HomeMy WebLinkAboutDSD-18-031 - Brownfield Remediation Program Application - 1 Adam Street (Victoria Common)REPORT TO: Community & Infrastructure Services Committee
DATE OF MEETING: June 18, 2018
SUBMITTED BY: Brian Bennett, Manager, Business Development, 519-741-2200 x7230
PREPARED BY: Rob Morgan, Brownfield Coordinator, 519-741-2200 x7734
WARD(S) INVOLVED: Ward 10
DATE OF REPORT: May 8, 2018
REPORT NO.: DSD-18-031
SUBJECT: Brownfield Remediation Program Application 1 Adam Street (Victoria
Common)
RECOMMENDATION:
That the Brownfield Remediation Program Application for 1 Adam Street, received from
1841362 Ontario Ltd. be approved, and,
That in exchange for a completed and filed Record of Site Condition for the subject
property, the owner will be provided a phased tax incremental grant on the phased
redevelopment of the property in the form of an annual rebate on City taxes in an
amount equal to 100% of the City Tax Increment applied on the basis of the six
redevelopment phases; and,
That the City Tax Increment be defined as the difference between the City portion of real
property taxes for the 2011 taxation year and the new City portion of real property taxes
levied as a result of a new assessment by the Municipal Property Assessment
Corporation (MPAC) determined for each phase following completion of the
redevelopment of each phase, as compensation for the remediation of the above
subject property; and,
That the total maximum City Tax Incremental Grant for all phases combined is not to
exceed $2,025,687.00 payable in phases over a 10 year period; and,
That the Region of Waterloo be circulated a copy of any decision made by Kitchener
City Council regarding this application; and further,
That the Mayor and Clerk be authorized to execute an Agreement, satisfactory to the
City Solicitor, with the Regional Municipality of Waterloo and 1841362 Ontario Inc., to
implement the provisions of the Brownfield Remediation Program for 1 Adam Street, as
outlined in the Development Services Report DSD-18-031.
*** This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994 for assistance.
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BACKGROUND:
In September 2011, the City of Kitchener and Region of Waterloo received a Joint Tax
Increment Grant (TIG) application from 1841362 Ontario Ltd. (the Applicant) for the
remediation and redevelopment of Victoria Common in Kitchener. The property was
municipally known as 1 Adam Street, 340 Louisa Street, and 175, 217 and 225 St. Leger
Street (please see location map in Attachment A). The 6.12 hectare (15.1 acre) property is a
former industrial property that once included a tannery, a woodworking shop and several auto-
related businesses.
The property, now known as Victoria Commons, is a transit oriented development that is a
strong example of reusing underutilized, contaminated lands for intensified residential infill
uses. The first three phases included the construction of 208 townhouses and 191
condominium units. An additional 551 condo units are expected in the next three building
phases.
This TIG would represent the seventh successful joint Municipal and Regional TIG application
with approved grants contributing to the development of approximately 1,549 residential units,
55,700 square metres of office and retail space, 39 acres of remediated industrial land and an
estimated total post redevelopment tax assessment increase of $528,891,272 vs a pre-
redevelopment tax assessment of $8,075,250.00.
Based on a detailed assessment of the remediation information and invoices provided, a total
of $7,135,059 in direct remediation costs are considered eligible for this TIG. With a 10 per
cent allowance for incidental costs afforded under the TIG program ($713,506), the total
maximum potential TIG (before deductions for brownfield financial assistance) is $7,848,565.
In September 2013, the Regional Municipality of Waterloo approved a Phase Two
Environmental Site Assessment Grant of $20,500 and a Brownfield Regional Development
Charge Exemption of $2,619,500 for the site. Therefore, the total maximum potential TIG, net
of other assistance, for Victoria Common is $5,208,565. Remediation of the site is complete
and no other brownfield financial assistance is pending for this development.
Eligible Remediation Costs (including 10% allowance)$7,848,565.00
Less other Brownfield Financial Assistance
Regional ESA Grant$ 20,500.00
Regional DC Brownfield Exemption$ 2,619,500.00
Total Brownfield Financial Assistance$2,640,000.00
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NetEligible Remediation Costs$5,208,565.00
The TIG would be cost-shared between the Region and the City of Kitchener with grant
property in the year the application was submitted (2011). Property taxes in 2011 determine
that approximately 61.1% (maximum of $3,182,877) of the TIG would be provided by the
Region and the remaining 38.9% (maximum of $2,025,689) would be provided by the City of
Kitchener. The Cityncremental tax revenue
following the phased redevelopment of the property.
The Applicant has requested a six phase TIG. Annual payments are expected to last between
one and six years for each phase and payments for the first two phases could start as early as
2019.
REPORT:
Environmental Remediation and Eligible Costs
The Phase Two Environmental Site Assessment confirmed the presence of petroleum
hydrocarbons and heavy metals in the soil and/or groundwater exceeding Ministry of the
Environment and Climate Change standards. The site has been fully remediated and a Record
of Site Condition has been filed.
City of Kitchener and Regional staff have conducted a detailed multi-year review of the
Remedial Work Plan for the site, all subsequent soil testing and disposal work, as well as all
submitted invoices. Based on this review, a total of $7,135,059 in direct remediation costs
could be substantiated and are accepted as eligible remediation costs for the site. This amount
plus a 10 per cent allowance for indirect costs afforded under the joint TIG program
($713,506), results in a net maximum eligible joint TIG of $7,848,565.
In September 2013, the Regional Municipality of Waterloo approved a Phase Two
Environmental Site Assessment Grant of $20,500 and a Brownfield Regional Development
Charge Exemption of $2,619,500 for the site. Therefore, the potential Total Tax Increment
Grant net of other assistance for Victoria Common is $5,208,565.
No other brownfield financial assistance is pending for this development.
Joint TIG Calculations and Payment Schedule
The estimated payment schedule for the joint TIG is based on the following information:
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The Municipal Property Assessment Corporation (MPAC) assessment value of the
property before remediation and redevelopment;
An MPAC estimate of the assessed value of the property after remediation and
redevelopment;
o The estimated increase in Regional and City taxes (tax increment) based on the
An estimated total net eligible remediation costs (including a 10 per cent allowance for
indirect remediation costs) less any other government financial assistance received.
The joint TIG is paid to the Applicant on an annual basis for a maximum of 10 years, or until
the net eligible remediation costs have been recovered or the Council approved maximum has
been paid, whichever comes first.
In the case of Victoria Common, the final net eligible remediation costs are known and were
used to calculate the proposed joint TIG and are included in the Recommendation. The joint
TIG is cost-shared between the Region and the City of Kitchener, with grant proportions
year the application was submitted (2011). While the application was received in 2011, the
proposed project was complex and additional time was required to determine eligible
remediation costs.
Property taxes in 2011 determine that approximately 61.1% (maximum of $3,182,877) of the
TIG would be funded by the Region and the remaining 38.9% (maximum of $2,025,689) would
befunded by the City of Kitchener.
The Applicant has constructed the first three phases of their proposed six phase plan.
Depending on the final MPAC assessment of each phase, it is estimated that annual TIG
payments would last between one and six years per phase. TIG payments for the first two
phases could start as early as 2019.
The joint TIG program permits phasing plans of up to 10 years.
Pre-Remediation Assessment and Taxes Vs Post Redevelopment Assessment and
Taxes
The anticipated joint Tax Increment Grant payments and schedule are determined for each
application based on the following steps:
The first step includes a calculation of the anticipated assessment increment. This is based on
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the pre-remediation MPAC assessment value(s) and the estimated post-remediation and
redevelopment assessment value(s) for each phase of development as provided by the
Applicant.
AssessmentAssessmentAssessment
Increment*
$2,292,301(2011)$268,863,000(est.)$266,570,699(est.)
*These values are based on estimates and will be confirmed by MPAC upon project
completion.
The anticipated assessment increment is then used to calculate the expected annual increase
in municipal taxes (Region and City) that would be generated by the remediation and
MunicipalMunicipalTotal
Area Municipality
Tax Increment*
City $14,193.86$1,101,330.72$1,087,136.86
Region$22,302.00$1,730,473.44$1,708,171.44
Total$36,495.86$2,831,804.16$2,795,308.30
*Tax amounts do not include the education portion of annual taxes levied as the School
Boards do not participate in the program and are rounded to the nearest dollar.
Phasing of the Tax Incremental Grant/ Estimated TIG Payment Schedule
Due to the size of the residential subdivision, the applicant has requested a 6 phase TIG.
The Applicant has constructed the first three phases of their proposed six phase plan.
Depending on the final MPAC assessment of each phase, it is estimated that annual TIG
payments would last between one and six years per phase. TIG payments for the first two
phases could start as early as 2019.
Table 1 provides an estimated payment schedule including all six redevelopment phases of
Victoria Common. The final payment schedule is not confirmed until each phase is complete
and reassessed by MPAC. The share of the TIG would be capped at $2,025,687, as
highlighted.
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Table 1 Estimated TIG Payment Schedule (Based on Six Phases)
Region of
YearPhaseCity of KitchenerWaterlooTotal TIG
2019
1 and 2
$ 242,468 $ 380,980 $ 623,448
2020
3
$ 451,532 $ 709,473 $ 1,161,005
2021
$ 267,776 $ 420,746 $ 688,522
2022
4
$ 382,443 $ 600,917 $ 983,360
2023
$ 242,468 $ 380,980 $ 623,448
2024
$ 199,564 $ 313,566 $ 513,130
20255
$ 88,320$ 138,773 $ 227,093
2026
$ 0$ 0$ 0
2027
$ 0$ 0$ 0
20286
$ 151,116 $ 237,443 $ 388,559
Total TIG
$ 2,025,687 $ 3,182,878 $ 5,208,565
Impact of the Joint TIG Program in Kitchener
The infusion of private investment in the redevelopment of brownfield properties which is
supported by the Brownfield Financial Incentive Program (BFIP) is helping to ensure the
efficient use of existing infrastructure, as well as helping to achieve the
Regions broader economic development and land use planning objectives.
Once Victoria Common is complete, MPAC estimates it will have a total assessed value of
$268,863,000 compared to $2,292,301 in 2011.
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ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
through the delivery of core service.
FINANCIAL IMPLICATIONS:
With the approval of this application the City of Kitchener will provide a total municipal property
tax rebate estimated to be a maximum of $2,025,687 payable on a phased basis upon
redevelopment and reassessment of each of the 6 phases of this development.
The six City of Kitchener TIG payouts range in duration from one year to six years. The range
in payout value for the phases is approximately $88,000 to $450,000 per year as described in
Table 1.
Funding for this application has been accounted for in the Brownfield Capital Account.The
source of funding for these grants is ultimately the new tax assessment growth that will result
from redevelopment.
COMMUNITY ENGAGEMENT:
INFORM website with the agenda in advance of the
council / committee meeting.
This Application has not been circulated to the public. Staff would note that this approval
applies only to the City of Kitchener portion of the proposed Tax Incremental Grant. The
Region of Waterloo Council has considered and approved its portion of this application at the
May 29, 2018 Planning and Works Committee.
CONCLUSION:
Regional Staff and the Brownfield Steering Committee, (
Investment Advisor, Director of Revenue, City Solicitor, and Director of Planning), reviewed the
Brownfield application and are satisfied that the application meets the eligibility and application
requirements. Staff support acceptance within the terms and conditions of the Region of
Waterloo City of Kitchener Brownfield Remediation Program.
The Applicant has requested a six phase TIG. Annual payments are expected to last between
one and six years for each phase and payments for the first two phases could start as early as
2019.
The Region of Waterloo Council approved the Brownfield Financial Incentive Program
application for 1 Adam Street on June 5, 2018.
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ACKNOWLEDGED BY: Justin Readman, General Manager, Development Services
Attachments:
A) Property Location
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