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Ideas for Municipal Incentive Programs for Downtown Redevelopment

#1 in a series of Municipal Ideas and Innovations
©2009 Hume Communications Inc.

Municipalities across Canada are under constant pressure to improve/redevelop/rejuvenate their downtown neighbourhoods. That almost always makes sense, as a strong, vibrant downtown is usually the home of artists and artisans, cultural facilities, heritage properties, unique housing, the dining and entertainment scene, business, the political and judicial headquarters of a community, and the home of many of the support industries for social agencies.

Having a sustainable, healthy and vigorous downtown is a reflection of the economic and social health of a city. It can set the tone for a community’s state of mind, and be a critical factor in attracting the creative sector (ie. those bright young twenty and thirty year olds) who generate income, start innovative businesses, lead the social scene and create the BUZZ about your city.

Most communities have a Business Improvement Area (BIA), Downtown Business Association (DBA), MainStreet group or some other business-oriented association that will be partners in this rejuvenation. Often there are some limited ‘taxing’ powers (ie. mandatory fees paid by all businesses to the association) with the funds being spent on improving/beautifying/promoting the business district.

There are some new opportunities emerging, depending on provincial authority, such as the ability of municipalities to establish Development Corporations. These have been common in the US and allow such organizations to access three-level government funding but still have nimble private-sector opportunities to acquire real estate, redevelop properties and manage or sell them with the assets then re-invested in the downtown.

The opportunity for municipalities to invest/support their downtowns (or other business districts) varies from province to province, depending on provincial laws and local decisions. But there are a growing number of tools available to enlighten communities to help re-shape their downtown core, and to enhance community prosperity. Here are some as identified in “Cultural Planning for Creative Communities”:

1. Create an Enterprise Zone:

The Enterprise Zone can be a broad section of the downtown (or other designated area) or target a specific street or area. This designation can allow greater incentives that are funded by the public purse in recognition of the importance of that area—and of the eventual economic benefits to the community.

2. Façade Loans:

To assist property owners in certain designated areas with public money to renovate/repair store-front facades. The concept is to brighten and improve the streetscape. Loans would be repaid (often these are offered interest-free) over a five or ten year period, or put on the tax rolls. Some municipalities may forgive up to 50% of the loan over time.

3. Awning, Signage and Decorative Lighting Grants:

This program provides financial assistance to property owners in designated areas to help bring buildings into conforming to the local Property Standards Bylaw. The grant might cover 50% of the cost (to a maximum of $X thousands) to help pay for upgraded awnings, signs and lighting. It helps to improve the streetscape and upgrade the enterprise zone buildings.

4. Building Code Loans:

One of the most significant challenges to property owners trying to upgrade their (older) properties is meeting the new Building Code Standards. This can be a major impediment to building owners. A municipal loan program can provide (perhaps) up to $50,000 (or half the cost) of these building improvements. The loan can be repaid over ten years, without interest. Loans may be secured through a lien placed on the title. Some municipalities may even forgive some or the entire loan if the building is located in certain enterprise zones and meets municipal conditions.

5. Accessibility Loans:

Assuring full accessibility, especially for older buildings that are in the downtown and may have narrow doors, steps or stairways, and non-sidewalk-level street fronts, can be challenging. Many municipalities and provinces are now aggressively pursuing fuller accessibility for all residents, and are assisting building owners by providing loans on a 50-50 basis to encourage them to update their accessibility.

6. Heritage Building Assessment Grants:

A significant impediment for many building owners is simply trying to find out what physical condition their older building is in. Some municipalities are now assisting them by providing grants to help them conduct a full building (engineering) assessment of the structure with respect to the conservation/restoration of the building’s heritage features.

7. Heritage Building Improvements Grants:

To encourage owners to protect, maintain and restore their heritage property, cash grants may be offered by municipalities. The grants would usually be restricted to buildings with a high heritage designation, and would be dependent upon the construction respecting and improving the heritage features. Typical grants might be for roof repairs, or removing aluminum siding that hides the original architectural features.

8. Development Charge Exemptions:

To encourage building new residential structures in a moribund downtown or area, cities may provide a temporary holiday on Development Charges for new construction. The advantage to the city is bringing new assessment on line, as well as a vibrant new residential tower to a designated area. The developer can save a substantial amount of money by not having to pay Development Charges. The city gets many decades of tax revenue.

9. Tax Holiday Grant:

To provide specific incentives for targeted areas, a municipality may offer a tax holiday program for a few years. The program is likely to be quite specific—targeting new ground-floor retail space in designated buildings in an enterprise zone, for example. The incentive would attempt to attract a grocery store, perhaps, into an area that does not have food services. Often these areas are economically disadvantaged.

Other grants, loans and incentives may be provided from time to time. Provinces and municipalities often have limits on what kind of programs can be offered, but innovative thinking aimed at specific community objectives can be effective. The programs are often administered or promoted by the Business Improvement Area Board (BIA’s, Main Street, etc).