Hey there, time traveller!
This article was published 3/10/2012 (1310 days ago), so information in it may no longer be current.
Last spring the city and province announced a partnership with CentreVenture, a Winnipeg downtown development corporation, to use a tax financing scheme to help develop a sports, hospitality and entertainment district (SHED) in downtown Winnipeg.
The projects include the 20-storey ALT Hotel planned for construction on the northwest corner of Portage and Donald streets. Its developer, Longboat Development Corp., has a $75-million redevelopment plan for the entire city block north of the MTS Centre.
Last fall, a long-established worker co-operative in Winnipeg's North End, Neechi Foods Co-Op Ltd., asked the City of Winnipeg for an $850,000 grant, also in the form of tax increment financing (TIF), to help cover the remaining costs of their business complex on North Main Street, Neechi Commons.
Neechi approached the province for TIF funding, but the province opted instead to provide over $2.6 million in infrastructure grants. Neechi's presentation to city council is pending, as is its grant proposal.
The TIF grant Neechi is seeking is one the city administers under the Municipal Act and City of Winnipeg charter. As a social enterprise, Neechi Commons was designed to respond to the needs of the North End community. It will offer training and employment opportunities to inner-city residents and youth, sell locally harvested and processed foods and showcase the work and talents of aboriginal and other inner-city artists and performers, among other things.
Manitoba is one of only two provinces in Canada that utilizes TIF to finance community revitalization in municipalities, although it has a long history of use in the United States. In a TIF scheme, the base property tax of a targeted development property or district is frozen, and the anticipated increase in the property tax that is to result from redevelopment -- that is, the increment -- is used to finance the development project. When the TIF scheme expires, property taxes flow to the municipality.
In 2009, Manitoba passed the Community Revitalization and Tax Increment Financing Act, largely to spur development in Winnipeg's downtown -- hence the SHED project and the Longboat development.
But would the Longboat plans have gone ahead without TIF assistance?
This also raises questions of how to best fund social enterprises like Neechi, and whether provincial TIF funds designated for community revitalization purposes can be used as an effective means of financing social enterprise and bringing about more equitable community revitalization in Winnipeg.
There are some key aspects of TIF and TIF legislation in Manitoba that need to be looked at.
First, according to the Community Revitalization and Tax Increment Financing Act, to qualify for TIF, developers do not seem to have to show private funds are lacking in sufficient quantities to finance the redevelopment of the property in question, whereas in many cases in the U.S., developers have had to show this.
This principle has been implemented in the U.S. through something known as the "but for" test, where it must be determined that redevelopment of a given property would not occur if not for TIF. Moreover, many cities in the U.S. have identified criteria that must be present before an area can be deemed a blighted neighbourhood and eligible for TIF.
In contrast, Manitoba's TIF Act states that for a property to be designated a TIF property, there only needs to be a belief that: a) significant improvements to the property are to occur; and b) it is in the public interest that these improvements be made. These criteria say nothing about financial or community need and appear to favour private developers, as they would be able to fund greater improvements to a property than a social enterprise would.
This suggests the very opposite of the "but for" principle. It would be useful to have more stringent criteria to determine whether the area in question is economically distressed, and such criteria should take into account the particular socio-economic conditions of the inner city.
Projects that qualify for TIF should have to demonstrate, beyond just the generating of revenue, how they will benefit the surrounding community and the residents who live there.
There also needs to be more public consultation in the administration of TIF. The provincial minister responsible for the TIF Act must meet with the municipal council and school board before designating a property a TIF property.
Further, the legislation should allow for the exemption of property taxes for schools as a source of TIF funds. The use of these taxes conflicts with equitable community revitalization, as schools themselves are important players in building stronger communities, particularly in marginalized areas such as Winnipeg's inner city.
These issues would see the provincial TIF better support social enterprises in the inner city and broaden community revitalization in Winnipeg.
Erin Knight is a volunteer researcher with the Canadian Centre for Policy Alternatives -- Manitoba.