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A deal for developers

Provincial tax grant catalyst for downtown revitalization

By: Murray McNeill

25/11/2009 1:00 AM | Comments: 10

Stefano Grande believes the province's tax grants will convince developers to renovate downtown properties such as the vacant Avenue Building (below).

PHIL.HOSSACK@FREEPRESS.MB.CA Enlarge Image

Stefano Grande believes the province's tax grants will convince developers to renovate downtown properties such as the vacant Avenue Building (below).

The provincial taxman could provide the cure for one of the city's biggest downtown headaches -- finding a way to revitalize the derelict Avenue Building.

The chief executive officer for the city's downtown development agency -- CentreVenture Development Corp. -- said Tuesday city officials are negotiating with an experienced local developer who wants to convert the long-vacant Portage Avenue office building into affordable apartments.

Enlarge Image

(KEN GIGLIOTTI / WINNIPEG FREE PRESS)

And Ross McGowan said this revitalization plan could succeed where others have failed because of the province's recently passed tax-increment-financing (TIF) legislation, which provides developers with upfront grants to help offset some of the costs of redeveloping old properties in distressed or underdeveloped areas such as downtown Winnipeg.

"We're hoping it might be the tipping point," McGowan said in an interview.

"We've got quite a live one (developer) we're working with on this (the Avenue Building redevelopment). Hopefully this is going to be our Christmas gift to everyone."

McGowan isn't the only one who thinks the provincial TIF legislation could be the catalyst for breathing new life into the Avenue Building and a number of other redevelopment-resistent Portage Avenue buildings, such as The Bay's downtown store, the former Mitchell-Copp Building, and the former A&B Sound Building.

"This TIF bill could be the single most important downtown revitalization tool this city has ever seen," Stefano Grande, executive director of the Downtown Winnipeg Business Improvement Zone, told the BIZ's 20th annual meeting Tuesday.

Grande said in an interview that while the city already offers a similar tax incentive to developers, it wasn't enough to make these particularly-challenging revitalization projects work. But the addition of a provincial incentive should change that.

"All of a sudden there are more dollars on the table, so now it makes more sense to build downtown," Grande said.

Downtown-development advocates like CentreVenture and the Downtown Winnipeg BIZ had been lobbying the province for years to match the city's tax-increment grants. And this year it finally did. Now all that's needed is the regulatory framework to make it workable, and McGowan said city, provincial, and CentreVenture officials hope to have that in place in the New Year.

McGowan wouldn't reveal the identity of the developer who's interested in the Avenue Building. But he said it's someone with previous experience in redeveloping heritage buildings.

He said the developer wants to convert the 104-year-old, six-storey building at 265 Portage Ave. into affordable rental units because that's what the city is in most need of right now with an overall apartment vacancy rate hovering at less than one per cent.

One earlier attempt to convert the building into a "green" office complex died on the vine after the local developer couldn't find an anchor tenant. And a plan by an out-of-province developer to convert it into offices and executive condominiums fell through after he couldn't obtain financing.

Grande admitted it's been frustrating waiting for something to happen with some of these high-profile downtown buildings.

"But I realize these things are complicated. It's not just a matter of finding a developer with the will. There are significant financial challenges (to overcome)."

In his address to the more than 100 people attending Tuesday's annual meeting, Grande reviewed a number of steps that have been taken to improve safety and to attract more residents, shoppers and businesses to the downtown.

murray.mcneill@freepress.mb.ca

All about TIF

TIF is short for tax-increment financing. It essentially provides developers with upfront grants to help offset some of the costs of redeveloping old buildings or erecting new ones in distressed or underdeveloped areas, such as downtown Winnipeg.

The grants are based on the amount of property taxes a developer will pay once its project is completed. The property taxes include a municipal-tax and a provincial education-tax component, and the property taxes the developer pays will go towards paying back the TIF grant.

The city already offers TIF grants of up to $20,000 for each new residential unit that is built, and the new provincial grant will be for a matching amount, for a total of up to $40,000 per unit.

Downtown development advocates like CentreVenture Development Corp. and the Downtown Winnipeg BIZ say that provincial incentive should be enough to finally bridge the funding gap and make it economically feasible for developers to redevelop more old buildings or properties.

Republished from the Winnipeg Free Press print edition November 25, 2009 B6

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10 Commentscomment icon

This is great news.

Looking at Avenue or the A and B building for the next 15 years in that state does nothing for anyone nor the downtown, nor the taxman.

Freeze the taxes, and it’s a whole new ball game.

With this program the developer can now build something that what was before money loosing project. And guess what? More people will come (people come downtown to work and live, and that drives retail. And an empty building draws no-one, get it?).

And I agree with the BIZ - Safety is a red herring. Its hard to argue the facts.

I went downtown 5 times last month. A hockey game, a concert (dinner before), to MEC to buy a gift for my aunt, Earls for dinner with some friends, and the Forks Hotel for a wedding. Never got robbed, never got beaten. Got panhandled (the guy appreciated my extra pizza I gave him, I say live and let live). Having visited and lived in many downtown's the peg is fine. Don't be afraid of the coloured folk.

I’ll park my car downtown that at Garden City, any time. I have been broken into 3 times in 2 years at that Mall..

Keep rocking downtown!

@libertarian
You are right, this likely will benefit some developers who don't really need the help, but I think that is an unavoidable risk. The city centre badly needs revitalisation, and we mustn't let the perfect be the enemy of the good. I think this plan is very good strategic investment, on the whole.
In the long run, an occupied building will generate more revenues (and other benefits) for the city. Empty buildings not only don't generate as much taxes, they also create other costs (higher crime rates in deserted areas, for example).
I applaud the city and province for trying out some new policy ideas. It is about time our governments take some risks to address this long-standing problem. I wonder what the feds are doing.
@ eman - I did not know building owners were using empty buildings in their tax shenanigans. Tell us more!

The problem with a tax giveaway program like this is that is will get applied to a lot of buildings that would have been renovated anyways. Stop eroding the tax base with endless freebies that end up costing the suburban homeowner and benefiting no one.

@ Endora Stevens
Why pick on downtown? Because I work downtown, what I see downtown. The assaults I have witnessed in broad daylight on Portage Avenue. Yes I live in the burbs and I feel safe in my neighborhood. I feel safe at Polo Park and St. Vital center. I know crime can happen there but it sure seems to me (and pretty much all my neighbors and friends) that you are more likely to be assaulted, mugged, threatened, robbed, carjacked, etc. downtown!

Until downtown is cleaned up myself, my family and many other suburbanites will not come downtown unless we have to. That is why the Apple Store and Sephora opened in Polo Park and not at Portage and Main.

As someone who visits downtown often (specifically the exchange district), I will say that there is excellent shopping. There are numerous boutiques in and around Mcdermot/Princess that carry products that are not found elsewhere. Each year I've seen more and more business go into the area.

And to answer your questions about the safety of downtown Winnipeg.Waterfront drive, and the plus 300 thousand dollar condos going up in the area(and being sold) are a testament that people believe in the future of the downtown of our city and feel safe.

I still don't know how downtown Winnipeg even stands a chance at real revitalization when so many millions of dollars keep going into Kenaston/McGillivray retail development. The almost obscene IKEA retail complex is a prime example. Not to mention Asper's Polo Park plans. Where are the people and the money supposed to come from when it seems the city does everything in it's power to keep them away from downtown??

@ Jay....People claim on this post they are not feeling safe almost anywhere in the city so why pick on downtown?
We all know that the busier an area becomes with increased traffic and people calling the area home makes it safer.
I hope that with all the massive mid-upscale retail developments destined for suburban Winnipeg that a few mid to high end retailers can be tempted downtown.People will come to a trendy spot to shop (H & M, Sephora, etc) anywhere it is located but not if it will exist in many locations.Downtown has to become a destination where certain stores open up an exclusive popular semi affordable place that is not in every quadrant of the city.

This is great news. Now that the city and province are providing incentives its now time for the feds to stop giving tax write-offs in TIF zones. Right now owners can write off loses for a Portage Avenue building against their profitable PoloPark buildings. The feds are the enemy here. The Feds allow owners to simply put a "for lease" sign on a building with out actually leasing for years at a time. Owners make more profit by owning empty buildings.

No Federal tax write-offs in TIF zones.

Right now If I owned 10 profitable buildings I would make more money by selling one profitable building to buy an empty downtown building to increase my write-offs and make more profit.

The BIZ does not seem to understand the obvious. If you want businesses to move in downtown you will need people to come downtown to support those businesses. People will not come downtown if they don't feel safe downtown. Stefano Grande can say downtown is safe all he wants, the people of Winnipeg know the truth and therefore they stay away.

Jeez, it's about time! It's embarassing walking downtown still seeing all these vacant buildings. I've been saying developers need more tax incentives and we need more people living downtown for years! It seems the province has finally caught up! As far as I'm concerned, they should only allow residential development downtown in most vacant buildings.

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