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Home My WebLink AboutCAO-13-025 - Brownfield Remediation Program Application - 55 Moorgate Crescent REPORT TO: Finance & Corporate Services DATE OF MEETING: September 9, 2013 SUBMITTED BY: Brian Bennett, Manager, Business Development, 519-741- 2200 X 7230 PREPARED BY: Rob Morgan, Capital Investment Advisor, 519-741-2200 X7734 WARD(S) INVOLVED: Ward 8 DATE OF REPORT: July 8, 2013 REPORT NO.: CAO-13-025 SUBJECT: Brownfield Remediation Program Application 55 Moorgate Crescent RECOMMENDATION: 1. That the City of Kitchener approve the Brownfield Remediation Program Application, received from Savic Homes Ltd. dated November 20, 2012. In exchange for a completed and filed Record of Site Condition for the property , the City of Kitchener will provide a grant in the form of an annual rebate on City taxes in an amount equal to 100% of the City Tax Increment; where the City Tax Increment is defined as the difference between the City portion of real property taxes for the 2012 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) following completion of the project, as compensation for the remediation of the above stated lands. The annual City property tax grant is estimated to be $25,043, payable for eight years with $17,873 being paid on the ninth and final year following re-assessment by MPAC. 2. That the Region of Waterloo Brownfield Coordinator be advised of City Council’s decision regarding this Application. 3. That the Mayor and Clerk be authorized to execute an Agreement amongst the City of Kitchener, the Region of Waterloo and Savic Homes Ltd. BACKGROUND: This application relates to the property municipally addressed as 55 Moorgate Crescent further described as Parts 1 and 2 on 58R-14480. The property is .44 ha in size and is situated on Moorgate Crescent off of Hazelglen Drive.The site was used as a waste disposal site in the 1960’s and has been vacant since the 1970’s. The lands are being redeveloped to accommodate 31 residential townhouses. 5 - 1 REPORT: a) Contamination and Remediation The Environmental Consultants for this project are LVM Inc. of Kitchener. Referring to the “Remedial Action Plan”, dated June 6, 2012, and subsequent addendum dated January 10, 2013, Environmental contaminates found on the property included concentrations of lead, arsenic, copper and benzo(a)pyrene at levels in exceedance of accepted Ministry of Environment Table 2 standards. Remediation of the site involved the excavation and off-site disposal of the impacted soils at an appropriate licensed landfill facility. Remediation activities have concluded on the site and a Record of Site Condition has been filed and acknowledged by the Ministry of Environment. Redevelopment of the site to accommodate the 31 townhomes is currently underway. b) Eligible Remediation Cost Savic Homes Ltd. And their Environmental Consultants, LVM have submitted actual remediation costs for the site of $773,814. This amount, plus a 10% allowance for indirect costs afforded under the TIG program ($77,381), less assistance already received under the Phase Two ESA Grant ($11,117.47) and Regional Development Charge (RDC) exemptions ($278,690) under the BFIP results in a maximum eligible joint TIG of $561,388. The grant will be cost-shared between the Region and the City of Kitchener with grant proportions determined by each municipality’s share of the municipal taxes levied on the property with 61.1% ($343,172) being provided by the Region and the remaining 38.9% ($218,217) provided by the City of Kitchener. The annual payments, which are estimated to last nine (9) years, would not start until after the property is fully remediated, redeveloped and ultimately reassessed by the Municipal Property Assessment Corporation (MPAC). c) Existing Assessment and Taxes There are no tax arrears outstanding on this property. The total 2012 Residential/New Multi- Residential Assessment for the lands was $245,000, and 2012 property taxes were $3070.10 split as follows City of Kitchener $982.56 Region $1545.21 Education $542.33 Excluding the Education component, the total 2012 Municipal (Region + City) taxes are $2527.77 d) Projected Assessment and Taxes This development will provide 31 new residential townhomes. The Applicant has estimated the projected post-project Assessment value at $6,500,000. The attached Table 1 - Tax Increment Grant Calculation provides details of the projected assessment and taxes generated by the development. 5 - 2 Using the 2012 Tax Rates, the projected annual Municipal Taxes (Region + City) following full completion of the project would be $66,953.77, split as follows: City of Kitchener $ 26,025.35 Region $ 40,928.42 Based upon this projection, the City’s Annual Tax Increment(i.e. the difference between the existing City tax level and the future City tax level) is estimated at $25,042.79 (26,025.35 - $982.56). TheRegionalTax Increment is estimated at $39,383.21 ($40,928.42 - $1545.21). e) Sequence of Financial Incentives The Region – City Brownfield Financial Incentive Program provides the development industry 3 funding instruments which work in the following sequence. First , the Region provides a 50% grant (up to $40,000) for a Phase 2 Environmental Site Assessment. Second , the Region provides an exemption in the applicable Regional Development Charge equivalent to (but not exceeding) the “Eligible Remediation Cost”. Lastly , the Region and the City jointly provide a Tax Incremental Grant (TIG) on any remaining “Eligible Remediation Cost” which has not been funded by Regional Development Charge exemptions. This development is eligible for all 3 incentives listed above. Staff estimates that the Regional Development Charges for 31 new residential units (using current DC rates) is $278,690. ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN: This project implements our Community Vision and the Citizens’ Vision for the Environment: “Together, we will build an innovative, caring and vibrant Kitchener with safe and thriving neighbourhoods”; “Our shared vision is for Kitchener to be a community that focusses significant energy and resources on becoming more environmentally friendly through investments in things like bike trails, improved transit systems, tougher environmental bylaws and stricter growth management policies that limit sprawl.” This project is in keeping with the following Environmental Strategic Direction: “Endorse and implement the proposed Environmental Remediation Strategy.” FINANCIAL IMPLICATIONS: The approval of this application will obligate The City of Kitchener to provide an annual municipal property tax rebate estimated to be $25,043.00 per year for the first 8 years upon reassessment by MPAC and $17,873.00 for the ninth and final year. 5 - 3 COMMUNITY ENGAGEMENT: 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 will consider its portion of this application at a future date. CONCLUSION: Regional Staff and The Brownfield Steering Committee, consisting of the City’s Capital Investment Advisor, Director of Revenue, City Solicitor, and Director of Planning, reviewed the application. Staff support acceptance within the terms and conditions of Region of Waterloo - Kitchener Brownfield Remediation Program. ACKNOWLEDGED BY: Jeff Willmer, CAO 5 - 4 5 - 5 5 - 6