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HomeMy WebLinkAboutCAO-05-037 - Financial Incentives Policy - Facade/Interior Loan Upper Storey Renovation ) dib KITCHENER Strategic Services ~ Report To: Date of Meeting: Submitted By: Prepared By: Ward(s) Involved: Date of Report: Report No.: Subject: Finance and Corporate Services Committee October 1 7, 2005 Rod Regier, Executive Director of Economic Development Silvia Wright, Manager of Downtown Community Development Wards 1 and 6 October 1 7, 2005 CAO-05-037 FINANCIAL INCENTIVES POLICY - FACADE/INTERIOR LOAN AND UPPER STOREY RENOVATION PROGRAM RECOMMENDATION: And further: THAT Policy 1-35 be repealed and replaced with the attached new Policy 1-35 "Combined Fa<;ade/lnterior Loan/Upper Storey Renovation Program"; That the Executive Director be authorized to grant or refuse approval of all loans in accordance with conditions and criteria as set out in the attached policy; and to execute on all documents to the satisfaction of the City Solicitor to evidence such approval or refusal of approval. REPORT: Policy Overview The attached policy is expected to provide a detailed framework for implementation for the new Upper Storey Renovation program and the modified Fa<;ade/lnterior Loan program. A staff approval committee has been created to review and recommend for approval all applications beginning after approval of this report and policy. The purpose of policy is to support the current and new financial incentives to promote Downtown economic sustainability through residential intensification, developing upper storey underused space and the exterior fa<;ade or interior of Downtown commercial/mixed use buildings. The policy provides details for the applicant criteria as they apply to both the Upper Storey and Fa<;ade Loan programs. The application review process, funding availability, approval procedures and timelines are outlined in detail. Eligibility is represented in terms of geographic location (Community Improvement Plan-CIP boundaries), grant formulation, current and proposed use and the debt service capacity of the applicant. For Fa<;ade/lnterior loans issued after June 1, 2005, these policies summarize the eligibility and financial assistance criteria and procedures. Eligibility is similar to the Upper Storey program with regard to the CIP boundaries and debt service capacity, though grant formulation, current and proposed use vary from the new program. Upper Storey Renovation Program Application Schedule For the new Upper Storey Renovation program, there are limited funds over each annual period, beginning in 2005 and ending in 2009. Disbursements will depend on availability of these funds and continued eligibility of any applicant. To offer the most equitable opportunity to all potential applicants, the following schedule is recommended: Application submission period begins: November 2, 2005. Application submission period ends: January 11, 2006 at 12:00 p.m. Responses will be reviewed by the Financial Incentive Review Committee with representation from Development and Technical Services, Economic Development, Financial Services and Legal Services. Qualified applicants can be expected to be notified of their acceptance by February 15, 2006. Applications will be made available at City Hall through Economic Development (6th Floor) Marketing materials will be available as part of the EDGE brochure and mailed to notify prospective building owners in advance of the application submission period. Formal application with signed documentation and all required attachments must be submitted to Purchasing at Kitchener City Hall, 3rd Floor, Berlin Tower. Fac;ade/lnterior Loan Program Application Schedule Formal application with signed documentation and all required attachments can be submitted at any time during the year through Downtown Community Development, Economic Development, 6th Floor Kitchener City Hall. FINANCIAL IMPLICATIONS: None. The Economic Development Investment Fund provides the financing for the Upper Storey Renovation program as $1 m is made available through 2005 - 2009. The existing fund for the Fa<;ade/lnterior Loan program is established based on the number and amount of loans in progress at any given time. Total available funding for both programs will vary based on available funds as determined through the Financial Services Department. Silvia Wright Manager of Downtown Community Development Rod Regier, Executive Director Economic Development Attachments: "Financial Incentives Policy - Fa<;ade/lnterior Loan and Upper Storey Renovation Program" COUNCIL POLICY RESOLUTION POLICY NUMBER 1-35 DATE: October 17, 2005 POLICY TYPE: COUNCIL SUBJECT: COMBINED FACADE/INTERIOR LOAN/UPPER STOREY RENOVATION PROGRAM (Replaces Previous Policy 1-35) 1. PURPOSE: To promote Downtown economic sustainability through residential intensification, developing upper storey underused space and the exterior fagade or interior of Downtown commercial/mixed use buildings. 2. POLICY STATEMENT: 2.1. General 2.1.1. The Upper Storey Renovation Program and the Fagade/lnterior Improvement Loan Program funding are combined 2.1.2. An applicant can apply for either or both programs, as well as other available incentives, but the total value of all forgivable loans/rebates under the City's Downtown Financial Incentives Program shall not exceed the cost of rehabilitating the lands and buildings. 2.1.3. All applications for assistance are subject to availability of funding. 2.1.4. For each year of available funding, preference for financial assistance will be given to vacant buildings fronting King Street. 2.1.5. All applications will be reviewed by a staff committee including representation from Downtown Development, Finance, Legal and Building. Other departments may be required to comment depending on unique circumstances as they arise. 2.1.6. The Executive Director of Economic Development will have final approval and refusal of all loans and will be authorized to execute each agreement upon approval. 2.1.7. Financial assistance for the Fagade/lnterior Improvement Incentive Program approved and issued prior to June 1, 2005 are not covered under this policy. 2.1.8. The combined program will terminate on December 31, 2009 unless Council approves an extension to the program. 2.1.9. For the subject property, an owner must provide, upon application, details of funding from any other government sources. 2.1.10. In order to be considered, all applications must be fully completed and all required supporting documentation must be provided. 3. UDDer Storey Renovation Proaram 3.1. Eligibility 3.1.1. Any registered owner of a property within the "Downtown Kitchener Community Improvement Project Area" may apply for assistance under the Program. 3.1.2. Eligible projects have vacant or underused space which is situated above commercial use space. 3.1.3. The proposed project's total cost must be greater than $40,000 and create new residential units with a minimum of 650 square feet in size per unit. 3.1.4. The proposed project consists of building renovation which, upon successful completion, results in an increase in both the property's assessment and taxes. 3.1.5. Applicants must have credit in good standing, be current with municipal taxes and utility accounts and not be in conflict or involved in litigation with the City of Kitchener. 3.1.6. All proposed improvements shall be made pursuant to an issued Building permit and constructed in accordance with the Ontario Building and Fire Codes, all applicable Zoning requirements and comply with all outstanding Orders issued against the property and any other applicable requirements pursuant to the renting of the units in Ontario. 3.1.7. Upgrading existing substandard residential units may be considered where the proponent demonstrates a major upgrading with high quality materials and design. 3.1.8. Application approval is required prior to commencement of work proposed in the application. This work does not include demolition, boarding or other temporary preparation work. 3.1.9. All applicants must provide documentation from their financial institution for substantiation of total debt service capacity. 3.2. Financial Assistance 3.2.1. The City of Kitchener will provide financial assistance for the building renovation/upgrade/conversion up to $100,000 per municipal address based on 50% of project renovation cost. 50% of the financial assistance will be in the form of a grant given as a forgivable loan and 50% will be a loan. 3.2.2. Over the life of the program, the maximum financial assistance for anyone owner is $100,000. 3.2.3. Eligible costs will be cost of materials, equipment and contracted labor based on two quotations. Labor provided by the applicant will not be considered eligible expenses. Professional fees including architects, designers, accountants, engineers and lawyers which relate to the eligible improvements will be considered an eligible expense. 3.2.4. For loans approved in 2005 and 2006, the interest rate will be 0%. Interest rates for the remainder of the life of the program will be Bank of Canada prime plus 0.5%, subject to staff review and Council approval. 3.2.5. The loan will have a maximum 10 year repayment period. 3.2.6. The loan and forgivable loan portion of the funding will be advanced in three stages: 10% on approval of the application, 80% at substantial completion and the final 10% after the 45 day lien period has expired, pursuant to the construction lien act. 3.2.7. Copies of actual invoices and proof of payment must be submitted by the applicant prior to final payment. 3.2.8. The forgivable loan will be amortized over a period of 5 years. If the owner of the property were to sell the property prior to this time, the portion of the forgivable loan not yet written off, must be repaid to the City. 3.2.9. Successful applicants will be required to enter into an Agreement with the City of Kitchener and loans will be secured through the registration of a lien on title to the subject property for the total amount of the loan. To ensure repayment of the loan, the City reserves the right to evaluate the applicant's equity and ability to repay the loan. 3.2.10. If the property is to be sold prior to the repayment of the loan or prior to the forgivable loan being written off, the outstanding loan balance and/or the outstanding forgivable loan on the books will become due and payable in full upon closing. 3.2.11. The loan and forgivable loan portion of the funding can be paid off in full at any time during the term of the loan. The forgivable loan will continue to remain on the books and be amortized during the first five years of the agreement. 4. Facade/Interior ImDrovement Loan Proaram- Loans issued after June 1. 2005 4.1. Eligibility 4.1.1. Any registered owner of a property within the "Downtown Kitchener Community Improvement Project Area" may apply for assistance under the Program. 4.1.2. The following is a list of eligible improvements: Exterior · Fagade restoration of brickwork, masonry wood etc. · Replacement or repair of entablature, eaves, parapets and other architectural design · Window and door repair or replacement · Signage in accordance with the City of Kitchener by-law respecting signs · Painting or cleaning of the fagade exterior; sandblasting is not eligible · Exterior lighting · Repair, replacement or addition of awnings, marquees and canopies · Replacement of Fagade elements originally in place during the initial construction of the building · Entrance way modifications including provisions to improve accessibility for the handicapped · Redesigned shop fronts · Roofing work where there is structural or flood damage · Other improvements to the building exterior as may be approved by the Director if Building or his designate Interior · Fire safety related work · Improvements to electrical, plumbing, heating and ventilation systems · Wheelchair access · Finishes ie painting, decorating, flooring, ceilings etc. 4.1.3. Landscaping and chattels are not considered eligible under this program. All eligible work must be of a permanent, built in nature. Items such as decorating and painting will be given low priority. 4.1.4. Applicants must have credit in good standing, be current with municipal taxes and utility accounts and not be in conflict or involved in litigation with the City of Kitchener. 4.1.5. All proposed improvements shall be made pursuant to an issued Building permit and constructed in accordance with the Ontario Building and Fire Codes, all applicable Zoning requirements and comply with all outstanding Orders. 4.1.6. The proposed project's total cost must be greater than $2,500 4.1.7. Application approval is required prior to commencement of work proposed in the application. Does not include demolition, boarding or other temporary preparation work. 4.1.8. All applicants must provide documentation from their financial institution for substantiation of total debt service capacity. 4.2. Financial Assistance 4.2.1. The City of Kitchener may provide financial assistance for the fagade and interior improvement of the building up to $15,000 per municipal address, $7,500 for interior work and $7,500 for exterior work, based on estimates provided for the project renovation cost. 15% of the financial assistance will be in the form of a grant given as a forgivable loan and 85% will be a loan. 4.2.2. Larger buildings with more than one tenant may be assessed on an individual basis 4.2.3. The maximum combined loan/forgivable loan for anyone owner is $45,000 4.2.4. Eligible costs will be cost of materials, equipment and contracted labor based on two quotations. Labor provided by the applicant will not be considered an eligible expense. Professional fees including architects, designers, accountants, engineers and lawyers which relate to the eligible improvements will be considered eligible expenses. 4.2.5. For loans approved in 2005 and 2006, the interest rate will be 0%. Interest rates for the remainder of the program will be Bank of Canada prime plus 0.5%, subject to staff review and Council approval. 4.2.6. The loan will have a maximum 10 year repayment period. 4.2.7. The loan portion of the funding will be advanced in three stages: 10% on approval of the application, 80% at substantial completion and the final 10% after the 45 day lien period has expired pursuant to the construction lien act. 4.2.8. Copies of actual invoices and proof of payment must be submitted by the applicant prior to final payment. 4.2.9. The forgivable loan will be amortized over a period of 5 years. If the owner of the property were to sell the property prior to this time, the portion of the forgivable loan not yet written off, must be repaid to the City. 4.2.10. Successful applicants will be required to enter into an Agreement with the City of Kitchener and loans will be secured through the registration of a lien on title to the subject property for the total amount of the loan. To ensure repayment of the loan, the City reserves the right to evaluate the applicant's equity and ability to repay the loan. 4.2.11. If the property is to be sold prior to the repayment of the loan or prior to the forgivable loan being written off, the outstanding loan balance and/or the outstanding forgivable loan on the books will become due and payable in full upon closing. 4.2.12. The loan portion of the funding can be paid off in full at any time during the term of the loan. The forgivable loan will continue to remain on the books and be amortized during the first five years of the agreement.