12. ST. JOSEPH BOULEVARD COMMUNITY IMPROVEMENT PLAN grant application – JARDIN ROYAL GARDEN INC. – 2802‑2810 ST. JOSEPH BOULEVARD (File no. D03-01-07 STJOG 1)

Demande de subvention du Plan d’amélioration communautaire du boulevard St-Joseph – Jardin royal garden inc. – 2802-2810, boulevard St-Joseph

COMMITTEE RECOMMENDATIONS

That Council:

1. Approve the St. Joseph Boulevard Community Improvement Plan Grant Application submitted by Jardin Royal Garden Inc., owner of the property at 2802‑2810 St. Joseph Boulevard, for a Development Incentive Grant not to exceed $735,060, payable to Jardin Royal Garden Inc. over a maximum of 10 years subject to the Owner entering into an Agreement, as provided for in the approved St. Joseph Boulevard Community Improvement Plan; and

2. Authorise staff to negotiate a Development Assistance Agreement with Jardin Royal Garden Inc. establishing the terms and conditions governing the payment of the Development Incentive Grant for the redevelopment of 2802-2810 St. Joseph Boulevard satisfactory to the Deputy City Manager, Infrastructure Services and Community Sustainability, the City Solicitor and the City Treasurer.

RecommandationS du Comité

Que le Conseil :

1. approuve la demande de subvention du Plan d’amélioration communautaire du boulevard St-Joseph présentée par Jardin Royal Garden Inc., propriétaire du terrain situé au 2802‑2810, boulevard St-Joseph, en accordant une subvention au développement d’un montant n’excédant pas 735 060 $, payable à Jardin Royal Garden Inc. sur une période maximale de 10 ans, sous réserve de l’établissement des conditions d’un Accord d’aide au développement, et en conformité avec celles-ci;

2. informe le personnel de conclure un Accord d’aide au développement avec Jardin Royal Garden Inc. en établissant les conditions régissant le versement de la subvention au développement pour le réaménagement du 2802-2810, boulevard St‑Joseph qui répond aux attentes de la directrice municipale adjointe, Services d’infrastructure et Viabilité des collectivités, du chef du contentieux et de la trésorière municipale.

DOCUMENTATION

1. Deputy City Manager of Infrastructure Services and Community Sustainability report dated 15 May 2009 (ACS2008-ICS-PGM-0092)

Report to/Rapport au :

Corporate Services and Economic Development Committee

Comité des services organisationnels et du développement économique

and Council / et au Conseil

15 May 2009 / le 15 mai 2009

Submitted by/Soumis par : Nancy Schepers, Deputy City Manager

Directrice municipale adjointe,

Infrastructure Services and Community Sustainability

Services d’infrastructure et Viabilité des collectivités

Contact Person/Personne-ressource : Richard Kilstrom, Manager/Gestionnaire, Policy Development and Urban Design/Élaboration de la politique et conception urbaine, Planning and Growth Management/Urbanisme et Gestion de la croissance Élaboration de la politique et conception urbaine

(613) 580-2424 x22653, Richard.Kilstrom@ottawa.ca

Innes (2)

Ref N°: ACS2009-ICS-PGM-0092

SUBJECT:	ST. JOSEPH BOULEVARD COMMUNITY IMPROVEMENT PLAN grant application – JARDIN ROYAL GARDEN INC. – 2802‑2810 ST. JOSEPH BOULEVARD (File no. D03-01-07 STJOG 1)

OBJET :	Demande de subvention du Plan d’amélioration communautaire du boulevard St-Joseph – Jardin royal garden inc. – 2802-2810, boulevard St-Joseph

REPORT RECOMMENDATIONS

That the Corporate Services and Economic Development Committee recommend Council:

RECOMMANDATIONS DU RAPPORT

Que le Comité des services organisationnels et du développement économique recommande au Conseil :

1. d’approuver la demande de subvention du Plan d’amélioration communautaire du boulevard St-Joseph présentée par Jardin Royal Garden Inc., propriétaire du terrain situé au 2802‑2810, boulevard St-Joseph, en accordant une subvention au développement d’un montant n’excédant pas 735 060 $, payable à Jardin Royal Garden Inc. sur une période maximale de 10 ans, sous réserve de l’établissement des conditions d’un Accord d’aide au développement, et en conformité avec celles-ci;

1. d’informer le personnel de conclure un Accord d’aide au développement avec Jardin Royal Garden Inc. en établissant les conditions régissant le versement de la subvention au développement pour le réaménagement du 2802-2810, boulevard St‑Joseph qui répond aux attentes de la directrice municipale adjointe, Services d’infrastructure et Viabilité des collectivités, du chef du contentieux et de la trésorière municipale.

BACKGROUND

On January 28, 2009 City Council adopted the St. Joseph Boulevard Community Improvement Plan (CIP). The goal of the CIP is to bolster the economic viability of the St. Joseph Boulevard area by stimulating the development and redevelopment of privately held property, encouraging land use intensification and the provision of affordable housing, supporting the establishment of mixed-use development, and improving site and built-form aesthetics. This is achieved in the CIP through a comprehensive framework of incentive programs including the Project Feasibility Study Grant, Planning Fee Grant, Development Incentive Grant and the Building Permit Fee Grant that partially offset a range of typical development costs.

J.P. Taillefer on behalf of Jardin Royal Garden Inc. has filed an application for a Development Incentive Grant for the one-hectare property located at 2802-2810 St. Joseph Boulevard (Document 1). The property is located within the St. Joseph Boulevard Community Improvement Plan Project Area. The 1397 square metre commercial building that existed on the property was demolished, by permit, in 2008.

The purpose of this report is to bring the Development Incentive Grant application for 2802‑2810 St. Joseph Boulevard before Committee and Council for approval.

DISCUSSION

The Development Incentive Grant Program provides financial assistance to partially offset the cost of site and building development. Eligible costs under this program include, for example, building demolition, construction, energy efficiency (LEED), building permit fees, hard and soft site landscaping components and signage. The annual grant amount is equal to 70 per cent of the increase in the municipal portion of property taxes (tax increment) resulting from constructed projects. This grant is paid once annually over a maximum 10-year period to a total overall maximum grant amount of 70 per cent of the eligible on/off site construction costs or $1,000,000 whichever is lower.

The Building Permit Fee Grant Program provides financial assistance to partially offset the cost of building permit fees. The grant amount is equivalent to 30 per cent of building permit fees. This Building Permit Fee Grant is automatically included as an eligible cost within, and is paid as a component of an approved Development Incentive Grant (a separate application is not required). Through the Development Incentive Grant, up to 70 per cent of the 30 per cent (maximum 21 per cent of permit cost) may be reimbursed.

The Development Incentive Grant amount is increased to 85 per cent of the eligible on/off site construction costs or $1,000,000.00 whichever is lower, if three or more new affordable housing units are constructed. This grant bonus does not apply to this application.

All grant programs are structured such that payment occurs following construction of a project, property reassessment by the Municipal Property Assessment Corporation has occurred and the first year of post-reassessment taxes has been paid. This grant payment timing ensures that the City through its investment in the four grant programs has facilitated an actual constructed project and allows time for project-related tax increment revenues to be received.

The CIP requires that all grant applications exceeding a total amount of $250,000 be brought before Committee for consideration and Council for approval.

The Royal Garden Grant Application

Staff has reviewed the required documents that are to be submitted to the City as part of a Development Incentive Grant application and the grant application is deemed to be complete. The proposed redevelopment is the conversion of an existing single storey commercial building to an expanded three-storey, 95-unit retirement residence (Document 2). The project is subject to an application for site plan control. Approval of the site plan application is expected to be finalized by early summer 2009 with construction scheduled to begin shortly thereafter. The project should be completed and occupied in 2010.

Development Incentive Grant Eligible Costs and Estimated Grant Amount

Under the St. Joseph Boulevard Community Improvement Plan, the applicant is required to submit an estimate of project construction costs and an estimate of the post-construction assessed value and tax payment amount to determine grant eligibility, eligible project costs and projected grant payment amount. Staff has reviewed the submissions and has determined that the total eligible costs for the Development Incentive Grant are $8,300,000. The CIP requires that total upset amount for all grants combined per property will be the lesser of 70 per cent of the eligible costs, $1,000,000, or until 10 annual grant payments at 70 per cent of the municipal tax increment amount have been made.

The detailed calculations based on the formulas contained within the approved CIP are shown in Document 4. In summary, the total Development Incentive Grant amount is estimated to be $735,060. The grant will be paid post-development in annual payments of approximately $73,506 over a 10-year period. The actual total amount of the grant and the actual annual grant payments will be recalculated annually based on actual taxes paid. The total grant however will not exceed $735,060.

The actual grant payment timing will depend on the pace at which development occurs, the property is reassessed and the first year of post-development taxes is paid in full. Since the total estimated grant amount is less than $1,000,000 and is less than 70 per cent of the eligible project costs, the grant program period will be 10 years from the date of first grant payment.

For the purposes of estimating the highest future municipal tax increment and the earliest estimated grant pay-out period it has been assumed for illustrative purposes that the development will be completed in 2010. The detailed assumptions and the calculations are shown in Document 4. If the building program proceeds at this pace the first grant payment could occur in 2012 and the grant pay-out could end in 2021.

Economic Benefits

The overall economic impact of the proposed development is estimated at $8,300,000 in construction value for the 95-unit retirement residence. Both significant direct and indirect economic benefits to the local economy will be realized during the construction period through payroll, purchased material supplies and services and equipment rentals for the development project.

Approximately $11,000,000 in new residential assessment would be added to the property tax assessment roll at full development. The tax consultant for the Owner estimates approximately $121,265 per year in municipal property taxes can be expected at full development. This is a significant increase over the estimated 2009 (post-appeal) municipal taxes of $16,256.

City Strategic Directions

One of the City’s priorities, as a strategic direction, is in planning and growth management. An important objective is to integrate new growth seamlessly with established communities.

In general, residential intensification assists the City’s overall smart-growth urban management objectives by placing less of an emphasis on the expansion of service boundary (into greenfields) and more of an emphasis on the utilization of existing municipal infrastructure investments. The current approved site plan for this property incorporates many sustainable development principles such as the creation of compact built form, the strengthening of the link between higher density residential development and public transit, and providing additional housing opportunities within an existing urban community.

CONSULTATION

Public consultation is not required for grant approval under the St. Joseph Boulevard Community Improvement Plan. The Heart of Orleans Business Improvement Area and Orleans Chamber of Commerce have been advised of this grant application.

LEGAL/RISK MANAGEMENT IMPLICATIONS

There are no legal/risk management impediments to implementing any of the recommendations in this report.

This application will be subject to a legal agreement setting out the details of the responsibilities of the Owner and of the City in providing the grant program. The agreement will be registered on the title of the property to which it applies.

Grant payments will only be made following construction and payment in full of the first year of post-development taxes. Grant payments will also not be made unless the minimum specified increase in assessed value of the property has occurred. These requirements reduce interim financial pressure on the City, help to ensure that substantive work has been undertaken on the property and eliminate the risk of grant payments being made that have not led to actual project construction.

FINANCIAL IMPLICATIONS

As per the CIP, if this grant application is approved the City would provide the Owner with an annual grant equivalent to 70 per cent of the increase in municipal taxes, to the lesser of a maximum of 70 per cent of site eligible development costs and $1,000,000. For this grant the total maximum grant is $735,060 as calculated based on the information submitted in support of the application. Note that the tax consultant for the Owner has estimated the 2009 taxes based on successful appeal to the Assessment Review Board. If the appeal is successful, the annual grant payment is estimated to be $73,506. The grant payment would be calculated annually based on actual taxes paid. The grant would be paid once per year for up to 10 years until the total maximum grant amount is reached. After that time, the City will begin to collect and retain the full municipal portion of the tax increment.

The City will retain the balance (30 per cent) of the municipal tax increment per year coinciding with the grant period. This money will be deposited into the CIP Revolving Fund account. This account functions as a revolving fund (capital account) to be used to offset the cost of future grants under the Feasibility Study Grant program and the Planning Fee Grant program.

The capital requirement for the Development Incentive Grant Program (and the Building Permit Fee Grant Program) is funded from the citywide capital reserve fund. All grant program capital requirements will be identified individually at annual budget time as strategic initiatives and as such will be subject to approval by Council as part of the usual City budget process. Since the first grant payment for this application is projected to be made in 2012, the grant payment amount will be brought to Council for consideration as part of the 2012 budget process. Note that if the first grant payment is approved and an agreement is entered into between the City and the applicant, the City is obliged to continue annual grant payments in subsequent years.

SUPPORTING DOCUMENTATION

Document 1 Location Map

Document 2 Site Plan

Document 3 Eligible Costs

Document 4 Estimated Future City Property Tax Increment and Annual Grant Payable

Document 5 Estimated Development Incentive Grant

DISPOSITION

Legal Services to prepare the Development Assistance Grant Agreement.

Planning and Growth Management Department to monitor the performance of this grant application and prepare a status report on this application as part of an annual CIP monitoring report to Council.

Planning and Growth Management Department to notify the applicant of Council’s decision.

LOCATION MAP DOCUMENT 1

SITE PLAN DOCUMENT 2

ELIGIBLE COSTS DOCUMENT 3

The costs eligible for a Development Incentive Grant are estimated as follows:

Item

Estimated Cost

Building demolition:

Construction of new building(s):

$7,975,000

Construction of addition(s):

Façade upgrade(s) in front yard or external side yard:

On-site infrastructure construction / upgrade including water services, sanitary sewers burial of hydro service and stormwater management facilities:

$100,000

Off-site infrastructure construction / upgrade including roads, water services, sanitary sewers, stormwater management facilities, electrical and gas utilities:

On-site features construction / upgrade including hard and soft landscaping, parking areas, walkways, decorative lighting and signage:

$200,000

Off-site features construction / upgrade including walkways, pedestrian amenities, hard and soft landscaping:

$25,000

30% (40% if 3 or more affordable housing units) of the estimated Building Permit Fee to be paid:

The following Leadership in Energy and Environmental Design (LEED) Program Components:

a) base plan review by a certified LEED consultant;

b) preparing new working drawings to the LEED standard

c) submitting and administering the constructed element testing and certification used to determine the LEED designation

Total Eligible Project Costs:

Eligible Project Costs x Maximum 70% grant amount:

$8,300,000

$5,810,000

The above-noted costs are estimates only and Eligible Costs shall be based on actual paid Project Cost amounts except that the maximum that the City will pay will be based on the lesser of actual paid amounts or estimated costs, which may be audited by the City.

ESTIMATED FUTURE CITY PROPERTY TAX INCREMENT

AND ANNUAL GRANT PAYABLE DOCUMENT 4

This Schedule is intended as an example of how the Development Incentive Grant is calculated.

Pre-Project Property Tax Rates and Property Taxes

Current Value Assessment (2009) on the property located at 2802-2810 St. Joseph Boulevard is $1,858,750, classed as Commercial. Current annualized property taxes are approximately $30,000 broken down as follows:

Table 1

Pre-Project Property Taxes*

Municipal Property Tax portion

$16,256

Education Property Tax Portion

$13,744

Total Pre-Project Property Taxes

(In the year the CIP grant application was made)

$30,000

* Based on successful appeal currently before the Assessment Review Board.

Based on the post-project assessment valuation prepared by Cushman & Wakefield LePage, as submitted as part of the application, it has been estimated that once the entire project is complete, the property including all buildings will have a post-project assessment value (in 2011) of approximately $12,500,000 in the residential tax class.

For the purposes of estimating the future municipal tax increment and the estimated pay-out period it has been assumed that all of the above components would be completed by mid-2010. It is important to note that the tax increment is an estimate and provides guidance on the order of magnitude of the possible payment under the assumption of all buildings being completed, reassessed and taxes levied and paid at the full rate in 2011. The tax rate (2011) and assessed values (2011) are held constant for illustration purposes. In practice, the assessed value of the units would likely increase reflecting increasing property values to reflect the existing MPAC reassessment term. As well, there would likely be some increase in annual municipal taxes during the projection period.

The administration of the grant program would require that any grants to be paid be based on actual Municipal Property Assessment Corporation (MPAC) property assessment (including any resolution of appeals) of improved properties. The prevailing tax rate would be applied and only after taxes are paid in full for one year and only when the City is satisfied that all terms and conditions have been met as specified in this agreement between the City and the applicant would a grant be issued. The CIP directs that the annual grant payment is capped at 70 per cent (85 per cent if three or more affordable housing units have been constructed) of the municipal share of the increase in property taxes over the pre-project municipal property taxes paid.

The program period is a maximum of 10 years from the Development Assistance Effective Date, until 70 per cent of the total project Eligible Costs (85 per cent if three or more affordable housing units have been constructed) have been paid by the annual grants or until $1,000,000 has been paid, whichever comes first.

For this application, the estimated future Municipal Tax Increment is the estimated future municipal tax minus the pre-project municipal share of taxes. That is $121,265 minus $16,256 (from Table 1) = $105,009.

The future municipal tax increment has been estimated and the annual grant is based on the 70 per cent grant factor. The possible grant payment schedule is shown in Table 2 below. In the administration of this grant the line item for each year would be calculated in the corresponding year based on the new assessment, tax rate, taxes paid and actual municipal tax increment paid in that year to establish the actual grant payment.

Table 2 - Estimated Grant Amount

Year	Existing Municipal Taxes (Base Rate)	Projected New Municipal Taxes	Municipal Tax Increment	Development Incentive Grant at 70% of increment	Feasibility & Planning Fee Grants (1/10 of Total amounts)	Est. Annual Development Assistance*	Balance to CIPRF**
1	$16,256	$121,265	$105,009	$73,506	N/a	$73,506	$31,503
2	$16,256	$121,265	$105,009	$73,506	N/a	$73,506	$31,503
3	$16,256	$121,265	$105,009	$73,506	N/a	$73,506	$31,503
4	$16,256	$121,265	$105,009	$73,506	N/a	$73,506	$31,503
5	$16,256	$121,265	$105,009	$73,506	N/a	$73,506	$31,503
6	$16,256	$121,265	$105,009	$73,506	N/a	$73,506	$31,503
7	$16,256	$121,265	$105,009	$73,506	N/a	$73,506	$31,503
8	$16,256	$121,265	$105,009	$73,506	N/a	$73,506	$31,503
9	$16,256	$121,265	$105,009	$73,506	N/a	$73,506	$31,503
10	$16,256	$121,265	$105,009	$73,506	N/a	$73,506	$31,503
TOT.	$162,560	$1,212,650	$1,050,090	$735,060	N/a	$735,060	$315,030

*The cumulative total of annual Development Assistance paid shall not exceed the total from line 8 in Document 5 (as may be reduced based on actual eligible project costs, assessed values and tax increments paid).

**CIPRF = St. Joseph Boulevard Community Improvement Plan Revolving Fund

DEVELOPMENT INCENTIVE GRANT UPSET AMOUNT DOCUMENT 5

The St. Joseph Boulevard CIP specifies that, the total of all grants combined with any Brownfield’s CIP grant shall not exceed 70 per cent of eligible project costs, 85 per cent if three or more affordable housing units have been constructed, to a total of $1,000,000, whichever is lower.

Total Eligible Project Costs*:

(from Document 3)

$8,300,000

Total capping equal to the lesser of 70 per cent of Total Project Costs (85% if 3 or more affordable housing units constructed) and $1,000,000:

$5,810,000

Project Feasibility Study Grant approved amount:

(from Schedule “C”)

N/A

Planning Fee Grant approved amount:

(from Schedule “D”)

N/A

Development Incentive Grant estimated amount:

(from Table 2 – Document 4)

$735,060

Brownfield’s CIP grant amount:

(from existing or pending agreement, if any)

N/A

Sub-total:

(lines 3 to 6 inclusive)

$735,060

Total estimated Development Assistance upset amount:

(the lower of lines 2, 7 and $1,000,000)

$735,060

*Eligible Costs are based on the lesser of the estimated and actual costs