HomeMy WebLinkAboutDSD-19-253 - Brownfield Remediation Application Program - 270 Spadina Road EastREPORT TO:Committee of the Whole
DATE OF MEETING:February 24, 2020
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:9
DATE OF REPORT:December 16, 2019
REPORT NO.:DSD-19-253
SUBJECT:Brownfield Remediation Application Program 270 Spadina Road East
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RECOMMENDATION:
That the Brownfield Remediation Program Application for 270 Spadina Road East,
received from 270 Spadina Kitchener Inc. dated December 12, 2018be approved subject
That in exchange for a completed and filed Record of Site Condition for the subject
property, the owner will be provided a tax incremental grant on the redevelopment of the
property in the form of a rebate issued on a proportionate basis, annually for a period not
to exceed 10 years on City taxes in an amount equal to 100% of the City Tax Increment;
That the City Tax Increment be defined as the difference between the City portion of real
property taxes for the 2018taxation 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 subject lands; and,
That the City property tax grant isestimated
City tax increment; payable in equal portions over a 10 year period following re-
assessment by MPAC, but subject to adjustment at the time the City Tax Increment is
actually calculated following completion of the project and the property is re-assessed
by MPAC; and,
That the Region of Waterloo Brownfield Coordinator be circulated a copy of any decision
made by Kitchener City Council regarding this Application; and further,
That the Mayor andClerk be authorized to execute an Agreement, subject to the
satisfaction of the City Solicitor, with the Region of Waterloo and 270 Spadina Kitchener
Inc., to implement the provisions of the Brownfield Remediation Program Application for
270 Spadina Road East, as outlined in the Development Services Department Report DSD
19-253.
***This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994for assistance.
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BACKGROUND:
In December of 2018, the City of Kitchener and Region of Waterloo received a joint Tax
Increment Grant (TIG) application from 270 SpadinaKitchener Inc. relating to the remediation
and redevelopment of the property municipally known as 270 Spadina Road East (Locational
Map Attached). The 0.58 ha (1.43 ac.) propertyis located east of the intersection of Spadina
Road East and Highland Road East and currently contains a six story residential apartment
building and underground parking garage. The redevelopment plan for the property includes a
second apartment building and new underground parking loton the north-east portion of the
property.The existing apartment building has been renovated and converted from a61unit
apartment building to a 103 unit building. The new apartment to be constructed will have 90
units.
REPORT:
Contamination and Remediation
The Environmental Consultants for thisproject are Peritus Environmental Consultants Inc.
Peritus completed a Remedial Action Plan dated November 30, 2018 as well as Phase One and
TwoEnvironmental Site Assessments. Within the scope of the Phase Two they completed a soil
and groundwater investigationwhich determined the extent of soil contamination.
in the soil and groundwater that include the following:
Petroleum Hydrocarbons (PHCs);
Volatile Organic Compounds (VOCs);
Salt
Metals;and,
Polycyclic Aromatic Hydrocarbons (PAHs).
Site remediation activities will include a combination of Risk Assessment to develop property
specific standards and remediation of remaining exceedances in the soil and groundwater.
Various techniques include soil excavation and disposal, soil embankment and capping, and
groundwater treatmentwill be utilized.
Eligible Environmental Remediation Costs
The applicant has submitted an estimated environmental remediation cost for the subject
property of $5,419,105.00. This amount plus a 10% allowance for indirect costs afforded under
the joint TIG program of $541,910.50 results in a maximumeligible joint TIG of$5,961,015.50,
less assistance that will be received through theRegional Development Charge (RDC)
exemption under the Brownfield Financial Incentive Program ($1,874,406.00) resultingin a
maximum eligible joint TIG of $4,086,609.50.
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Based on the projected tax increment, the developer will be able to recover approximately 63%
of the estimated remediation costs. This amount(TIG)would be cost-shared between the Region
of Waterloo and the City of Kitcheneras shown in Table1below.
The annual payments of approximately $69,454.00(City) would last the entire 10 years allowed
by the program and would not start until after the property is fully remediated, redeveloped and
reassessed by the Municipal Property Assessment Corporation (MPAC), likely not before 2023
(Table 4).
Table 1:Remediation Cost Recovery
Max Eligible Remediation Cost$5,961,015.50
Less Regionof Waterloo DC Exemption$1,874,406.00
Total Tax Incremental Grant Amount$4,086,609.50
Less City of KitchenerTIG$694,540.00
Less Regionof Waterloo TIG$1,184,750.00
Remaining remediation costs to be$2,207,319.50
Paid by the Developer that cannot be recovered
through the Brownfield program
The maximum eligible TIG amount after the Regional Development Charge exemption is
accounted for is $4,086,609.50. This amount, less the City and Regional Tax Incremental Grant
amounts results in approximately $2,207,319.00 in remediation costs that the applicant is not
eligible to recover.Specifically, the City and Regional taxes on the property are not increasing
enough as a result of the redevelopment to cover all of the remediation costs.
As a condition of final approval of eligible costs, invoices must be submitted by the applicant and
must be approved for eligibility by City of Kitchener and Regional staff.
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
the pre-remediation MPAC assessment value(s) and the estimated post-remediation and
redevelopment assessment value(s) for thedevelopment as provided by the Applicant.(Table 2)
Table 2:PotentialAssessment Increment
AssessmentAssessmentAssessment
Increment*
$901,500.00$21,339,000(est.)$20,437,500(est.)
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*These values are based on estimates and will be confirmed by MPAC upon project completion.
Secondly, 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
redevelopment of the property(Table 3)
Table 3:Anticipated Tax Increment
MunicipalMunicipalTotal
Area Municipality
Tax Increment*
City $6,235.35$75,689.43$69,454.08
Region$10,636.29$129,111.19$118,474.90
Total$16,871.64$204,800.63$187,928.98
*Tax amounts do not include the education portion of annual taxes levied as the School Boards
do not participate in the program.
Table 4:TIG Payment Schedule
YearArea MunicipalityRegionTotal TIG
1$69,454$118,475$187,929
2$69,454$118,475$ 187,929
3$69,454$118,475$ 187,929
4$69,454$118,475$ 187,929
5$69,454$118,475$ 187,929
6$69,454$118,475$ 187,929
7$69,454$118,475$ 187,929
8$69,454$118,475$ 187,929
9$69,454$118,475$ 187,929
10$69,454$118,475$ 187,929
Total TIG$694,540$ 1,184,750$ 1,879,290
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
the delivery of core service.
FINANCIAL IMPLICATIONS:
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The approval of this application will obligate The City of Kitchener to provide an annual municipal
property tax rebate estimated to be $69,454per year for 10 yearsupon redevelopmentof the
property and reassessment by MPAC.
COMMUNITY ENGAGEMENT:
INFORM This report
council / committee meeting.
Region of Waterloo Council will consider its portion of this application at a future date.
CONCLUSION:
Regional Staff and The Brownfield Steering Committee, (
Investment Advisor, Director ofRevenue, City Solicitor, and Director of Planning), reviewed the
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 ofKitchener Brownfield Remediation Program.
ACKNOWLEDGED BY: Justin Readman,General Manager, Development Services
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Locational Map
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