 13, 2015 - From the July, 2015 issue

Edmonton, Canada’s City Manager Prioritizes Building a City Rather Than Just Projects

Simon Farbrother serves as city manager of Edmonton, in Alberta, Canada. During a Los Angeles visit to attend the CityAge LA conference this spring, he enlightened TPR about the strategies guiding his city’s growth and development. With an emphasis on creating an “innovation ecosystem,” focusing on infill development, and enhancing light-rail connectivity, Edmonton aims to remain attractive as yet-unbuilt cities offer competition in the coming 20 years.


Simon Farbrother

“We try to bring a systems approach to our decision-making. We don’t do projects—we build a city.” —Simon Farbrother

Simon, share with our readers what brings you to Los Angeles, and your role in Edmonton.

Simon Farbrother: I’ve been the city manager for Edmonton for about five and a half years. 

Our city is undergoing significant change and growth. Part of that is figuring out the most appropriate strategies to be successful. I’m here in Los Angeles because the CityAge conference is one of the few environments where people are really talking about leadership in cities.

You’ve been the point person for Edmonton’s “innovation ecosystem.” Explain to our readers the goal of that initiative, and how you’ve been moving it forward.

Our city council approved a document called “The Way Ahead” five or six years ago. It’s a broad strategy that focuses on the three elements of sustainable development. 

The document is about creating a strong urban core, with an integrated set of villages connected as a city. We’ll grow up much more significantly than we grow out. We’re starting to shift our modes of transportation. This means: investing significantly in LRT; reinvesting in infill development; promoting residential in the downtown core; bringing key strategic assets and lining them up together in the downtown core, such as our new downtown arena and plaza complex; and the redevelopment of a 600-acre site on which we’re aiming to create a net-zero-emissions community for 30,000 people, connected to the LRT.

We try to bring a systems approach to our decision-making. We don’t do projects—we build a city.

Describe the different elements that you’ve pulled together to accomplish this goal.

“The Way Ahead” involved a very significant public engagement process. Hundreds and hundreds of people were involved in setting that framework. We’ve had two different councils endorse and support it. It’s a living strategy that actually does drive budget priorities. Obviously, as a city, we don’t deliver on all of this ourselves.

There are community-building elements, such as four major recreational complexes—all in excess of 300,000-400,000 square feet—designed as multiuse facilities. It’s a great model—all full cost recovery. There are half a dozen libraries being built. We’ve invested $10 billion in a six-year period, although a significant piece of that is through provincal funding.

Interest rates are low. We have a really good credit rating, and we don’t allow our debt to get above 15 percent of our operating budget. That’s allowed us to do major capital investments, such as building affordable housing. 

Through our Neighbourhood Renewal program, every single neighborhood in Edmonton will be rebuilt over a 30-year period. It’s very popular and done on the general tax base. 

Our waste management will hit 90-percent recovery without incineration in the near future. We’re at 60 percent now. We’ve set up a private company to sell that technology to China. We’re finalizing an agreement for a project in Hubei Province as we speak. We’ve used models like that before. 

The city of Edmonton is the owner of EPCOR. It’s a private company that provides services in our own city and also has five utility contracts in Arizona and some contracts in Ontario. We get a dividend of about $140 million a year, which is about 10 percent on our tax rate. That’s moved from an energy-water model to more of a water-utility model. 

Since we’re talking about an innovation ecosystem including the university, incubators, and accelerators, can you elaborate on partnerships underway?

We have both Startup Edmonton and TEC Edmonton. EEDC is our economic arm—it’s arm’s length from the city. 

We do a lot of work with the university. We’ve actually been bringing students into the downtown core. We’re looking at an arts project right now, which would have a theatre complex and two schools for the university. 

We’re investing in school programs. We’re an investor in the planning school, which provides a supply chain for our Sustainable Development Department. 

It’s not just one university. We have four major academic institutions in the city, totaling 100,000 students, and we partner with all of those institutions. Our rail transit expansion means that now, all four are linked together. Students can live anywhere in the city and access any of those academic institutions, and the institutions can look at doing some of their overhead stuff in a joint model.

From your vantage point as city manager, does everybody play well together?

Generally, yes. 

Recently, we’ve been preparing a bid for the Commonwealth Games. The right solution was to put a new midsize stadium not at the university, but somewhere else. The university was okay with that. In a purely self-interested model, they’d have probably preferred a different solution. There’s always give-and-take. 

If you wanted to make the ecosystem stronger, what would be on your to-do list?

Our target for city development is 25-percent infill, 75-percent greenfield. We would like to increase that to a higher percentage of infill. It’s also about increasing density in existing parts of the city and creating a strong urban core. We continue to increase our densities of development and are starting to think about fixed boundaries. We may get to a point where we actually create a green belt. There is no natural boundary for Edmonton. We actually need some of the fiscal triggers to incentivize our ability to grow up—otherwise, we’ll just sprawl. There’s a broader regional conversation taking place around how to do that. We’re in the middle of a discussion with our province around a new charter for the two cities, ourselves and Calgary. They’ve agreed to look at charter legislation.

Could you elaborate on the issue that has prompted this conversation around a new charter?

The real issue is creating a situation in which the province and the two cities, which are two-thirds of its population, can be successful in the global economy. Right now, we’re structured in a cookie-cutter way: The province is one-third rural, one-third Edmonton, and another third Calgary. That’s a simple, politically expedient model, but the reality is way more complex.

What’s driving the political energy to do this?

The need to build a successful city. 

There are a hundred new cities being built over the next 20 years that don’t exist today and will have every technological advantage. For us to stay where we are, we have to jump 100 cities in the next 20 years. That’s our framework. If we’re to do that, then we need the governance structures to allow us to be successful in that environment. We need the right investment strategies. We need to have a system approach to decision-making so we can leverage our resources, time, and energy. It’s all based on the triple bottom line. 

Edmonton has a significant homeless problem, much like Los Angeles. We’re doing a lot of work on poverty elimination. 

The charter changes would be around role clarification: Who’s accountable for what? It’s also about solution-seeking.

Taking a step back, what do you believe are the advantages of a city-manager form of government for a municipality the size of Edmonton?

The strong-mayor and city-manager models are not much different. 

I have 13 bosses. A coalition of thought drives policy. In a strong-mayor model, it’s a single voice. In both cases, though, an individual runs the corporation. 

The advantage of the city-manager model is that we tend to be more of an independent bureaucracy than a secretariat. At the end of the day, you’re looking for good advice, which is not always the advice you want to hear. I think you may, at times, get better advice under the city-manager model.

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Let’s turn to sports. Phil Anschutz and AEG have played a major role in Los Angeles in creating of the Staples Center as part of Downtown LA’s revitalization. In Edmonton, you have Daryl Katz and the Edmonton Oilers. Is there a model here?

Yes. Obviously, the Staples development was a basis for the thought process in Edmonton. We looked at Pittsburgh and New Jersey, too. 

In Edmonton, it was time to reinvest in a new arena. We wanted it in the downtown core; we wanted it connected to the LRT; we didn’t want to build any more parking structures; and we wanted it to support our downtown aspirations. We also wanted a 35-year extension to the Oilers playing in the city. 

For the Katz Group, the deal was around an arena, but also around associated development. Over a two- or three-year period, we were able to craft an agreement that is fairly simple. We’re in for about 50 percent of the cost of the arena, and our portion is raised through a Community Revitalization Levy—which is similar to a TIF, except we don’t have to back-stop the borrowing like you do in the US. About $300 million would come from the CRL to go to the arena.

Could you explain further how the CRL works in relation to the arena?

The CRL is an area defined in the downtown core where new tax revenue goes into a pot for reinvestment in the downtown core. The life of the CRL is 20 years. In this particular example, the arena has been a catalyst for significant associated development

Our current estimate on the CRL is about $1.4 billion in taxes generated for the city. It’s not just paying for the arena—it’ll pay for another billion dollars of infrastructure in the downtown core that we otherwise wouldn’t be doing. 

The benefit to the Katz Group is that they own, operate, and have a lease on the arena. They get all the revenues, but they also get all the expenses. That includes annual capital and life-cycle capital, which is different than what you’ll find in agreements elsewhere. At the end of the lease, the city owns the land and the building.

Katz is also doing the development around the arena. Three major high-rises are going up, and a plaza that’s already approved. It’s just over a year since we finalized the agreement, and they’re already working on the roof of the arena. The Winter Garden crosses a four-lane roadway. There are 30 cranes onsite, two blocks from City Hall. It will be connected through our ped-way and LRT systems.

I gather that the City of Edmonton has a stake in economic growth and the valuation increases of the property’s benefit, which is not the case any longer in California for local government.

Yes—but when assessment appreciates in the city, we don’t actually take that market appreciation. We just realign it.

Let’s say we collected a billion dollars in taxes last year. If the market goes up, we will still collect a billion dollars in taxes. When we have new assessment, we will take that new growth. In the same way, if there’s a market depreciation in assessment, we don’t reduce the amount of money we collect in taxes. That gives us long-term stability in terms of the tax model. But for individual property owners, the amount of taxes they pay can go up and down.

Could you describe the relationship of Edmonton to the province, and the significance of the administration change in the provincial government?

Edmonton is the province’s capital city, so we’ve always been very close to government. We have very good access and a good working relationship with our provincial body, although we’re less connected federally. 

For Edmonton, I’m not sure that much will change with the change in government. In fact, it’s the first time in many years that the premier and the most significant ministers are all from Edmonton. 

It’s a new government that will need to learn how it wishes to govern. Our approach right now is: How can we help you get to a point where you can make significant decisions to the benefit of this province and the city? We’re not knocking on the door asking for anything. 

We’ve got a great mayor. Our council is not party-based—it’s independent. They work well together. We’ve done a huge amount of work around our own corporate culture and how we support decision-making for our leadership. It’s a city on the move. 

The province and Edmonton have been major beneficiaries of the price of oil over the last 20 or 30 years. Recently, there’s been a bit of a crash. How has that impacted the province and city?

Going from $110 to, say, $50 a barrel created a direct impact on the provincial government of about $7 billion. I think that’s more than they were spending on education!

Edmonton is a university town, a government town, and a healthcare town. We also do the maintenance on the oil-and-gas business, but most of the shareholder headquarters are in Calgary. 

The oil-and-gas industry is so embedded, after 40-50 years of investment, that there’s an ongoing maintenance cycle that has to take place irrespective of the price of oil. We do feel a downturn, but it’s less significant than you would anticipate. 

Right now, year over year, house prices in Edmonton are up 1 percent. Employment is hanging in there, although in the last few months it has starting to get a bit softer. 

How the province itself deals with its budget deficit will influence Edmonton because of our significant public sector relationship. So far, there’s been an impact, but nothing like the order of magnitude you may have anticipated 20 or 30 years ago with the boom-bust cycle. 

On the positive side, when oil is down, there’s less of a crowding-out effect. When oil is up, the oil industry can price everybody else out of the market, so it’s hard to diversify. When it’s down, people move into other lines of business. 

The province seems to be recognizing that they’ve actually got to deal with their own structural deficit, which I think will lead to less revenues and a change in the tax system. Our taxes are the lowest in Canada. There’s no sales tax in Alberta.

You’re the Qatar of North America!

We are, in some respects. Incomes are 25 percent above the national average.

Let’s close by returning to your agenda around the innovation economy. How does the decline in oil prices affect the clusters you pursue now?

It creates greater opportunity to build on our investments—through Startup, Tech Edmonton, the work we do at the universities, and the work we do at the province in the medical field. History tells us that it’s the companies you grow, as opposed to the ones you attract, that tend to have the bigger multiplier effect. 

We work really hard to retain what we’ve got. Stantec, an Edmonton-based multinational company, is going into the Arena District, which means they’re committed to headquarters in Edmonton for the next 30 to 40 years. It’s about being open to business and having a can-do attitude. 

We’re moving the agenda on our environmental footprint. We’re shifting our modes of mobility. We’re a green city anyway, but we’re becoming greener. We do invest in quality-of-life very significantly: recreation, libraries, and open spaces. 

We understand that, for a city to be really successful, it has to work for our whole population. Inclusion is really important. 

From an innovation point of view, we ask: How do you create an environment where people want to be? If they want to be here, they will be innovative.

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