Kingston Council to consider increased Brownfield Tax Assistance for downtown Homestead development

At their upcoming meeting scheduled for Tuesday, Jul. 12, 2022, Kingston City Council will consider amendments to the already approved Brownfield Tax Assistance for the downtown Homestead development at Queen and Ontario Streets.

The item refers to Homestead Land Holdings Limited’s somewhat controversial plan to build two high-rise buildings in the heart of the downtown core, which will now proceed after the Ontario Superior Court dismissed the Frontenac Heritage Foundation’s appeal against the development in mid-June, 2022. The proposal for the development, however, first came before Kingston City Council in 2015. At Tuesday’s meeting, Council will discuss a report from Peter Huigenbos, Commissioner of Business, Environment, and Projects for the City of Kingston, which recommends amendments to the Brownfield Tax Assistance approvals previously granted to the developer.

Brownfields and tax incentives in the City of Kingston

The City of Kingston defines a ‘brownfield site’ as “abandoned, idle, or unused industrial and commercial lands that have been or are perceived to have environmental contamination due to historic activities. A brownfield site may be as small as a vacant gas station with remaining underground storage tanks, or as large as several hundred acres of abandoned factory that may have dumped waste on its property during its operation.”

The Brownfield Financial Tax Incentive Program (BFTIP) through the City of Kingston is part of its Brownfield plan, which is based on the Community Improvement Plan. The BFTIP has been identified by the current Council as an integral aspect of Council’s Strategic Priorities, specifically with regard to Strategic Priority #4: Strengthen economic development opportunities, as it allows those wanting to develop on brownfield lots “relief from paying 100 per cent of the municipal and 100 per cent of the educational property tax for a period of 36 months.

“The period may start at the beginning of the Rehabilitation period and ends 36 months later. The amount is based on the pre-development tax assessment as per MPAC Assessment. The municipal portion of the tax assistance is approved by the City. The education portion of the tax assistance is approved by the Minister of Finance. The City applies for this tax assistance on behalf of the proponent,” the City of Kingston states on its webpage devoted to Municipal Incentive Programs.

North Block Homestead development and Brownfield Tax Assistance

According to the report from Commissioner Huigenbos, the amendments to the previously approved Brownfield Tax Assistance for the Homestead Development on Queen and Ontario Streets (51-57 and 18 Queen Street, and 282 Ontario Street) are being recommended, as the “remediation and redevelopment of these projects has not commenced due to delays related to appeals of the Official Plan and Zoning By-Law amendments that were deliberated at the Ontario Land Tribunal (OLT).”

As mentioned earlier, those appeals have now been dismissed; however, the “six-year delay has rendered the original remediation cost estimates and completion timelines out of date to the point that they are no longer reasonable or attainable, and the project owner has requested that
the City consider renewed approvals based on current estimates of remediation cost, property tax uplifts and construction timelines.”

Specifically, the report recommends that the amended brownfield tax assistance be provided for the development “in an amount not to exceed $3,989,612,” for the 51-57 Queen Street property. That amount is a 23.5 per cent increase over the same costs from the 2016 estimates. For the 18 Queen Street property, the amended tax assistance amount is “not to exceed $5,053,879,” which translates to a 13.9 per cent increase over the previous costs based on 2016 estimates.

“The amounts of new annual municipal tax revenue estimated for each project at completion are expected to be at least $486,145 and $614,962 respectively, which indicate a full ten years of future tax cancellations or rebates would likely be applied,” the report reads.

“This report also recommends the amendment of Brownfield Financial Benefit By-Laws and the enactment of Brownfield Tax Cancellation (BFTIP) By-Laws for the subject properties.”

In total, the combined recommended tax assistance amounts for the two Queen Street properties would be $9,043,491.

The report also recommends Council authorize City of Kingston staff to “proceed with seeking administrative amendments to the Brownfields Community Improvement Plan” to allow the 10-year brownfield tax cancellation or rebate period to be extended by 10 years for the development in question.

“The six-year delay has created a situation where the ten-year window for annual brownfield financial assistance for each completed project is likely to extend beyond the 2035 deadline currently prescribed in the City’s brownfield CIP. The intent of the extension past 2035 is to allow room for a full ten years of financial assistance for each project,” the report states.

The report concludes that the impact of these amendments to annual municipal budgets is “expected to be minor and manageable” over the 10-year term of the assistance.

Kingston City Council meets at 7 p.m. on Tuesday, Jul. 12, 2022; the meeting can be viewed in full (both live and afterward) on the Kingston City Council YouTube channel.