September 18th, 2019

Off-site levy subsidy lives on

By Collin Gallant on December 6, 2018.

Medicine Hat City Hall is seen in this undated photo. City council on Monday renewed a taxpayer support program for new development, though one member questions how paying a portion of infrastructure fees meshes with city priorities — or whether it works at all.

City council on Monday renewed a taxpayer support program for new development, though one member questions how paying a portion of infrastructure fees meshes with city priorities — or whether it works at all.

Coun. Kris Samraj was the lone dissenting vote against a new two-year off-site levy assistance program that will carry through 2020. By that time, a new major development plan should be in place, while city administrators and industry officials alike say the program meant to spur development activity should be adjusted.

Samraj however, questioned the value of the program, which has taxpayers pay a minimum of 40 per cent of infrastructure costs charged to developers. The new iteration, which begins in 2019, provides 90 per cent of such costs in existing areas, in hopes to boost the tax base with lower overall costs.

“There’s an imbalance that distorts a lot of things,” said Samraj, citing the difference in tax recovery between new communities and old. “It’s another two years of pulling in the wrong direction.”

Administrators proposed the new plan, which differentiates between new greenfield communities and redevelopment infill — or brownfield — projects at committee meetings last week.

They say infill projects do better to increase the tax assessment base without adding costs of new major roads or major sewer and water lines to suburbs.

That is a major concept in early versions of the city’s planned update to its Municipal Development plan. Officials tout it as a way to gain the upper hand on rising infrastructure replacement costs without raising taxes.

However, Samraj told the committee last week, if more dense, centralized commercial property earns 10 times the tax revenue when lower servicing costs are factored in, why are tax rates the same in outlying commercial properties?

The issue created a good amount of debate among most councillors, who approved the program with an 8-1 vote.

Mayor Ted Clugston told council the issue was too complex to explain, but the program is important.

Coun. Jim Turner said Medicine Hat’s development rates must be compared to neighbouring jurisdictions such as Redcliff and Cypress County.

“It’s a matter of being competitive,” he said.

Coun. Julie Friesen said the program supports the local construction sector, which has argued higher infrastructure costs are passed on to Hatters who buy lots and build new homes.

Coun. Darren Hirsch said that until new planning documents were ready in 2020, he was “comfortable holding the line” with the new proposal. It mimics the current plan that has a higher subsidy along commercial corridors and downtown.

Prior to 2014, a blanket 40 per cent assistance program was in place across all areas of the city.

New infill zones for 2019-20 include the downtown, areas of the North Flats, South Flats and Trans-Canada Way area.

Coun. Robert Dumanowski said council and the city are “damned if we do and dammed if we don’t,” referring to expenditures to bolster development or watching construction of new housing and businesses go outside city limits.

Business and development groups told council during a related public hearing they hoped the current two-year plan would bridge the issue until later in the term. At that point the rewriting the Municipal Development Plan, the Tri-Area Intermunicipal Development Plan and the Intermunicipal Collaboration Plan, should be complete.

“In 2020 we’ve got to come up with an off-site proposal that’s favourable to everybody,” said Garry Ruff, a spokesperson with the local branch of the Canadian Homebuilders Association.

Councillors in 2016 delayed a planned to phase out the program, though members and staff admitted there was no way to link construction projects to the assistance program due to business conditions and a variety of other factors.

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