Downtown Revitalization, the Real Price Tag

Wednesday, November 09, 2005 04:00 PM

Ghiai Developments has a great incentive to complete its Metropolis 1, 2, and 3 projects by September of 2007. If the developments are completed by that time, Ghiai stands to have more than a decade of property tax exemptions (municipal only) saving the company millions of dollars.

Monday night, City Council gave the first three readings to a by-law that will give a municipal tax exemption to property owners who commit to construction or improvements of at least $50 thousand dollars in the area considered to be the downtown core.

The two downtown Prince George projects are, according to Ghiai Developments CEO Yves Ghiai, worth $18 million dollars.

According to the by-law, when construction is complete, tax exemptions can kick in. The completion date will determine how long the tax break will be allowed.

Here is the break down:

If the tax exemption certificate is issued before September 30, 2007 (Ghiai’s projected completion date) then the project will receive a tax exemption for 2008, and 5 subsequent years ( total of 6 years) and the option to renew for another 5 years.

If the first deadline is missed, but the project is completed before September of 2008, then there’s a tax exemption for 2009 and four more years, plus the 5 year renewal option for a maximum of ten years of tax exemption.

The exemptions are tied to completion deadlines so that at the very least, if the developments aren’t completed until September 30, 2011, Ghiai will get a tax exemption for 2012, 2013 and an option to renew for five more for a total of 7 years.

How much is that worth?

That is not an easy question to answer. The projects contain a mix of retail and residential, so the mill rates would be different for each component. Residential rates are lower than retail. Even if the projects were strictly residential, the municipal portion of the tax bill would be (at current mill rates) 10.36677 per $1,000 of assessment. So the municipal portion of taxes on a project assessed at $18 million would be $186,601.86 If the projects are completed within the maximum tax exemption benefit time (and if taxes and mill rates were to stay at today’s levels) the total amount of savings (over eleven years) would be more than $2 million dollars.

For Ghiai, early completion is favoured, for the by-law echoes the business cliché, “time is money”.

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Posted on Wednesday, November 09, 2005 04:00 PM in News by Elaine Macdonald

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Comments

Posted by: Palopu on November 9 2005 4:51 PM

If I was an apartment owner,or business owner in other areas of Prince George paying full taxes, I would be a little p----- o-- at the City. Giving my competition tax breaks to compete with me, especially when the tax breaks come from my tax dollars would not impress me at all.

It seems this City Council is totally out of control.

Posted by: Chester on November 9 2005 7:09 PM

It's great to give incentives and tax concessions to encourage developers to come and invest in our community.

I can only hope that these perks are not at the expense of existing businesses, property owners and tax payers.

After all, they are here paying the taxes and supporting our community through good times and bad.

But, we do need fresh ideas, fresh money and a fresh vision for our city. Sometimes it takes an outsider to see the potential we have here.

Sometimes the locals are too protective of their own terf to want to encourage competition to come to our city.

I would measure the financial benefit to our community first, before I got hung up on the taxes we are giving an exemption for. After all, if the developer didn't come, we wouldn't have had the tax anyway.

So, let's not lose sight of the potential benefits of a new vision for our downdown.

All of the past ones haven't been supported by the locals, so let's move ahead. Chester

Posted by: Palopu on November 9 2005 7:58 PM

We should be very wary of our City if it gets to close to Developers, etc; This property was bought up by the city and will be sold to the Developer at a reasonable cost to help get him to invest here. On the surface this looks good, however we all know that the City would not buy up property and sell it to us locally at a reasonable price to develop the Downtown. Nor should they. Then to go further and give this developer tax concessions makes it even worse. The taxpayers of Prince George owned that property and it was sold out from under us at a closed session of Council. **Interesting**

In addition keep in mind that everytime the City gets a New Developer to build in Prince George, it creates work for the Engineering, Planning, and other departments,(Job security) and in addition adds to their tax base. If the new developments cause other already established companies to go broke. the city doesnt care because they still collect the taxes on the empty buildings.

Take a look at all the empty buildings on 1,2,3,4,5th avenue East of Victoria Street. There must be at least 100 of them, and you can rest assured that somebody is paying the City taxes on these buildings. Does the City have the best interests of the community at heart or is it hell bent to increase its tax base as much as possible to try to pay down some of their $154,000,000.00 in debt.

You can be sure that when 2 or 3 more big box stores locate on Highway 16 west some more companies in the City and in the do called downtown area will go broke.

Prince George and the surrounding area of 200 miles does not have the population base to support all these companies at a profit. Somebody will have to go broke, and its usually the smaller companies.

Posted by: Chester on November 9 2005 8:56 PM

Well, just what is it that we are trying to protect? Our downtown is dying. What are you afraid of? The 100 empty buildings should tell you something. It can't get any worse. Can it? And if it does, so what? At least we tried something different. Chester

Posted by: brackencole on November 10 2005 12:49 AM

So great, we rush into a bum deal and are left with an eyesore for decades. If we are going to spend $2 million, at least make sure they ditch the roof.

Posted by: brackencole on November 10 2005 12:51 AM

and try to leverage some sort of public service out of them like a space for the university or a non-profit.

Posted by: Chadermando on November 10 2005 7:10 AM

On further thought I like the idea of the roof, but not so sure yet on its design.

It lloks like the roof covers a large open space and that is something the downtown could really use. A large open space covered from the elements.

As for the tax breaks. I wonder what the parking lots brought in for taxes and if it shouldn't have been peged at the existing tax revenue from the prior state of those properties?

I think once the precident is started it should be available to all who wish to invest in our community including locals. That said ten years is a little excessive, and maybe it should only be for 2-3 years next time.

Posted by: rock on November 10 2005 8:21 AM

I can't believe that there would be opposition to this kind of proposal.People need to remember that in order to invite outside investment we have to be able to offer THEM something,this is not the sunny okanagan or the big city of Vancouver.C'mon people if we want people to come here and invest we have to be able to offer them some incentive to be here.If this thing goes through and believe me I will be suprised if it does there is nothing but upside for the city.
Rock

Posted by: Opatcho on November 10 2005 10:20 AM

The City sold the driving range at a time when realestate was in the dumper. why is the City in the realestate business? I think its up to the developer to decide if his project will be profitable not up to the City to enhance the deal. They are scewing the market and thats what has happened down town. Cant we just leave it alone and let the market decide. I always thought we lived in a free enterprise society. Its not getting free looks more like socialism.
I agree with Polopu that the City is just increasing the tax base to spend on airy-fairy projects.
And lets not get to excited. We all know the meaning of the word "INTENT".
Somone said "time will tell".

Posted by: gypsy on November 10 2005 11:53 AM

The city of Prince George does not give a damn about businesses, downtown or otherwise.
They really are concerned only with the taxes these businesses must pay to keep city hall viable.
The rocket scientists???? sitting in the council chambers every other Monday should take a trip to Quesnel to the mall on the West side, and see the type of establishment Bruce High has set up in that mall.
The Monkey Forest is a store the city of Quesnel can be proud came into the city.
Prince George lost him, and they well deserved it.
Anybody who asks me about establishing any type of business in Prince George may be surprised at my negative attitude towards the city.
I am happy to say I have told a number of people to look elsewhere.
Fortunately they paid attention.
There are many cities and towns which accept new businesses, and let the business owner know they are more than pleased their city has been chosen.
Prince George simply collects the Business Licence fee, and there is never a welcoming letter sent to any new business being established.
The Mayor and council, to my knowledge, never so much as make any effort to visit the new establishment.
Prince George does not give any incentive to locate there, nor do they give any incentive for businesses to remain.
Go ahead and flog the "dead horse" and spend lots of money, and the powers that be at city hall will figure out every manner in which to have their hands out to keep collecting.
Until Prince George gets rid of the "old hats" at city hall, it will just be a "lesson in futility" for the hopefuls and dreamers.
Good luck!!!!
You bet I am a cynic.
Anybody with half a brain that lives there and attempts a business venture is a "no brainer."

Posted by: brackencole on November 10 2005 10:27 PM

Rock-

I agree. But if we are going to offer them something, such as a tax break, at least use that to leverage things that we as a city need- which includes a decent-looking building.

Posted by: NyteHawwk on November 11 2005 9:45 AM

In following this thread it seems that some of you believe that there was a special set of incentives laid out for this developer. The fact is that the proeprty tax exemption is available to every downtown property owner so that they will either build something new to add to OUR community, or renovate an existing building to make it more appealing, and again ADD to our comunity. I have lived in this City most of my life, and I have found this insular, protectionist, anti development, anti change attitude to be a real stumbling block when it comes to any sort of new development coming to Prince George. If any of you can remember we didn't have a real mall here until 1974 because downtown business people were afraid of it, and those same people dominated City Hall at the time. Lets not do the same thing now to people that want to come to Prince George and apend their own money to build something that will enhance OUR downtown today, and possibly be the catalyst for the future downtown that we all would like to put proudly on display.

Posted by: Palopu on November 11 2005 3:32 PM

There is more to this than tax incentives. The City purchased property at 6th and Quebec (Old CKPG) Building, and it seems they will sell that property along with the parking lot on 2nd and Que, plus providing some some of parking arrangement in the Parkade on 2nd ave.

We do not know what all went on at the **Closed meeting**, however I suppose we will find out in due course.

As for the Mall in Prince George on or about the 1970's if this was the Cadillac Fairview Venture, it seems to me it was discarded because the Business's downtown wanted to much money for their property. Maybe they can now sell their property to the City so it can sell it cheap to some more **Investors**.

Posted by: NyteHawwk on November 12 2005 4:49 PM

In actual fact the Cadilac Fairview deal was much later in the 70's in fact it didn't get scuttled until the municipal election in 1981. The Mall deal that I'm talking about is Pine Centre mall. The proponents of that development got turned away on prior attempts to establish a regional mall outside of the central business district, by a protectionist city council, and administration that was dominated at the time by downtown property owners.
As for this deal, as long as the City is selling the property in question to the developer for at least what the City paid for it, then I say it is a fair use of the Cities resources to assemble property so that private developers can come in and invest their money in projects that benefit the city, and all of us in the long term. Just because someone is going to make a profit in the end does not make this a bad deal for the City. Lastly, those parking lots have been sitting empty, and extremely under-utilzed for as long as I can remember. Up until now I had not heard of any local developer that had come forward to offer to invest their own funds to enhance our downtown. As far as I am concerned my hat is off to this developer, and I would like to personally welcome him and his company to Prince George. Here's hoping the can find some other proeprties in PG that no locals have given a sideways glance at in years, and that they then come up with an innovative development that makes them tonnes of dough.