Calgary urban sprawl

Killing Us: Urban Sprawl

Urban Sprawl is killing us early, keeping us unhappy and costing municipalities tens billions. Here are some ideas to help stimulate a conversation. On the table is huge savings in energy and the elimination of unnecessary infrastructure. Smart city planning can even a double the wage of the average person. PROPERTY TAX BREAKS Counterintuitive, but strategic in the long term. In the mid 1800’s, Paris innovated with tax breaks for beautiful architecture. The city held annual competitions that exempted the six best projects from city taxes. By doing this they created a infrastructure of skilled labor, and architectural innovation for building owners looking to save money. The cost of the tax breaks offset the increased skilled labour needed to build such buildings. The finished buildings also raised area market values. Thus raising the bar for “everyday” buildings to become better looking. Winning buildings benefited by being able to charge a higher rent. They garnered a higher sale valuation because of the tax break and prestige of the building. Tenants got a prestigious building to … Read more

Calgary Overpass rebar fail

Fixing Canada’s Infrastructure With Volcanoes

Above: close up of a failed rebar on a bridge overpass in Calgary Canada’s infrastructure is failing and Canadians need to re-think the future. The problem with modern approaches to infrastructure is the constant need for maintenance, renovation and replacement. It could be that the RFP, lowest bidder process and lack of true building material knowledge is to blame. The current short term solutions approach taken to long term assets is expensive, environmentally costly- a better way can taken. The basis for modern life is concrete. Modern concrete is made from Portland Cement recipe and it has a usable outdoor life of 20 years. When the time comes to demolish these unsound structures, the dust generated contributes to air pollution. Also problematic is the manufacturing process. Portland Cement is responsible for 5% to 7% of the man made CO2 gas worldwide. The emissions are so high because of the heat (1,500C) needed to make to make the curing mineral, Alite harden … Read more

Whirling Dervish

Are REITs Relevant II?

Last article covered the basics of some misconceptions of REITs. In part II we address how managers “add value” and dodge restrictions imposed on them. The term “adding value” is short hand to justify management overhead. That value is supposed to be the profit, realized or not yet realized in a business that management created solely though its skill and expertise. The easiest way in the last 20+ years is to cut costs.The “Do more with less” ethos does work. But at the cost of employee attrition rates and wide knowledge gaps from senior employees leaving. Customer service levels also suffer because of low moral and chronic understaffing. The other most popular way is accounting slight of hand. The transition from GAAP to IFRS accounting has enabled REITs to capitalize things like window cleaning, carpet cleaning, lawn mowing, and the labor that goes into those activities. All serving to increase the “value” of the properties. This practice is not endemic to just REITs, O&G companies can do this as well. When a geologist drills … Read more

fair

Are REITs Relevant?

Created in the USA during the Eisenhower era, REITs have dominated real estate investment capital and in the past have returned healthy yields. Unchanged, they were introduced to Canada in the early 90’s and have flourished in popularity. Their primary attractiveness being their monthly dividend. This series aims to examine REITs, their structure, environment in which they operate and their risk to returns.The question being are they relevant in today’s marketplace?Started as an investment vehicle for real estate to compete in mutual funds, its often sited that REITs are superior structures as they dividend almost 75 to 95% of all excess cash. One of the main foundational documents of this thinking was written in the seminal 1986 paper entitled “Agency cost of free cash flow, corporate finance, and takovers”.  Here, the author Michael Jensen explored the notion of principal-agent http://papers.ssrn.com/sol3/papers.cfm?abstract_id=99580 The thesis of principal agent, was tied into several sectors, principally oil pipelines. http://en.wikipedia.org/wiki/Principal%E2%80%93agent_problem Summarized, both state that if left … Read more