Members of the city's corporate services listen to administrators present a new tax incentive program focused on new business development and expansion during Thursday's committee meeting. Pictured from left are chair Coun. Robert Dumanowski, Coun. Shila Sharps and Coun. Cassi Hider. - News Photo Collin Gallant
cgallant@medicinehatnews.com@CollinGallant
New tax incentives meant to spur redevelopment and draw in business investment were introduced to a city committee on Thursday, with administrators saying safeguards are built in and the practice is becoming widespread.
“This creates a level playing field with other municipalities, who we know are considering this (sort of legislation),” said corporate services division head Dennis Egert. “We want to be in the game.”
New large industrial or commercial projects, as well as smaller non-residential redevelopments, could apply for sliding scale of tax cancellation related to new construction if the bylaw is approved next month.
That builds on a three-year-old program of redevelopment subsidies when the province first loosened such regulations.
Committee chair Coun. Robert Dumanowski said Hatters have often asked if the city could be doing more to attract jobs, but haven’t until recently had such authority.
“I’ve heard it for 21 years,” she said. “This is an enhancement, and good news, quite frankly.”
Coun. Cassi Hider called the bylaw a “wonderful opportunity to drive growth to Medicine Hat.”
Coun. Shila Sharps questioned some definitions in the wording, but strongly supported moving the item to council for approval.
A proposed bylaw would allow administrators to contemplate waiving a portion of property tax in two instances for non-residential development.
One would involve a new-build industrial or commercial project worth at least $10 million in construction value, add at least $50,000 to tax assessment of the site, and involve the creation of a minimum of 10 positions considered “skilled” under federal standards.
The “brownfield” program would be open to all existing businesses in the city, involve at least $1 million worth of improvements, adding $25,000 to tax assessment value, but not include a component of increased employment.
Depending on how projects score on a matrix of benefit, property owners could see tax bills decrease between 50 to 100 per cent for three years, then between 25 and 75 per cent in the fourth year, before a cap of 50 per cent in the final fifth year.
In line with provincial limitations, the city manager would be required to revisit applications and potentially cancel them mid-term if objectives are not met.
Mayor Linnsie Clark sat in on the meeting and later said the program could provide benefits.
She campaigned on the need to consider long-term costs of development in planning and economic attraction, not just assessment growth.
“We do need to be cognizant of the long-term maintenance and infrastructure costs,” she told the News. “Brownfield (redevelopment) sites are already serviced, and we have (new) greenfield sites that are vacant, on which we’re not collecting taxes to recover the costs (now).”
In 2019 the province allowed municipalities to consider tax subsidies to help offset the cost of cleaning up contaminated sites, and the council passed three bylaws for specific projects to that effect.
The United Conservatives expanded measures in the recent changes to the Municipal Government Act and has actively promoted the use of the regulation as a way to entice business investment.
The City of Medicine Hat already provides discounted development fees, known as offsite levies, to projects in several priority development areas. It also doesn’t charge the machinery and equipment assessment.
The program is structured to contemplate taxable assessment from municipal purposes, which staffers argue gives a physical presence and some assurance of the “permanency” of the investments.
“We don’t want a company that will come in for three years (of subsidy) then leave to get 2 per cent better somewhere else,” said city manager Merete Heggelund.
Jon Sookocheff, of Invest Medicine Hat office, said interested companies in talks with city hall’s economic development office “will lead” with questions about local incentives.
“These are sophisticated groups that know about federal and provincial supports, and they arrive with questions about what municipal governments can do,” he told the committee, adding that eight other municipalities in southern Alberta already have programs in place.
“It’s quickly become standard operating procedure.”
