Moncton Beefs Up Incentives To Get More $10-Million Projects Built Downtown
MONCTON – The City Council voted 8-to-1 Monday night to expand a financial incentive program aimed at private sector developments in the downtown area.
A project that’s worth at least $10-million and is within the Downtown Moncton Centre-ville Inc.’s (DMCI) Business Improvement Area (BIA) or within the city’s Central Business District will now be able to qualify.
The original program, which began in 2015, covered a smaller area called “downtown core.”
“We want to help enable more city-changing projects in our downtown,” said Kevin Silliker, the city’s economic development director, in a presentation to council.
He said the incentive is meant to entice development that would otherwise not happen.
“It helps with the risk associated with new projects, it helps with absorption, obviously cash flows. You’re looking for new tenants and leasing opportunities – those are often the risks that prevent projects from happening,” he told reporters after the council meeting.
Under the expanded program, a developer could get a rebate worth around 6-to-7-per cent of their building permit over three years. Plus, the $75,000 building permit and planning fee grant that’s part of the original program also still applies.
That means, for a $10-million project, a developer could receive $665,400 over three years, more than the $119,300 of new tax revenue the city expects from it in the same period.
City Manager Marc Landry said the incentives won’t directly cost the city and CFO Jacques Doucet said if developments do come downtown, it will “absolutely benefit” the budget.
Developers that have to install municipal infrastructures, like road extensions, sidewalks and others, worth $500,000 or more can also be eligible two additional years.
But before receiving any grants, the projects have to be completed. The developers have to prove to the city that they’ve paid their property taxes and their property assessment has to meet the $10-million threshold.
“The financial incentive is based off new revenues that are generated [through construction and property taxes],” Silliker said. “If there are no projects that happen then we don’t have any grant revenues, or any property tax revenues to transfer into the grant program.”
The original initiative, called the Downtown and Heritage Financial Incentive Program, has also been extended for five more years with the same terms. This means developments under $10-million could still apply if they’re located within the downtown core.
The city aims to have a total of $108-million worth of new developments downtown by 2023. This includes $25 million on the surplus lands surrounding the Avenir Centre and $83 million in the rest of downtown. Silliker said the city currently stands at $50 million.
There are five projects worth more than $10-million and many smaller ones in the pipeline, he said. One of them is FiveFive Queen, a condo complex and boutique hotel that will also have a Gahan Pub. The grant program would also allow projects like a hotel proposed by Harper Building Inc. on Main St. to qualify.
“Our objective is to try and bring as many of those projects over the finish line as possible. There are a number of projects that may take advantage or may apply in this program,” he said.
The expanded program will roll-out as a three-year pilot with a review after the first year. Silliker said the city should be ready for developers’ applications in January 2019.
Jim Dixon, President of DMCI and the principal of Ashford Group, which has properties downtown, said the new expansion is good news for developers.
“This will accelerate the pace a little bit,” he said. “It gives you more confidence to jump in.”
But Ashford Group also has developments outside of the downtown area that aren’t afforded similar grants. Councillor Paul Pellerin, the only one to vote against the changes, noted this as a concern for developers in other parts of the city.
I would encourage other developers across Moncton to come and ask City Council for the same token, because at the end of the day, why should they be paying more compared to someone who wants to develop down here?”
But Mayor Dawn Arnold said densification of the downtown area has been one of the city’s top priorities. The city wants to limit sprawl that makes it difficult for the city to provide services. The downtown area is also a large source of revenue. It only accounts for 1.5 per cent of Moncton’s footprint, but downtown brings in more than 14.4 per cent of property taxes, despite nearly half of the area currently being used for surface parking.
“We know that we need to densify,” said Arnold. “By bringing multilevel garages, by bringing people down here, by having residential options in our downtown core, that’s how we will do it.”
“If you get the density, then you get more nice restaurants … and more attractions,” added Dixon. “I think it makes for a better overall lifestyle for everybody. Even if you live in the suburbs, there are more things to go downtown to do.”
Pellerin also questioned the need for the incentive program when the council was previously told that large investments in the Avenir Centre were supposed to spur downtown development.
Mayor Arnold told reporters similar grants are being used by cities across Canada and it’s needed to keep the city’s growth momentum going.
“We have incredible momentum going on in our city and we want to make sure that it keeps on going,” she said. “And it’s about growing our economy so that we can enhance the quality of life for all citizens.”