The parking lot at 603 First Street will be the subject of a tax abatement hearing at Medicine Hat City Council on Tuesday, July 2, with the aim of reducing overall cleanup costs for a developer who has made an offer to buy the long-vacant piece of land.--NEWS PHOTO COLLIN GALLANT
cgallant@medicinehatnews.com@CollinGallant
A first of its kind public hearing will take place on Tuesday evening at Medicine Hat city council – focused on issuing a tax break to help a potential developer recoup costs of cleaning up the 603 First Street parking lot to build a hotel.
But councillors who first heard the proposal this spring said at the time they can see it lead to more, and with them new construction activity in derelict sites.
The new provincial government is already debating expanded powers, while the City of Medicine Hat is one of the first to develop a program targeted to contaminated sites, and allowed by the previous government.
Mayor Ted Clugston said when measures for the lot and Medicine Hat Arena were introduced, that, if successful, he’d like to see what can be done elsewhere.
“Those two properties are top of mind,” he said on April 15 when asked about reaction from the development community. “Obviously if it’s greenfield (unbroken land), you couldn’t have it. Contamination is a scary word, but could even include asbestos. But you think, some of the properties around South and North Railway streets, maybe something could be done.”
Soil testing in those area showed some hydrocarbon levels from historic uses, and the lot itself once had fuel stored on site.
That’s been a major factor and major cost, administrators have said, when investors decide on project locations.
In April, councillor members applauded the changes, brought in by the New Democrats to help level costs for work in central, mature areas, where council has prioritized growth.
Such a program has long been lobbied for by the local Chamber of Commerce, which two years ago also specifically called for the city to step away from a proposal to develop the lot internally.
This month, it supported a broadened array of tax incentive powers proposed by the new United Conservative Party government in Edmonton.
“By empowering municipalities to offer multi-year tax incentives, Medicine Hat and surrounding district will be able to offer a competitive and desirable location to diverse businesses to set-up their operations,” stated chamber president Sarah MacKenizie.
According to the specific brownfield regulation, each property must be dealt with separately, each it’s own bylaw coupled with a public hearing, and the potential tax cancellation must be based on cleanup costs.
In the case of 603 First Street, the current purchase price of the lot would be $364,500.
After meeting conditions of reclamation and erecting a building on the site, taxes in each of the following five years could be cancelled up to a cumulative maximum of $400,000.
That would expire in 2023, after which it would become fully taxable.
The tax break was determined through negotiation with the buyer, according to a statement in April municipal officials.
The hearing is one of the first in Alberta to occur under new rules included by the NDP government in a 2018 update to the Municipal Government Act, but only covers sites with potential contamination and are therefore less desirable for developers.
This spring the UCP announced it would give municipalities even more expanded powers to exempt tax amounts for up to 15 years on general land so municipalities could offer incentives for industrial and business expansion.
Both city and chamber officials have said that program could be a “strong tool” for municipalities, but requires clear rules and implementation.
The Saga
2019 – Council approves a conditional sale for the lot at 603 First Street to local landlord Aaron Burghardt who is proposing to build a 60-room boutique hotel on half the site with the other. That’s contingent on a proposal to reduce future tax amounts in line with potential environmental remediation costs at the former car dealership.
2015 — Council acts on various campaign promises to develop the lot through the city land department while seeking out a private sector partner to with join or buy the project. Plans show a pair of five-storey towers on the site, one commercial and one residential. It would later shelve the proposal when the only potential partner backs away.
2014 – Developer Pat McNally backs out of a second proposal to build offices on site stating that local market wouldn’t support lease rates need to make the project viable.
2010 – An agreement to sell the land to McNally for $1 (a compromise to keep utility servicing and offsite fees to the site in place) falls through after it is publicly criticized by Mayor Norm Boucher.
Pre 2010 – Local builder Medican lets an option lapse to build on the property following a push to develop the property led by corporate services division.
The beginning – In 1979, the lot owned by Reidy Moters but leased to Glanville Ford, trades hands in two transactions that later leads to questions of impropriety for former and future Mayor Ted Grimm.
Out of office at the time, Grimm was the real estate agent for Reidy, but purchased the property – which sat across from the future site of the future city hall complex – for $500,000 before his business partnership sold to the city for $650,000.
