City Hall is developing a multi-year tax forgiveness program for new construction projects that add multi-family housing units in Medicine Hat. The final program will be presented this spring.--NEWS FILE PHOTO
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City Hall will likely offer tax breaks to new apartment blocks and other types of multi-family housing built in Medicine Hat, council heard Monday.
Economic developer staff told council that offering graduated tax forgiveness over the first several years after a project is built could bring in out-of-town developers, would be easier to administer and would keep the Hat competitive with competing markets.
Medicine Hat Economic Development director Selena McLean-Moore says the cost of the new program wouldn’t require dedicated funds because the outlay is essentially forgone tax revenue, not cash, while tax revenue would grow after several years.
“In my mind, any tax incentives that we might provide, we might take a loss (initially),” she said. “But in the long term it’s better for the Medicine Hat and local economy, because after three years it would be fully taxable for many more years.”
Council supported finalizing the program and conditions, and drawing up a bylaw for consideration this spring.
It would replace the city’s “Housing Infill and Redevelopment Incentive” aimed at mature areas of downtown and portions of the Southwest Hill, Riverside and River Flats, providing a $15,000 grant per new housing unit, up to a maximum of $750,000 on a single site.
Such subsidies to lure development run contrary to arguments made by “Strong Towns” during a recent tax assessment and development exercise conducted by the group and the city.
Mayor Linnsie Clark told the News the final bylaw could target infill only – a measure to efficiently grow the assessment base at lower costs.
“I’ll be looking at business cases for sure,” she told the News. “It’s not ideal, but we are in a pretty serious housing crunch.”
Coun. Ramona Robins asked about the current pot of funds for development, approved in December, and was told some items, such as commercial vibrancy and improvement grants are still available.
Coun. Darren Hirsch says he sees the value in offering an incentive, but wondered if the city is rewarding money that would be spent anyway.
“We know we’re in dire demand for multi-family residential,” he told council. “I’m not sure that we need to provide an incentive if an incentive – in the form of a (market) shortage – is already there.”
McLean-Moore told him the city is “struggling to find developers that want to come to our city because of the stagnant growth, and this keeps us competitive with other communities.”
Last year, the province loosened regulations that now allow municipalities to provide tax subsidies on housing projects, similar to longstanding commercial property incentives, and the local housing program would follow along the same basic lines, council heard.
It cancels a portion of taxes on new projects for several years when tax assessment value increases by certain benchmarks or creates new jobs.
The business case is that, over time, annual revenue will make up for initial lost income.
Last year in Brooks, that city council began offering a program of reducing tax abatement that would see new residential construction tax bills discounted entirely in the first year, then by 25 per cent less in subsequent years until it became fully taxable.
Brooks also offered a 15 per cent discount on lots owned by the city, though the city’s real estate department has shied away from giving discounts in the past to avoid undercutting private-sector developers.
Local municipal economic development staff surveyed Brooks, Lethbridge, Taber, Regina and Moose Jaw – municipalities considered to be in competition for development with Medicine Hat – while examining program options.
McLean-Moore said discussions with local industry groups show a need for multi-family housing units, and the previous grant-based incentive was difficult to administer as money was reserved, but not all successful applicants completed their projects, thereby tying up funds and discouraging other applications.
Notices delayed
One was dealt with, two were delayed and three more notices of motion were added to council’s agenda Monday night.
Two motions put forward last meeting by Coun. Andy McGrogan – on a system to release to administrator’s expense reports and for information related to overnight shelter zoning in the city – were postponed at his request.
He said two absent councillors should be involved in debate as they may be contentious.
Coun. Shila Sharps was unable to attend Monday’s meeting but submitted three notices of motion.
After some discussion of process – the mover being absent – the motions were received and will be on the April 7 meeting agenda.
The general subjects are “human resource metrics,” “severance reports” and “buy local.”
City council did agree to direct staffers to explore options to create a non-profit operating grant program. Such a program needs separate approval, but the issue now moves to public services after it was suggested by chair, Coun. Cassi Hider.
