Risk Analysis:
There is low risk associated with the approval of the subject Downtown CIP grant applications. An agreement between the City and owner will be prepared to ensure the Building/Property Improvement Tax Increment Grant Program requirements and provisions of the Downtown Windsor Enhancement Strategy and Community Improvement are met. The Commercial/Mixed Use Building Facade Improvement Grant will only be paid after the work is complete to the satisfaction of the City Planner.
Financial Matters:
As mentioned in the discussion section of the report the proposed redevelopment is eligible for:
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119 Chatham Street: fifty percent (50%) of the costs of facade improvements to the maximum amount of $30,000 ($20,000, plus $10,000 for a corner building).
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149 Chatham Street: fifty percent (50%) of the costs of facade improvements to the maximum amount of $20,000.
If approved, the funds would come from the City Centre Community Development Planning Fund (Project #7011022) in the maximum amount of $50,000. The uncommitted balance in this fund is $138,158.
Building/Property Improvement Tax Increment Grant Program
The program provides an annual grant equal to 100% of the increase in municipal property taxes for five (5) years, with the possibility of a five (5) year extension, up to a total of ten (10) years if the project is considered a Catalyst Project.
The base rate from which the grant is calculated is the total amount of municipal taxes payable in the calendar year that City Council approves the financial incentives for the eligible works. The Downtown CIP stipulates that the base rate may be reduced to reflect a Vacancy Tax Rebate where such a rebate was issued for the previous tax year and the subject property, or a portion thereof, is vacant at the time of application.
Council will recall in June 2017, amendments to the vacancy rebate program within the DWBIA were approved and as such, for commercial properties, the annual amount of rebate is to be phased out over a 3 year period.
As it relates to the subject properties, vacancy rebate applications have been received consecutively for the past several years dating back to 2014 for 119 Chatham St. and 2011 for 149 Chatham St. No further tax relief is available under this program for either property. Given the longstanding vacancy of both properties, Administration supports a further reduction be provided in what is used for purposes of the base municipal property tax. The average of the previous Vacancy Tax Rebates was subtracted from the Pre-Development Municipal Taxes, and is referred to as the Vacancy Rebate Allowance. This approach creates a more attractive grant package compared to the project being considered a Catalyst Project and receiving an annual grant for a period of ten (10) year without the Vacancy Rebate Allowance. Therefore, staff only recommended approval for an annual grant for a five (5) year period.