The clock is ticking for developers looking to take advantage of the city's downtown Revitalization Tax Exemption (RTE) program, after city council approved a sunset date for the program during Monday's council meeting.
The program, which was launched in 2011, offers developers a 10-year break on municipal property taxes on new construction and upgrades to properties in the downtown core. On Monday, city council amended the bylaw to include a sunset clause of Sept. 30, 2024, after receiving a consultant's report saying the program had achieved its objective.
"This comprehensive program is among the most competitive in Canada. Revitalization is happening in the area," city manager of economic development Melissa Barcellos said. "It is an extended sunset date, and that gives developers quite a bit of time to take advantage of it and get shovels in the ground."
Since the program's inception, 23 projects have received the RTE benefit – seven new buildings, 12 renovations, two additions and two facade improvements. Those numbers don't include public-sector projects like the RCMP detachment or Wood Innovation and Design Centre, or projects like the Park House condominium development that is still under construction.
The combined value of the projects is approximately $48.1 million, Barcellos said. Once the Park House project is complete, that number will jump to approximately $76 million.
"Of course the RTE agreement means the city will not see the benefit of the tax assessments for 10 years," Barcellos said.
Between 2011 and 2019, the assessed value of properties downtown grew from $292.7 million to $505.6 million – growing an average of nine per cent per year, compared to five per cent per year for the city as whole. Between 2005 and 2011, property values downtown grew an average of eight per cent per year during a time when property values in the city as a whole grew an average of 12 per cent per year.
While the estimated cost to the city in property tax exemptions is $10.5 million, rising property values downtown has seen the city collect an additional $11 million in property taxes since 2011, Barcellos said.
"The city has seen an immediate return on investment," she said.
In its report to city council, consultants KR Solutions reported vacancy rates downtown hit an eight-year low in 2018 of 10.55 per cent.
"It is clear that market conditions are improving and confidence is growing in the downtown of Prince George as community, businesses and tourists enjoy living in a part of Prince George that had been progressively deteriorating in prior years with businesses and visitors vacating the area," KR Solutions wrote in its report. "The RTE program has been successful and proved effective in supporting development objectives. However the 10-year benefit is costly to the city. The rise in market assessments suggests that a 10-year
tax exemption may not be necessary to compensate for risk, although risk is still high particularly for street level retail."
Mayor Lyn Hall said the program has attracted investment to the downtown and create jobs – both in construction and long-term jobs in places like the Mariott hotel downtown.
"It changed the landscape of our downtown," Hall said. "The sunset date is two, three years down the road, so it gives us a bit more time."
The program was about more than bringing in tax revenue, it was a game-changer for the city's downtown, Coun. Brian Skakun said.
"This was a success. We made the investment, and it got results," Coun. Garth Frizzell said. "You look out this window and see the results."