grant will be determined based upon the incremental increase in the municipal taxes that result from the eligible work being completed. The tax increment will be established after the final inspection of the improvements in accordance with the Ontario Building Code and when MPAC has established a new assessment value. The total amount of the grant provided cannot exceed the value of the eligible work that resulted in the reassessment. The grant is paid out after the project is completed and MPAC has reassessed it.
The TIF grants are in place to help offset the capital costs of constructing, rehabilitating and/or redeveloping properties, as long as such development results in an increase in assessment that in turn results in an increase in property taxes. Proponents are still required to pay the property taxes at the rate that was in place before construction and reassessment.
The TIF grants are more of an incentive for projects that have owners and operators that are committed to the longer term, largely because they take up to ten years to be paid out in full. They are most effective for larger projects that are developed on vacant land or have a lower assessment to start with. Based in the current residential tax rates, it will require an increase of approximately $28,000 to $29,000 in assessed value for every $500 in annual grants.
Upfront Grants for Affordable Units
Council could also consider an outright grant for the provision of affordable units, similar to the New Residential Development Grant Program offered by the Downtown Windsor Enhancement Strategy and CIP. The program would provide a grant for each affordable housing unit, up to a program defined maximum amount. This program is aimed at off-setting some of the front end construction costs associated with building the affordable units.
This program would require Council to identify a funding source to draw from. This budget could end up being depleted quickly depending on the level of uptake for the program. The timing of payment for this type of grant is important in order to protect the municipality and to make sure that the units are completed in accordance with the program’s requirements. As such, the grant payment does not usually happen until the units have been constructed and inspected.
Development Fee Grants
There are a number of planning approvals and other construction related permits (building permits, right-of-way permits, etc.) required for any new development. These development fees are collected by the various municipal departments at the time of application to cover the administrative costs associated with reviewing and inspecting the project.