Tax incentives in North End
City mulls grant to assist completion of Neechi biz site
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Hey there, time traveller!
This article was published 04/06/2012 (3765 days ago), so information in it may no longer be current.
Property-tax incentives that have stimulated downtown housing in Winnipeg are being eyed to complete the construction of a business co-op in the North End.
The City of Winnipeg has been asked to consider a tax-increment financing grant for the Neechi Commons Community Business Complex, a $7-million co-operative under construction at the southeast corner of Main Street and Euclid Avenue.
When completed, Neechi Commons will include a supermarket, cafeteria-style restaurant, aboriginal art centre, hardware store and fish market, among other amenities. Approximately $5.5 million has been raised for the project, including $1.3 million from Ottawa, $2.3 million from the province and $400,000 from co-op members themselves, state communications between Neechi Commons and members of city council.
Neechi Commons is now seeking an $850,000 grant from the city as an advance on future property taxes to flow from the redeveloped site. This would be a form of tax-increment financing (TIF), a funding mechanism cities across North America have employed to kick-start redevelopment in blighted or economically depressed neighbourhoods.
TIFs have already been used to stimulate condominium and apartment construction in downtown Winnipeg and will soon be used to spruce up streets around the MTS Centre. Creating a TIF in the North End would constitute a more traditional use of the funding mechanism, which works best in areas that generate very little tax revenue in the first place.
“This is exactly what TIFs are all about, to help out blighted areas,” said Mayor Sam Katz, who confirmed city officials are considering the Neechi Commons request. “This is already underway.”
Construction on Neechi Commons is “90 per cent complete,” said project manager Russ Rothney, who hopes the structure will open in the summer or fall. When construction resumed this spring, the intention was to have the complex complete in time for June 21, Aboriginal Day, but the Commons is still trying to raise a few hundred thousand dollars to purchase opening inventory, he said.
“We’re not scared at all by the fact we still haven’t raised all we need to open,” Rothney said. “This capital (fundraising) drive has to go well beyond that.”
Even without a city grant, the confirmation of a TIF program for Neechi Commons could help the co-op secure a loan, as the promise that the organization could get a rebate on future property-tax revenues could provide some security.
But Mynarski Coun. Russ Eadie, who represents a large portion of the North End, would like to see the city create a larger tax-increment-financing zone that would also spark develop at the former Merchants Hotel site on Selkirk Avenue, a Manitoba Metis Federation property on Euclid Avenue, and other sites in the underdeveloped city region.
“There is some momentum in the North End,” said Eadie, who would like to see a CentreVenture-like entity focus solely on the area. “There is a potential to improve the social well-being of the neighbourhoods that surround this area with jobs, while bringing back customers from around the city.”
At the same time, city officials are cautious about mortgaging their future by committing to too many tax-increment-financing projects. After the U.S. housing bubble collapsed in 2008, some cities south of the border regretted the approval of projects that denied them access to property-tax growth.
“We have to be careful this is not seen as a panacea,” said Ross McGowan, CentreVenture’s president and CEO, referring to TIF programs.
Katz, however, expressed confidence about the creation of a single North End TIF.
“If you have an area that generates very little in property taxes and by lifting it up, you can generate positive development, create employment, and get people coming to certain areas, why would you be concerned there’s two of them or 12 of them?” the mayor asked.
Neechi Commons is also continuing to try to raise funds through share offerings, both to members and non-members.
Bullish on TIF?
Neechi Commons has asked the city to consider tax-increment financing (TIF) help to complete the North End project. So far, the city is involved in two other TIFs:
Downtown housing: The city and province have a combined $40 million worth of grants committed to downtown apartment and condominium projects. The cash will be recouped from increased property taxes from the completed projects.
The SHED: CentreVenture plans to spend $8.3 million on new sidewalks, lighting, and decor around the MTS Centre over the next two years. The cash will be recouped from increased property taxes from the Longboat Development Corporation’s 311 Portage at CentrePoint complex across the street.