Evaluation of Community Improvement Plan Incentives€¦ · Evaluation of Community Improvement Plan Incentives Public Engagement Open House Thursday October 20, 2016

Evaluation of Community Improvement Plan Incentives

Public Engagement Open HouseThursday October 20, 2016

What Are We Here to Talk About?

Review of the Financial Incentives through Community Improvement Plans:

• Loans & Grants- Upgrade to Building Code & Façade Improvement Loans- Forgivable Grant Programs- Non-street Façade Loan Program- Awning, Signage and Decorative Lighting Grant Program

• Industrial Development Charges

• Residential Development Charges

• Tax Back Grants - Residential;- Brownfield;- Heritage;- Airport

Why Review ?

Objectives of Review• Determining the overall best value for money – “bang for

buck”/ROI

• Ensure we are not incenting something that would occur even without the incentives in place

• Ensure that the incentive programs implement the goals of the CIPs

• Focus on key policy objectives of the CIPs

• Establish clear measures of success for programs

• Ensure consistent with CIP Legislation

• Find savings wherever possible

Interim Report & Direction

August 22, 2016 – Report to Planning and Environment Committee

DIRECTION GIVEN FROM COUNCIL THAT:• No CIP or program for Sports and Recreation Programs• No CIP or program for Private/Not-for-Profit Education Facilities

• Retain Upgrade to Building Code Loan Programs (Downtown, Old East, SoHo)• Retain Façade Improvement Loan Programs (Downtown, Old east, SoHo)• Retain Tax Increment Grant Programs (Downtown, Old East)• Retain Brownfield Tax Increment Grant Program and Property Tax Assistance Program• Retain Brownfield Assessment Study Grant Program

• Noting that changes to the programs to align with the objectives above will be recommended.

Existing Programs

Existing Types of Financial Incentives through CIPs

Loans

Tax Grant

Other Grants

DC Grants

Existing Types of Financial Incentives through CIPsPrograms Examples Description

Loans- Upgrade to Building Code- Facade Improvement- Non-street Façade Improvement Loan

No interest, 10 year pay back to the City, Capped (percentage of cost of improvements set to a max.), Low cost

Tax Grant

- Brownfield Tax Increment Equivalent Grant- Rehabilitation & Redevelopment Grant- Heritage Tax Increment Grant - Airport Tax Increment Grant

Tied to increase Tax (related to improvement), New taxes paid, grant provided for a set proportion of the tax increase, city received no less than prior to improvement, Low cost

Other Grants

- Forgivable Upgrade to Building Code - Forgivable Facade Improvement - Awning, Signage & Decorative Lighting Grant - Tax Holiday Grant- Industrial Corridor Enhancement Grant

Typically tied to Small Scale propertyimprovement Projects or studies, Capped, Moderate cost

DC Grants

- Industrial - Residential- Brownfield- Heritage Development Charge Equivalent Grant

Widely used for a variety Projects,Not capped for IND/RES/AIR, Capped for HER/BRO based on costs of site improvement/remediation – value of grants determined at Building Permit Stage, High cost

Loan Programs

Loan Programs

Programs Examples Current Program Description

Loans • Upgrade to Building Code

• Facade Improvement• Non-street Façade

Improvement Loan

• No interest, 10 year pay back to the City, Capped (percentage of cost of improvements set to a max.),

1. Loan Programs - Upgrade to Building Code

Areas of Eligibility proposed: – Downtown CIP;– Old East Village CIP; and– SoHo CIP.

Upgrade to Building Code

Current Model Proposed Changes

Up to $50,000 loan to property owner or half the value of the eligible works

Up to $ 250,000 loan to property owner or half the value of eligible works

Review criteria for ‘eligible works’

2. Loan Programs – Façade Improvement

Areas of Eligibility proposed for Façade Improvement: – Downtown CIP;– Old East Village CIP; and– SoHo CIP.

Areas of Eligibility proposed for Non-Street Façade program:– Downtown CIP; and – Old East Village CIP.

Façade Improvement

Current Model Proposed Changes

Up to $ 25,000 loan to property owner Up to $ 100,000 loan to property owner or half the value of eligible works

Review criteria for ‘eligible works’

Only one (1) application per property Permit one (1) application per property every eleven (11) years or one (1) year after the previous loan is repaid.

Open eligibility to include non-street façades

Grant Programs (including Forgivable)

Program Example Description

Grant Programs

(not including Tax Increment Grant Programs)

• Forgivable Upgrade to Building Code Grant;

• Forgivable Façade Improvement Grant;

• Awning, Signage & Decorative Lighting Grant;

• Tax Holiday Grant;• Industrial Corridor Enhancement

Grant.

• Typically tied to small scale property improvement projects or studies.

• Moderate cost to City with costs capped.

GrantPrograms(Non-DC)

Grant Programs (including Forgivable)

Propose re-activation of pilot program for Forgivable Loans as part of Grant programs.

Forgivable portion only applicable for defined ‘eligible uses’.

Note: List of ‘eligible uses’ requires review and confirmation.

Note: Awning, Signage and Decorative Lighting Program subject to a future budget ask; possibly incorporated into Façade Improvement Program.

Eligible Areas Proposed Changes

Downtown CIP • 25% of Upgrade to Building Code and Façade Improvement Loans to be paid back to property owner through a grant, up to a cap of:

• $ 12,500 forgivable portion for Façade Improvement; and

• $ 25,000 forgivable portion for Upgrade to Building Code;

Old East Village CIP

SoHo CIP

Tax Grant Programs

No changes proposed to Tax Grant programs

Program Example Description

Tax Grants • Brownfield Tax Increment Equivalent Grant

• Rehabilitation &Redevelopment Grant

• Heritage Tax Increment Grant• Airport Tax Increment Grant

• Tied to increased tax (related to improvements) through new taxes paid;

• Grant provides for a set portion of the tax increase;

• City receives no less than prior to improvement.

• Identified as lower cost to the City.

Development Charges

Programs

Development Charge Programs

Program Example Description

Development Charges Grants

• Industrial;• Residential;• Brownfield;• Heritage DC Equivalent

Grant

• Widely used for a variety of projects;• Cost not capped for Industrial or

Residential;• Costs capped for Heritage and

Brownfield, based on costs of site improvement/remediation.

• Value of grants determined at Building Permit Stage.

• High cost program to the City.

Brownfield and

Heritage DC

DC Grant Programs – Brownfield & Heritage DC Equivalent

Development Charges

Program Current Model Proposed Program Changes

Brownfield • Grant for eligible remediation costs on up to 50% of the Development Charges that have been paid

No changes proposed.

Heritage • Grant in the amount of the DCs that would have applied to the heritage-designated building, had it been built today, when that structure is rehabilitated or incorporated into a development project.

• Grants may not exceed cost of rehabilitating the heritage-designated building

No changes proposed.

ResidentialDC

DC Grant Programs - Residential

Four (4) options for the Residential DC Grant Program:

Note: funding for the Council-approved but un-funded SoHo Residential DC Grant Program under consideration.

Residential DC Grant program

Option 1 Option 2 Option 3A Option 3B Option 4

“Existing” “Stepped” “Straight Cap” “Cap with Minimum Quality Threshold Criteria”

“Heritage”

DC Grant Programs – Residential (Option 1)

Option 1: “Existing Program”

• 100% grant back of Development Charges

• Eligible in the Downtown CIP and Old East Village CIP areas

DC Grant Programs – Residential (Option 2)

Option 2: “Stepped”

• Units 0 to 100 at a 100% DC rebate;• Units 101-200 at a 75% DC rebate;• Units 201+ at a 50% DC rebate.

0

20

40

60

80

100

120

DC Grant%

Stepped DC Rebate (% by # of units)

100 units 101-200 units 201 units +

DC Grant Programs – Residential (Option 3A)

Option 3A: “Straight Cap”

– 100% Development Charges Grant;

– Grant is up to a maximum of $ 2 million cap;

– $ 2 million cap is a cap per building.

DC Grant Programs – Residential (Option 3B)

Option 3B: “Cap with Minimum Quality Threshold Criteria”

Grant (%) Cap ($) Minimum Quality ThresholdCriteria

Note

100% DC Grant Up to a maximum of $ 2 Million perbuilding

Grant only provided if meets the criteria as follows:• If Heritage building on

the site, the building is appropriately conserved (Heritage Designated);

• Meets applicable Design Guidelines; and

• Provides green roof or an alternative that is acceptable to Council.

No grant back if development does not meet the minimum quality threshold criteria.

DC Grant Programs – Residential (Option 4)

Option 4: “Heritage”

• If no Heritage-designated building on the site:• 75% DC grant for site;• Grant is up to a maximum of $2 million (per building).

• If a heritage building is on site and is conserved with Heritage Designation:

• 100% DC grant for site;• Grant is up to a maximum of $2.5 million (per building).

IndustrialDC

DC Grant Programs - Industrial

Three (3) options for the Industrial DC program

Industrial DC Grant Program

Option 1 Option 2 Option 3

“Existing Program” “Targeted Sectors” “Employment Density”

DC Grant Programs – Industrial (Option 1)

Option 1: “Existing Program”

• 100% Development Charges Grant

DC Grant Programs – Industrial (Option 2) Option 2: “Targeted Sectors”

Industrial DC Grant Program – Option 2 “Targeted Sectors”

Sector DC Grant (%) Example Sectors

Targeted Sectors 100% • Research, Development and Commercialization;

• Life and Health Sciences;• Agri-Food Processing;• Advanced Manufacturing;• Automotive;• Defence and Aerospace.

Non-Targeted Sectors 60% • Transportation and Logistics;• Commercial Truck Service

Establishments;

Warehouses 50% • Warehouses• Data warehouse and data storage.

Retention of Businesses with existing operations in London

100% All sectors.

DC Grant Program – Industrial (Option 3)

Option 3: “Employment Density”

Industrial DC Grant Program – Option 3 “Employment Density”

Employees per building area (sq. ft.)

Industrial Sectors DC Grant (%)

High Category ‘A’ 100

Mid Category ‘B’ 75

Low Category ‘C’ 50

Summaryof Proposed

Options

Program Comparison / EvaluationProgram Proposed Changes Program Attributes

Loans• Upgrade to Building

Code;• Façade Improvement;• Non-Street Façade Loan

• Building Code: Loan up to $250,000 or half eligible work;

• Façade: Loan up to $100,000 or half eligible work and one loan every 11 years or 1 year after previous loan repaid.

• Low cost to City;• High leverage/ROI;• Feedback suggests

current caps too low.

Grants• Forgivable Building

Code and Façade;• Awning/Signage/

Lighting

• Reactivate pilot program of forgivable loans;

• Façade: $12,500 forgivable portion;

• Building Code: $25,000 forgivable portion;

• 25% paid back to property owner through grant

• Low cost to City;• Feedback suggests

sought by small businesses and effective for small businesses.

Tax Grants No Changes Proposed • Tied to increased tax;• Low cost to City

Program Comparison / EvaluationDC Program Proposed Changes Program Attributes

Residential • 5 Options: “Existing Program”; “Stepped”; “Straight Cap”; “Cap with Minimum Quality Threshold Criteria”; and “Heritage”.

• High cost; Currently no cap; Costs only known at time of building permit.

• Options for changes increase cost certainty and introduce criteria regarding community objectives (for heritage or quality threshold criteria).

Industrial • 3 Options: “Existing Program”; “Targeted Sectors”; and “Employment Density”.

• High cost; Currently no cap; Costs only know at time of building permit.

• Options for changes provide strategic alignment with City’s industrial land development strategies for economic development and employment generation.

Brownfield No change proposed. • Costs are capped at the cost of 50% of site remediation

Heritage No change proposed. • Costs are capped at the cost of heritagebuilding restoration;

• Offsets the DC demolition credit associated with demolishing the heritage building.

Next Steps

Review comments from Public Consultations (held October/November 2016); and

Report to Council with Recommendation on program changes by end of 2016.