Edmonton (Alta.) - 2001-2007 - Edmonton Socio-Economic Outlook, 2001-2006 (2001-03)

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Prepared he City Forecast Committee MARCH 200 Planning and Development Edmonton

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EDMONTON SOCIO-ECONOMIC OUTLOOK 2001 2006

Prepared by: City Forecast Committee March 2001

etionton

PLANNING AND DEVELOPMENT

Copyright Š 2001 by the City of Edmonton Planning and Development Department clo: .3rd Floor, City Hall Sir Winston Churchill Square Edmonton, Alberta, Canada T5J 2R 7 The City of Edmonton provides this information in good faith but it gives no warranty nor accepts liability from any incorrect, incomplete or misleading information, or its use for any purpose.

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FA Edmonton Socio-Economic Outlook, 2001 2006 MEMBERS OF CITY FORECAST COMMITTEE Jong Huang (Chairperson) Chief Economist Planning and Development Department

K.L. Siu Senior Infrastructure Officer Asset Management & Public Works Department

Madjid Heydari Senior Economist Planning and Development Department

Stan Dilworth Director, Audit, Regulatory and Standards Planning and Development Department

Dana Oikawa Forecast Manager EPCOR Power Generation

Susan Ancel Manager, Network Services EPCOR Water Services

Terry Dew Director of Research Economic Development Edmonton

Rod Keith Strategic Planning Officer Community Services Department

Alan Brownlee General Supervisor, Forecasting & Assessment Transportation and Streets Department

Staff Sgt. Joe Rodgers Planning & Evaluation Services Section Edmonton Police Services

Audra Jones General Supervisor, Traffic Planning Transportation and Streets Department

Don Pilling Fire Protection Engineer Emergency Response Department

Nila Chowdhury Budget Consultant Corporate Services Department

Christina Ionescu Economist Corporate Services Department

Robert Higgins Planner II Planning & Development Department

Cyndie Annett Research Analyst Economic Development Edmonton

For more information contact: Jong Huang

fax: (780) 496-8450 phone: (780) 496-6068; email: iong.huang(@,gov.edmonton.ab.ca

Madjid Heydari

fax: (780) 496-8450 phone: (780) 496-6070; email: madjid.heydaria,gov.edmonton.ab.ca

or

Prepared by: aty Forecast Committee, March 2001

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Edmonton Socio-Economic Outlook, 2001 2006

TABLE OF CONTENTS

EXECUTIVE SUMMARY ECONOMIC OUTLOOK SOCIAL OUTLOOK

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IMPLICATIONS OF THE OUTLOOK

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BUSINESS SECTOR GOVERNMENT AND THE PUBLIC SECTOR FAMILIES AND INDIVIDUALS

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INTRODUCTION

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PART 1: ECONOMIC OUTLOOK

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UNITED STATES CANADA

Prime Lending Rate Exchange Rate ALBERTA

Oil and Gas Net Migration EDMONTON

Factors Contributing to Growth Output Demographic Changes Employment Unemployment Rate Inflation Building Permits

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9 10 11 11 12 13 14 14 15 15

Prepared by: City Forecast Committee, March 2001

Housing Starts Real Estate Market

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ECONOMIC OUTLOOK RISKS

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Downside Risks to the Outlook Upside Risks to the Outlook

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PART 2: SOCIAL OUTLOOK OVERVIEW KEY SOCIAL ISSUES

Social Implications of Demographic Change Employment and Incomes Poverty Social Services Housing and Homelessness Education Crime Recreation and Leisure APPENDIX I GRAPHS AND TABLES

APPENDIX II

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23 24 25 26 27 28 28 29 32 32

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EDMONTON CENSUS METROPOLITAN AREA MAP 35

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Edmonton Socio-Economic Outlook, 2001 2006

EXECUTIVE SUMMARY Economic Outlook External Factors •

A sharply weakening U.S. economy in the second half of last year has raised the possibility of the economy moving into a recession. The current forecast assumes that the U.S. economy muddles through in the first half of this year, but avoids a recession.

Economic growth is expected to accelerate in 2002 and will continue thereafter at an annual rate of 3%.

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The world economy will be affected by slower U.S. economic growth in 2001, but will rebound in 2002 as the U.S. economy moves to a higher growth path.

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Natural gas prices are forecast to continue to rise in 2001, but start to drop in 2002 and moderate to about $4 per gigajoule during 200306. Oil prices are expected to moderate over the forecast horizon to about $US22/bbl to $US23/bbl range.

Interest Rates and Exchange Rates The U.S. Federal Reserve acted quickly and decisively in response to the weakening U.S. economy by lowering short-term interest rates by 150 basis points so far in 2001. The Bank of Canada, in turn, lowered Canadian short-term interest rates by 75 basis points so far. An additional 25 to 50 basis points drop in the U.S. and Canadian short-term rates are expected before the mid-year. In 2002, concerns over re-emerging inflationary pressures will result in a tightening monetary policy in the U.S. Canada will likely raise interest rates too, but less than its U.S. counterpart, leading to a widening of the spread between the U.S. and Canadian rates.

The Canada/US exchange rate averaged US$0.67 in 2000, for the second consecutive year. With faster economic growth in Canada than in the U.S. over

Prepared by: City Forecast Committee, March 2001

the forecast horizon, the Canadian dollar is expected to appreciate relative to the U.S. dollar, averaging US$0.67 in 2001 and US$0.71 by 2006.

Canada After a strong performance last year, the Canadian economy is slowing in response to the weakening U.S. economy. The federal and provincial tax cuts and lower interest rates are expected to save the day for Canada. The economy is expected to expand at about 3% in 2001 and 3.5% in 2002; growth will average 3.2% over the 2003-06 period.

Alberta After a stellar performance in 2000, thanks to the energy sector, the Alberta economy is expected to continue to grow, albeit at a more moderate pace.

Lower taxes and interest rates, positive net migration, supported by continuing consumer, government and business spending will result in a 4.5% growth rate in 2001 and 4% in 2002.

Economic growth is forecast to average 3.5%-3.7% over the 2003-06 period.

Edmonton The Edmonton region's economy grew by 1.1% in 1999, down from 1.6% in 1998. Economic growth is estimated to have accelerated in 2000, rising by 4.5%, buoyed by sharply higher energy prices, a strong provincial economy and positive net migration.

Economic prosperity is expected to continue in the region in 2001 and 2002. Tax cuts and lower interest rates will boost consumer and business confidence. This, coupled with a continuing strong energy sector and increased government spending, will result in the Edmonton region's economy growing by 4.6% in 2001. With the completion of several major projects currently underway, economic growth in the region will moderate to about 3.5% to 3.7% over the 2002-06 period.

Demographic Changes The City of Edmonton's population is expected to increase by about 39,000 people by 2006 reaching

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Edmonton Socio-Economic Outlook, 2001 - 2006 702,200 (Table 2). The population of the Edmonton Census Metropolitan Area (CMA) is expected to increase by some 67,000 over the same period reaching 1.001 million (Table 3) (See Appendix 11 for the boundaries of the Edmonton CMA). Net migration is expected to range between 4,000 to 6,000 people per year for the City of Edmonton and 6,000 to 10,000 for the Edmonton CMA. The City of Edmonton and the Edmonton region's population, like the rest of Canada, will continue to age.

Inflation The inflation rate is expected to drop to 3% in 2001, from 33% in 2000, mainly due to natural gas and electricity rebates and lower oil prices. The region's inflation is expected to rise in 2002 to 3.5%, with the termination of energy rebates. Inflation is forecast to average around 2.5% per year during the 2003-06 period.

Labour Market

6,489 units in 1999. This was largely due to a fall in construction of multi-family units, as the singles were almost unchanged. Housing starts are expected to rise slightly in 2001, but thereafter they should average around 5,500 units per year in the region and about 3,500 units in the City over the 2002-06 period.

Office space vacancy rates will decline gradually over the forecast period, as continued healthy economic growth will result in higher net office absorption rates. The apartment vacancy rate will decline in the early phase of the forecast period and then rise gradually as the pace of economic activity moderates.

Social Outlook The Federal Government announced a number of social initiatives in the January Speech from the Throne. Some of the items relevant to this forecast include:

The Edmonton region's employment grew by 5,800 persons to a total of 488,900 in 2000. Employment is expected to rise by 12,000 persons in 2001 and by about 7,000 to 9,000 per year over the 2002-06 period. In total, the region's economy is expected to generate 52,000 new jobs over the 2000-06 period.

Despite the strong job creation pace, the unemployment rate in the region, which fell to a historical low of 5.5% last year, is likely to remain unchanged at 5.5% in 2001, owing to higher participation rates.

Thereafter, the region's unemployment rate will start to rise slowly, reflecting a more moderate economic growth. As a result, Edmonton region's unemployment rate is to rise to 5.6% in 2002. Over the 2003-06 period, the unemployment rate in the region will be in the 5.7% - 6.1% range.

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Increased funding for the National Child Benefit, better access to services for all families and children, and changes to the laws for child support, custody, and access.

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Registered Individual Learning Accounts to help adults finance additional learning.

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Focussed assistance for Aboriginals.

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Initiatives to address " crime prevention, organind crime and gangs, cybercrime and terrorism; greater consideration for the needs of victims; and added safeguards for children.

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Efforts to advance progress on disease prevention; innovation in primary health care; funding for needed equipment; and strengthened efforts to encourage physical fitness and participation in sport.

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Improvements to public transit and creation of more affordable rental housing.

Construction Sector The value of building permits in the Edmonton region rose by about 11% in 2000. The City of Edmonton building permit value increased by about 20% due primarily to a 47% increase in the value of commercial building permits. Housing starts for the Edmonton region fell slightly to 6,228 units, from

Prepared by: City Forecast Committee, March 2001

The Alberta and Federal governments have both announced energy cost-shielding programs.

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PNA Edmonton Socio-Economic Outlook, 2001 - 2006 Among the provinces, Alberta has shown the steadiest employment growth over the longest period (eight years). The majority of new jobs were full time; job creation was strongest for women and young people in the service sector.

Between 1991 and 1998 the proportion of singleparent families in the city increased from 16.2% to 17.6% of all families. 62% of Edmonton's singleparent families had incomes below the poverty level in 1997.

While the number of owner-occupied dwellings in Edmonton increased from 1991 to 1999, the number of rental units declined. The shortage of affordable housing in Edmonton is becoming acute. The third count of homeless persons in Edmonton (September 2000) found 1,160 homeless persons in the city.

IMPLICATIONS OF THE OUTLOOK Business Sector Over the forecast period, Edmonton's business community is expected to benefit from: • •

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Canada-wide, criminal activity has declined for eight years, up to 1999. In contrast, total criminal activity in Edmonton increased in 2000. Violent crime rose 3.7%, property crimes were up 4%, the number of family disputes rose from 5,357 in 1997 to 5,514, but the number of child abuse cases reported dropped from 543 in 1997 to 441. In 1998/99 the number of youth property crime cases before Canadian courts fell significantly, while the number of youth violent crime cases held steady.

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However, during the same period, Edmonton businesses must adjust to: •

• Walking for pleasure has remained the most popular recreational activity since the early 1980s. Soccer and basketball are the only team sports to show significant growth. People say they get involved in recreation/leisure activities to get away from work, to find relaxed time with family or nature, and for health and exercise. The costs of participating — admission fees, equipment and supplies— are the major factors preventing or limiting participation in recreation and leisure activities. Family commitments are an important criterion in allocation of leisure time. 48% of Edmonton residents were physically active on a regular basis

short-term relief from the Alberta Government for high energy costs, increased spin-off from investment activity in energy, pipeline and resource-related projects in northern Alberta, stable housing starts, modest employment and income growth, and therefore, stable consumer spending, a large supply of relatively low-cost downtown office space, modest population growth, and a slightly higher, but stable inflation.

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an uncertain economic environment, as fluctuating resource prices affect cash flows, investment and hiring plans, an uncertainty surrounding the deregulation of electricity and potentially higher electricity prices, higher wage rates in response to tight labour market conditions, higher inflation as a result of strong economic growth and higher energy and labour costs, the ageing of the "baby-boomers", an increase in the 55-64 age group, and growing pool of potential retirees.

Government and the Public Sector Over the next few years, Edmonton's government and public sector will benefit from: •

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Prepared by: City Forecast Committee, March 2001

continued strong economic growth for the province and an increase in employment opportunities, increased assessment base,

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Edmonton Socio-Economic Outlook, 2001 2006

increased spending on education, health care and infrastructure by the provincial government, and continued relatively high oil and gas prices.

However, over the same period, the public sector must deal with: • •

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continued municipal infrastructure shortfalls, continued excess supply of space and a slower increase in real estate prices in the downtown non-residential markets, continued demand for government services in the areas of health, education and infrastructure as a result of the ageing population and positive net migration, the number of potential retirees will exceed the number of first-time labour market entrants, an increasing demand to maintain and acquire parkland for more passive pursuits, a shortage of affordable housing, and homelessness.

Families and Individuals Over the forecast period, Edmontonians are expected to benefit from: •

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greater employment opportunities and a healthy rise in wages as a result of continued strong economic activity, and some moderation in the depth of poverty for the working poor with children.

However, Edmontonians must also deal with: • •

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rising house prices and rents due to tighter apartment vacancy rate, higher inflation as a result of strong economic growth, and potentially higher electricity prices, higher home heating bills (both electricity and heat after 2001) and higher gasoline costs, and providing more care for aged relatives.

Prepared by: City Forecast Committee, March 2001

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Edmonton Socio-Economic Outlook, 2001 2006

INTRODUCTION This report provides an economic and social analysis of current and future changes in the City of Edmonton and the Edmonton Census Metropolitan Area (CMA) for the years 2001 to 2006. The outlook is used as a reference for the preparation of the 2002-2004 corporate and departmental business plans, 2002 corporate and departmental budgets, 2002-06 Capital Priorities Plan and Budgets, and the City's Long Range Financial Plan. In addition, other public agencies, citizens and businesses could use the forecast for planning purposes.

The City Forecast Committee monitors economic and social activities/trends throughout the year. The Committee prepares an outlook report semiannually, in the spring and in the fall.

consumer and business confidence. Deterioration in equity markets further contributed to the slowing of the economy. Despite the weakness in the second half; the U.S. economy grew by 5% in 2000.

In an unexpected move, in terms of timing and magnitude, the U.S. Federal Reserve reacted quickly to the slowing of economic activities by lowering short-term interest rates by 50 basis points in early January, and again by another 50 basis points in late January 2001. A further 50 to 75 basis points reduction is expected in the first half of the year.

Economic Growth U.S. & Canada 6

O US • Canada 4

PART 1: ECONOMIC OUTLOOK UNITED STATES

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97 98 99 '00 91 '02 '03 '04 'O5 '06 Source: U.S. Deparenent of Commerce. Statistics Canaria. City Faso:tot Committee

Economic growth in the U.S. slows to 2.5% in 2001, rebound to 3.5% in 2002, and resumes at 3% per year through to 2006 Recent economic indicators suggest that economic activity in the U.S. slowed considerably in the second half of last year. Real GDP growth slowed to an annual rate of 2.2% and 1.1%, respectively, in the last two quarters of 2000, compared to 4.8% and 5.6% in the first two quarters. Employment growth fell from an annual rate of about 2% in the first half of the year to less than 0.5% in the second half.

Growth in consumer spending, a major force behind this expansion, decelerated while business investment in equipment and software, another engine of growth, dropped in the fourth quarter. In the area of trade, both real exports and imports fell in the fourth quarter. The drop in imports was the first quarterly decline since the first quarter of 1991.

The main reasons for the weakening U.S. economy are past interest rate increases, the spike in energy prices, the high value of the U.S. dollar, and lower Prepared by: City Forecast Committee, March 2001

The drop in interest rates is expected to boost consumer and business confidence and to stabilize equity markets. It will also result in narrowing of spreads between U.S. rates and rates in other countries, which, in turn, will weaken the U.S. dollar relative to other currencies. Energy prices are also expected to moderate over the next two years, leaving more cash in consumers' pockets for spending and reducing operation costs for businesses. In addition, the new administration's promise of tax cuts, once implemented, will provide added fiscal stimulus to the economy.

The U.S. economy is likely to expand by less than 2% in the first half of this year, with growth accelerating in the second half of the year. Overall, the economy is forecast to grow by 2.5% in 2001 and 3.5% in 2002. By mid-2002, concerns over reemergence of inflationary pressures will result in a renewed bout of credit tightening. Over the 2003-06

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Edmonton Socio-Economic Outlook, 2001 - 2006

period, the U.S. economy is forecast to expand by about 3% per year.

CANADA The Canadian economy will grow by 3% in 2001, 3.5% in 2002 and 3.2% over the 2003-06 period There are signs that the economic slowdown in the U.S. is spilling over to Canada. Real GDP in Canada grew at an annual rate of 2.6% in the fourth quarter of 2000, after expanding at rate of more than 4.5% (annualized) over the first three quarters of the year. Canada's composite leading economic indicator posted a 0.4% decrease in January 2001, following a 0.3% drop in December 2000. The pace of job creation has weakened significantly. The economy lost about 24,000 jobs in February 2001, after posting virtually no gains in January. During the September to December of 2000, the Canadian economy had created over 40,000 jobs per month.

Overall, the Canadian economy grew by 4.7% in 2000, the strongest performance since 1994. A double-digit increase in real private and public investment, coupled with robust consumer spending, contributed to growth. Exports, a major contributor to Canada's current expansion, waned in the second half, reflecting the weakening U.S. economy. The Canadian economy created 319,000 jobs in 2000.

The vast majority of the new jobs (82%) were fulltime employment. The service industry accounted for close to 92% of the new jobs with the goods producing sector accounting for the remaining 8%.

Canada's inflation rate averaged 2.7% in 2000, mainly due to higher energy, and to a lesser degree, higher housing costs. Canada's core inflation (excluding energy and food) remained under 2%. A broad measure of inflation, the GDP price deflator, grew by 0.4% (annualized) in the fmal quarter of 2000, compared to an average of over 4% in the first three quarters. Furthermore, despite strong growth in overall domestic demand, private sector wage settlements slowed in the second half of last year.

In January 2001, Canada's annual inflation fell slightly. Further moderation of inflation is expected in 2001 and 2002, as the economy will grow slower and energy prices will weaken.

Prepared by: C"dy Forecast Committee, March 2001

Looking ahead, the effect of the recent slowing in the U.S. economy will likely cause the Canadian economy to slow in the first half of this year.

However, the pace of economic activity is expected to pick up in the second half of the year, supported by a lower interest rate, lower taxes and higher government spending. The Bank of Canada already eased monetary policy by lowering short-term interest rates by 25 basis points in January and another 50 basis points in March. In addition, corporate and personal income tax cuts and cuts to capital gains taxes announced in the Federal Mini Budget are expected to help restore consumer and business confidence and boost spending in the second half of this year.

Overall, economic growth in Canada is expected to drop to 3% in 2001 from 4.7% in 2000. Canada's economic growth will rise to 3.5% in 2002 as the U.S. and world economies strengthen. Over the 2003-06 period, the Canadian economy is forecast to grow by about 3.2% per year.

The forecast assumes that political stability will prevail throughout the forecast period. The issue of Quebec's place in Canada will not have an impact on Canadian short-term interest rates and economic growth.

Prime Lending Rate The U.S. Federal Reserve, concerned with a sudden abrupt turnaround in the U.S. economy, cut shortterm interest rates by 150 basis points so far this year. The Bank of Canada has responded by lowering Canadian short-term rates by 75 basis points so far. The chartered banks in both countries followed their respective central banks immediately, lowering their prime lending rates. As a result, the U.S. prime rate has fallen by 1.5 percentage points to 8% in March 2001 from 9.5% in December 2000, while the Canadian prime rate has fallen by threequarter of a percentage to 6.75% by early March. A further 25 to 50 basis points drop in short-term rates are expected in both countries before the mid-year.

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Edmonton Socio-Economic Outlook, 2001 - 2006 Prime Lending Rate

Monthly Canada-US Exchange Rate and 90-day T Bills Rate Differential Percent

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0.70 Esc ha nge Roe (Right Sca le)

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• • • MI • • • IN NINE III II • Ill • • • • •• • • • • III • • • II • • NI II III • • • • • • 97 98 19 10 11 12 13 14 15 16

Source: Bank of C03030. City Forecast Committee

By late this year and early next year, the U.S. economy is expected to recover from the current slowdown. Although the U.S. jobless rate will rise this year, the increase will not be sufficient to dissipate potential inflationary pressure. As a re§ult, the U.S. Federal Reserve will likely step in and start to tighten monetary policy gradually by early 2002.

Canada's prime rate is forecast to average 6.7% in 2001 and 2002, down from 7.3% in 2000. Beyond 2002, short-term rates are expected to increase slightly in Canada, but less than the increase in their U.S. counterparts, resulting in a widening of the spread between Canada and U.S. rates. This is because Canada's current expansion only intensified in the last couple of years and the unemployment rate, although lower, is still not low enough to trigger widespread wage pressure.

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Prepared by: City Forecast Committee, March 2001

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Since mid-January of this year, the Canadian dollar has weakened against the U.S. dollar in response to the slowdown in the Canadian economy. Despite the current weakness, the Canadian dollar is expected to bounce back later this year. For the year as a whole, the Canadian dollar is forecast to average US0.67. Over the 2002-06 period, with a stronger economic expansion forecast for the Canadian economy relative to the U.S. economy, narrowing of the spread between short-term interest rates in the two countries, and continued sound fiscal management at the federal and provincial levels, the Canadian dollar is expected to appreciate relative to its U.S. counterpart. The Canadian dollar is forecast to average US$0.68 in 2002, US$0.69 in 2003, US$0.70 in 2004 and US$0.71 over the 200506 period.

Exchange Rate

Despite Canada's sound economic and fiscal conditions, the Canadian dollar fell against the U.S. dollar from about US$0.69 in January last year to about US$0.65 in November. One reason for this is that although the Canadian economy performed well last year, the U.S. economy did even better until recently. This contributed to the strengthening of the U.S. dollar against most major currencies last year. Another factor contributing to the weakening of the Canadian dollar against the U.S. dollar was lower short-term interest rates in Canada relative to the U.S. for much of last year. The Canadian dollar averaged US$0.67 in 2000. Compared to most major overseas currencies such as the yen, euro and U.K. pound, the Canadian dollar strengthened last year.

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Canada-US Exchange Rate (US$/Cdn$) 0.73 0.72 0.71 (oi 0.70 c 0.69 a 0.68 0.67 0.66

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0.65 '97 18 19 10 11 12 13 14 15 16

Source: Bank of Canada. City Forecaet Conmattee

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Edmonton Socio-Economic Outlook, 2001 - 2006

ALBERTA Alberta economic growth accelerated to 6% in 2000. The economy will grow by 4.5% in 2001, 4% in 2002 and 3.5% to 3.7% over the 2003-06 period.

1999-2000

The Alberta economy expanded by 3.6% in 1999, the latest year for which data is available, up from 2.4% in 1998. Business spending on machinery and equipment, along with government and consumer spending provided the largest contributions to growth. Real exports grew by only 1.1%, reflecting lower volumes of oil and gas exports out of the province. On the income side, corporate profits before taxes rose by a whopping 58% in 1999, while total wages and salaries increased by 6.4%.

Soaring oil and natural gas prices helped the Alberta economy to surge ahead in 2000. Oil prices averaged US$30.30/bbl in 2000, up 57% from their 1999 average of US$19.29/bb1, while natural gas prices are estimated to have averaged $5.32/gj, up 91% from their 1999 average of $2.77/gj. As a result, Alberta's real GDP is estimated to have grown by 6% in 2000. Economic expansion appears to have been broadly based with all major components of aggregate demand growing strongly.

Consumer spending, buoyed by robust employment growth and rising compensation, grew solidly, as indicated by an 8.9% rise in retail sales in 2000.

Alberta led all other provinces and territories in retail sales gains in 2000, and posted its second highest gains in 10 years. Alberta sales of new motor vehicles in 2000 registered their strongest performance ever. Total housing starts in the province grew by 6.4% last year, the total value of residential construction in the province rose by 4.4%.

As reported in the Third Quarter Fiscal Update, the Alberta government spending on goods and services and capital investment also posted a healthy increase in 2000, reflecting increased spending on health, education and infrastructure. In addition, buoyed by substantial increase in energy commodity prices, business spending increased significantly in 2000.

Rigs drilling activity rose by about 39% in 2000, Prepared by: City Forecast Committee, March 2001

compared to 1999. The value of manufacturing shipments was up by nearly 17% in 2000, led by a dramatic 60% rise in the value of shipments from the petroleum and coal products industry.

Probably none of the major components of Alberta aggregate demand in 2000 grew more vigorously than exports. In the first nine months of 2000, the value of Alberta's international merchandise exports increased 57% from the same period in 1999.

International exports accounted for about 60% of the total value of Alberta exports. Higher prices for oil and natural gas, petrochemical products, wood pulp, and increased for export volumes telecommunication equipment, oil and gas, and wheat contributed to this stellar performance.

Economic Growth Alberta & Edmonton 12

iU Alberta 60 Edmonton I 10 8

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SourcaStatiatics Canada. City FONUCILII COillrnitt•O

The Alberta economy created 35,000 (annual average) new jobs in 2000, pushing the number of employed Albertans to 1,588,200 (annual average), up from 1,553,300 in 1999 or by 2.3%. The accommodation and food industry created the highest number of jobs, followed by the construction industry. More than 80% of those employed were working in full-time positions.

Alberta's unemployment rate averaged 5% in 2000, the lowest in decades.

Strong economic activity, coupled with low unemployment, has resulted in higher consumer prices and tightening labour markets with rising wage rates. Alberta inflation, as measured by the annual rate of growth in the CPI, increased by 3.5% in 2000, the highest since 1991. Alberta average weekly earnings grew by 3.3% in the first ten

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Edmonton Socio-Economic Outlook, 2001 - 2006 months of last year, compared to the same period in 1999.

on big-ticket items such as houses, motor vehicles and appliances is expected to continue to grow.

2001 and Beyond

Another source of support for the Alberta economy is government spending. Increased government spending will be a stimulant and contribute to economic activity.

Looking ahead, although oil and natural gas prices are expected to moderate over the forecast period, prices and demand will likely stay high enough to provide continued support for a relatively strong level of economic activity in the province.

However, the slowdown in the U.S. economy, the most important destination for Alberta's exports, will directly and indirectly —through impacts on other jurisdictions' economies— affect Alberta's exports. This will, however, be offset by stronger domestic demand, brought on by the federal and provincial tax cuts effective January 2001, higher government spending and continued positive net migration into Alberta.

The federal government lowered personal and corporate income taxes and capital gains taxes in its November 2000 Mini Budget. It also increased a number of important tax credits. The Conference Board of Canada estimates the combined effects of these tax cuts and the ones announced in the 2000 budget will cut personal income taxes by $7.7 billion in 2001, a hefty increase in consumer purchasing power. In addition, the recent health care agreement between the federal government and provinces will result in increased transfer payments to provinces for health spending.

The Alberta government tax cut initiative introduced a provincial 10% single-rate tax system and raised personal and spousal exemptions effective January 2001. The package will leave an estimated $1.5 billion in Alberta taxpayers' pockets. In addition, Albertans have been receiving an energy tax refund and natural gas and electricity rebates this year to protect them against higher fuel, natural gas and electricity costs. All commercial and business users of electricity in the province will also receive an electricity rebate, while only small businesses, institutions and not-for-profit organi7ations will be qualified for a natural gas rebate. As a result, consumer spending in Alberta is expected to grow unabated this year, supported by tax cuts, lower interest rates, and positive net migration. Spending

Prepared by: City Forecast Committee, March 2001

Non-residential construction is also expected to grow significantly over the forecast period.

Businesses will continue to invest in newer technologies so as to maintain their international competitiveness. As of February 2001, Alberta Economic Development estimates the total value of major projects in Alberta, worth $2 million or more, that are planned, underway, or have been recently completed, at over $71 billion.

Overall, the Alberta economy is forecast to grow by 4.5% in 2001 and 4% in 2002. Inflation is expected to moderate in 2001, owing to lower energy prices and a more moderate economic growth. Higher prices for electricity and natural gas will not directly affect the Alberta CPI in 2001 as the government rebates fully offset the increase in prices. The current forecast does not assume the rebates will be extended beyond 2001. However, lower prices for oil and natural gas are expected to mostly offset higher electricity prices in 2002. Other major components of the Alberta CPI are expected to grow slowly, owing to a more moderate economic growth in the province.

Economic growth will further moderate to about 3.5% during 2003-04 as the U.S. and Canadian economic growth approach their respective longterm potential growth paths, and oil and natural gas prices fall back to under US$25/bbl and $4/gj, respectively. Over 2005-06, the Alberta economy will expand at a slightly faster pace, as net migration to the province accelerates. During this period, real GDP is forecast to grow by 3.7% a year

Oil and Gas Faced with the rebuilding of crude oil inventories throughout the latter half of 2000 and the prospect of a slowing U.S. economy, OPEC producers moved to head off a decline in oil prices by cutting February 2001 production by 0.5 million barrels per Page 9

E2

Edmonton Socio-Economic Outlook, 2001 - 2006

day. This action pushed the price for West Texas Intermediate (WTI) back up briefly over US$30 per barrel, but in recent weeks prices have begun to soften once again. The slowing world economy and replenished oil stocks should allow prices to continue to moderate, with the key benchmark prices returning to more normal levels later this year. Consequently, the price for WTI is expected to fall back to average US$27.50 per barrel in 2001, after averaging US$30.30 last year. Thereafter, a more balanced supply/demand position is expected to allow WTI prices to settle in the US$22 to $24 per barrel range for the remainder of the forecast period.

World Oil Prices (US$/bbl) 11111=11111111M11111111111 35 30 25 20 15 10

MAI • • • II • II ••••••MINNI 97 98 99 '00 '01 92 93 94 95

96

Source: City Forecast Committee

With much of North America returning to milder winter temperatures in January and analysts announcing that gas storage levels were now sufficient to meet requirements for the remainder of the heating season, gas prices began to moderate from the record high levels reached this winter.

Indeed, gas prices at the AECO storage facility in southern Alberta dropped from an average of $12.91/gj in January to less than $8/gj more recently. Although the growing dependence on gasfired power plants is expected to continue, the slowing North American economy and stepped-up drilling programs are expected to improve the supply/demand balance over the next two years.

Consequently, AECO gas prices are expected to ease substantially from an average of $7.704 in 2001 to around $5.50/gj next year. Over the longer term, prices are expected to level-off near $4/gj, reflecting the preferred status of natural gas as a fuel source and the increasing cost of new supplies.

Prepared by: City Forecast Committee, March 2001

Alberta Natural Gas Price

(Cdn$/G.J.) 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 97 98 99 90 91 '02 '03 94 95 96 Source: City Fcrecast Committee

Net Migration Net migration to Alberta from other provinces and countries was estimated at 22,130 persons from January 2000 to September 2000, up from 20,172 in the same period in 1999. Alberta is expected to have higher growth than Canada as a whole during the forecast period with net migration averaging 28,000 in the 2002-04 period, increasing to 35,000 by 200506. The forecast assumes that the Alberta unemployment rate will remain below the Canadian rate for the entire forecast period_

Net Migration(*) Alberta, Edmonton(CMA), Edmonton(City)

60.008

I=Alberta l=1CMA — Cit

50 000 40 000 30 000 20 000 10

n° n

1

III

Ili a mu EN a a ail RN i mil 11111 us am Ern on um a III I

gm

97 98 99 90 '91 92 93 94 95 96 Source: Stntatics Canada, City of Edmonton Planning &Development Deportment Numbers am for July1 of previous year to June 31 of corrent year

Page 10

E-0 Edmonton Socio-Economic Outlook, 2001 2006 EDMONTON The Edmonton economy is estimated to have grown by 4.5% in 2000, and is forecast to grow by 4.6% in 2001 and 3.5% to 3.7% over 2002-06.

The following projects will have a significant impact on the Edmonton economy over the next five years: •

The 8th World Championships in Athletics, to take place in August 2001 is expected to have a net impact (direct, indirect and induced) of about $203 million in Alberta. Of this amount, $157 million will be spent in the Edmonton region. In addition, Edmonton will also be hosting the 2001 World Triathlon championships.

•

The City of Edmonton is spending $145 million to upgrade and expand its sewer system.

•

EPCOR plans to spend $115 million between 2001-03 to upgrade the Rossdale Generating Plant. The Company has also proposed to build a $500 million expansion to its Genesee plant during 2002-05 to increase capacity by 400 megawatts.

•

TransAlta Utilities has announced a $1.8 billion expansion to its Keephills power plant during 2002-05. The expansion will increase the plant current 754-megawatt capacity by 900 megawatts.

•

The City of Edmonton plans to spend $108 million for the first phase of the south LRT extension over the next five years.

•

Edmonton Airports is proceeding with the third phase of the re-development of the Edmonton International Airport at a cost of $67 million.

The third phase involves the construction of a Central Hall to connect the new and original terminals, and is expected to be completed in 2002.

•

Camrose Development Ltd.'s construction of a retail complex "South Edmonton Common" on a 300-acre site at 23 Avenue and Calgary Trail, costing $250 million, is currently underway.

About 3,500 construction jobs will be created over five years.

•

Christenson Developments is constructing a $40 million commercial and townhouse complex in

Factors Contributing to Growth The Edmonton economy is estimated to have grown by 2.5% in 1999, following a 1.3% expansion in 1998. Economic growth in the Edmonton region is estimated to have accelerated in 2000 in response to a number of positive factors, including sharply rising oil and gas prices, and a strong performance of the provincial as well as the national economies.

Positive net migration to Edmonton, coupled with strong consumer, business and government spending contributed to growth.

The Edmonton region's economic prosperity is expected to continue in 2001.

Despite the slowdown in the U.S. economy this year, demand and prices for natural gas and oil are expected to be high enough to continue strong activity in the energy sector, contributing to strong economic growth in the Edmonton region's diversified economy.

Positive net migration is expected to continue this year. In fact, with Ontario's relatively stronger ties to the U.S. economy through the auto industry, the adverse impact of the U.S. slowdown may cause net migration to Alberta and Edmonton to rise faster than expected.

Personal and corporate tax cuts, announced by the federal and the Alberta governments effective January 2001, are expected to play an important role in strengthening consumer and business spending.

The regional economy is expected to benefit from the economic spin-off from investment in northern Alberta.

In December 2000, Economic Development Edmonton estimated the proposed, announced and recently completed or under construction major projects in northern Alberta at over $51 billion. These projects represent roughly 72% of the value of all major projects planned for the province of Alberta.

Prepared by: City Forecast Committee, March 2001

Page 11

Edmonton Socio-Economic Outlook, 2001 2006 the downtown. Construction will be completed in 2001.

•

The provincial government will spend $250 million over the next 5 years to create two centres of excellence, one in Edmonton and one in Calgary, for cardiac and bone and joint research. The centres are expected to be in operation in 2005.

•

LiveBridge Inc. of Portland is set to open a call center in west Edmonton employing 300 people in the 15,000 square-foot centre.

Summary of Major Projects ($ million) Sector Agriculture & Related Chemicals & Petroleums Commercial/Retail Commercial/Retail and Residential Forestry & Related Infrastructure Institutional Manufacturing Minig Oil, Gas & Oilsands Other Industrial Pipeline Power Residential Telecommunications Tourism/Recreation Total

North 292 1,202 827 245 1,974 3,554 1,232 106 8 35,288 190 3,465 1,675 422 300 566 51,344

Alberta 324 880 2,114 1,455 1,717 5,602 3,022 147 8 43,663 201 3,429 5,042 876 300 2,090 70,867

Sources:

Output

Edmonton economic growth is estimated at 4.5% in 2000, up from 2.5% in 1999. Increased business spending, coupled with higher government expenditures on health, education and infrastructure, contributed to growth.

In addition, healthy employment growth and a rising wage rate led to increased consumer spending.

1.Alberta Economic Development, February 2001 2. Economic Development Edmonton, December 2000 ' _Totals may not addup due to rounding

•

The City of Edmonton will spend approximately $50 million in the next seven years to upgrade the Gold Bar wastewater plant to the tertiary treatment level.

•

Canadian National will begin construction in April 2001, of its $18 million intermodal terminal in northwest Edmonton. Construction is slated to be completed in late fall.

•

Alberta Envirofuels Inc. plans to spend $80 million to convert its existing Edmonton plant, which is producing MTBE, to produce isooctane, a gasoline component. Construction will begin in early summer this year and is expected to be completed by mid-2002. 250 person-years will be needed during the construction phase.

•

The provincial government is spending $220 million for the completion of the Anthony Henday Drive from Whitemud Drive to Calgary Trail. Construction is expected to be completed by 2005.

Prepared by: City Forecast Committee, March 2007

The region's economy is forecast to grow by 4.6% in 2001, slightly higher than the provincial economy. It will continue to benefit from the construction of Shell Canada's $1.7 billion heavy oil upgader and the Air Liquide's $150 million gas processing and electricity generating complex at Scotford, located 40 km northeast of Edmonton. In addition, the construction of facilities for hosting the 8th World Championship in Athletics in 2001 will add additional stimulus to the local economy. The increased investment activity in northern Alberta will increase job opportunities in the Edmonton region, which, in turn, will lead to increased migration to Edmonton to take advantage of available job openings. This will add to the region's customer base and therefore have a positive impact on consumer spending.

With the completion of several projects in 2001, including Scotford refinery and the 8th World Championship in Athletics, economic growth in the region will moderate to about 3.5% in 2002. The region's economy is then forecast to continue to grow at about 3.5% over the 2003-04 period, before rising to 3.7% over the 2005-06 period in response to higher net migration to the region.

Page 12

E2

Edmonton Socio-Economic Outlook, 2001 - 2006

Demographic Changes Over the forecast period, the number of people aged 40 and over is forecast to increase by nearly 6 times the number of people aged under 40.

The City of Edmonton's population is expected to increase by about 39,000 people by 2006 reaching 702,200 (Table 2). The population of the Edmonton CMA is expected to increase by some 67,000 over the same period, reaching 1.001 million (Table 3) (See Appendix II for the boundaries of the Edmonton CMA). Net-migration is expected to range between 4,000 and 6,000 people per year for the City of Edmonton and between 6,000 and 10,000 for the Edmonton CMA. Net migration for the Edmonton region is linked to the relative differences in the unemployment rates between the region and the rest of Canada. Unemployment rates for Edmonton and Alberta are expected to continue to decline relative to the rest of Canada. The other component of population change, natural increase, is expected to continue to decline as the number of deaths increase and births decline as the population ages.

Our ageing population has a direct impact on the size of the working age population (ages 15 to 64) and the labour force (which is comprised of people either working or looking for work). As the working population ages, more people will leave the labour market than enter it.

The population of the City of Edmonton and the Edmonton CMA have broadly similar age profiles, with the CMA having slightly larger shares of ages under 20 and the City having larger shares of young adults and people aged 60 and over.

Edmonton Population Growth 2001-06 =MEI IMINIM1111111 27,000 22,000

• CMA 0 City

17,000 12,000 7,000 2,000 (3,000) 0 - 9 10.19 20.29 30 - 39 49.49 50 - 9 60 - 69 70-79 500 Source: City of Edmonton Planning S Development Department

The Edmonton region's population, like the rest of Canada, continues to age. The number of people aged under 40 is expected to grow by nearly 10,000 over the forecast period while the number of people aged 40 and over is forecast to increase by some 58,000 with most of the increase occurring in the 50s age group (28,000) and the 40s age group (9,000). The trend is similar for the city of Edmonton.

This changing age structure has important implications for various sectors of the economy: •

Growth in the number of people in their twenties will increase demand for apartment and first-time buyer housing.

•

The large increase in the 40s and 50s age groups will support continued strong demand for more expensive housing while growth in the 55 and older groups will support 'empty nester' and retirement housing.

•

High growth in the number of people aged 65 and over will increase demand for social and health care services.

Population Edmonton (CMA), Edmonton (City) MMINNOMMEMIlli 1000

H

• CMA CI City

750

500

250

.99 90 111 92 Spume, Statistics Canada, City Forecast Committee

93

Prepared by: City Forecast Committee, March 2001

Page 13

01

Edmonton Socio-Economk Outlook, 2001 2006

Employment

The Edmonton region's economy is expected to create 12,000 new jobs in 2001, 7,000 in 2002 and about 8,000 per year during 2003-06.

The total employment in the Edmonton region averaged 488,900 in 2000, up from 483,100 in 1999, or by 1.2%. Trade, accommodation and food, and transportation and warehousing, made the largest gains, while manufacturing, health and social assistance, and educational services, respectively, had the largest losses.

Edmonton Employment Change Annual Average, 1999 and 2000 MEMMEMNIN1111 Heath and InlIonao.....m row*

Employment growth is expected to ease over the last quarter of this year, as the 2001 World Games will be concluded in August. Overall, the region's employment is forecast to rise by 12,000 new jobs in 2001. Employment growth will further moderate in 2002 as the construction of Scotfort refinery will be completed.

Overall, the Edmonton region's employment is expected to rise by an average of about 8,000 new jobs per year during 2002-06.

In total, the Edmonton region economy is forecast to create 52,000 new jobs during 2001-06.

Unemployment Rate

The unemployment rate in the Edmonton region is forecast to be 5.5% in 2001, 5.6% in 2002, and to rise gradually each year, reaching 6.1% by 2006.

P.M Co.* 1...11.

011..1 <1.

Adm... Moo. 1.1 taro. loana.

MI. amok.

To...11â&#x20AC;˘11.

Tea.

(10) (8) (6) (4) (2)

2 4 6 8 10

Source:Statistics Canada

The Edmonton region's economy created an average of 3,650 new jobs per month during the first two months of 2001. This means, compared to the first two months of 2000, employment in the Edmonton region in the first two months of 2001 grew by 3%, or 15,000 new jobs.

Employment Edmonton (CMA) MIIIIMMIIIIIIIIIIIII

The unemployment rate fell to an average of 5.5% in 2000, down from 5.9% in 1999 and 6.1% in 1998.

The region's 2000 unemployment rate of 5.5% is the lowest since 1987 when Statistics Canada started to release the unemployment data by metropolitan area.

The unemployment rate, for individuals 25 years and over, declined from 4.4% in 1999 to 4.2% in 2000.

The unemployment rate for individuals in the 15 to 24 age groups also fell from 12.6% in 1999 to 11.2% in 2000. The region's overall labour force participation rate' fell steadily, from 72% in 1997 to 70.2% in 2000, as participation rate for both sexes fell from 1998 to 2000 male participation rate fell from 77.3% to 76.3%, while female participation rate fell from 65.1% to 64.2%.

560 540 520 I SOO i 480 460 440 420 '97

'98

'99

'00

'01

'02

113

'04

'OS

'06

Source: Statistics C0,1817.1. City Forecast Committee

In recent months, the participation rate in the Edmonton region has rebounded in response to increased job opportunities, This, in turn, has partially offset the strong job creation pace, holding the region's unemployment at about 5.5% during the Overall, the first two months of this year.

Edmonton region's unemployment rate is forecast to remain at 5.5% in 2001, rising marginally to 5.6% in The participation rate represents the number of persons in the labour force expressed as a percentage of the total working age population.

Prepared by: City Forecast Committee, March 2001

Page 14

Ed

Edmonton Socio-Economic Outlook, 2001 - 2006

2002. Thereafter, the unemployment rate will continue to rise moderately, reaching 6.1% by 2006, reflecting slower economic growth in the region.

Inflation Rate Edmonton (CMA)

11111 4

Unemployment Rate

3

Edmonton (CMA) 2

97

'93

'99

'00

'01

'02

'03

'04

'05

'06

Source: Statistic. Caned.. City Forecact Committee

The region's inflation rate is expected to pick up pace when the natural gas rebate will terminate in April 2001.

Overall, the Edmonton region's inflation rate is expected to average 3% in 2001.

Inflation The Edmonton region's inflation rate is forecast to drop to 3% in 2001, but rise to 3.5% in 2002 and thereafter average to 2.5% per year.

Edmonton's inflation rate increased to 3.3% in 2000, up from 2.3% in 1999 and 0.9% in 1998.

Sharply higher energy prices and the increased cost of housing contributed to higher prices in 2000.

Low unemployment has also contributed to inflation by pushing wage rates up.

Despite higher prices forecast for natural gas and electricity in 2001, inflation in the Edmonton region is expected to moderate this year. A major reason for a lower inflation rate is the Alberta government rebates on natural gas and electricity to households and other users in 2001. In addition, oil prices are expected to drop by about 9% this year. Over the first two months of this year, Edmonton's year-overyear inflation rate averaged 1.8%, compared to the same period in 2000.

Prepared by: City Forecast Committee, March 2001

In 2002, oil and natural gas prices are expected to fall by an average of about 12% and 29%, respectively. The price of electricity is also expected to fall by about 10% in 2002 in response to increased supply. However, compared to the after rebate prices in 2001, electricity prices in 2002 will be 100% higher than in 2001. The net result of lower prices for natural gas and gasoline, and higher price of electricity would push the Edmonton region's inflation rate to 3.5% in 2002.

Over 2003-06, the inflation rate is expected to ease to 2.5%, reflecting a slower economic growth and loosening of labour markets in the region.

Building Permits The total value of building permits will range between $500 - $700 million over the forecast period The value of building permits for the City in 2000 totalled $786.7 million, up by about 20% from $657.5 million in 1999. The increase was due primarily to a substantial increase in the value of commercial building permits, which rose by 47% in 2000. The value of residential building permits rose by 13% in 2000. An acceleration in the pace of economic activity in the city, coupled with continued positive net migration into the city Page15

1E21

Edmonton Socio-Economic Outlook, 2001 2006

resulted in the higher value of the building permits.

A further continuation of healthy economic growth in 2001 should result in the value of building permits reaching between 8600-$700 million.

Beyond 2001, as construction projects are completed and the demand for building space moderates, building permit values will fall within the range of $550-$650 million in 2002-06.

neighbouring provincial economies. International events such as the 8th World Championship in Athletics and the 2001 World Triathlon Championships will also increase exposure for the City and the region, which may result in additional migration, and therefore increased demand for accommodation.

Housing Starts Edmonton (CMA), Edmonton (City) MENEM...NU

Building Permits City of Edmonton 7000 800

6000

600

. 4000

INCIAA 10 C Ity

5000

3000 400 2000 1000 200 0 '97

'98

'99

'00

'01

'02

'03

'04

95

'06

Source: CMISC. Cily Forecast Committee '07 98 99 '00 91 '02 '03 '04 '05 96 Source: Planning & Development, City Forecast Cornmittea

Housing Starts Housing starts are expected to rise to 6,300 units for the Edmonton region and to 3,900 for the City. Thereafter they moderate to 5,600 and 3,500 respectively.

Housing starts in the Edmonton region totalled 6,228 units in 2000, down from 6,489 units in 1999.

The drop was due mainly to multi-family units, which fell by about 11%. Single-family starts in 2000 were almost at the 1999 level. Similarly, the City's housing starts dropped in 2000 largely due to lower multiples. In 2001, housing starts are expected to rise in both the Edmonton region and the City of Edmonton, to 6,300 and 3,900 respectively. Lower mortgage rates, continued strong activity in the energy sector and strong labour income brought on by continued robust employment growth, higher wage rates and lower taxes will contribute to higher starts in 2001. In addition, the Edmonton region is expected to receive higher net migration in 2001 than 2000, as the Alberta economy continues to out-perform the national and Prepared by: City Forecast Committee, March 2001

These events will also result in an influx of construction workers to the region, creating a demand for rental accommodation. With the completion of the games and the construction of Shell's heavy oil upgrader, the demand for rental accommodation will grow at a slower rate. Housing starts in the Edmonton region and the City are expected to moderate to 5,600 units and 3,500 units, respectively by 2006.

Real Estate Market The apartment vacancy rate will average 1.0% in 2001 and then climb to 2.5% in 2006. The downtown office vacancy rate will average 12% in 2001 and fall to 10.5% by 2006.

Canada Mortgage and Housing Corporation's (CMHC) rental market report indicates that the City of Edmonton's apartment vacancy rate fell to 1.4% in 2000, the lowest in two decade. The low vacancy rate has resulted in an increase in rental rates.

Rental rates have increased 4.7% in the past year and are expected to continue to increase, especially in view of the rising utility costs.

Page 16

01

Edmonton Socio-Economic Outlook, 2001 - 2006

The City's apartment vacancy rate is expected to fall to 1% in 2001, as net migration rises this year. With the construction of new apartments, the vacancy rate will climb gradually, reaching 2% by 2003 and 2.5% from 2004 to 2006.

Vacancy Rate City of Edmonton II la SApartment II Office Space

15 12 9

Canadian economy will likely weaken sharply, or follow the American economy into a recession.

As oil inventories are replenished and prices begin to drop down to the OPEC target range, world producers will need to ease back on production to maintain a reasonable supply/demand balance. A failure to do so will return world markets to a state of excess supply with sharply reduced prices. In such a case, planned investment in the Alberta energy sector could be interrupted and provincial government revenues reduced.

Under these circumstances, economic activity in Alberta and Edmonton could be much weaker.

6 3

111

r77

97 S8 99 VO '01 '02 53 04 05

116

Source CMHC. City Forecast Committee

The vacancy rate in the downtown office market fell to 12A% in 2000 from 12.9% in 1999. This is a continuation of the downward trend in the vacancy rate. The downtown office market will be affected by the conversion of current office space to other uses as owners attempt to add value to their properties. It is also expected that space will be released to the market as public and private sector leases expire. This will place upward pressure on the office space vacancy rate in the short run.

Office space vacancy rates will decline over the forecast period as economic activity and employment opportunities continue to improve, resulting in higher positive net absorption rates.

The forecast calls for the downtown vacancy rate to fall to 12% by December 2001 and then decline slowly to 10.5% by 2006.

ECONOMIC OUTLOOK RISKS Downside Risks to the Outlook A more severe downturn in economic activity in the U.S. could result in a sharp reduction in the volume of Canadian exports, since the United States is Canada's major trading partner. In that case, the

Prepared by: City Forecast Committee, March 2001

Although high prices for natural gas will be beneficial to gas producers and provincial government revenues (see Upside Risks), it may adversely affect the competitiveness of some of the domestic industries which rely heavily on lowpriced natural gas as feedstock, or as their major fuel source. This could lead to reduced exports and production in this sector.

The uncertainty regarding electricity deregulation may result in electricity shortage, which in turn results in higher prices. This may affect the competitiveness of the domestic industry, leading to reduced exports and lower economic growth in Alberta.

The Canadian forecast assumes that interest rates will stay relatively stable over the forecast period.

This assumption could be changed by the following events: â&#x20AC;˘

continued political uncertainty over the future of Quebec, and

â&#x20AC;˘ a much lower than forecast Canadian dollar.

Any or a combination of the above two events will exert downward pressure on the Canadian dollar and thus force the Bank of Canada to increase interest rates; interest rates higher than those forecast will adversely affect the economic activity and result in a lower growth rate.

Alberta's personal savings rate has trended downward since 1982. It rebounded in 1999 to 7.1% from 5.9% in 1998. A continued sharp

Page 17

01

Edmonton Socio-Economic Outlook, 2001 2006

correction in equity markets will cause a significant reduction in individuals wealth. The combination of these events will result in consumers retrenchment.

As a result, the forecast will have to be revised downward if a prolonged slump takes place in equity markets.

Alberta Savings Rate 30 25 S

14

20 15

E

10

5

.A'sâ&#x20AC;˘

IifluiIi

.0 .0 .0 .4 .0 .4

Source: Alberta Treasury

Upside Risks to the Outlook The recent election results in Israel, the apparent demise of the peace process there, and the resulting tensions throughout the Middle East could lead to a more restrictive stance on the part of Arab oil producers. If, in this case, discipline can be maintained among non-Arab producers, oil prices could remain high for a time in spite of the slowing world economy. While high energy prices would contribute to increased inflation and a general slowdown in economic activity, it would help to sustain the feverish pace of development in the oil and gas sector in Alberta.

Over the medium or longer term, a concerted effort to meet the greenhouse gas objectives of the Kyoto protocol through a mandated increase in the reliance on natural gas will increase both its demand and price. While clearly inflationary, such a move will require expanded drilling programs and pipeline facilities in the province. Whether such a change will increase overall economic activity in Alberta and Edmonton will depend on the extent to which other industries might be damaged by these and other climate change provisions.

Prepared by: Go? Forecast Committee, March 2001

Page 18

Edmonton Socio-Economic Outlook, 2001 - 2006 Table 1 Forecast for Selected Economic Indicators Actual/Estimate Indicator

1998

1999

Forecast

2000

2001

2002

2003

2004

2005

2006

USA, Canada and Alberta 14.42

19.29

30.30

27.50

24.20

22.00

22.50

23.00

23.50

1.92

2.77

5.32

7.70

5.50

4.40

4.10

4.00

4.10

USA

4.4

4.2

5.0

2.5

3.5

3.0

3.0

3.0

3.0

Canada

3.3

4.5

4.7

3.0

3.5

3.2

3.2

3.2

3.2

Alberta

2.4

3.6

6.0

4.5

4.0

3.5

3.5

3.7

3.7

6.6

6.4

7.3

6.7

6.7

7.0

7.0

7.0

7.0

Exchange Rate(USS/Cdn$)

0.67

0.67

0.67

0.67

0.68

0.69

0.70

0.71

0.71

Net Migration (Alberta) (000) (4)

49.3

37.5

20.5

25.0

28.0

28.0

28.0

35.0

35.0

World Oil Price (US$/bbl) (1) Alberta Natural Gas Price ($/GJ) (2) Economic Growth Rate (°/0) (3)

Prime Lending Rate (%)

Edmonton 11.0

7.0

5.0

6.0

8.0

8.0

8.0

10.0

10.0

- City(000) (4)

6.8

4.3

3.1

3.7

5.0

5.0

5.0

6.2

6.2

- CMA(000)

n/a

910

923

933

945

959

972

985

1,001 702

Net Migration - CMA(000) (4)

Population

- City(000)

633

648

658

663

670

678

685

693

Economic Growth Rate (CMA)(%) (3)

1.6

1.1

4.5

4.6

3.5

3.5

3.5

3.7

3.7

Employment (CMA)(000)

475

483

489

501

508

516

524

532

541

Unemployment Rate(CMA)(%)

6.1

5.9

5.5

5.5

5.6

5.7

5.8

6.0

6.1

Inflation Rate CPI(CMA)(%)

0.9

2.3

3.3

3.0

3.5

2.5

2.5

2.5

2.5

1.9

2.2

1.4

1.0

1.5

2.0

2.5

2.5

2.5

14.0

12.9

12.4

12.0

12.0

12.0

11.5

11.0

10.5

Vacancy Rate (°/0) Apartment(CMA) (Oct) Downtown Office(City) (Dec) Housing Starts (Units) City

CMA

-Total

3,591

3,932

3,765

3,900

3,500

3,400

3,400

3,500

3,500

- Single Family

2,032

2,141

2,137

2,200

2,100

2,000

2,000

2000 ,

2,000

-Multi-Family

1,559

1,791

1,628

1,700

1,400

1,400

1,400

1,500

1,500

5,947

6,489

6,228

6,300

5,500

5,500

5,500

5,600

5,600

- Single Family

4,080

4,075

4,072

4,200

3,900

3,900

3,900

3,900

3,900

-Multi-Family

1,867

2,414

2,156

2,100

1,600

1,600

1,600

1,700

1,700

600

550

500

525

550

550

688

658

787

700

650

600

625

650

650

-Total

Building Permit Value- Low -(City) ($million)

- High

Sources: - Actual/Estimate: Statistics Canada, Bank of Canada, Canada Mortgage and Housing Corporation, Colliers Mccaulay Nicolls Inc., Canadian Petroleum Association, Alberta Economic Development and The City of Edmonton Planning and Development Department - Forecasts: City Forecast Committee, March 2001 Notes:(1) World oil prices are for West Texas intermediate crude at Chicago in U.S. dollars.

(2) Natural gas prices are Alberta average market prices in Canadian dollars.

(3) The U.S., Canada and Alberta economic growth rates are for real GDP at market price, while Edmonton's is for real GDP at factor cost.

(4) Net-migration estimates are for the period July 1 of previous year to June 31 of current year.

Prepared by: City Forecast Committee, March 2001

Page 19

IZ2

Edmonton Socio-Economic Outlook, 2001 - 2006

Table 2: City of Edmonton Population: 2000-2006 2000

2001

2002

2003

2004

2005

2006

0-4

38,386

38,079

38,346

38,820

39,231

39,383

39,661

5-9

41,623

40,710

39,622

38,753

38,097

38,012

37,976

10-14

42,285

42,284

42,266

42,088

41,642

40,901

40,277

15-19

45,031

45,461

45,607

45,531

45,647

45,748

45,890

20-24

56,326

56,429

56,916

58,127

59,250

60,005

60,824

25-29

52,744

53,386

54,314

54,970

55,587

56,213

56,778

30-34

52,549

52,294

52,096

52,569

53,076

53,656

54,763

35-39

56,868

55,187

53,647

51,937

50,739

50,332

50,519

40-44

57,066

57,768

57,953

58,191

57,852

56,981

55,694

45-49

47,521

49,475

51,379

53,081

54,326

55,191

56,073

50-54

38,175

39,735

40,375

41,427

43,287

45,199

47,191

55-59

28,267

29,527

31,914

33,981

35,761

37,723

39,386

60-64

24,403

24,998

25,760

26,821

27,970

29,084

30,471

65-69

23,908

23,932

24,057

24,373

24,669

25,157

25,860

70-74

20,107

20,569

20,873

21,132

21,273

21,309

75-79

15,836

16,235

16,498

16,888

17,347

17,814

18,261

80-84

8,987

9,478

10,089

10,580

11,027

11,306

11,608

85+

7,429

7,765

8,064

8,350

8,648

9,108

9,557

657,509

663,311

669,777

677,619

685,428

693,123

702,185

3,720

4,960

4,960

4,960

6,200

6,200

Total

Net-Migration

.

21,399

Prepared by: City of Edmonton Planning & Development Department, February, 2001.

Prepared by: City Forecast Committee., March 2001

Page 20

E2

Edmonton Socio-Economic Outlook, 2001 - 2006

Table 3: Edmonton CMA Population: 2000-2006 2o00

2o01

2 002

2005

2004

2003

2 006

0-4

56,423

56,106

56,647

57,519

58,305

58,690

59,257

5 -9

62,754

61,551

60,097

58,948

58,096

58,110

58,204

1 0 -1 4

65,562

65,746

65,902

65,839

65,335

64,362

63,539

1 5-i 9

66,347

67,159

67,503

67,557

67,893

68,253

68,726

2 0 -2 4

67,458

67,763

68,527

70,187

71,748

72,853

74,045

25 -2 9

69,495

70,568

72,009

73,102

74,125

75,140

76,093

3 0 -3 4

70,783

70,672

70,643

71,474

72,338

73,330

75,061

3 5 -3 9

81,625

79,471

77,465

75,190

73,636

73,220

73,692

40-44

82,300

83,553

84,051

84,622

84,356

83,295

81,609

4549

70,655

73,785

76,844

79,599

81,687

83,219

84,765

5 0 -5 4

58,392

60,875

62,048

63,860

66,909

70,080

73,384

5 5 -5 9

42,124

44,136

47,857

51,148

53,994

57,058

59,629

6 0-6 4

33,438

34,374

35,528

37,121

38,819

40,466

42,512

65 -6 9

29,584

29,702

29,946

30,427

30,883

31,582

32,544

7 0 -7 4

25,041

25,696

26,157

26,549

26,795

26,914

27,098

75 -7 9

19,073

19,619

19,989

20,521

21,131

21,766

22,367

8 0-8 4

11,709

12,382

13,219

13,907

14,536

14,943

15,379

85+

9,771

10,235

10,650

11,053

11,481

12,132

12,772

922,532

933,394

945,081

958,623

972,067

985,412

1,000,676

6,000

8,000

8,000

8,000

10;000

10,000

Total

N e t-Migratio n

Prepared by: City of Edmonton Planning & Development Department, February, 2001.

Prepared by: City Forecast Committee, March 2001

Page 21

Edmonton Socio-Economic Outlook, 2001 - 2006 fitness and participation in sport, plus further steps to combat substance abuse, reduce tobacco consumption, prevent injuries and promote mental health.

PART 2: SOCIAL OUTLOOK OVERVIEW

•

In the January 30, 2001 Speech from the Throne, the Government of Canada announced a number of initiatives that should have significant positive impacts on the health and social well-being of Canadians. Those with particular relevance to this forecast are outlined below.

•

•

•

For children — increased funding for the National Child Benefit, better access to services for all families and children, and changes to the laws for child support, custody, and access.

Career training — help for youth who need assistance staying in school or getting their first job, Registered Individual Learning Accounts to help adults finance additional learning, and a comprehensive labourmarket strategy for persons with disabilities.

Focussed assistance for Aboriginals — better delivery of the basic needs for jobs, health, education, housing and infrastructure; training to increase entrepreneurial and business expertise; measures to reduce the incidence of fetal alcohol syndrome, preventable diabetes and tuberculosis; and steps to reduce the percentage of Aboriginal people entering the criminal justice system.

•

Initiatives to address crime problems — increased emphasis on crime prevention, organind crime and gangs, cybercrime and terrorism; greater consideration for the needs of victims; added safeguards for children; and re-introduction of amendments to legislation on young offenders.

•

Health care — efforts to advance progress on disease prevention; innovation in primary care; funding for needed equipment; and strengthened efforts to encourage physical

Prepared by: City Forecast Committee, March 2001

Provincial and municipal infrastructure — improvements to public transit; creation of more affordable rental housing; safer water quality and improved municipal water and waste water systems; strengthened laws on toxic substances and environmental contaminants; enhanced broadband communications access (which will complement Government Alberta investments to extend high-speed Internet); and continued support for the Community Access Program and SchoolNet.

The Alberta Government has announced a shortterm energy cost-shielding program to help Albertans cope with the increased cost of electricity and natural gas.

•

A $300 Energy Tax Refund to help offset high energy prices.

•

A province-wide regulated rate for electrical power through 2001.

•

Consumers will be eligible for a $150 per month rebate on natural gas for the period January 1 to April 30, 2001. As well, consumers will benefit from a $40 per month reduction in their electrical power bills for one year. The rebates for a typical two-adult household will amount to $1,680.

Renters should see a benefit through rebates paid to landlords.

•

Businesses, farms, municipalities, hospitals, schools and non-profit community groups will receive a rebate of $6 per gigajoule on natural gas, to a maximum of $30,000 per month for the same January to end of April period.

The Federal Government has also announced an energy cost relief program for lower income Canadians (those eligible for GST rebates) — a single payment of $250 for married or common-law

Page 22

Edmonton Socio-Economic Outlook, 2001 - 2006 couples and single-parent families, and $125 for single individuals without children.

implications for schools and other agencies providing services to children.

Gaming has become a major source of revenue for the Province and may surpasses oil royalty in the future. About $1.37 billion was played in legal gaining in Edmonton in 1997/98, including lotteries, charitable casinos, bingo, raffles, horse racing, pull tickets, and video lottery terminals.

Lottery revenues continue to flow into the Alberta Lottery Fund, which will increase by $68 million to $838 million in 2001. For the year 2000/2001, the Edmonton Community Lottery Board received $11.7 million, an increase of $0.8 million over last year.

These monies fund a variety of community projects across the city.

At the other end of the population spectrum, the 75+ age group in Edmonton is expected to increase by about 17.8%. The increase will largely occur in the older, central areas of the city and a high proportion of this age group is women living alone. The demand for services such as health care, exercise programs, seniors housing, and aids to daily living will continue to increase. Isolation may be a problem for some, and conflicts with adult children and other caregivers may also affect this group.

In August of this year, Edmonton will host the 8th World Championships in Athletics and the World Triathlon Championships. Events of this scale bring considerable benefits to Edmonton. They also are increasing an already competitive market for corporate sponsorships, volunteers and to a lesser extent, special event equipment. As the growth in the number and scope of events continues, the demands on existing parkland are increasing. Some parks, most notably Edmonton's North Saskatchewan River Valley, are reaching their capacity both from an environmental and a social perspective.

KEY SOCIAL ISSUES

The "baby-boomers", currently in their 40s and 50s, are becoming the overriding demographic group of interest. While this age group is not at present considered to be as vulnerable as are others from a social and economic perspective, the group warrants attention due to its sheer numbers. The 45 - 54 age group in Edmonton is expected to increase by 15.8%, the 55 — 64 group will increase by 28.1%, and the 65 — 75 group will grow by 6.2%. These increases will have implications for specific health services used by this group, but also present significant opportunities for companies serving their needs. Social issues will include caring for ageing parents and helping to meet needs of adult children not in the workforce.

Net migration to the province and to the Edmonton area is forecast to remain positive (See Tables 2 and 3). In-migrants will generally be singles and young families, and will create some demand for housing, childcare, and other human services.

Social Implications of Demographic Change The increases in the 55-64 age group (28.1%) and the 75 age group (17.8%) will be the most significant demographic trends during the forecast period. The proportion of young people in the population is starting to decline

Where Does Alberta's Population Growth Come From?

INNEMINIMIEM•11111

• Net Interprovincial Migration

It is estimated that over the forecast period in the City of Edmonton, the 0 — 9 age group will decrease by 1.4%. The 10 — 14 and 15 — 19 age groups will change by -4.7% and 0.9%, respectively over the forecast period. This decline in the number of young people in our population will begin to have Prepared by: aty Forecast Committee, March 2001

El Net International Migration 111Netural Increase

10

20

30

40

SO

60

70

% of Tota11998 !Nero..

Page 23

Edmonton Socio-Economic Outlook, 2001 2006 Migration will also contribute to Edmonton's increasingly ethnically diverse population. In 1996, 15% of Alberta's population consisted of immigrants, the third highest proportion after Ontario and British Columbia. In 1991, there were 46,785 people who were not Canadian citizens in Edmonton's population. By 1999, there were only 31,161, a decrease of 33.3%, suggesting that immigrants are becoming citizens and making their home here. In 1996, 14% of Edmonton's population consisted of visible minority groups. Visible minorities comprise 10.1% of Alberta's population.

The share of Canada's immigrant population born in Asia and the Middle East increased from 14% in 1981 to 31% in 1996, a considerable change from the predominantly European-born immigration of previous decades.

Edmonton has the second highest number of Aboriginal people of major Canadian cities, after Winnipeg. Although Aboriginals make up only 4% of the Edmonton population, their numbers are rapidly increasing. Canada-wide, between 1991 and 1996, the Aboriginal population increased by 24.6%, compared to growth of the general population of 5.2%. In Edmonton, the Aboriginal sub-population is significantly younger than the overall population.

The number of jobs in the private sector grew by 3.9%, but public sector jobs also increased for the second consecutive year. The number of persons self-employed declined for the first time since 1986; losses in farm employment were a major factor behind the decline.

Among the provinces, Alberta has shown the steadiest employment growth over the longest period. For eight consecutive years employment has grown by more than 2%. Alberta's unemployment rate-dropped to 4.8% by December 2000.

Canadians' real disposable income has been dropping. Nationally, estimated family income after tax remained essentially unchanged in 1997 for the third consecutive year, after adjusting for inflation.

Apart from a modest increase in 1994, the average had declined throughout the early 1990s. The 1997 average after-tax family income was estimated at $45,605, about 6% less than in 1989, the peak year for income. Transfer payments averaged $6,474, about 10% lower than the peak in 1993, while the average income tax was $11,541, down slightly from the high in 1996. Employment grew 1.9% in 1997, while average hours worked per week increased 0.5% to 37.9 hours. Average weekly earnings in 1997 were essentially unchanged.

Employment and Incomes Household Savings Rate Canada

Across Canada, employment grew by 2.2% in 2000, somewhat slower growth than in the previous three years. Although the number of people in the workforce increased, the unemployment rate remained the same (6.8%). The majority of new jobs were full time (up 2.2%), but part-time jobs increased as well (by 2.1%). hi part because of strong growth in the service sector, job creation was strongest for women and for young people aged 15 to 24. Jobs for young people were up 4%, but unemployment rate for them is still at 12.5% Canada-wide. When population growth is taken into account, the employment rate among core workingage males actually declined slightly.

Prepared by: City Forecast Committee, March 2001

of. of Disposable Income

In 2000, Alberta recorded its eighth consecutive year of employment growth over 2%.

20 18 16 14 12 10

a 4 2 0

1/-4 9

ec'

e`)

ec'

Source: Statistics Canada

Page 24

Q1 Edmonton Socio-Economic Outlook, 2001 - 2006 Total Household Debt

% of Disposable Income

Canada MiiMMINIES11111 100 90 80 70 60 50 40 30 20 10 0

the rate it was just recently. Job growth has fallen to less than half the almost 6% growth of two years ago and economic growth driven by oil and gas is not expected to be sustainable.

Poverty

I,IrIUIlIIIiIiIiUrII,

Source: Statistics Canada

Canadians' personal savings rate (disposable income minus consumer spending) has continually declined, to below 2% by 1999. Because of slow growth in wages over the last several years, many Canadian families have gone increasingly into debt. to maintain their lifestyles. Since 1995, the consumer bankruptcy rate for Alberta has risen dramatically from the early 90s, although it has been down the last two years from the high in 1997.

Consumer Bankruptcies

Edmonton IME.1111.1111riii 6 —5 1 -a 7 3 Z. ; 2 1

1991 1992 1993 1994 1995 1996 1997 1999 Source: Quality of Life In Canadian Communities, 2001 Report. FCM

Positive social impacts can be expected from decreasing unemployment, low inflation, and low mortgage rates. This environment will result in increased financial independence and improved health status for those Edmontonians obtaining fulltime jobs with benefits, and those successful with small business ventures. Demand for some elements of social services may be reduced.

Notwithstanding the relatively positive news discussed above, the Greater Edmonton Competitive Strategy has recently raised concerns that Edmonton's local economy is not creating jobs at Prepared by: City Forecast Committee, March 2001

The income gap between rich and poor is widening in Edmonton and across Alberta.

Poverty is a factor that contributes to an increased risk of health and mental health problems, and injuries, particularly for children. About one in eight Alberta children live in low-income situations.

Twenty-six percent of all Edmontonians had an income below the Statistics Canada Low Income Cut-Off (LICO) in 1995, a significant factor when compared with the figure of 20% for Canada and 18% for Alberta. Figures for some of the subgroups falling below the LICO, were more alarming: • • • • • • •

61.6% of Aboriginals.

49.4% of recent immigrants.

35.0% of youth (ages 15 to 24).

34.9% of persons in visible minorities.

32.1% of children under 14.

27.9% of women, but only 24% of men.

24.8% of seniors.

The poverty gap (what an average low income family would need to reach the LICO) for poor families in the City of Edmonton was greater than for poor families in Canada, in Alberta and even within the Edmonton CMA. Couples with children under age 18 have the largest poverty gap. In 1995, an average low-income Edmonton family would have needed an additional $11,585 to raise their income to the LICO level. Just-released information from the report on quality of life in Canadian communities indicated, however, that the percentage of Edmonton families living on low incomes decreased from 21.3% in 1996 to 15.9% by 1998.

In Edmonton, two-parent families earned, on average, $58,300 in 1998. Single-parent families averaged only $24,800. Between 1991 and 1998 the proportion of single-parent families in the city increased from 16.2% to 17.6% of all families.

Page 25

Edmonton Socio-Economic Outlook, 2001 2006 Sixty-two percent of Edmonton's single-parent families had incomes below the poverty level in 1997, compared with the rest of Canada at 51.1% and Alberta at 52.7%.

The numbers of families and children living in poverty in Edmonton may decrease somewhat during the forecast period, given the historically close association between the unemployment rate and the poverty rate. Consequently, the number of food bank users may level off. Food bank usage more than doubled between 1991 and 1996, but then declined to 1999.

Government transfers (including E.I., Old Age Security/Income Supplements, C.P.P., social assistance, etc.) contributed 10.8% of the total community income of Edmonton in 1998. This compares to a high of 15.3% in Sudbury and a low of 6.4% in Halton, Ontario. The average for Canada is 12.8%. Edmonton is more or less in the middle of the range for the 18 cities reporting.

Economic Dependency Rates Alberta and Canada 25

Average Monthly Food Bank Use Edmonton == =M EM 11111 20,000 18,000

â&#x20AC;˘ Persons

16,000

69 Hampers

14,000 1996

12,000

t

1997

Source: Statistics Canada

10,000 8,000 6,000 4,000 2,000

Source of Family Income Alberta, 1998

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Source: Edmonton Gleaners Association

90 IN &WOW... h...

12 Government Transfers 60ther

Social Services Most families are less dependent on various forms of government social programs for financial support than they have been in recent years.

The following table illustrates the reduced dependence of most Edmontonians on the Employment Insurance and Social Assistance programs between 1996 and 1998. % Receiving Benefits 1996 1998 Husband-Wife Families Employment Insurance Social Assistance Lone-Parent Families Employment Insurance Social Assistance Non-Family Persons Employment Insurance Social Assistance

21.0 9.2

16.8 8.8

15.2 37.2

13.2 31.6

10.3 22.8

8.9 23.6

Prepared by: City Forecast Committee, March 2001

Hiskendâ&#x20AC;˘Wille Ferries

Slnide-Perent Fenian

Source: Statistics Canada, 2000

Although child welfare caseloads in the city are increasing, they are not rising as fast as for the province as a whole.

Page 26

172

Edmonton Socio-Economic Outlook, 2001 2006 Average Monthly Child Welfare Caseloads

14900 IS Edmonton CD Alberta

Number ofCases

12,000 10,000 8,000 6,000 4,000 2,000

0 95 96 94 Source:Alberta Family and Social Services

98

97

99

Numbers of Individual Children Receiving Child Protection Services Edmonton, 1995-2000 1111=1.111.E.Miiii 7,000 .6,000 5,000 4,000

Declining vacancy rates, coupled with increased demand and rising energy costs are driving up rents.

Although incomes have shown upward trends in recent months, they are not rising as rapidly as rental rates. One-fifth of Canadian households spend at least half of their income on housing. Many of these are families already living below LICO. Lowincome renter households, the number and proportion of which increased between 1991 and 1996 in Edmonton, may experience increased difficulty obtaining adequate shelter. Many who cannot afford housing will join the ranks of Canada's homeless.

The third count of homeless persons in Edmonton (September 14, 2000) found 1,160 homeless persons in the City. Of these, 650 (56%) had no housing alternatives, and 510 were living in emergency accommodations/shelters. Because there are a number of factors potentially influencing the numbers of persons counted, comparisons with the results of other surveys of the homeless are probably not meaningful.

3.000 2.000 1,000 0 1995/96

1996197

1997198

1698/99

1999/00

Source: Ma'mowe Region, Children's Services, unpubl. Data, 2001

Housing and Homelessness The shortage of affordable housing in Edmonton is becoming acute.

The Federation of Canadian Municipalities (FCM) has raised concerns about the growing shortage of affordable housing in Canada.

Edmonton's experience is no different. While the number of owner-occupied dwellings in Edmonton has increased from 123,200 units in 1991 to 148,000 units in 1999, a 20.1% increase; the stock of rental dwelling units decreased from 113,000 to 112,100.

Conversion of apartments to condominiums, ageing of buildings and demolition of derelict housing are all affecting the existing affordable housing stock.

Prepared by: City Forecast Committee, March 2001

Homelessness continues as a significant problem across Canada. The Government of Alberta and Edmonton City Council jointly appointed a task force on homelessness for Edmonton. The task force will identify ways the community, private and public sectors can co-ordinate support for homeless people. Spending to provide shelter for Alberta's homeless will total $13 million this year. This includes $3 million in new money toward a publicprivate partnership to address homelessness, and an increase of $500,000 for operating emergency shelters — a total budget of $10 million.

Alberta's retail housing market remains strong.

Increased employment and the arrival of workers from outside the province are putting more pressure on housing inventories. In Edmonton, this is reflected by the hike in the resale of homes in the $160,000 to $220,000 range. Many Edmontonians who can afford to are moving into larger and better homes; sales of upper-end homes are up by 35% in recent months. At the same time, home sales in the lower cost range — under $120,000 — are slightly down, from 55% to about 50% of the total home sales last year. Recent . trends over the past three years have revealed that the price of housing in Page 27

E21

Edmonton Socio-Economic Outlook, 2001 2006

urban locations is increasing at a greater rate than that of outlying suburban areas. This trend is opposite to that which has been predicted for decades.

Edmontonians have been living in the same residence for longer periods. 46% of Edmontonians had lived in their current place of residence for five years or longer in 1999, in contrast to 40.6% in 1993. This suggests that Edmonton neighbourhoods may be becoming somewhat more stable. In 1993, 77.3% of Edmonton residents who had lived in their current dwelling less than one year came from elsewhere in Edmonton, while in 1999, only 69.6% had lived elsewhere in Edmonton.

due to significant increases in fraud and counterfeiting. There were 5,514 cases of family disputes in 2000, up from 5,357 in 1997, but the number of child abuse cases reported to police has dropped significantly— from 543 in 1997 to 441 in 2000.

Criminal Offences Edmonton, 1995-2000

111111

IIMMM 60,000

C Property • Person

50,000 40,000 30.000 — 20,000 —

Education

10,000 —

1995

Low-income residents have difficulty getting out of the poverty trap, in part because of the cost of obtaining additional training.

The opportunity to attain an education is elusive for a significant proportion of Edmonton families living at or below the poverty level. In 1994, about onethird of persons aged 18-21 from low-income backgrounds had not completed high school, compared with one-quarter of their counterparts from higher income backgrounds. Furthermore, while university participation rates rose for people from all socio-economic backgrounds between 1986 and 1994, the increase was smallest amongst those from lower income backgrounds. The Federal Government has just announced establishment of a system of Adult Learning Accounts to help lowincome Canadians finance much-needed education.

Crime Criminal activity increased somewhat in Edmonton in 2000.

For all of Canada, criminal activity has shown a consistent decline for the eight years up to 1999, the latest figures available. In contrast, total criminal activity in Edmonton rose in 2000. Violent crime rose 3.7%, to 1,392 incidents per 100,000 population. Property crimes were up 4% in 2000, Prepared by: City Forecast Committee, March 2001

1996

1997

1998

1999

2000

Source: Edmonton Pollee Service, 2001

Violent Crimes Edmonton

1•1111111111•1111111•11111 1.600 1.400

1200 .

1.000 800 600 400 200

-

III IN NI NI 1111 ----IN IM NM

1966

1991

1996

1998

1999

2000

Source: Quality of Ufa in Canadian Communities, 2001 Report, FCM; Edmonton Police Service, 2000

The following table illustrates the favourable ranking of Edmonton CMA when compared with crime rates in other western Canadian census metropolitan areas. It should be noted that Statistics Canada compiled these figures using different inclusion criteria than those from the Edmonton Police Service quoted above. The EPS figures include all reported incidents, and also include just the City of Edmonton, not the CMA.

Page 28

Edmonton Socio-Economic Outlook, 2001 2006 AGAINST PERSONS 274 271 236 224 203

Regina Vancouver Calgary Victoria Winnipeg

AGAINST HOUSEHOLDS 382 360 268 234 277

-Edniiiition:

Source: Statistics Canada 1999

Youth crime continues to be proportionally more property-oriented than crimes committed by adults.

However, in 1998/99 the actual number of youth property crime cases before Canadian courts fell significantly, while the number of youth violent crime cases held steady. Over the past decade, the violent crime rate of female youths has increased 2.5 times as fast as for male youths, but the rate of male youths charged with violent crime is still almost three times as high as that for female youths.

reported the highest rate of personal victimization â&#x20AC;&#x201D; more than twice the national average, and 1.5 times that of individuals in the next age cohort (2534). Generally, the risk of personal victimization declines as people get older with those aged 65+ reporting the lowest rate. Persons with low income are more likely to become victims of crimes against the person than are those with higher incomes. With respect to crimes against households, those in urban areas were at greater risk, as are households with higher incomes.

By 1999, 54% of Canadians felt that crime levels had become stable in their neighbourhoods, up from 46% in 1993. Seniors, the fastest growing age group, are generally more fearful of crime than are others in the general population. The citizen surveys conducted by the Edmonton Police Service in 1994, 1996 and 1998 indicate stabilization in the perceived levels of neighbourhood crime. This is accompanied by a steady increase in perceived safety walking alone at night and an increased use of discretion when assessing personal safety.

Number of Young Offenders Charged

Edmonton

Percent Feeling Safe Walking Alone in the Neighbourhood at Night Edmonton IMMMI111.11E1111

BOO 80

700 600 500

60

400 300 200 100

MEE

o 1986

1991

1996

1998

20

Source: Quality of Life In Canadian Communities. 2001 Report. FMB

1993

Aboriginals continue to be over-represented in the youth and adult correctional systems relative to their population. In reporting jurisdictions where Aboriginal status was known, Aboriginal admissions to custody accounted for 26% of the total admissions and 18% to probationary status. In those same jurisdictions Aboriginal youth made up only 5% of the total youth population.

The chances of an individual being a victim of either a crime against the person or a household varies with age, the person's income and where he lives.

Across Canada in 1999, young people ages 15-24 Prepared by: City Forecast Committee, March 2001

1994

1996

1998

Source:Edmonton Pollee Services

Recreation and Leisure The popular trends in recreational pursuits are reflecting the ageing of the population, as well as people's complex and busy lifestyles.

A province-wide recreation survey was conducted in Alberta in 2000, the latest in a standardized survey approach conducted periodically since 1981. The Page 29

Q1 Edmonton Socio-Economic Outlook, 2001 - 2006 following chart summarizes the top ten recreational pursuits, as compared to the survey results from 1996.

pressures of work, seeking relaxed, quality time with family or nature, and for health and exercise.

Why do Edmontonians Participate in Recreation/Leisure Activities?

Ten Most Popular Recreational Pursuits Edmonton, 1996 and 2000

% of Respondents

MUMEMEniii 30

40

% of Households 50 60 70

80

90

100

Welding ter pleasure „

0

10

20

30

40

50

For pleasure For physical health/exercise

Walking on Streets

60

p.

Visiting a museum etc

Relaxation Gardening „ GOO

etc

_

Enjoy nature

• 1988 0 1992 • 1996 • 2000

Attend lair or lastly el Attend anon

t. etc.

Walking on trail..

O1996' • 2000

Bicycling .

To do something different To be with family

Swimming In noel.

Source: Alberta Recreation Stavey 2000.1998. 1992, 1988 Source: Albetta Recreation Survey 1996,2000

The top ten activities have remained relatively stable over the time span of the survey. Walking for pleasure has remained the most popular activity since the inception of the survey. The most notable changes in 2000 arose through additional choices given in the questionnaire. Low-cost healthpromoting activities that people can do spontaneously have remained popular while more expensive activities, or activities that have to be organized in advance or require greater time commitments have dropped in popularity. Soccer and basketball are the only team sports to show significant growth, largely because of popularity among young people. Most other team sports have levelled off (ice hockey, football, ringette), or have declined somewhat (softball/baseball). Other oncepopular sports to show significant decline are racquetball and tennis.

According to the survey results, many Edmontonians are interested in taking up physical fitness/aerobics, golf, swimming, bicycling and tennis, if they aren't already taking part in these activities.

Like the activities themselves, the factors motivating Edmontonians to get involved in recreation and leisure pursuits have remained relatively constant over the last few years. The most frequently stated reasons have to do with getting away from the

Prepared by: City Forecast Committee, March 2001

What are the Barriers to Recreation/Leisure Participation for Edmontonians?

MinillIMMEM11111111 V. of Respondents 4

6

0

10

12

14

Come/ aggiginwaglaupplin Adridaelon

firssicssopes Wont certoornent.

Fanayconenitrnents

1111.

11.

1.

11 Overcnnededlacliaed 1011.

No oppertunilloa Naar Mew

• 1986 III 1992 01996 O2000

Source: Alberta Recreation Surrey 2000. 1996,1982. 1988

The costs of participating — for admission fees and for equipment and supplies — are the major factors preventing or limiting participation in recreation and leisure activities for Edmontonians. The demands of work have increased in importance recently.

Perhaps in compensation for this, increasing proportions of Edmontonians cite family commitments as an important criterion in allocation of their leisure time.

With respect to recreational activity, it has been found that Albertans are more active than people in Central and Eastern Canada. A survey of 87,000 Canadians found that nearly 20 million people, or about 85% of the population aged 15 and over, participated in one or more nature-related activities during 1996. Albertans had the highest participation rate, at 89%.

Page 30

ra Edmonton Socio-Economic Outlook, 2001 - 2006 According to research conducted in 1999 by the Alberta Centre for Well-Being, 48% of Edmonton residents were physically active on a regular basis.

In comparison, 56% of Calgarians said they were exercising regularly. Almost 59% of Edmontonians agreed that they were not getting as much exercise as they needed. Approximately 19% of the Alberta population remain sedentary. Of them, 69% have no intention of becoming active. People with higher income and those with more education were more likely to be physically active. Those with an annual household income of less than $20,000 reported the least physical exercise.

Prepared by: City Forecast Committee, March 2001

Page 31

Et Edmonton Socio-Economic Outlook, 2001 2006 APPENDIX I Graphs and Tables

Industry Total Goods-Producing Sector Agriculture Forestry, Fishing, Mining, Oil & Gas Utilities Construction Manufacturing Services-Producing Sector Trade Transportation and Warehousing Finance, Insurance, Real Estate and Leasing Professional, Scientific and Technical Services Management of Companies & Administrative & Other Support Services Educational Services Health Care and Social Assistance Information, Culture and Recreation Accommodation and Food Services Other Services Public Administration Source: Statistics Canada

1987

Employment by Industry - Edmonton C.M.A. (000) 1988 1989 1990 1991 1992 1993 1994

1995

1996

1997

1998

1999

2000

399 79 6 8 4 23 37 320 71 25 23 21

410 82 2 10 4 28 38 328 74 24 23 22

416 84 3 10 6 28 37 332 72 24 27 22

424 80 4 7 5 29 35 344 77 23 28 21

428 81 3 8 4 30 35 348 78 23 29 19

429 83 3 8 6 29 38 346 74 22 30 20

422 81 4 6 6 27 37 341 74 21 28 22

429 84 3 8 5 26 41 345 76 22 27 26

441 94 10 11 4 28 41 347 76 23 27 21

441 91 6 12 5 31 37 350 74 26 23 26

466 96 8 14 3 27 44 370 77 27 26 29

475 100 8 15 3 31 44 375 76 25 29 30

483 110 7 10 4 35 55 373 77 24 28 33

488 101 5 10 5 34 47 387 84 30 29 32

11 34 35 19 23 25 35

10 33 38 23 24 21 36

11 34 43 19 21 20 39

13 33 43 20 28 21 37

11 35 49 18 27 22 38

13 37 45 19 28 23 37

13 36 43 20 28 25 32

12 31 50 23 26 22 33

15 34 46 24 28 26 27

15 31 51 22 29 25 28

17 33 48 21 32 31 30

17 30 54 28 31 28 27

15 37 54 22 30 26 27

16 34 51 20 36 29 26

Prepared by: City Forecast Committee, March 2001

Page 32

Edmonton Socio-Economic Outlook, 2001 - 2006

EDMONTON GROSS DOMESTIC PRODUCT AT FACTOR COST BY INDUSTRY Constant (1992) Dollars (1) Millions Industry Agriculture Forestry, Fishing, Mning, Oil & Gas Manufacturing Construction Transportation and Warehousing Utilities Trade Finance, Insurance, Real Estate and Leas Business Service (2) Public Administration Educational Services Health Care and Social Assistance Accommodation and Food Services Other Services (3) GDP at Factor Cost Edmonton Growth Rate (%) Alberta Growth Rate (%)

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

120 1,193 1,764 1,666 1,590 610 2,289 2,771 967 1,647 1,520 1,161 622 897

43 1,594 1,892 1,897 1,710 664 2,528 2,770 1,019 1,675 1,460 1,299 680 1,025

64 1,588 1,887 1,813 1,730 1,143 2,504 3,113 996 1,801 1,442 1,464 603 965

88 1,076 2,003 1,959 1,692 843 2,580 3,129 1,040 1,827 1,281 1,456 722 1,033

69 1,332 2,124 1,865 1,931 693 2,517 3,256 948 1,857 1,340 1,696 648 1,002

62 1,456 2,247 1,647 2,005 978 2,531 3,483 939 1,848 1,535 1,564 639 1,018

108 1,081 2,320 1,727 1,975 903 2,697 3,434 1,060 1,708 1,430 1,451 676 1,107

83 1,503 2,777 1,674 2,008 899 2,981 3,555 1,223 1,819 1,252 1,653 614 1,107

306 2,121 2,734 1,755 2,031 781 2,833 3,599 1,228 1,582 1,392 1,498 693 1,180

178 2,213 2,575 1,909 2,144 1,025 2,848 3,244 1,307 1,595 1,264 1,508 689 1,127

256 2,545 3,140 2,157 2,347 766 3,394 3,726 1,466 1,683 1,344 1,336 753 1,233

249 2,730 2,903 2,225 2,217 864 3,256 4,331 1,536 1,558 1,231 1,475 712 1,283

258 1,989 3,593 2,370 2,120 1,096 3,362 4,009 1,543 1,719 1,379 1,484 727 1,212

18,817

20,255

21,114

20,729

21,278

21,951

21,677

23,150

23,732

23,628

26,145

26,570

26,862

n/a 1.2

7.6 7.4

4.2 1.0

-1.8 2.0

2.7 2.2

3.2 1.2

-1.3 5.2

6.8 6.4

(1) Preliminary Estimates - Subject to Revision (2) This includes: Professional, Scientific and Technical Services & Management of Companies and Administrative and Other Support Services (3) This includes: Other Services & Information, Culture and Recreation

Prepared by: City Forecast Committee, March 2001

Page 33

2.5 3.5

-0.4 1.6

10.7 8.1

1.6 0.8

1.1 3.8

exi Edmonton Socio-Economic Outlook, 2001 - 2006 Exchange Rate & Commodity Price Index USIReel 0.76

Edmonton CMA Participation Rates (percent) 90

—Tote)

120 —Exehenge Rate (Let! Seale)

0.74

Female

85

---e--Commodlly Pelee Index (Right Seale)

110

0.72 100

0.7 0.68

00 75 - 70

90 0.66

65 111111111111111111111111111111111111111 $11111111

0.64

80

.• .

•

60 '87 '88 '89 '90 '91 '92 '93 '94 '95 '90 '97 '98 '99 '00

149A4."0.6Ve"," :059',49:1 PV14PV:1-"04'6`4.

1 /, ' ,1• P/ : vVrIP."

Source: Stallslics Canada

Source: Statistics Canada

Alberta Per Capita Personal Disposable Income ($) ==111111111111INNIIIIIII 21,000

Estimated Market Value Assessment & House Price (% change)

USSICdn6 15

19,000 10

17,000

30 25

1M1Halle Pike (Leff Seek) —0—Assetsmen1(111018cote)

20

15,000

15 5

13,000

10

11,000 1

9,000

1

1

1— 1

1

1

7,000

1

1 11 1 MI

II

11

1

.

5,000 -

3,000 -10

1,000 AN

,1 A

ett‘

13

0 .0 .0 .0

3a1 0 .0) .4:1 5 Olb

Source: Alberta Treasury

Prepared by: City Forecast Comotittee, March 2001

'81 '82 '83 '84 '85 '88 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 Source: Statistics Canada

Page 34

Edmonton Socio-Economic Outlook, 2001 - 2006 Appendix II Edmonton Census Metropolitan Area

28

LEGAL

a.

City Town •

Village

REDWATER

Sturgeon Cdiunty

—el— Primary Highway Secondary Highway Railway

!BON ACCORD

MORINVIL LE

MOLANDEn

County Boundary

7-LIL 114

Sanefy Lake

I Urban Service Area Boundary

AN

k1I

1319 L.

Entwistle

tratilcona_fr County

4

5 W•bamun Lake

STONY PLAIN

AILARIUN

IN LIM

Norm

,SPRUC

i GROVE

Parkland County SaskatchoWell

Ries,

BEAUMONT _.

DEVON

NewSemple

CALMAR LEDUC

mo.by Leduc County

Werbo

DIE CITY Of Edmonton .© PLANNING AND DEVROPMENT

Prepared by: City Forecast Committee, March 2001

'

0

10

kilometres

25

Page 35