By Doug Hallett
Faced with the potential loss of an 18-storey residential and commercial tower, city council has put up a united front on the issue of financial incentives for downtown development.
There were no dissenting votes Monday against a motion that’s expected to lead to more than $4 million worth of incentives for an 18-storey development by the Tricar Group of London, Ont. The proposed development, which got rezoning approval Monday, is near the 18-storey condo tower that Tricar has almost finished building at the northwest corner of Macdonell and Woolwich streets.
The motion, which passed 12-0, directs city staff to look at diverting funds from two other incentive funds so that Tricar can get more than $4 million from a fund that has already been exhausted – less than two years into the city’s five-year incentive program to boost downtown redevelopment.
The $12.4-million Downtown Major Activation Grants program was exhausted Monday when council agreed to provide a total of $11.7 million worth of incentive grants to the new owner of the former W.C. Wood industrial site on Arthur Street, Fusion Homes.
This incentive program is based on the difference between property taxes collected on a property before development and the higher taxes that will be collected after development due to increased assessment. The incentive grant is paid annually for up to 10 years after a project is completed.
The Downtown Major Activation Grants fund had $6.2 million remaining in it after the first four grants were made, including to Tricar’s first 18-storey condo tower. Fusion was the fifth applicant for this sort of grant.
Council agreed Monday to transfer $2.3 million from its brownfield redevelopment fund into the Downtown Major Activation Grants fund, bringing it up to $8.6 million that’s to go to Fusion. Council also agreed to grant Fusion $3.1 million directly from a brownfield fund, for a total of $11.7 million worth of incentives.
As a result of the council motion related to a possible incentive grant of over $4 million for Tricar’s second tower, city staff will eye redirecting all remaining money from the two tax-based incentive funds that haven’t yet been exhausted – for brownfield redevelopment and for retention of heritage aspects of buildings being redeveloped.
Tricar official Adam Carapella told council Monday that Tricar’s second tower is eligible for incentive funding of $4 million to $4.7 million. Getting this money is “essential” to the project going ahead, he said. Carapella said Tricar has spent $1 million on moving city infrastructure off the site of its second building, as well as $800,000 for brownfield remediation. This work was all done in anticipation of getting a Downtown Major Activation grant to defray some of the higher costs of building in the downtown.
Carapella said it came as a “complete shock” to read in a city staff report that this incentive fund would be exhausted by the grant to Fusion. It’s for three phases of work on the Arthur Street site that won’t all be completed for several years.
Fusion president Lee Piccoli told council that these three phases are for one interconnected building that will bring over 400 residential units to the site on the east side of the Speed River. Without the incentive grant, he said, “the whole project could be in jeopardy.”
Coun. Bob Bell said the total incentive funding from the city is almost $16 million to Fusion and the site’s previous owner, which did a lot of brownfield cleanup work there. This incentive money has resulted in city hall’s redevelopment goals aligning well with those of the adjacent neighbourhood and the developer, he said.
While some people might “resent” this kind of money going to such projects, “the outcome is what is important,” Bell said. In the end, “I think the community will be very pleased at where this subsidy was spent.”
Coun. Lise Burcher said it’s a sign of the city’s success in spurring downtown redevelopment that the incentive funding is being depleted so fast. “It seems to me that we are running out of funds in our incentive programs that are doing exactly what we wanted,” she said.
Ian Panabaker, the city’s corporate manager of downtown renewal, said the incentive funds “have been extremely effective, but we are not out of the woods yet” in ensuring redevelopment momentum in the downtown. The city now needs to look at options for keeping incentives going, which will be explored at a Feb. 26 special meeting of council, he said.
In all, the city is about to exhaust $33 million worth of incentives, but this is leading to a big increase in property assessment from the resulting projects, said city CFO Al Horsman.
By Doug Hallett