HomeMy WebLinkAboutCAO-07-011 - Kitchener Brownfields - Future DirectionI
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Report To: Economic Development Advisory Committee
Date of Meeting: February 28, 2007
Submitted By: Kathy Weiss, Director of Business Development
Prepared By: Terry Boutilier, Senior Business Development Officer and
Brownfield Co-ordinator
Wards Involved: City Wide
Date of Report: February 19, 2007
Report No.: CAO-07-011
Subject: Future Directions -Kitchener Brownfields
INTRODUCTION
The purpose of this Report is to review with EDAC the background and status of the Kitchener
Brownfield Remediation Program; the City's current issues with contaminated lands; and to
seek advice on the future direction of the Program given recent developments.
BACKGROUND
'A Brownfield is a property which contains environmental contamination either in the ground or
buildings due to the operational activities of a previous land use, where the extent of the
contamination renders the property vacant, under-utilized, unsafe, unproductive or
abandoned. "
Kitchener, like many Ontario municipalities, has a number of former industrial, commercial or
public properties which are contain chemical contamination due to their past business
operations.
The number of affected properties in Kitchener is not precisely known. We do not have access
to any source of comprehensive information which would lead us to fully understand the breadth
of our City's problem. Kitchener brownfield property ranges from larger parcels of vacant
Downtown & Inner City lands (up to 15 acres in size) and smaller sites such as former gas
station sites. Our experiences indicate that Kitchener Brownfields are located in both suburban
as well as urban areas of the City.
Brownfield sites collectively present our citizens with a number of negative community impacts:
a) visually degrade the community by the presence of empty building shells and vacant
lands;
b) negatively affect surrounding property values, residents and businesses;
c) present community Public Health risks due to the potential of chemical contamination in
both structures and soils;
d) offer community safety problems due to the lack of people, and "normal" activity taking
place on site;
e) increase municipal operating costs through additional Policing, Fire/Building & Property
Standards inspections & enforcement;
f) provide only a minimum contribution (property taxes) to community costs due to a low
level of assessment;
g) are an inefficient use of prime urban land as typically, these vacant sites are fully
supplied with previously paid for urban infrastructure with prime access and exposure;
h) promote urban sprawl by forcing our City's growth to be shifted to the periphery of the
City on Greenfield lands which require the extension of urban infrastructure and
community services; and are an ongoing threat to our community's ground water supply.
KITCHENER BROWNFIELD COMMUNITY IMPROVEMENT PLAN
In early 2002 Members of the City's Environmental Committee and EDAC worked together with
City Staff to produce a Brownfield plan under Section 28 of the Ontario Planning Act. Approved
by the Minister of Municipal Affairs in November of 2003, the Plan provides financial assistance
in the form of Tax Incremental Financing as follows:
In exchange for a completed and filed Record of Site Condition or approved Site Specific Risk
Assessment, 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. The annual grant will continue for
a maximum period of 10 years or until the total Eligible Remediation Cost has been reached,
whichever comes first, where:
a) The City Tax Increment is defined as "the difference between the City portion of real
property taxes as determined on the date of Application to this Program, 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 project completion; and
b) Eligible Remediation Costs include the cost of conducting Phase 1 & 2 environmental
studies, environmental remediation project costs, associated consultant fees, and costs
of complying with a Certificate of Property Use (CPU) under 168.6 of the Environmental
Protection Act, as necessary, incurred from November 6, 2003, (i.e. The date of the
approval of this CI Plan by the Minister of Municipal Affairs & Housing) and the date of
issuance of the first Building Permit (excluding demolition permits) for the proposed
project.
The City has processed four applications under the program - 537 Frederick Street, 90
Woodside Avenue, 1420 King Street East, and 112 Benton Street (Arrow Lofts). These four
applications have resulted in the:
• clean up and redevelopment of 11 acres of contaminated land,
• 20,000 square feet of new commercial space (completed);
• creation of 530 new Inner City residential units (under construction); and
• private sector investment of approximately $78 million.
The following summary sheet demonstrates how the program works.
Brownfield TIF Example
52 & 90 Woodside Avenue
Location: Near Queen Street and Highland Avenue -Victoria Park Community.
Size: 3.383 ha
History of Site & Contamination
Originally developed in 1914 as a foundry to produce ductile iron and brass castings, a number
of operations have operated on the site including the Buffalo Forge Company, Canadian Blower
& Forge Ltd., and the Howden Fan Company. Soil and groundwater contamination occurred
from foundry sand waste, slag, many underground storage tanks, coal sheds, drum storage
areas, transformers, industrial solvents and paint residue.
Cost of Remediation - $1,763,892 (actual)
Intended Redevelopment: 128 Condominium Townhouses
2005 Assessment and Taxes: 2005 Assessment is $1,250,000, and the 2005 property taxes
were 55,533 split as follows:
City - $11,282
Region - $16,903
Province - 27 348
Total 55,533
Proiected Assessment: $29,000,000
Proiected Taxes (using 2005 Final Tax Rates for the RT-Residential category)
City - $132,808
Region - $198,966
Province - 85 840
Total 417,614
Resulting Increase in Revenues (Tax Increment)
1. City of Kitchener = $121,526
2. Region of Waterloo = $182,063
3. Province (Education) _ $58,492
Projected City TIF = 121,526 X 10 years = $1,215,260 (68.89% of Remediation Cost)
In addition to the Brownfield Program, the City's Downtown Incentive Program assists project
within the Downtown by eliminating City and Regional Development Charges, and rebating fees
paid for Planning Approvals and Building Permits. This Program has been instrumental for the
Kaufman Lofts project at Victoria and King Streets.
Both Programs are included in the accompanying EDGE Brochure. (Encouraging Development
for Growth Efficiency)
KITCHENER'S CURRENT BROWNFIELD ISSUES
There are two prominent policy matters which Staff would like to discuss with EDAC Members
at the March Meeting.
A. Reaion of Waterloo Proposed Brownfields Financial Incentives Proaram
Until recently the Region as an Upper Tier government in a Two Tier structure did not have
legislative ability to participate in Community Improvement programs. With the adoption of Bill
51 - An Act to amend the Planning Act and the Conservation Land Act -legislative authority
has now been provided.
Regional Council has approved of Regional Staff developing a Pilot Program (see enclosed
Regional Report P-06-096), scheduled to commencing the Spring of 2007. The Pilot intends to
provide incentives in three forms:
• Contribution of 50% of the cost of a Phase II Environmental Site Assessment to a
maximum of $40,000. that provide information for the Region's groundwater resources
protection strategy.
• Amendment of the Regional Development Charge Bylaw to provide for an exemption (or
reduction) in Regional Development Charges for brownfield sites to a value not
exceeding the site remediation cost, plus 20% allowance for indirect costs.
• Consideration of partnerships with area municipalities to facilitate the Region's financial
participation in the area municipality's Brownfield TIF program.
With this highly welcomed proposal for partnership, it would be timely for Kitchener to re-think its
program and underlying objectives/principles. More specifically, there are three emerging
issues for the Committee to consider and discuss at its March meeting:
1. The objective of the current Brownfield Program is to provide a level of assistance which
brings the value of a cleaned-up contaminated site to that of a green field site, i.e. "level playinq
field". With the adoption of the new principle of "re-urbanization" in the City, Region and
Province's growth strategies should we be maintaining this principle or should we capitalize on
the additional incentive source to increase the value of a former Brownfield to that which is
higher than a greenfield site?
2. From the following range of methods of providing financial assistance, which are the most
beneficial and effective from the development industry perspective?
• Environmental Study Grants for Phase 1 & 2 ESA
• Elimination or reduction of Development Charges
• Direct grants (e.g. Cambridge provides $1,500 per dwelling unit or $10 per square meter
of new commercial/office space)
• Rebate of Planning & Building Permit Fees
• Tax Incremental Financing
• Reduction of Park Dedication Fees
• Exemption from Sign Bylaw Fees
• Freezing or canceling of Municipal property taxes
3. Should we attempt to combine the City-Region program into one processing system or allow
them to operate independently?
4. The Kitchener Brownfield Program was structured to serve two equal objectives through
financial assistance. First, get the lands cleaned up; and second get the lands appropriately
redeveloped for productive re-use, increased assessment and tax revenue. One suggestion
has been that the new City-Region partnership program should only concentrate on the first
objective, and that incentives be formulated for only this purpose. Would you agree?
B. Abandoned Gas Station Sites
Kitchener, like most Ontario communities, has a good number of abandoned and (we believe)
contaminated gas station sites. These sites are well located on major roadways and at
intersections which have very good exposure and vehicle volumes. Yet despite their quality
business locations, oil companies have become reluctant to clean up sites, and promote their
sale for reuse. Kitchener has approximately 16 such sites.
Councillor Weylie, the Belmont BIA, and Staff have been working for approximately two years
with the owners of the former Esso station at Union & Belmont Avenues. Despite a good level
of prospective business interest for the site, Devon Estates (the holding company for Imperial
Oil) has indicated they are not willing to clean up the site and sell the lands. They are prepared
to lease the lands, as is, for short periods of time with conditions. This arrangement has turned
out to be unworkable.
Staff discussions with industry and government representatives have revealed that abandoned
gas stations is not unique to Kitchener, and is in fact a National issue. The root cause of the
problem is the on-going liability which the oil companies incur despite cleaning up their sites to
the respective jurisdiction's environmental standards of the day. There have been cases (in
Alberta and Quebec) where a site has been cleaned up and certified, sold and then years later
the oil company has been successfully sued for the presence of contamination. The Canadian
Petroleum Producers Association (CPPA) is seeking a level of "closure" on civil liability where
they remediate sites. Until such time as this occurs no action should be anticipated.
The Province of Ontario's Brownfield Coordinator has pursued this issue with the Ontario
Chapter of CPPA. CPPA has agreed to participate in discussions with the Province to develop
a new model protocol, acceptable for all, for the clean up of Ontario's abandoned gas stations.
Kitchener has been invited to key participant in this process. We expect these talks to begin in
late March or early April.
Terry Boutilier Kathy Weiss
Senior Business Development Officer & Director of Business Development
Brownfield Co-ordinator
Enclosed:
• EDGE Brochure
• Regional Report P-06-096