$680K tax break included in first approved TRIP development downtown
A $680,000 tax break over seven years was approved with a unanimous vote by Lethbridge City Council on Monday, as a city incentive for downtown developers.
The Targeted Redevelopment Incentive Policy (TRIP) is a municipal tax cancellation incentive that aims to encourage the construction or major renovations of businesses in Lethbridge’s downtown core.
It took a few years to get off the ground.
“Between 2015 and 2018, we didn’t have any applications actually,” said urban revitalization manager Andrew Malcolm. “So we went back and we did a little bit of digging and we tweaked it, and we took it back to council in August of 2018 for some amendments.
“With the new program we have our first application, and that application went forward to council [Monday], just to confirm the tax cancellation for a new, $4.85 million dollar development in the downtown.”
Property owners in the core can apply for the tax break if they meet the eligibility requirements, which include:
- Project must be located in the downtown core
- Must be a new building or significant renovation
- Must have a minimum construction value of $1 million
- Buildings must be at least two storeys tall
- Projects must meet or exceed requirements of the Heart of Our City Master Plan and the Downtown Area Redevelopment Plan
- Range of thresholds related to verified construction value ($1 million – $12+ million) can mean longer incentive periods (6-11 years)
- Only the registered owner(s) of the property – at the time of commencement of the construction approval – is/are eligible for the tax cancellation
- Eligibility for tax cancellation will begin on Jan. 1 of the year subsequent to the completion of construction
TRIP was created after input from the Heart of Our City Committee.
“Heart of Our City listens to our community,” said Dawn Leite, chair of the committee. “We’re a committee of stakeholders from the community; we bring forward ideas about how we might be able to incentivize downtown, how do we make it a more vibrant place, how do we make it more accessible.”
Watch below: City of Lethbridge begins 2019-2022 budget deliberations (November 2018)
The first developer to bite on the incentive is Six08 Health Inc.
“My understanding is that it’s an integrated health building,” Leite said, “which I think will bring its own vibrancy and activity.”
“Downtown there’s always a great mix of a variety of businesses and corporations who operate there, and we want to see that mixed bag of businesses.”
The city and the Heart of Our City Committee are hopeful that this first approval will encourage other property owners downtown to take advantage of the incentive as well.
“Major redevelopments like this in the downtown always kind of spark interest,” Malcolm said. “People say, ‘Well, oh there’s other people investing, maybe I will take that chance as well.’ But then also, it gives us the chance to put the incentive out there and show what the actual benefit is to a developer utilizing it.
“In this case, it’s the tax cancellation over seven years of just over $650,000. So [it’s] pretty significant, and our hope is that it kind of spurs more development.”
But that significant dollar amount has come with a lot of questions — mainly, how can the city afford to miss out on those tax dollars?
“If the developments were going to take place anyways, that would be what your concern would be, is that $650,000 in potentially lost tax to the city, ” Malcolm said.
“However, the chances of those developments taking place without this incentive are fairly slim. So this will actually be an assessment and a tax gain for the city in the long run, because it is actually initiating the actual development to take place in the core. So over 20+ years it’s actually a significant benefit to the municipality to do this, as it is the spur for new development.”
Construction on the first development — on the corner of 5 Avenue S. and 6 Street S. — is expected to begin this summer.
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