A plan to use taxpayer money to incentivize developers to build on the future Lakeview Business District will go before council next week, after a 6-1 vote during the standing committee of the whole meeting on April 7. Only Coun. Shelley Biermanski was opposed.
In a presentation by Michael Erickson, Patricia Nichol, and Marty Pawlina, the members of the city's economic development department outlined the Lakeview Development Acceleration Program (DAP), an incentive program designed to bring developers to Lakeview faster and reduce the financial risk to the city.
"The risk of stalled or delayed development in Lakeview may present financial challenges for the city, as it could defer collection of off-site levies specific to Lakeview and thereby slowing its debt repayment plan," the report said.
At the heart of the Lakeview DAP is an investment of $1.27 million annually, funded through new assessment growth, into the city's growth stabilization fund, until a balance of $8 million is reached. The program will run for 10 years.
Lakeview Business District has repeatedly been mentioned as being among council's top priorities. In January, it was announced council had approved an investment of $62.7 million for the front-end servicing of the industrial hub.
Financial incentive programs in St. Albert aren't necessarily new, although nothing of this size has been done by the municipality before. Examples given were the Beautification Program, which offers $2,500 annually to local businesses, and the Community Capital Program offers $250,000 annually to non-profits.
To be eligible for the DAP, a project must be a minimum of 30 gross acres of developed land and/or with completed buildings, and commence construction within 18 months of executing the program agreement.
City staff have developed different scenarios of the program with a baseline of an average yearly development rate of 15 acres/year and the DAP is not in place. In the high-impact scenario, development occurs at 25 acres/year for the first 10 years.
A low-impact scenario sees no improvement over the baseline development rate, but rebates are issued according to the framework. The cumulative tax of each scenario over 30 years is -$5.1 million for the low-impact scenario, and +$61 million for the high impact scenario.
If development were delayed by one year, the scenario sees a development rate of 15 acres/year and a cumulative tax of -$36 million.
Coun. Sheena Hughes was hoping to apply a decrease to the tax rate with the new assessment growth this year. The decrease will still come, but it won't be applied for future years until the program is fully funded.
She said it's important to note that the potential decrease, which would have been around 0.45 per cent, is not nothing.
"It's still something that we have to recognize, but it will be available to residents in the future," Hughes said. How long depends on when an uptick in development occurs and the success of the program.
During the standing committee of the whole meeting, she said she felt some consolation in the program, describing it as more of a tax deferral, and that it was being implemented to offset the risk of potentially not being able to make upcoming debt payments from off-site levies.
"The intention behind this is to ensure that we have the development necessary to take away the risk that he city has incurred with servicing," she said, adding that if the acceleration program was a tipping point to get developers to see what council sees in Lakeview then it's a necessary initiative.
"I'm confident that the acceleration program as presented will definitely increase the development competitiveness of our Lakeview Business District and realize the return on the investment made by the city," Coun. Ken MacKay said.
Being the only councillor to vote against the plan, Biermanski said she hoped a more creative solution, without the use of taxpayer dollars, could have been used.
"I would have like to see them at least negotiate with a few developers first and work together for something. Because it's not going to be the same thing that works for every developer, and you have to have conversations and then get creative," Biermanski said.
The program will be further debated during the regular council meeting on April 15, where a final approval decision will be made. Coun. Wes Brodhead was proud of the work already done to get Lakeview ready for development, and hopes the DAP will help continue that work.
"The Lakeview Business District Acceleration Program is just a mechanism to allow us to bring those first, critical developers into our community," Brodhead said. He added that he went out to take a look at the land just a day before.
"If you put your mind forward, you can see it come in the future and it's a compelling vision to St. Albert," he said
