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HomeMy WebLinkAboutCAO-14-009 - Downtown Financial Incentive Program Modifications - Facade Grand Program & Grants in Leiu of Planning & Building Permit Fees Staff Report ITC:HFI ? .R CA0 Office www.kitchenerca REPORT TO: Finance & Corporate Services Committee DATE OF MEETING: February 3, 2014 SUBMITTED BY: Rod Regier, Executive Director, ext. 7506 PREPARED BY: Cory Bluhm, Manager of Downtown Development ext. 7065 WARD(S) INVOLVED: 9 & 10 DATE OF REPORT: January 23, 2014 REPORT NO.: CAO-14-009 SUBJECT: Downtown Financial Incentive Program Modifications: Fagade Grant Program & Grants in Lieu of Planning and Building Permit Fees RECOMMENDATION: That subsection 4.2.1 of Council Policy 1-535 be amended to change the expiration date of the Fagade Grant Program from December 31, 2013 to December 31, 2018. That subsection 4.1.1 of Council Policy 1-535 be deleted in its entirety and replaced with a new subsection 4.1.1, in the form shown in the amendment attached to Report CAO-14-009, stating that the `Downtown Incentives Funding' line item in the capital budget shall be the on-going funding source for the Fagade Grant Program. That a new subsection 9 (e) be added to Council Policy 1-540, in the form shown in the amendment attached to Report CAO-14-009, to modify the scope of the `Exemption from Planning and Building Permit Fees' program to apply only to those permits for retail, restaurant and personal service uses that do not exceed $1,000. That a new subsection 9 (f) be added to Council Policy 1-540, in the form shown in the amendment attached to Report CAO-14-009, stating that no more than $10,000 worth of permit rebates be granted in a given year, with any unallocated funds being transferred to the Fagade Grant Reserve Account. That a new subsection 9 (g) be added to Council Policy 1-540, in the form shown in the amendment attached to Report CAO-14-009, identifying the criteria by which projects currently in the planning and development phases may still apply to the `Exemption from Planning and Building Permit Fees' program for rebates exceeding $1,000. BACKGROUND: The Fagade Grant Program commenced in 2009, as part of the Downtown Community Improvement Plan (CIP). The City offers matching grants of up to $10,000 per storefront, being no more than 50% of the total project costs. Since the program began, the City has approved 39 applications, encompassing 54 storefronts. Once all of these projects are complete, the estimated total construction value will be $1.46 million, of which the City provided $429,000. As such, for every $1.00 the City contributed, the private sector spent $2.40. Prior to converting this program to a grant, the former loan program stimulated just 6 projects over a 5 year period. The Exemption from Planning and Building Permit Fees program provides rebates to building owners for applicable development fees. Since 2006, the City has issued 21 rebates for a total cost of$403,244.17. As part of the 2013 Downtown Financial Incentive Review, City Council endorsed extending the Fagade Grant Program, and modifying the scope of the permit rebate program, as is proposed in this report. REPORT: Fagade Grant Program Extension It is standard practice that all financial incentive programs establish sunset clauses, requiring City Council to either repeal, amend, or extend the program, typically on a 5-year basis. The current program is producing tremendous results, not just in the volume of applications, but in enhancing the overall appearance of Downtown, which is positively affecting the community's perception of the core. However, staff estimate that there are upwards of 60+ storefronts that could still benefit from fagade enhancements. And most of the previous applicants noted that they either would not have enhanced their facades had it not been for the grant program, or they would not have carried out the extent and quality of work completed. Another key benefit of the program is that all applications are vetted by staff in accordance with the King Street Fagade Guidelines. This ensures that every project is aesthetically pleasing, completed to the highest quality feasible, consistent with neighbouring properties, and respectful of any architectural or historic feature. Without this program, the City would have limited opportunities to achieve these design objectives. Based on the foregoing, staff recommend extending the program for another 5 years. Modifications to the Exemption from Planning and Building Permit Fees Program Through the Downtown Financial Incentives Review, it was determined that the planning fee and building permit rebate program does not play a significant role in incentivizing new major redevelopment projects. However, it does play a significant role in enabling building owners and tenants to enhance ground floor storefronts and interiors. As such, the Incentive Review recommended modifying the program to limit rebates to permits of $1,000 or less for retail, restaurant and personal services uses only. The proposed policy modifications would implement this change effective upon final approval by City Council. However, for property owners and developers who have started major redevelopment projects under the assumption that this incentive would be available, it is important to allow a reasonable sunset period to allow for the completion of their projects. As such, provisions have been added to the Council Policy which allow them to apply for the grant, provided they meet specific criteria. In particular, they must submit a formal application for the rebates prior to April 10, 2014, must have commenced site plan or building permit work prior to April 10, 2014, and the corresponding building permits must close prior to March 1, 2017. In addition, those developers who have a legal agreement with the City already in place, respecting the provision of planning fee and building permit rebates, would be eligible subject to any terms and conditions of those agreements. Funding Reallocations The Fagade Grant Program was initially funded through the capital reserve account previously used to finance the now discontinued Fagade Loan Program. The majority of these funds have now been allocated or distributed as grants. Building permit rebates have been funded through the Downtown Incentives Funding line item in the capital budget. As part of the 2013 Financial Incentive Review, City Council endorsed the reallocation of incentive funding, whereby $10,000 of the Downtown Incentives Funding capital budget would be directed to fund permit rebates, while the balance of funding in any given year would be directed to the Fagade Grant Program. The proposed Council Policy amendments establish this reallocation of funding. FINANCIAL IMPLICATIONS: No new funding is required beyond what is currently allocated in the capital budget. The report section of this report outlines changes to the funding allocations for each program. COMMUNITY ENGAGEMENT: Public, stakeholder and advisory committee consultation was undertaken as part of the Downtown Financial Incentive Review. The City will contact those developers and property owners who are currently undertaking site plan or building permit work to advise them of the proposed changes to the permit rebate program, in advance of the April 10, 2014, application deadline. CONCLUSION: That the Fagade Grant Program be extended until December 31, 2018 and the Exemptions from Planning and Building Permit Fees Program be amended to modify the scope of the program to target ground floor commercial businesses. ACKNOWLEDGED BY: Jeff Willmer, CAO DRAFT REVISED COUNCIL POLICY 1-535 That Council Policy 1-535 be amended as follows: 1. That section 4.1.1 be deleted in its entirety and replaced with the following: "Annual funding will be determined through the City's capital budget, as identified in, but not limited to, the `Downtown Financial Incentives' line item, with any unallocated funds transferred to the subsequent year." 2. That the date contained in Section 4.2.1 be deleted and replaced with "December 31St 2018". DRAFT REVISED COUNCIL POLICY 1-540 That Council Policy 1-540 be amended as follows: 1. That under section 9 "Grants in Lieu of Building Permit Fees" new subsections 9(e), 9(f) and 9(g) be added as follows: "e) Eligible Uses and Financial Assistance — only those building permits that are associated with retail, restaurant and/or personal services uses shall be eligible to receive a grant. In addition, only those permit fees that are less than $1,000 will be eligible. No individual unit (ie: street address) may receive more than $1,000 in total grants for building permit fees in any given year." f) Program Funding — The City shall issue no more than a total of$10,000 worth of grants in lieu of building permit fees in any given year. Any unallocated funding will be transferred to the Fagade Grant Reserve Account." g) Exceptions — nothwithstanding sections 9(e) and 9(f) above, property owners may be eligible to receive grants in excess of$10,000, for any use permitted by the zoning bylaw, provided i) they have a legal agreement in place with the City of Kitchener, prior to February 1, 2014, respecting the provision of grants in lieu of building permit fees; or, ii) the property owner has submitted a `Grants in Lieu of Building Permit Fees' application by April 10, 2014, and at least one of the following applies: i. The applicant has submitted a complete site plan application prior to April 10, 2014, and said application is deemed `Under Review', `Approved in Principle', or `Construction'; or ii. The applicant has submitted a building permit application prior to April 10, 2014, and said application is deemed `Active' or `Closed'. For those property owners who satisfy policy 9(g)(ii)(i) or 9(g)(ii)(ii) above, a grant will be issued subject to the availability of funding, and provided the building permit has closed prior to March 1, 2017. The City reserves the right to reject any application for any reason it sees fit."