Coun. Darren Hirsch, right, talks with council colleague Brian Varga prior to Tuesday night's city council meeting at city hall. -- News Photo Collin Gallant, Feb. 16, 2021
cgallant@medicinehatnews.com@CollinGallant
A new city economic incentive program would offer tax breaks to new industrial projects and also lay out millions to spur housing construction, especially near the South Saskatchewan River, but other long-standing grants to help businesses and land developers would be chopped.
The general program, totalling $5.2 million over two years, was approved by council at Tuesday’s meeting by an 8-0 vote.
It would see direct grants for all new home construction, residential infill properties, and specifically for those residential and business developments located near the downtown and a new Waterfront District.
That’s not including an incoming program that would offer substantial property tax abatement for new large industrial or commercial construction over several years based on things like boosted utility sales, eventual tax revenue and even company payroll.
City councillors called it the most detailed plan they have seen to offer enticements to attract new industry in “decades” of trying to spur growth within tight parameters of provincial regulations.
“We’ve taken programs (like the downtown development incentive program) and gone nuclear with it,” said Mayor Ted Clugston.
“It’s almost like a menu: If you’re going to increase the tax base, use more utilities, create jobs, you get more points.”
Major new projects or expansions could qualify for tax relief on a sliding scale based on the determined value to the city, either full forgiveness or partial on an expiring basis over a maximum of three years.
“It’s a growth investment in our community,” said Coun. Darren Hirsch, likening the change to using a rifle compared to a shot gun.
Coun. Kris Samraj said the measure lays out support for council’s infill building goals.
Coun. Robert Dumanowski said it outlines council’s support for the downtown area, and allows the city to advertise incentives the general public has called for, but haven’t been available until now under provincial regulations.
A detailed scoring system that would determine tax breaks would ensure value to the city, he said.
“If there is a high expected return, they qualify, if there isn’t they don’t,” said Dumanowski.
As part of the recommendation, administrators recommend repealing a cross-city system of discounts on development fees, known as off-site levies, and $200,000 per year in grants from the Downtown Development Incentive Program that has run since 2010. Medicine Hat’s exemption of machinery and equipment taxes would remain.
The program would be paid for with $800,000 left over from a COVID economic development package approved last May, and the remainder transferred out of the city’s community Capital Reserve. That fund was built up by land sale proceeds, which would now be turned back to help spur new development, said Coun. Phil Turnbull.
“We need a plan to not only build up our residential areas, but incentives to companies to come and build here,” he said. “And now we’ve got a plan.”
Up to $1.5 million each year would be earmarked to help spur “riverfront housing” in the centre of the city described as the new “Waterfront” area, including the general downtown as well as areas on North Railway Street and Maple Avenue, north of Prince Street.
There, developers could receive between $15,000 and $20,000 per address for mixed-use or residential projects, respectively, to certain maximums.
As well the 2021 and 2022 programs would provide an annual total of:
– $400,000 for a builder incentive program, consisting of $10,000 rebate once projects reach the weeping tile stage of foundation work in a city-led or privately developed subdivision;
– $300,000 for residential infill projects, awarding up to $25,000 for work that adds population density (more units) within existing neighbourhoods;
– $400,000 for “waterfront vibrancy” projects, consisting of matching grants up $50,000 per applicant for commercial property improvements.
The city also eliminated a long-standing “municipal assist policy” to forego a substantial portion of off-site levies that comes up for review this year. That sees taxpayers cover 40 per cent of major road, sewer and water projects to connect new communities, and up to 90 per cent in priority areas.
Applications will be evaluated by staff at the city’s new Invest Medicine Hat office, and the program is subject to review and change by council on a twice annual basis.
The “brownfield” tax incentive would be applied along lines of power granted by the province to all municipalities in 2017, but be extended to “all non-residential properties” in the city, not just those facing contamination and remediation costs.
Locally it was applied to both the now-cancelled sale of the 603 First Street parking lot and demolition costs of the Medicine Hat Arena site, which is slated for condo construction.
