On Tuesday, the City of Calgary approved the expansion of its Downtown Calgary Development Incentive Program, which encourages the conversions -- or the "adaptive reuse" -- of office buildings into residential units, widening the program to include conversions into post-secondary institutions as well.

The new initiative, officially called the Downtown Post-Secondary Institution Incentive Program (PSI Program) will provide financial incentives to property owners to repurpose office space into post-secondary institutions -- a move that the City hopes will "contribute to downtown vibrancy."

The City says the new PSI Program is "complementary" to the existing residential-focused incentive program. The City simultaneously approved improvements to the existing program, which will now encourage conversions into hotels and performing arts spaces as well. The City also announced the creation of a new Downtown Office Demolition Incentive Program on Wednesday.

The PSI Program will focus on the downtown core, bounded by 9th Street SW, 3rd Street SW, and 2nd Avenue SW, north of the CPR Main Line. This area will be given priority because it has the highest office vacancy, but projects outside of that area and within the Greater Downtown Plan Area will still be considered, the City says. Buildings outside of the Greater Downtown Plan Area will not be considered and buildings that are not currently classified by the City as a commercial office building will also be barred.

Downtown Calgary Office To Post-Secondary Institution Conversion Incentive ProgramThe Post-Secondary Institution Program's focus area, with the downtown core as the priority area. (City of Calgary)

In terms of the incentives, the PSI Program will provide grants of $50 per sq. ft of existing office floor area that will be converted into post-secondary institution use, up to a maximum of $15M per property. Grants over $15M are not out of the question, but will require Council approval.

According to a City of Calgary Terms of Reference document for the PSI Program, the Downtown Strategy Team, which oversees the office conversions program, will conduct an initial evaluation of each application before forwarding it, along with a recommendation, to the Incentives Approval Committee. If the application is seeking a grant of over $15M, the application will instead go to Council for approval.

Applicants will also need to show "evidence of commitment from the post-secondary institution and the Government of Alberta." To be approved, the applicant will need to enter into a lease agreement with the chosen post-secondary institution for at least 20 years and must receive a commitment from the Government of Alberta to pay the costs of that lease.

While evaluating applications, the City will also take into account the applicant's history, requiring "a proven track record in office conversions or major urban renovation programs." The City will also take into account its "previous dealings" with the applicant, if any.

If approved, the grant will be paid upon fulfillment of the funding agreement terms, construction completion, the issuance of an occupancy permit, and a signed lease agreement.

READ: Adapt or Die: Why Converting Offices Into Homes Hasn’t Taken Off in Canada

"The Downtown Calgary Development Incentive Program was created to remove excess office space from downtown, support downtown vibrancy and ultimately support the City's fiscal sustainability by restoring downtown property values," Natalie Marchut, Manager and Development and Strategy for the Downtown Strategy Team said in a press release on Wednesday announcing the program. "Supporting post-secondary institutions will bring more students downtown, breathing new life, activity and innovation into our downtown."

This new Downtown Post-Secondary Institution Incentive Program comes after the City approved $9M in November 2022 to support the conversion of vacant office space to house the University of Calgary's School of Architecture, Planning, and Landscape, which served as the pilot project for the program.