HomeMy WebLinkAboutCAO-09-044 - Referral of Projects to the 2010-2019 Capital Forecast - CAO - Elmsdale Lands - RevisedKIT(~NER
Ch o f Ad m i n is rra ror "s
Office
REPORT TO: Finance and Corporate Services Committee
DATE OF MEETING: October 26, 2009
SUBMITTED BY: Carla Ladd, CAO
PREPARED BY: Hans Gross, Director, Project Administration and Economic
Investment
WARD(S) INVOLVED: All
DATE OF REPORT: October 7, 2009
REPORT NO.: CAO-09-044
SUBJECT: ELMSDALE LANDS
REFERRAL OF PROJECTS TO THE 2010-2019 CAPITAL
FORECAST -CHIEF ADMINISTRATORS OFFICE
RECOMMENDATION:
THAT the following capital project be included in the 2010 - 2019 capital forecast for
consideration by the Finance and Corporate Services Committee as part of the 2010 budget
deliberations, as outlined in staff report CAO-09-044.
Brownfield TIG -Elmsdale Lands $174,062 -Years: 2013, 2014, 2015, 2016
$153,198 -Years: 2017
BACKGROUND:
As part of the Consolidated Maintenance Facility project, the City intends to sell approximately
12.09 acres of lands on the north side of Ottawa Street currently used for the Elmsdale
Operations Centre. City Council deemed these lands surplus to the City's needs on April 6,
2009. The highest and best use of these lands is for commercial purposes, and a 125,000
square foot commercial development can be accommodated on the site.
A recently completed Phase 2 Environmental Site Analysis (ESA) indicates that remediation will
be required at an estimated cost of $3 million. One of the options available to the City is to sell
the lands "as is" on the condition that the new owner completes the required remediation as part
of the redevelopment proposal for the site. A private sector owner would be eligible to
participate in the Region of Waterloo Brownfield Financial Incentive Program. This Program
provides a Grant to assist with the Phase 2 Studies; reduction in Regional Development
Charges; and a Tax Incremental Grant (TIG). The City of Kitchener is a partner in the Tax
Incremental Grant program with the Region.
Staff are recommending that an amount should be included in the Capital Forecast to provide
funds for Kitchener's share of this TIG should this option be pursued.. It is the purpose of this
Report to provide an estimate of the amount that should be set aside and the respective years.
REPORT:
The Region of Waterloo Brownfield Financial Incentive Program provides 3 forms of assistance
which are applied sequentially to a site's total eligible remediation cost. In this case $3 million
plus a maximum of 10% admin costs (legal fees, insurance, etc).
The first form of assistance is a grant of 50% of the Phase 2 costs to a maximum of $40,000.
The second form of assistance is a reduction in the Regional Development Charges applicable
for the new development. The third form is the Tax Incremental Grant and it is applied to any
the remaining costs.
Reviewing Table 1, Table 2, Table 3, and Table 4 attached, Staff would estimate that:
• City Taxes before redevelopment = $19,035 and after redevelopment = $193,097
• City of Kitchener Tax Increment = $174,062
• The project would be eligible fora $40,000 ESA Grant and Regional DC Exemption of
$1,120,000 for the new commercial development.
• Total TIG is estimated at $2,140,000, of which $849,447 would be Kitchener's share
(39.7%)
• Payback is under 5 years.
Table 1 - Elmsdale Lands - RoW Brownfield Program -Tax Increment Calculation
Remediation ~ Completion ~ Increment
Current Value Assessment
Residential/New Multi-Residential
(RT/NT)
Multi-Residential (MT)
Commercial (CT,DT,ST,GT,XT,YT,ZT) 21,831,000
Industrial (IT,LT,JT,KT) 1,840,560
Tax Rates
Area Municipal
Residential/New Multi-Residential
Multi-Residential
Commercial
Industrial
Region
Residential/New Multi-Residential
Multi-Residential
Commercial
Industrial
0.00453600
0.00975230
0.00884510
0.01034200
0.00689141
0.01481651
0.01343823
0.01571239
0.00453600
0.00975230
0.00884510
0.01034200
0.00689141
0.01481651
0.01343823
0.01571239
0
0
21,831,000
-1,840,560
0.00453600
0.00975230
0.00884510
0.01034200
0.00689141
0.01481651
0.01343823
0.01571239
Annual Taxes
Area Municipal $ 19,035.07 $ 193,097.38 $ 174,062.31
Region $ 8,919.60 $ 293,370.00 $ 284,450.40
Total Municipal Taxes $ 47,954.67 $ 486,467.38 $ 438,512.71
Table 2 -Grant, DC Reduction, and TIG Calculation
Eligible Remediation Costs (including 10% Allowance)
Brownfield Financial
Assistance
3
Units Amount
Regional ESA Grant $ 40,000
Regional DC Brownfield
Exemption $ 1,120,000 $ 1,120,000
Other $ -
Total Other Brownfield Financial
Assistance $ 1,160.000
Net Remediation Costs Eligible for
TIG $ 2,140
Table 3 -Eligible Tax Increment
Maximum Po tential TIG Eli ible TIG Amount
Annual Total Annual Total
Kitchener 174,062 1,740,623 174,062 849,447
Region 264,450 2,644,504 264,450 1,290,553
Total TIG 438,513 4,385,127 438,513 2,140,000
Table 4 -Payment Schedule
Year City of
Kitchener
Re ion
Total TIG
2013 174,062 264,450 438,513
2014 174,062 264,450 438,513
2015 174,062 264,450 438,513
2016 174,062 264,450 438,513
2017 153,198 232,751 385,949
year 6 - - -
year 7 - - -
year 8 - - -
year 9 - - -
ear 10 - - -
Total TIG 849,447 1,290,553 2,140,000
It is projected that the land purchase will close in the Spring of 2011. Assuming that
construction takes place in 2011 and re-assessment of the lands by MPAC takes place in 2012,
then money should be made available in 2013 for repayment of the TIG. An estimated
amount of $174,062 should be provided in years 2013 to 2016, and $153,198 should be
provided in 2017. This estimate has been developed based upon the following assumptions:
1. Current Tax - As a municipal property there is no tax being currently collected on the
Elmsdale lands. An Assessment and Tax consultant was retained by the City to provide a
reasonable estimate of the current taxes that would be applicable should this industrial property
be in private ownership.
2. Projected Assessment and Taxes -The same Consultant provided 3 redevelopment s with
varying levels of density: low, medium, and high. Staff selected the medium scenario, and the
Consultant provided an estimated projected assessment for the development and tax levels. All
tax levels are calculated using 2009 Assessment and Mil Rates.
3. Proposed commercial use -Advice was obtained by the Project Administration section of
Economic Development that the site can accommodate a 125,000 square foot commercial
development. This assumes the new property owner obtains suitable Zoning and approved Site
Plan.
4. Regional Development Charge calculations use Regional rates effective January, 2010.
5. The Terms of the Region of Waterloo Brownfield Financial Incentive Program do not change.
FINANCIAL IMPLICATIONS:
Approval of this report will obligate the Capital Budget to provide $174,062 in the year 2013 -
2016and $153,198 in 2017.
CONCLUSION:
If supported, the capital projects and reallocations proposed in this report will be referred to
capital budget deliberations. They will then be evaluated against all other capital projects and
funding constraints within the ten-year forecast.
ACKNOWLEDGED BY: Rod Regier ,Executive Director of Economic Development