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The province has unveiled its newest version of tax increment financing just in time to help get the largest private sector investment in downtown Winnipeg since True North Square over the finish line.
The first project to get in on the new scheme is the $392-million redevelopment of Portage Place being proposed by Starlight Developments.
Although its $70-million acquisition of the downtown mall has not yet been completed — the closing date was recently pushed back to August — the new incentive is expected to provide an additional boost to ensure the project goes forward.
More than a year in the works, the new TIF program called Manitoba Works Capital Incentive, will apply to projects with a minimum of $10 million in capital investment, a minimum of 65 per cent of which is from the private sector and must have a demonstrable potential for job creation and economic benefit to the province.
Ralph Eichler, Manitoba’s economic development and training minister, said the province is glad to be able to have a new tool in its tool kit to support new development, especially during these times when such large scale real estate development may become harder to come by.
"Manitoba’s COVID-19 numbers are low and this shows we are open for business," Eichler said. "This (the redevelopment of Portage Place) is a big investment, especially for downtown. It fits nicely with the True North Square development."
The work is scheduled to create 450 construction jobs and about 150 jobs after construction is completed.
The TIF support would provide a total rebate of the educational tax component of the property tax of up to $28.7 million over 20 years.
Starlight is proposing to build two 20-storey residential towers on pre-existing pods on both the east and west ends of the mall for student housing as well as larger-family Indigenous student housing. It also recently announced plans to create a 10,000-square-foot community hub that would be open to the public 24 hours a day and include public washrooms.
The redevelopment plans include retail and services, and will transform its street presence to become more connected to the surrounding area while increasing safety.
Marni Larkin, a spokeswoman for Starlight, said the TIF support provides an important step towards closing the deal.
"It will absolutely have an impact," she said. "This is definitely excellent news and points us in the right direction but it certainly is not over."
She said the company is optimistic about closing the acquisition and is in conversation with all levels of government.
"There is a very large community component to this re-development and as such we need to have participation from everyone," she said.
Manitoba is one of the few provinces in the country where school districts collect tax via the property tax. The Manitoba government has said it wants to eliminate that over the course of about 10 years.
Eichler said, "This will level the playing field."
The TIF leverages the educational tax component of property taxes and rebates the incremental taxes (or the increase in taxes) created by significant new development.
The incremental taxes are the difference between the amount of property tax revenue generated before the development occurred and the amount of property tax revenue generated after the project is complete.
TIF programs have been in existence for some time including for certain regions like the SHED (sport, hospitality and entertainment district downtown), but the new version expands its reach throughout the province.
There had only been a handful of developments that have been awarded TIF support in the past, including the Roquette pea protein plant in Portage la Prairie, the Hylife pork processing plant in Neepawa and True North Square.
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.
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