Downtown Residential Development Grant

Program

Presented by: Stefano Grande,

Executive Director, Downtown Winnipeg BIZ

Presentation Outline

• Overview of CentreVenture

Development Corporation

• History of Residential Development

Incentive Program

• Province of Manitoba TIF

Legislation

• The Downtown Residential Grant

Program (“DRDG Program”)

• Strengths & Weaknesses of the

DRDG Program

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About Winnipeg

Population, Winnipeg: 690,000

Area: 179.2 square miles

Density: 3,535/square mile

Downtown

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About CentreVenture

CentreVenture Development Corporation

• created in May 1999 by

Winnipeg City Council;

• to spearhead the revitalization of

downtown Winnipeg;

• to act as an advocate and catalyst

for business investment,

development and economic

growth in downtown Winnipeg;

• guided by private sector, self

appointing Board of Directors

(9 Board Members).

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CentreVenture’s focus…

• Development of strategic clusters as a

catalyst for further private and public

investment;

• Strategic land assemblies;

• Community investment in parks and open

spaces;

• Promote adaptive reuse of heritage

properties;

• Provide financial tools such as gap and

bridge financing, mortgages and construction

loans;

• Promote/facilitate of residential development;

• Deliver Municipal and Provincial tax incentive

programs.

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Downtown Housing Incentives

The City of Winnipeg has always had the ability to

capture municipal incremental tax revenue and

provide grants of the incremental revenue;

• past 9 years, the City has offered grant

programs using incremental taxes to

provide the grants to developers -

primarily for residential development;

• municipal incremental tax grants are paid to

the developer annually as incremental

tax revenue is collected;

• CV provides bridge financing of grants to

developers during construction and

takes assignment of the future grants as

security/repayment.

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Winnipeg TIF

Provincial TIF enabling legislation was passed in Manitoba in 2008 – the Community

Revitalization Tax Increment Financing Act;

The legislation allows for incremental school/education taxes to be collected on

designated properties and placed in a community revitalization fund

- funds disbursed in accordance with a program/plan;

The provincial legislation regarding designation of a property is not very prescriptive. A TIF

property (community revitalization property) can be designated in Manitoba if:

a) significant improvements to the property are to occur; and

b) it is in the public interest that the improvements be made.

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The DRDG Program

Downtown Residential Development Grant

The original DRDG Program, effective January 1, 2010,

provided for a total of $20 million of incremental tax

grants - $10 million from each the Province & City;

The program was to be a 3 year program, but was fully

subscribed in 10 months and has since been

doubled to $40 million;

Currently CV has obtained applications for 28 projects

totaling almost 1,400 new residential units;

The DRDG Program effectively doubled the amount of

the grant provided under the previous City program;

The program has been effective in more than doubling

the number of units.

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DRDG Program - Overview

Both Condominium & Rental Residential Projects are eligible;

Has to be new residential units – either new construction or conversion of non-residential;

Rehabilitation of existing residential units are eligible if they have been vacant for 12 months;

Mixed use buildings are encouraged - the commercial taxes are applied toward the

“incremental taxes” for purposes of calculating the grant;

The program is limited to properties within the downtown boundary as defined by By-law.

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The DRDG Program - Overview

How the Grants are Calculated:

• The grants are funded by the incremental

taxes generated post development;

• Condominium Projects receive the 1st

year’s incremental taxes for 10 years, up the

to maximum allowable grant;

• Rental Projects receive the 1st year’s

incremental taxes for 15 years, to to the

maximum allowable grant.

Example:

Post Development Taxes – Predevelopment Taxes = 1st Year Incremental Taxes

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How is the Maximum Allowable Grant Calculated:

The maximum grants are calculated on a “per unit” basis in accordance with a table that is

adjusted each year to reflect changes in the sales market values/rental rates.

For Condo projects, the maximum allowable grant per unit is based on “assessed value” and

unit type in accordance with the following table:

The DRDG Program - Overview

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CONDOMINIUMS Amount per

Dwelling Unit $40,000 $35,000 $30,000 $25,000

Assessed Value per Dwelling Unit (in thousands of dollars)

Bachelor or Studio less than 650 square feet

$0-$150 $151-$185 $186-$220 $221-$255

Bachelor or Studio of 650 square feet or more or 1

bedroom

$0-$175 $176-$215 $216-$255 $256-$300

2 bedroom $0-$215 $216-$265 $266-$305 $306-$350 3 bedroom or more $0-$250 $251-$300 $301-$350 $351-$400

How is the Maximum Allowable Grant Calculated:

For Rental projects, the maximum allowable grant per unit is based on the rental rate of the

unit in accordance with the following table:

The DRDG Program - Overview

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APARTMENT BUILDINGS Amount per

Dwelling Unit $40,000 $35,000 $30,000 $25,000

Rent per month per Dwelling Unit

Bachelor or Studio less than 650 square feet

$0-$500 $501-$550 $551-$625 $626-$750

Bachelor or Studio of 650 square feet or more or 1

bedroom

$0-$655 $656-$730 $731-$830 $831-$955

2 bedroom $0-$880 $881-$955 $956-

$1,080 $1,081-$1,205

3 bedroom or more $0-$1,100 $1,101-

$1,225 $1,226-$1,350

$1,351-$1,475

How are the Grants Paid:

•Because grants are based on incremental taxes, the amount of the grant is determined in

the 1st full year following completion.

•Once the amount of the grant is determined, the developer has the Option of:

a) Receiving an annual grant, equal to the 1st years’ incremental taxes, or

b) Receiving a lump sum payment equal to the “net present value” of the gross

amount of the grant.

•The discount rate to determine the NPV is set annually by City Council and is related to

current market borrowing rates.

•When a project is complete and developer elects to receive the NPV, CentreVenture

borrows the funds from a conventional lender and takes assignment of the annual

incremental tax payments to repay the loan.

The DRDG Program - Overview

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Timelines for Project Completion:

•Developer has 1 year from approval of the

application to draw development permits;

•Developer has 4 years from approval of the

application to complete the project.

Developer Fees:

•$5,000 application fee;

•$300 per unit – paid 90 days following

approval;

These fees are refundable when the grant is

paid out.

The DRDG Program - Overview

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The DRDG Program – Strengths & Weaknesses

Strengths:

•The level of incentive the combined Municipal & Provincial

TIF provides seems to be sufficient to spur development;

•The program has generated much positive response and

has more than doubled the development in the previous 5

years.

Weaknesses:

•When making decisions to proceed, developers have to rely

on estimates of what the grant will be;

• Actual amount of the grant not determined until the 1st full

assessment year following completion of the project;

•Depending on the date of completion, the grant may not be

paid until well over a year after completion.

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The DRDG Program – Strengths & Weaknesses

Weaknesses…con’t

The inherent fundamentals of the program work inversely

to what was trying to be achieved:

•Intent was to provide larger grants to achieve more

affordable pricing for both condo’s and rental units;

•Because the grants are “developer” TIF’s and incremental

taxes generated are not “pooled”, the projects that are

more affordable generate “less” incremental tax and thus,

receive smaller grants.

•it is very difficult to realize a grant per unit for either condo

or rental that is beyond the bottom end of the grid -

$25,000/unit, unless there is proportionately more

commercial whose taxes help to attain the per unit

maximums.

•Taxes on rental projects are generally lower/unit than

condo, thus grant per door for rental projects is lower.

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Alleviating the Shortcomings

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• CentreVenture acts as the “one stop shop” for

the developers so they do not have maneuver

through the different levels of government;

• When applications are submitted,

CentreVenture works closely with the

Assessment Department to obtain as accurate

an estimate as possible;

• CentreVenture, out of its own assets, will

“Bridge Finance” the grants during the

construction phase of a project;

Although the program has issues, those tasked with

fostering development in the downtown are

pleased that our City and Province have

stepped up to assist in furthering residential

development on our downtown!!

Further Information

Questions about the DRDG Program or links to

access the DRDG By-law or Community

Revitalization Tax Increment Financing Act,

please email shewchuk@centreventure.com

www.centreventure.com

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