CITY OF KINGSTON REPORT TO COUNCIL Report No.: 13-234 TO: FROM: RESOURCE STAFF: Mayor and Members of Council Cynthia Beach, Commissioner Sustainability and Growth Nathan Richard, Project Manager, Brownfields Paul MacLatchy, Director Environment & Sustainable Initiatives DATE OF MEETING: June 18, 2013 SUBJECT: Approval of the application 2013-02BD for financial assistance under the Community Improvement Plan Brownfields Project Areas 1C for the property located at; 659-663 Princess Street, Owner: Ogilvie Realty Ltd (Toyota) 598 Victoria Street, Owner: Ogilvie Realty Ltd (Toyota) 590 Victoria Street, Owner: Ogilvie Realty Ltd (Toyota) 582 Victoria Street, Owner: Ogilvie Realty Ltd (Toyota) 604 Victoria Street, Owner: 2246955 Ontario Inc (Jay Patry) EXECUTIVE SUMMARY: This report is being brought forward at the request of the applicant for approval of the Brownfields Financial Tax Incentive Program (BFTIP) and Tax Increment-Based Rehabilitation Grant Program (TIRGP) tax cancellations and tax rebates. The City s Community Improvement Plan for brownfield projects has been in effect since 2005, following approval by the Ministry of Municipal Affairs and Housing. The program allows the City to provide incentives, such as grants and property tax assistance to assist development proponents in rehabilitating and developing eligible brownfield properties. The Proponent s property is located at 659-663 Princess Street and 582, 590, 598 and 604 Victoria Street and is within Brownfield Project Area 1C, Williamsville Main Street, as approved by Council in March 2013. The project will see the remediation of soils contaminated as a result of previous commercial land uses, the preparation of Records of Site Condition in compliance with Ontario Ministry of the Environment requirements and the construction of a new high density residential development. The application has been reviewed by staff and the project is considered to be eligible for financial assistance as defined in the Brownfields Community Improvement Plan. Council Meeting 16 June 18, 2013 85
REPORT TO COUNCIL Report No.: 13-234 June 18, 2013 - Page 2 - RECOMMENDATION: THAT Council approve the application and deem 659-663 Princess Street and 582, 590, 598 and 604 Victoria Street, as a property eligible to receive Brownfields Financial Tax Incentive Program (BFTIP) and Tax Increment-Based Rehabilitation Grant Program (TIRGP) assistance; and THAT a by-law be forwarded to Council for the cancellation of property taxes for Education and Municipal purposes for the duration of the rehabilitation period and the development period for the eligible property; and THAT following first and second reading of the by-law to cancel taxes, said By-law be forwarded to the Ministry of Finance for their approval and once approved, presented to Council for third reading; and THAT staff be directed to negotiate the Brownfields Site Agreement with the developer in a form satisfactory to the Director of Legal Services; THAT the Mayor and Clerk be authorized to execute the Agreement. Council Meeting 16 June 18, 2013 86
REPORT TO COUNCIL Report No.: 13-234 June 18, 2013 - Page 3 - AUTHORIZING SIGNATURES: Cynthia Beach, P.Eng., MCIP, RPP, Commissioner, Sustainability and Growth Gerard Hunt, Chief Administrative Officer CONSULTATION WITH THE FOLLOWING COMMISSIONERS: Lanie Hurdle, Community Services Denis Leger, Transportation, Properties & Emergency Services Jim Keech, President & CEO, Utilities Kingston N/R N/R N/R (N/R indicates consultation not required) Council Meeting 16 June 18, 2013 87
REPORT TO COUNCIL Report No.: 13-234 June 18, 2013 - Page 4 - OPTIONS/DISCUSSION: This application satisfies all criteria of the Community Improvement Program (CIP) Brownfield Project Areas 1C, Williamsville Main Street. The Environment & Sustainable Initiatives group has reviewed the application and has no issues or concerns with it. The property is located within the CIP project area and the required Environmental Site Assessments (ESA) have been completed and submitted to the City which demonstrates that the property is contaminated and that remediation is required in order to obtain a Record of Site Condition (RSC) for the property. Staff reviewed the application submitted and recommends that it be approved. The application submitted by 2246955 Ontario Inc. (Jay Patry) as the owner deals specifically with a request for Brownfields Financial Tax Incentive Program assistance and the Tax Increment-Based Rehabilitation Grant Program. There are several parcels of land currently owned by Ogilvie Realty Ltd. (Kingston Toyota), however as of June 21, 2013, all of these properties will be owned by 2246955 Ontario Inc. The Brownfields Financial Tax Incentive Program authorizes the cancellation of property taxes for both the Municipal and Education portions. This report requests authorization for a by-law to cancel the property taxes. The cancellation of the education portion of taxes must also be approved by the Minister of Finance. A copy of the Draft By-Law for Tax Exemption/Cancellation is attached as Exhibit B. The duration of this exemption from taxes is the length of the rehabilitation period and development period or 36 months, whichever is less. Only the land benefiting from the CIP will be exempted from taxes. It is estimated that property taxes of approximately $52k will be cancelled under this program in the first year. 2246955 Ontario Inc. has previously submitted an Initial Study Grant Application which was approved by City Council on May 21, 2013. The amount approved was $13,261 which was 50% of the estimated cost for the Phase Two ESA. The Tax Increment Based Rehabilitation Grant Program provides an annual grant to assist with environmental remediation costs for the subject property. The annual grant shall continue until such time as all the rehabilitation costs have been granted back to the owner or a period of ten years has expired, whichever occurs first. The value of both the Brownfields Financial Tax Incentive Program and the Tax Increment Based Rehabilitation Grant Program cannot exceed the total estimated cost of rehabilitation less the initial study grant which, for the subject project, totals $1,503,366 and may be less if the incremental taxes for each property are not sufficient to cover the total rehabilitation costs within the maximum ten year payback period. The annual grant is calculated as 80% of the increase in municipal taxes upon redevelopment completion compared to the municipal property taxes prior to rehabilitation. The current value assessment of the land is $1.8M. Upon completion in fall 2014, based on the proposed development, the post-development valuation will be Council Meeting 16 June 18, 2013 88
REPORT TO COUNCIL Report No.: 13-234 June 18, 2013 - Page 5 - approximately $25M. The municipal portion of the taxes will increase from $33k to approximately $254k, providing a differential of $221k and 80% of this tax increment will be $177k per year. This value will change each year based on changes to the assessed value of the property and any annual increase in taxes. The Tax Increment Based Rehabilitation Grant Program benefit is transferable in the event that title to the property changes from the current owner 2246955 Ontario Inc. to a new owner within the period of the Tax Increment Based Rehabilitation Grant Program rebates. In such an event, 2246955 Ontario Inc. must advise the City of Kingston its intent to transfer the benefit to a new owner. A brief cash flow outlines the financial assistance provide by this program as follows: CASH FLOW PROJECTIONS Eligible Costs Eligible Program Cost, as per statements submitted $ 1,516,627 Total Approved Grants or Cancellation to date (Initial Study Grant) $ 13,261 Balance remaining eligible for grants and or rebates $ 1,503,366 Balance remaining prior to BFTIP $ 1,503,366 BFTIP Program Tax Cancellation (1 year) $ 52,530 Balance remaining post BFTIP (if 1 year is applied) $ 1,450,836 Property Tax Increment per year Post-development estimated municipal property taxes in 2015 $ 254,116 Pre-development municipal property taxes in 2013 $ 33,183 Incremental tax increase (Pre to Post) $ 220,933 Grant/Rebate per year Annual amount available for rebate through brownfields program = 80%* $ 176,746 Annual amount directed to Municipal Brownfield Reserve Fund = 20%* $ 44,187 Estimated duration of grant program (years) 8.2 *based on an estimate of 2013 tax rates and assessment. These will change annually but the maximum funds granted are not to exceed $ 1,503,366 Council Meeting 16 June 18, 2013 89
REPORT TO COUNCIL Report No.: 13-234 June 18, 2013 - Page 6 - All amounts shown above are estimates. An audit of costs will be performed prior to the final bylaw authorizing the payment of annual grants. EXISTING POLICY/BY-LAW: By-Law 2006-125 and By-Law 2006-126 are by-laws giving approval of Brownfields Project Areas 1A & 1B as Community Improvement Areas and a by-law to amend By-Law 2005-41 to adopt the Community Improvement Plan for Brownfields Project Areas 1A & 1B. The City of Kingston received a notice of decision from the Ministry of Municipal Affairs and Housing dated July 26, 2006 giving approval of Amendment No. 1 of the City s Community Improvement Plan effective August 16, 2006. On March 5, 2013, Council passed By-Laws No. 2013-63 and No. 2013-64, which constituted Amendment No. 2 to the Community Improvement Plan for Brownfields Project Areas 1A, 1B and 1C. This amendment revised the boundaries of Project Area 1A and added a new Project Area 1C (Williamsville Main Street Area). Due to recent legislative changes, Ministry of Municipal Affairs and Housing approval was not required for Amendment No. 2 to the Community Improvement Plan and it came into force on March 5, 2013. NOTICE PROVISIONS: There are no notice provisions required for this action. ACCESSIBILITY CONSIDERATIONS: There are no accessibility considerations at this time. FINANCIAL CONSIDERATIONS: It is anticipated that the Tax Increment Based Rehabilitation Grant Program will cover all eligible environmental remediation costs within the 10 year maximum allowed by Kingston Brownfield CIP Program. As per the CIP, the City will credit the remaining 20% of the tax increase to the City s Municipal Brownfield Reserve Fund during the same period as the grants are being paid, resulting in approximately $363k expected to be generated toward the Environmental Reserve Fund over the duration of the Tax Increment Based Rehabilitation Grant Program tax rebate period. CONTACTS: Nathan Richard, Project Manager, Brownfields 613-546-4291 ex 1325 Paul MacLatchy, Director Environment & Sustainable Initiatives 613-546-4291 ex 1226 Council Meeting 16 June 18, 2013 90
REPORT TO COUNCIL Report No.: 13-234 June 18, 2013 - Page 7 - Cynthia Beach, Commissioner, Sustainability & Growth 613-546-4291 ex 1150 OTHER CITY OF KINGSTON STAFF CONSULTED: Desiree Kennedy, City Treasurer 613-546-4291 ex 2220 Pat Carrol, Manager Taxation 613-546-4291 ex 2468 EXHIBITS ATTACHED: Exhibit A Site Map Exhibit B Draft By-Law for Tax Exemption/Cancellation Council Meeting 16 June 18, 2013 91
EXHIBIT A Site Map LJ U Council Meeting 16 June 18, 2013 92
Clause ( ), Report No. By-Law No. 2013-1 BY-LAW NO. 2013- A BY-LAW TO CANCEL MUNICIPAL AND EDUCATION TAXES FOR, 659-663 PRINCESS STREET and 582, 590, 598 and 604 VICTORIA STREET PASSED:, WHEREAS By-Law No. 2005-40, being A By-Law to Designate Brownfields Project Areas 1A, 1B & 1C as Community Improvement Project Areas, pursuant to Section 28(2) of the Planning Act, was passed by Council on February 15, 2005; AND WHEREAS By-Law No. 2005-41, being A By-Law to Adopt the Community Improvement Plan for Brownfields Project Areas 1A, 1B & 1C was passed by Council on February 15, 2005; AND WHEREAS By-Laws No. 2006-125 and 2006-126, being Amendment No. 1 to the Community Improvement Plan for Brownfields Project Areas 1A, 1B & 1C was passed by Council on May 23, 2006; AND WHEREAS By-Laws No. 2013-63 and 2013-064, being Amendment No. 2 to the Community Improvement Plan for Brownfields Project Areas 1A, 1B & 1C was passed by Council on March 5, 2013; AND WHEREAS 2246955 Ontario Inc., the registered owner of the property known as 659-663 Princess Street and 582, 590, 598 and 604 Victoria Street, more specifically described as: 659-663 Princess St-Lot 37 Plan A8 Kingston City, Part Lot 3 Plan A8 Kingston City; Part Lot 1 N/S Princess St, 2 N/S Princess St Plan C17 Kingston City; Part Lot 4, 38 Plan A8 Kingston City, as in FR334650, FR365401 S/T FR334650, FR 365401 S/T; Kingston, The County of Frontenac 604 Victoria St- Part Lot 36 Plan A8 Kingston City as in FR200665 T/W & S/T FR200665, Kingston, The County of Frontenac 598 Victoria St- Part Lot 36 Plan A8 Kingston City as in FR716501 T/W & S/T FR716501; Kingston, The County of Frontenac 590 Victoria St- Part Lot 36 Plan A8 Kingston City as in FR425211; Kingston, The County of Frontenac 582 Victoria St- Part Lot 3 Plan A8 Kingston City Part 1 13R16071; S/T Execution 04-000012; if enforceable; Kingston, The County of Frontenac, applied to the City of Kingston to cancel the property taxes for this property, in accordance with the Community Improvement Plan and section 365.1 of the Municipal Act; AND WHEREAS the property is located within the Community Improvement Project Area and is eligible for Tax Assistance pursuant to section 365.1 of the Municipal Act; Act; AND WHEREAS the Minister of Finance has approved this By-Law as required by the Municipal Council Meeting 16 June 18, 2013 93
Clause ( ), Report No. By-Law No. 2013-2 NOW THEREFORE the Council of The Corporation of the City of Kingston, pursuant to Section 28 of the Planning Act, R.S.O. 1990 and section 365.1 of the Municipal Act, 2001 S.O. 2001, c. 25, as amended, ENACTS AS FOLLOWS: 1. In this By-Law, a) Development Period means, with respect to the Eligible Property, the period of time starting on the date the Rehabilitation Period ends and ending on the earlier of, i) the third anniversary of the passage of the By-Law, or ii) the date that the Tax Assistance provided for the Eligible Property equals the Remediation Costs; b) Eligible Property means 659-663 Princess Street (assessment roll number (ARN)101105004009000), 582 Victoria Street (ARN 101105004009300), 590 Victoria Street (ARN 101105004009050), 598 Victoria Street (ARN 101105004008950 and 604 Victoria Street (ARN 101105004008900) c) Owner means 2246955 Ontario Inc., the owner of the Eligible Property; d) Rehabilitation Period means, with respect to the Eligible Property, the period of time starting on the date that Tax Assistance begins to be provided under this By-Law for the property and ending on the earliest of, i) the date that is 18 months after the date that the Tax Assistance begins to be provided, ii) the date that a record of site condition for the property is filed in the Environmental Site Registry under section 168.4 of the Environmental Protection Act, and iii) the date that the Tax Assistance provided for the property equals the Remediation Costs; e) Remediation Costs means the cost of any action taken to reduce the concentration of contaminants on, in or under the Eligible Property to permit a record of site condition to be filed in the Environmental Site Registry under section 168.4 of the Environmental Protection Act and the cost of complying with any certificate of property use issued under section 168.6 of the Environmental Protection Act, and as further specified in the Community Improvement Plan; f) Tax Assistance means the deferral or cancellation of taxes for municipal and education purposes levied on the Eligible Property during the Rehabilitation Period and the Development Period pursuant to this By-Law. In the period before the Owner s obligations under this By-Law have been met, Tax Assistance shall take the form of a deferral of taxes. Once the City of Kingston has confirmed that the Owner s obligations under this By-Law have been met, Tax Assistance shall take the form of a cancellation of taxes. 2. The City of Kingston shall provide Tax Assistance for the Eligible Property subject to the provisions of this By-Law and subject to confirmation that the Owner has paid all property taxes owing with respect to the Eligible Property for all years prior to the year in which this By-Law is passed. Council Meeting 16 June 18, 2013 94
Clause ( ), Report No. By-Law No. 2013-3 3. The Tax Assistance shall commence as of the date this By-Law receives third reading and shall be effective only for the duration of the Rehabilitation Period and the Development Period. In no event shall the Tax Assistance continue past the third anniversary of the passage of this By-Law. 4. The Tax Assistance available shall be a maximum of 100% of the taxes for municipal purposes and 100% of the taxes for education purposes levied during the Rehabilitation Period and the Development Period. The City of Kingston may revise the level of Tax Assistance based on the Municipal Tax Roll as returned in any given year and said revision shall not require an amendment to this By-Law, but the percentage of education taxes deferred or cancelled shall match the percentage of municipal taxes deferred or cancelled. The City of Kingston shall notify the Minister of Finance forthwith of any revision to the level of Tax Assistance. 5. Where Tax Assistance is provided for a portion of any year, or where Tax Assistance represents only a portion of the taxes levied on the Eligible Property, the Owner is responsible for payment of all property taxes levied during the portion of the year when Tax Assistance is not provided, and for all taxes not subject to Tax Assistance. 6. As of the date of passing of this By-Law, the City of Kingston may, a) refund the taxes to the extent required to provide the Tax Assistance in the year this By-Law is passed, if the taxes for the Eligible Property have been paid; or b) credit the amount to be refunded to an outstanding tax liability of the Owner with respect to the Eligible Property, if the taxes have not been paid in the year that this By-Law is passed. 7. The Treasurer shall alter the tax roll in accordance with the Tax Assistance to be provided for the Eligible Property. 8. The Owner shall, within 18 months of the anniversary of the commencement of Tax Assistance (or such later date agreed to in writing by the City of Kingston and the Minister of Finance), file a record of site condition with respect to the Eligible Property in the Environmental Site Registry under section 168.4 of the Environmental Protection Act. The owner shall, within 30 days, notify the City of Kingston of the filing. Within 30 days after receiving the notice from the Owner, the City of Kingston shall advise the Minister of Finance of the filing. 9. (1) The Owner shall provide to the City of Kingston an annual report within thirty (30) days of the anniversary of the commencement of Tax Assistance for each year or part thereof that Tax Assistance is provided. The annual report shall include: a) An update of the concentration and location of contamination on the Eligible Property; b) The status of remediation work completed to date; c) Costs expended to date and an estimate of costs not yet incurred; and d) Time estimates to complete the remedial and redevelopment work. Council Meeting 16 June 18, 2013 95
Clause ( ), Report No. By-Law No. 2013-4 (2) Within 30 days of receiving the report from the Owner, the City of Kingston shall provide a copy to the Minister of Finance. 10. (1) Tax Assistance shall be suspended, and either or both the municipal and education portions of it may be terminated, where any one of the following occurs: a) The Owner is in default of any obligation pursuant to this By-Law; b) The Owner is in default of any provision of the Brownfield Site Agreement entered into between the Owner and the City of Kingston and attached as a Schedule to this By-Law. c) The Owner fails to commence or ceases remediation for any reason. (2) The municipal portion of the Tax Assistance shall be suspended, and may be terminated, where any one of the following occurs: a) The Eligible Property has been severed, and the severed parcels have each been assigned roll numbers, and one of the severed parcels is subsequently sold the by-law in only canceled on the portion that has been sold.; b) Tax Assistance has been provided for three (3) years. (3) The education portion of the Tax Assistance shall be terminated where any one of the following occurs: a) The Eligible Property is severed, subdivided or all or any portion of the property is conveyed; b) Tax Assistance has been provided for three (3) years. (4) The Tax Assistance shall be terminated where the Remediation Costs equal or exceed the Tax Assistance. 11. The Owner shall notify the City of Kingston forthwith if any of the events in sections 10(1), 10(3)(a) or 10(4) occur. The City of Kingston shall then forthwith notify the Minister of Finance. 12. If Tax Assistance has been suspended under subsections 10(1) or 10(2), the City of Kingston may: a) provide the Owner with notice that the Tax Assistance is terminated; or b) provide the Owner with notice that it may cure the default within such period and on such terms as the City specifies in writing, and that the failure to do so will result in termination of the Tax Assistance. 13. A notice under clause 12(b) is not effective with respect to education taxes unless it has been agreed to in writing by the Minister of Finance. 14. (1) In the event that Tax Assistance is terminated pursuant to section 10 or 12 above, the City of Kingston shall provide notice to the Owner under subsection 365.1(3.1) of the Municipal Act that the conditions under this By-Law have not been met and order the Owner to repay all of the education taxes which were subject to the Tax Assistance, and all or a portion of the municipal taxes which were subject to the Tax Assistance. Council Meeting 16 June 18, 2013 96
Clause ( ), Report No. By-Law No. 2013-5 (2) Where the City makes an order under subsection (1), interest is payable on the taxes which become payable under the order calculated at the standard rates of the Municipality, as if the Tax Assistance had not been provided. 15. In the event that the Tax Assistance provided pursuant to this By-Law exceeds the actual Remediation Costs for the Eligible Property, the amount that the Tax Assistance exceeds the Remediation Costs shall be repaid by the Owner, failing which the amount to be repaid shall be added to the Assessment Roll for the Eligible Property and collected as property taxes. 16. This By-Law shall come into force and take effect on its passing. GIVEN FIRST AND SECOND READINGS GIVEN THIRD READING AND FINALLY PASSED CITY CLERK MAYOR Council Meeting 16 June 18, 2013 97