Edmonton is considering waiving one-quarter of property taxes for three years to encourage new industrial developments as part of its upcoming four-year budget deliberations.
On Wednesday, members of the executive committee heard administration’s plan to attract more industrial investment to the city.
“The big deal is 20 years ago our non-residential tax base used to account for about 60 per cent of our property tax revenue and 40 per cent was made up by residential,’ said Mayor Andrew Knack. “Over the last 20 years that’s been flipped. That puts more pressure on the residential tax base and also means you’re not creating as much new business opportunities and new jobs.
“This next piece allows us to really create more shovel-ready land which allows for new investment, new job creation and new tax revenue which didn’t exist before. That will help us with our financial stability. It will also help us deliver on the basics because you’re creating new opportunities to be able to fund those basic services.”
With the 25 per cent tax forgiveness, administration told committee the mill rate would be approximately 18 per cent for new industrial builds and potentially opening up to 15 hectares of land annually. The program would require the city to forgo roughly $1 million per year, but longer-term could lead to the city collecting $4 million per year.
Also proposed is a four-year $23 million first mover plan where developers will be able to apply for reimbursement of one key piece of municipal infrastructure per project. Administration provided two scenarios, suggesting the city could incentivize 10 projects by 2030 with a one-time investment of first mover funding and would recoup $6.7 million annually. If the program proves successful, council could also opt to inject the first mover funding every four years, which could see a property tax uplift of $31.6 million within eight years. Existing businesses looking to expand or build a new building can also access the program.
If the plan clears budget talks, industry could access the two programs as of April next year.
Noting historically the top spot for investment is Toronto, Panattoni Development vice-president Mark Edwards told committee Edmonton is being looked at more frequently by industrial developers and said the two programs would only improve the chances of landing new builds.
“There’s a market for the groups that want to be in the city,” he said. “The city offers amenities — transit, access to rooftops for staff, commercial corridors for product movement within the city.
“It removes some of that risk so your investment becomes more tangible. The market is ‘on’ in Edmonton, so this is a great time for it to be coming forward.”
Administration told council the city only has 2.6 per cent of industrial land currently shovel ready — the target is 4.5 per cent. Less than a percentage is fully serviced, 12 per cent is partially serviced and 44 per cent is unserviced. The city has approximately 45 projects which could be advanced to shovel ready with the right incentives. If the city implements the first mover program as a regular four-year package, administration estimates the city could be at its 4.5 per cent goal of shovel-ready lots per year within nine to 12 years.
Surrounded by smaller municipalities which have much lower service costs, Edmonton has struggled to attract industrial investment when its neighbours can afford to charge considerably lower property tax rates.
Edwards noted that investment scare was exacerbated by the separatism push, which he said caused a noticeable freeze in investment in Alberta, but anticipated this incentive would help get the ball rolling again.
“People weren’t sure what was going to happen,” he said. “So the timing (of this) is excellent.”
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