December 9, 2019

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Public funding for True North Square rises to $45 million

Total taxpayer support for True North Square has ballooned to more than $45 million — $20 million more than original estimates — to support the construction of luxury condominium and apartment towers. It could increase even more depending on the future value of the two properties.

City and provincial officials confirmed that although there are a number of components that drove up the total public funding, the largest contribution was the decision to rebate property taxes through the city-provincial tax-increment financing program (TIF) for a residential apartment tower at 225 Carlton St., a project being led by True North Real Estate Development, and a 130-unit luxury condominium tower at 220 Carlton St., which is beside the proposed Sutton Place Hotel, which are both being developed by Northland Properties.

Despite the fact that both levels of government had agreed to expand the scope of TIF support, details of how much additional money would flow to developers appear to have been concealed from public view.

Some details of the additional tax rebates were included in a report tabled Sept. 12 at the city's executive policy committee, where the expanded TIF scope was approved. That report included an estimate for the tax rebates for the two towers of $17.2 million, split evenly by the province and city.

The report indicated that the city had agreed to provide an additional $3.5 million for work on the public plaza and surrounding streets and skywalks. When you include the $25 million originally approved for TNS, total public support now tops $45 million.

However, details about the total cost of taxpayer support were conspicuously absent from a Sept. 10 news release from Municipal Relations Minister Jeff Wharton. Despite including the details in the appendix of its Sept. 12 report, the city did not issue a news release acknowledging that the scope and extent of taxpayer support have increased substantially.

Wharton's news release described total provincial support at $11.95 million. It did mention a decision to support the apartment and condominium towers, but did not identify a cost despite the fact that estimates existed.

Construction at True North Square.

MIKE DEAL / WINNIPEG FREE PRESS

Construction at True North Square.

Interviews with city and provincial officials suggested that $17.2 million figure was not highlighted in news releases because it is an estimate and not a firm number.

Both levels of government said the additional money was needed to ensure that the full scope of the True North Square project, including the Sutton Place hotel and condo tower, went ahead as planned.

A spokeswoman for Wharton said in a written statement that the additional TIF support was necessary "to leverage private investment, particularly investment from the Sutton Place ownership (Northlands) for a hotel." She also suggested that the former NDP government "made a commitment" to Northlands that it would provide TIF support for the hotel development if it went ahead.

The spokeswoman said Northlands did not threaten to pull out of the Winnipeg development if it did not get tax rebates but "the TIF was a significant part of their decision making."

Jim Ludlow, president of True North Real Estate Development, said in a written statement that TIF support helped Winnipeg secure private investment in TNS. "The Canadian development landscape is highly competitive and programs like these provide opportunities for cities like Winnipeg to continue to compete and attract outside investment capital."

Mayor Brian Bowman said Friday that when city hall agreed to cover one-third of the plaza cost back in March 2017, the province had not yet agreed to put in any funds. He said that city officials knew then that TIF agreements with the province have involved a 50-50 split of cost-sharing, so the province’s request this week for the city to up its share was not unexpected.

"We knew, obviously it was a possibility if the province came on board," Bowman said, adding he felt no pressure from the Pallister government for city hall to amend its original contribution.

Bowman continued to defend the TIF contributions to the True North Square project as a sound investment for taxpayers.

"It’s a good project for Winnipeg," Bowman said. "It will pay significant tax dividends for taxpayers when the TIF Funding is exhausted."

Mayor Brian Bowman: 'It's a good project for Winnipeg.'

RUTH BONNEVILLE / WINNIPEG FREE PRESS

Mayor Brian Bowman: 'It's a good project for Winnipeg.'

Public funding for True North Square (TNS) is provided through two sources, both cost-shared by the city and province.

Some of the money comes from the Sports Hospitality and Entertainment District (SHED) program, which was earmarked for street-level enhancements surrounding new development in a 10-block area of downtown. Additional money is now flowing from the provincial-city Tax Increment Financing program, where property taxes on new developments are rebated to developers either as an up-front grant or incrementally over a period of 10 years.

Originally, the city and province agreed to provide $25-million support from the SHED program to cover costs associated with a public plaza and improvements to surrounding streets and other public spaces including additions to the skywalk system. However, on Sept. 10, with a deadline looming for final approval at the last city council meeting before civic elections, the province and city jointly agreed to significantly expand the scope of TIF funding.

The province highlighted its growing interest in expanding the scope of tax rebates in letters to the city that started in late spring. However, the province only formally informed the city about its intention to expand the scope of TIF support in a Sept. 10 message from Jan Forster, the deputy minister of municipal relations, sent to Winnipeg CAO Doug McNeil.

In that letter, obtained by the Free Press, Forster indicates she is writing "to convey Manitoba's interest in furthering the unprecedented partnership between the Province, the City of Winnipeg and the private investors on True North Square development, including the Northlands elements."

The total value of the rebates offered for 220 and 225 Carlton will not be known until the TIF agreement runs out in 20 years.

City and provincial officials confirmed that under the terms of the expanded TIF support, the property owners will be allowed to collect and keep all provincial and municipal property taxes generated by the site over the 20 year term. This is typically done with projects when TIF rebates are paid out incrementally over a longer term.

However, the province also agreed to remove the requirement for 10 per cent of the units in the residential towers to be available at affordable market rents. That had been a requirement for previous TIF support to residential developments.

— with files from Aldo Santin

dan.lett@freepress.mb.ca

Dan Lett

Dan Lett
Columnist

Born and raised in and around Toronto, Dan Lett came to Winnipeg in 1986, less than a year out of journalism school with a lifelong dream to be a newspaper reporter.

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