10-09-2014, 04:27 PM
Developer asks for $10M tax break
June 20, 2014 | Catherine Thompson | The Record | LINK
June 20, 2014 | Catherine Thompson | The Record | LINK
Quote:KITCHENER— The City of Kitchener and Waterloo Region are proposing giving up more than $10 million in taxes and fees over seven years to ease the way for the redevelopment of a vacant industrial site.
NovaCore Communities Corporation, a Hamilton developer that specializes in rehabilitating old industrial sites, is proposing to build two apartment buildings, a retirement home as well as office and retail space on the 4.89-hectare (12-acre) site at 83 Elmsdale Dr., near Ottawa Street South and Strasburg Road.
The site, which is owned by the city, was a Kitchener Utilities maintenance yard and has been vacant since 2011, when Kitchener consolidated its operations at a sprawling new facility on Goodrich Drive.
A study commissioned by the developer estimates it will cost $10.4 million to clean up the site, which is contaminated with old landfill and construction waste such as bricks and rubber products, as well as zinc, mercury and dichlorobenzene, a group of chemicals that can harm the liver and kidneys.
The environmental assessment also detected some groundwater contamination.
Under the city and region's brownfield remediation programs, the developer would clean up and develop the site, and the city and region would absorb the $10.4 million cost of the cleanup through several years of foregone taxes. The city would waive $2.9 million in taxes; the region would waive $4.8 million in property taxes and $3.7 million in development charges.
The municipal governments would grant annual rebates on property taxes, equal to the difference between the 2013 property taxes, and the property taxes that would apply to the redeveloped site. The rebate essentially allows the developer to pay property taxes for several years based on the old, pre-development assessed value.
The annual tax rebates, which would last seven years, wouldn't begin until after the site is completely cleaned up and redeveloped, likely not before 2016. The city and region will be providing services, such as garbage collection, fire protection and so on, to the new development once it's done, but essentially not begin collecting taxes on those services for about seven years.
Rob Morgan, who coordinates brownfield development for Kitchener, says the foregone taxes are a good investment.
"We still get building permit fees, we still get development charges, in addition to the monies we will get from the sale of the land," he said.
"We're getting future assessment, we're getting jobs, and a parcel of land that would likely be dormant for a considerable time is cleaned up and brought back to life," he said.
The site now has an assessed value of $2.2 million, generating property taxes of just under $44,000 a year, split between the city and region. The plan to build 225 apartment units in two buildings of about seven to eight storeys, a 135-unit retirement home and 99,000 square feet of office and commercial space would represent a development assessed at $59.6 million, generating $1.2 million in annual property taxes under 2013 tax rates.
"I think it's a very positive change from what is an unused industrial site," said city planner Katie Anderl.
The proposed mixed development makes sense in that site, which is wedged between McLennan Park on the opposite side of Ottawa Street, and Elmsdale Park to the north.
The apartments would be built closest to Elmsdale Park, with commercial and office looking onto Ottawa, and parking and access streets tucked in between the two. Most of the parking for the apartments and retirement home would be underground.
The proposal also fits nicely with the city's planning goals of having residential areas within walking distance of offices and shops, and of having somewhat more intense development on transit corridors, Anderl said. The site is on the future Ottawa Street iXpress route, which connects to the light rail transit system.
The region's planning committee approved the incentive grants on Tuesday. Kitchener's planning and finance committees consider the proposed development on June 23, which then goes to council on June 30. If approved, the sale is likely to close by August and remediation would start shortly thereafter.
"My sense is the developer is keen to get going," Morgan said.