Development Fund Policy
Development Fund Policy
Recommendations:That Executive Committee recommend to City Council:
- That the Development Fund Policy C553, as outlined in Attachment 1 of the October 8, 2009, Planning and Development Department report 2009PPP036, be approved.
- That Administration prepare for the November 30, 2009, Operating Budget deliberation:
- A service package of $3,200,000 on a one-time basis (to be spent in 2010, 2011, 2012) for the creation of a Development Fund.
- A recommendation that any unspent amounts be transferred into a Reserve Fund on an annual basis to be used as funding for the Development Fund program until December 31, 2013.
- That Administration prepare for the November 30, 2009, Operating Budget deliberations:
- A service package of $900,000 on a one-time basis(to be spent in 2010-2014) for the continuation of the Façade Improvement Program.
- A recommendation that any unspent amounts be transferred into a Reserve Fund on an annual basis to be used as funding for the Façade Improvement Program until December 31, 2015.
Report Summary
This report outlines the criteria, funding requirements and procedures for the administration of the Development Fund, and the related Façade Improvement Program.
Previous Council/Committee Action
At the August 26, 2009, Executive Committee meeting, the following motion was passed:
That Administration draft a Development Fund Policy for revitalizing and reinvesting in main street commercial areas in need of added support. The draft policy is to return to Executive Committee by October 7, 2009, with the estimated budget in advance of 2010 budget deliberations.
Report
This report was unavailable for agenda printing because of the time required to investigate the grants aspect of the development fund. The report should be presented to Executive Committee so that its financial implications coincide with, and are considered during, 2010 budget deliberations.
Administration proposes the Development Fund operate as a three year pilot program starting in 2010, and the Façade Improvement Program be extended for five years starting in 2010. Administration will provide annual updates on both programs to Council.
Development Fund
The Development Fund is an incentive program for revitalizing and reinvesting in seven main street commercial areas. The program will apply to Enterprise Areas which form part of seven existing Business Revitalization Zones. The boundaries of the Areas include those commercial properties most in need within the Business Revitalization Zones, and some properties abutting the Business Revitalization Zones zoned for higher density residential (see Attachment 3).
The seven Enterprise Areas are located within the following Business Revitalization Zones areas:
- Stony Plain Road and Area
- Chinatown and Little Italy
- Alberta Avenue
- North Edge (107 Avenue)
- Beverly
- Old Strathcona (east of CPR)
- Inglewood
The criteria used in selecting Enterprise Areas and their boundaries are:
- Enterprise Areas should be in an existing Business Revitalization Zones, but may include abutting higher density residential zoned properties within one block of the main street commercial area.
- Enterprise Areas should be a pedestrian oriented area.
- Enterprise Areas should have planned or existing new or upgraded infrastructure.
- Enterprise Areas should be relatively small in area to concentrate the impact of the incentives.
- Enterprise Areas should have opportunities for redevelopment to increase the tax base.
- Enterprise Areas should reflect the application of the Neighbourhood Revitalization Indicators developed by Administration.
Criteria have been established in the attached Development Fund policy and procedures to determine which new businesses and housing would be eligible for incentives.
Two funding options (grants or tax refunds), were identified in the previous report to Executive Committee meeting on August 26, 2009. Administration recommends a grant approach for the following reasons:
- Research and discussions with the Development Industry make it clear that grants are preferred. The developers prefer incentives to be paid up front, similar to the manner in which the Downtown Edmonton housing incentive program was implemented in 1998.
- The legislation for tax refunds is more restrictive in Alberta than in other Provinces, and more complicated to administer than a grant program.
Key Components of the Fund
a)Market Housing Incentives
This incentive will encourage mixed use commercial-residential development and apartment or stacked row housing in the Enterprise Areas.
Grants for housing will be $7,000 per dwelling unit for ten or more units of Apartment or Stacked Row Housing, up to a maximum of 36 units per project. For mixed use development, the grant will be $12,000 a unit for any number of units up to a maximum of 36 units per project. The maximum annual funding for this incentive is $2.5 million based on 250 units of housing per year at an estimated average of $10,000 a unit.
b)Commercial Incentives
This incentive will encourage new start-up businesses in vacant buildings (being vacant during the prior 12 months) in Enterprise Areas.
Existing vacant properties may qualify for a grant of up to $15,000. The grant would be paid to the property owner on a 50/50 cost shared basis for improvements to retrofit the building - similar to the Façade Improvement Program. The maximum annual funding for this incentive program is $200,000.
For new commercial development, the commercial portion of the development will be eligible for a grant, subject to the guidelines in the Development Fund Policy and Procedures. The grant will be up to $40,000 based on a pro-rated construction value with a minimum of $250,000 required for each grant application. The maximum annual funding for this incentive is $400,000.
c)Land Assembly and Remediation
Land Assembly and Remediation are important issues to the Corporation. The Development Fund program may be involved in land assembly in the Enterprise Areas. Consideration will also be given to public/private partnerships of underutilized strategically located land parcels and brownfield sites in Enterprise Areas, along with the potential undertaking of a mixed use demonstration project. Zoning incentives could be used as a tool to encourage redevelopment in these Enterprise Areas. A business case would be undertaken for each of these projects. This element of the program requires more research in terms of its scope, mandate, funding and criteria.
d) Façade Improvements
The Development Fund would assign $400,000 of the total annual Façade Improvement Program funds to the seven Enterprise Areas (see below). Grants would be distributed to businesses on the same basis as in previous years under the Façade Improvement Program.
Costs and Administration of the Development Fund
The program would be administeredby Planning and Development Department similar to the Façade Improvement Program to review applications and to identify development opportunities. A Senior Planner assigned to the Office of Great Neighbourhoods, would liaise with Planning and Development Department to coordinate these projects with the scope of work planned or underway in these areas.
The program costs are mostly in the form of grants. The maximum annual housing grants proposed for this incentive will be $2.5 million based on 250 units of housing each year at an estimated average of $10,000 per unit. For new commercial development, the maximum annual commercial grants proposed for this incentive is $400,000. For new start-up business in vacant buildings, the maximum annual grants proposed for this incentive is $200,000. The resulting annual total proposed is $3.1 million.
Grants of this type are not an eligible expense in the Great Neighbourhoods Capital Program as the City would not own these assets.
Additional funds would be required for:
- One FTE to administer the Development Fund Program ($100,000)
- Land assembly and/or remediation of strategically located land parcels, and if a demonstration project for a mixed use development is undertaken. A business case would be made for each proposal after projects are identified.
Benefits of the Development Fund
Supporting the City’s strategies of inner city revitalization, smart growth, and good urban design.
- Increasing investor confidence and encouraging more private sector investment in these special needs neighbourhoods.
- Increasing opportunities for more market housing that will support revitalization efforts.
- Targeting specific commercial services to locate in these areas while addressing major land use conflicts, vacant space, or other detriments to these areas.
- Increasing property values and tax revenues from these business areas and adjacent neighbourhoods.
Façade Improvement Program
Administration recommends the Façade Improvement Program be allocated $900,000 annually. This amount includes the FTE required to administer the program.
The Facade Improvement Program has been in place since 2002 and has proven to be very successful. It is proposed that 50% ($400,000) of the funding for this program be allocated to the Enterprise Areas. The other 50% ($400,000) will be available to all other Business Revitalization Zone areas.
Upon Council approval of funding for the Development Fund and/or the Façade Improvement Program, reserves should be established to carry forward any unspent annual funds.
Policy
The concept of a Development Fund for a declining area supports some of the economic development priorities of the Edmonton’s Municipal Development Plan in the following areas:
- Reinvestment in Mature Neighbourhoods
- Expanded Business Base
- Positive Business Environment
Focus Area
The concept of a Development Fund for special needs areas supports the 2009-2018 Edmonton Strategic Plan in two areas:
- Improve Edmonton’s Livability:
Implementation of this fund is in line with the strategy to “concentrate efforts on prevention and getting to the root causes or barriers that are in the way of achieving a more liveable city”.
- Transform Edmonton’s Urban Form: Implementation of this type of fund is also in line with the goal to increase Edmonton’s “density and optimize existing infrastructure while maintaining and revitalizing strong, vibrant neighbourhoods; ensuring high standards of urban design, adopting best land use practices, and preserving natural areas and public spaces”.
This fund is also in line with the strategic priority to facilitate revitalization of neighbourhoods in need through the Great Neighbourhoods program.
Public Consultation
Administration met with key stakeholders to seek their input into this development fund. Meetings were held with the Business Revitalization Zones that would be affected by this program. Discussions were also held with a limited number of business and property owners in these Business Revitalization Zone areas and with members of the development industry and consultants who have been involved with past revitalization projects.
Many opinions and suggestions were offered regarding this fund. It was the consensus of the stakeholders that a Development Fund would be an important element in helping to revitalize these neighbourhoods in distress and decline. While not a consensus opinion, the majority of those consulted supported grants over tax refunds. The need for such a program was also confirmed from the research phase of the Great Neighbourhoods Program, where using public investment to spur private development was a key part of neighbourhood transformation initiatives.
Budget/Financial Implications
The establishment of a Development Fund would require operating Funding of $3.2 million for the Development Fund and $900,000 for the Façade Improvement Program.
Justification of Recommendations- Approval of this policy will enable the Administration to implement, operate and maintain the Development Fund.
- a.Aservice package is required to bring forward the Development Fund funding request for Council’s consideration during the 2010 Operating Budget deliberations.
- a.A service package is required to bring forward the Façade Improvement Program funding request for Council’s consideration during the 2010 Operating Budget deliberations.
Attachments
1.Development Fund PolicyC553
2.Development Fund Policy City Procedure C553
3.Maps of the Seven Proposed Enterprise Areas and Their Boundaries
4.Map of the Proposed Seven Enterprise Areas
Others Reviewing this Report
- L.Cochrane, General Manager, Community Services Department
- L.Rosen, General Manager,Asset Management and Public Works Department
- D. H. Edey, General Manager, Corporate Services Department
- J.Tustian, DeputyCity Manager
Others Approving this Report
- C.Warnock, Chief Financial Officer and Treasurer
Page 1 of 5
Attachment 3
Maps of the Seven Proposed Enterprise Areas and Their Boundaries
Page 1 of 7Report: 2009PPP036 Attachment 3
Attachment 4
Map of the Proposed Seven Enterprise Areas
Page 1 of 1Report: 2009PPP036 Attachment 4