HomeMy WebLinkAboutDSD-2022-006 - Brownfield Financial IncentiveProgram Application - 60 Charles St W
Development Services Department www.kitchener.ca
REPORT TO: Finance and Corporate Services Committee
DATE OF MEETING: January 10, 2022
SUBMITTED BY: Bennett, Brian, Manager, Business Development,
519-741-2200 ext. 7230
Sbeiti, Danielle, Manager of Realty Services, 519-741-2200 ext.7357
PREPARED BY: Morgan, Rob, Brownfield Coordinator, 519-741-2200 ext. 7734
WARD(S) INVOLVED: Ward 9
DATE OF REPORT: December 3, 2021
REPORT NO.: DSD-2022-006
SUBJECT: Brownfield Financial Incentive Program Application 60 Charles
Street West
RECOMMENDATION:
That the Brownfield Remediation Program Application for 60 Charles Street West,
received from 24 Gaukel GP Inc. dated February 13, 2019 be approved subject to the
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; and,
That the City Tax Increment be defined as the difference between the City portion of
real property taxes for the 2019 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 subject lands; and,
estimated City tax increment; payable in equal portions over a 7-year period with a
th
lesser amount paid in the 8 year following re-assessment by MPAC, but subject to
adjustment at the time the City Tax Increment is 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,
*** This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994 for assistance.
That the Mayor and Clerk be authorized to execute an Agreement, subject to the
satisfaction of the City Solicitor, with the Region of Waterloo and 24 Gaukel GP Inc.,
to implement the provisions of the Brownfield Financial Incentive Program
Application for 60 Charles Street West, as outlined in the Development Services
Department Report DSD-2022-006.
REPORT HIGHLIGHTS:
The purpose of this report is to obtain approval for the Tax Increment Grant (TIG)
detailed within this report.
The financial implications involve the obligation of the City to pay out the Tax Increment
Grant over an 8-year period, estimated to be approximately $281,844 per year for 7
th
years and $229,153 for the 8 and final year, for a total payout of $2,202,061.
Community engagement included
agenda in advance of the committee meeting
This report supports the delivery of core services.
BACKGROUND:
In February of 2019, the City of Kitchener and Region of Waterloo received a joint Tax
Increment Grant (TIG) application under the Brownfield Financial Incentive Program from
24 Gaukel GP Inc. relating to the remediation and redevelopment of the property municipally
known as 60 Charles Street West (Locational Map Attached). The 0.22 ha (0.54 acre)
property is located at the intersection of Gaukel Street and Charles Street West in
sly contained an automobile service
garage and gas bar. The property is being redeveloped into a 305-unit residential
condominium with 564 square meters of commercial space on the main floor and two levels
of underground parking.
REPORT:
The Environmental Consultants for this project are MTE Consultants Inc. MTE completed a
Remediation Work Plan dated February 12, 2019 as well as Phase One and Phase Two
Environmental Site Assessments. Within the scope of the Phase Two they completed a soil
and groundwater investigation which determined the extent of the contamination.
Historical Use of the Property and Surrounding Area
The subject property was first developed in 1894 and used for residential and commercial
purposes. Over the next 124 years the property was used for a variety of commercial uses
that included a welding operation, sign manufacturer, lumber yard, dry cleaning operation,
vehicle maintenance facility and retail fuel outlet. Historical uses in the surrounding area
included: manufacturing, lumber
gasification plant.
Contamination and Remediation
The consultant completed comprehensive testing on the property which identified multiple
in concentrations that
exceeded the applicable Ministry of the Environment Conservation and Parks (MECP) Site
Condition Standards, including the following:
Metals;
Petroleum Hydrocarbons;
Polycyclic Aromatic Hydrocarbons (PAHs);
Volatile Organic Compounds (COCs); and,
Sodium Chloride.
Site remediation activities included a combination of Risk Assessment, which developed
property specific standards, and remediation of remaining exceedances in the soil and
groundwater. Various techniques including soil excavation and disposal, soil embankment
and capping, and groundwater treatment are being utilized.
Eligible Environmental Remediation Costs
The applicant has submitted an estimated environmental remediation cost for the subject
property of $5,432,364. This amount plus a 10% allowance for indirect costs of $543,236
(which are eligible as the application was received prior to Council amending the policy
eliminating indirect costs on November 22, 2021) results in a maximum eligible joint TIG of
$5,975,600. The TIG would be cost-shared between the Region and the City of Kitchener
on the property in the year the application was submitted (2019), with approximately 63.1%
($3,773,539) being provided by the Region and the remaining 36.9% ($2,202,061) provided
commence after the property is completely redeveloped and ultimately reassessed by the
Municipal Property Assessment Corporation (MPAC), and likely not before 2023. The
$281,844 TIG payment will last for seven years with a payment of $229,153 in the eighth
and final year.
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 the development, as provided by the Applicant
(Table 1).
Table 1:Potential Assessment Increment
Assessment Assessment Assessment
Increment*
$989,489 $81,350,000 (est.) $80,360,511 (est.)
*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 2).
Table 2: Anticipated Tax Increment
Municipal Municipal Total
Area Municipality
Tax Increment*
City $5,740.67 $287,584.27 $281,843.60
Region $9,837.44 $492,816.60 $482,979.16
Total $15,578.11 $780,400.87 $764,822.76
*Tax amounts do not include the education portion of annual taxes levied as the School
Boards do not participate in the program.
The anticipated TIG payout schedule is detailed in Table 3 below.
Table 3: TIG Payment Schedule
Year Area Municipality Region Total TIG
1 $ 281,844 $482,979 $764,823
2 $ 281,844 $482,979 $764,823
3 $ 281,844 $482,979 $764,823
4 $ 281,844 $482,979 $764,823
5 $ 281,844 $482,979 $764,823
6 $ 281,844 $482,979 $764,823
7 $ 281,844 $482,979 $764,823
8 $229,153 $392,686 $621,839
9 $0 $0 $0
10 $0 $0 $0
Total TIG $2,202,061 $3,773,539 $5,975,600
STRATEGIC PLAN ALIGNMENT:
This report supports the delivery of core services.
FINANCIAL IMPLICATIONS:
With the approval of this application the City of Kitchener will provide a total municipal
property tax rebate through the Brownfield Financial Incentive Program, which is estimated
to be a maximum of $2,202,061 payable in eight annual installments not expected to be
sooner than 2023.
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.
Capital Budget The recommendation has no impact on the Capital Budget.
Operating Budget The recommendation has no impact on the Operating Budget.
COMMUNITY ENGAGEMENT:
INFORM e 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 will consider its portion of this application at their Planning and
Works Committee.
PREVIOUS REPORTS/AUTHORITIES:
There are no previous reports/authorities related to this matter.
APPROVED BY: Justin Readman, General Manager, Development Services
ATTACHMENTS:
Attachment A Locational Map
Attachment A Locational Map