downtown residential development grant program · pdf file · 2011-10-13downtown...
TRANSCRIPT
Downtown Residential Development Grant
Program
Presented by: Stefano Grande,
Executive Director, Downtown Winnipeg BIZ
Presentation Outline
• Overview of CentreVenture
Development Corporation
• History of Residential Development
Incentive Program
• Province of Manitoba TIF
Legislation
• The Downtown Residential Grant
Program (“DRDG Program”)
• Strengths & Weaknesses of the
DRDG Program
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About Winnipeg
Population, Winnipeg: 690,000
Area: 179.2 square miles
Density: 3,535/square mile
Downtown
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About CentreVenture
CentreVenture Development Corporation
• created in May 1999 by
Winnipeg City Council;
• to spearhead the revitalization of
downtown Winnipeg;
• to act as an advocate and catalyst
for business investment,
development and economic
growth in downtown Winnipeg;
• guided by private sector, self
appointing Board of Directors
(9 Board Members).
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CentreVenture’s focus…
• Development of strategic clusters as a
catalyst for further private and public
investment;
• Strategic land assemblies;
• Community investment in parks and open
spaces;
• Promote adaptive reuse of heritage
properties;
• Provide financial tools such as gap and
bridge financing, mortgages and construction
loans;
• Promote/facilitate of residential development;
• Deliver Municipal and Provincial tax incentive
programs.
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Downtown Housing Incentives
The City of Winnipeg has always had the ability to
capture municipal incremental tax revenue and
provide grants of the incremental revenue;
• past 9 years, the City has offered grant
programs using incremental taxes to
provide the grants to developers -
primarily for residential development;
• municipal incremental tax grants are paid to
the developer annually as incremental
tax revenue is collected;
• CV provides bridge financing of grants to
developers during construction and
takes assignment of the future grants as
security/repayment.
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Winnipeg TIF
Provincial TIF enabling legislation was passed in Manitoba in 2008 – the Community
Revitalization Tax Increment Financing Act;
The legislation allows for incremental school/education taxes to be collected on
designated properties and placed in a community revitalization fund
- funds disbursed in accordance with a program/plan;
The provincial legislation regarding designation of a property is not very prescriptive. A TIF
property (community revitalization property) can be designated in Manitoba if:
a) significant improvements to the property are to occur; and
b) it is in the public interest that the improvements be made.
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The DRDG Program
Downtown Residential Development Grant
The original DRDG Program, effective January 1, 2010,
provided for a total of $20 million of incremental tax
grants - $10 million from each the Province & City;
The program was to be a 3 year program, but was fully
subscribed in 10 months and has since been
doubled to $40 million;
Currently CV has obtained applications for 28 projects
totaling almost 1,400 new residential units;
The DRDG Program effectively doubled the amount of
the grant provided under the previous City program;
The program has been effective in more than doubling
the number of units.
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DRDG Program - Overview
Both Condominium & Rental Residential Projects are eligible;
Has to be new residential units – either new construction or conversion of non-residential;
Rehabilitation of existing residential units are eligible if they have been vacant for 12 months;
Mixed use buildings are encouraged - the commercial taxes are applied toward the
“incremental taxes” for purposes of calculating the grant;
The program is limited to properties within the downtown boundary as defined by By-law.
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The DRDG Program - Overview
How the Grants are Calculated:
• The grants are funded by the incremental
taxes generated post development;
• Condominium Projects receive the 1st
year’s incremental taxes for 10 years, up the
to maximum allowable grant;
• Rental Projects receive the 1st year’s
incremental taxes for 15 years, to to the
maximum allowable grant.
Example:
Post Development Taxes – Predevelopment Taxes = 1st Year Incremental Taxes
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How is the Maximum Allowable Grant Calculated:
The maximum grants are calculated on a “per unit” basis in accordance with a table that is
adjusted each year to reflect changes in the sales market values/rental rates.
For Condo projects, the maximum allowable grant per unit is based on “assessed value” and
unit type in accordance with the following table:
The DRDG Program - Overview
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CONDOMINIUMS Amount per
Dwelling Unit $40,000 $35,000 $30,000 $25,000
Assessed Value per Dwelling Unit (in thousands of dollars)
Bachelor or Studio less than 650 square feet
$0-$150 $151-$185 $186-$220 $221-$255
Bachelor or Studio of 650 square feet or more or 1
bedroom
$0-$175 $176-$215 $216-$255 $256-$300
2 bedroom $0-$215 $216-$265 $266-$305 $306-$350 3 bedroom or more $0-$250 $251-$300 $301-$350 $351-$400
How is the Maximum Allowable Grant Calculated:
For Rental projects, the maximum allowable grant per unit is based on the rental rate of the
unit in accordance with the following table:
The DRDG Program - Overview
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APARTMENT BUILDINGS Amount per
Dwelling Unit $40,000 $35,000 $30,000 $25,000
Rent per month per Dwelling Unit
Bachelor or Studio less than 650 square feet
$0-$500 $501-$550 $551-$625 $626-$750
Bachelor or Studio of 650 square feet or more or 1
bedroom
$0-$655 $656-$730 $731-$830 $831-$955
2 bedroom $0-$880 $881-$955 $956-
$1,080 $1,081-$1,205
3 bedroom or more $0-$1,100 $1,101-
$1,225 $1,226-$1,350
$1,351-$1,475
How are the Grants Paid:
•Because grants are based on incremental taxes, the amount of the grant is determined in
the 1st full year following completion.
•Once the amount of the grant is determined, the developer has the Option of:
a) Receiving an annual grant, equal to the 1st years’ incremental taxes, or
b) Receiving a lump sum payment equal to the “net present value” of the gross
amount of the grant.
•The discount rate to determine the NPV is set annually by City Council and is related to
current market borrowing rates.
•When a project is complete and developer elects to receive the NPV, CentreVenture
borrows the funds from a conventional lender and takes assignment of the annual
incremental tax payments to repay the loan.
The DRDG Program - Overview
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Timelines for Project Completion:
•Developer has 1 year from approval of the
application to draw development permits;
•Developer has 4 years from approval of the
application to complete the project.
Developer Fees:
•$5,000 application fee;
•$300 per unit – paid 90 days following
approval;
These fees are refundable when the grant is
paid out.
The DRDG Program - Overview
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The DRDG Program – Strengths & Weaknesses
Strengths:
•The level of incentive the combined Municipal & Provincial
TIF provides seems to be sufficient to spur development;
•The program has generated much positive response and
has more than doubled the development in the previous 5
years.
Weaknesses:
•When making decisions to proceed, developers have to rely
on estimates of what the grant will be;
• Actual amount of the grant not determined until the 1st full
assessment year following completion of the project;
•Depending on the date of completion, the grant may not be
paid until well over a year after completion.
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The DRDG Program – Strengths & Weaknesses
Weaknesses…con’t
The inherent fundamentals of the program work inversely
to what was trying to be achieved:
•Intent was to provide larger grants to achieve more
affordable pricing for both condo’s and rental units;
•Because the grants are “developer” TIF’s and incremental
taxes generated are not “pooled”, the projects that are
more affordable generate “less” incremental tax and thus,
receive smaller grants.
•it is very difficult to realize a grant per unit for either condo
or rental that is beyond the bottom end of the grid -
$25,000/unit, unless there is proportionately more
commercial whose taxes help to attain the per unit
maximums.
•Taxes on rental projects are generally lower/unit than
condo, thus grant per door for rental projects is lower.
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Alleviating the Shortcomings
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• CentreVenture acts as the “one stop shop” for
the developers so they do not have maneuver
through the different levels of government;
• When applications are submitted,
CentreVenture works closely with the
Assessment Department to obtain as accurate
an estimate as possible;
• CentreVenture, out of its own assets, will
“Bridge Finance” the grants during the
construction phase of a project;
Although the program has issues, those tasked with
fostering development in the downtown are
pleased that our City and Province have
stepped up to assist in furthering residential
development on our downtown!!
Further Information
Questions about the DRDG Program or links to
access the DRDG By-law or Community
Revitalization Tax Increment Financing Act,
please email [email protected]
www.centreventure.com
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