RECOMMENDATION:
THAT the
report entitled “Update on a Financial Strategy for Markham Centre ” dated
February 4, 2003 be received;
AND THAT Town staff continue to work
with Markham Centre key stakeholders to prepare a comprehensive financial strategy
for Markham Centre;
AND
THAT, in preparation of a financial strategy, staff identify and assess the
impact of appropriate financing mechanisms including tax related strategies
such as Tax Increment Financing or TIFs that may be used to support Markham
Centre urban design premiums, special features and the delivery of structured
parking and transit facilities; and other infrastructure as determined;
AND THAT
staff identify any policy enhancements or legislative amendments that may be
required to implement the financial strategy;
AND THAT staff identify how financing
mechanisms will be secured through appropriate agreements and conditions of
approval with Markham Centre stakeholders and report back to Council.
BACKGROUND:
At the December 10th, 2003 meeting
of the Committee of the Whole, staff was directed to work with Remington and
other landowners in Markham Centre to:
- identify, assess
and make recommendations regarding suitable financial implementation tools
and strategies for Council’s consideration,
- provide a fiscal
impact analysis of the various financial strategies on Markham, as a
whole,
- identify, assess
and make recommendations regarding the legislative framework that will
need to be put in place to implement the Markham Centre financial strategy,
- coordinate the
financial study findings with the Parking Authority study,
- provide a
potential benefits analysis of a preferred financial strategy, (or
strategies), to the Province of Ontario.
This report provides a brief analysis of the
approach recommended by staff to undertake a financial strategy to assist in
the development of Markham Centre.
DISCUSSION:
Implementing the Vision
The implementation of the Town’s vision for
Markham Centre will require a comprehensive funding strategy. In the delivery of Markham’s new urban
downtown the qualitative uplifts associated with the development of urban
parks, squares and streetscapes, as well as the funding support for structured
parking and Regional rapid transit facilities, in the early stages of development,
will be addressed in the financial strategy. New financial tools are required
to not only support the urban capital programme but to also underwrite some of
the ongoing maintenance and operations until such time as the urban
improvements can be supported on a self sustaining basis. An internal drive
team has been identified to coordinate the Town’s investigations. A consultant will be retained to assist in
the identification and assessment of potential financing tools.
The Ten Guiding
principles and the Markham Centre Advisory Group
In the mid 1990’s Council adopted a vision and
Official Plan Amendment to lay the groundwork for the development of Markham
Centre. In 2002 Council endorsed Ten Guiding Principles to provide greater
definition to the vision and provide a framework for the adoption of
performance measures to help guide and monitor development in the downtown and
the overall sustainability of Markham Centre. The Principles specifically state
that a new financial framework and a full range of financial tools will be
required to help fund the high quality infrastructure, public spaces as well as
structured parking.
Since May 2002 a Markham Centre Public
Advisory Group has been engaged in the development of the performance measures.
With the assistance and guidance of the Advisory Group the Town is undertaking
two major studies. The first study will
bring forward recommendations regarding the feasibility of forming a ‘parking
authority’ to build and operate parking facilities in Markham Centre. The second study will assist the Town in the
identification and analysis of the impact of new financial tools for funding
the downtown on the Town as a whole.
Coordination with key
stakeholders
The Region of York
The Region of York has been actively investigating
a range of initiatives and incentives to help stimulate high-density
development in the regional centres and corridors, including Markham Centre. On
January 8, 2003 the Planning and Economic Development Committee had before it a
staff report recommending that staff move forward to prepare a centres and
corridors strategy and implement the key action initiatives. The report also
directed staff to coordinate common policy proposals with local municipalities
for presentation to the Province including: “an evaluation of the Region’s role
in the creation of Community Improvement Plans under Section 28 of the Planning
Act” and “an investigation into policy enhancements to financial tools such as
TIFs to promote compact urban development”.
YRT Consortium
The York Rapid Transit Consortium has
undertaken preliminary research into potential funding strategies for financing
transit improvements within the regional centres and corridors. The preliminary
findings outlined that special assessment districts and TIFs to capture
enhanced value attributable to higher densities in the centres and corridors
supported by rapid transit have the greatest potential to support the transit
infrastructure improvements over the build out period.
The Remington
Group
In the spring of 2002, Remington retained a
consultant team to provide a feasibility assessment of the financial impacts of
implementing the Remington plan. The team also undertook a comprehensive review
of the proposed new legislative framework to determine whether the proposed
amendments would provide the municipality with sufficient scope and flexibility
to implement the Markham Centre vision. Remington’s review determined that
municipalities would need additional and specific legislative assistance from
the Province to provide the financial tools to address the order of magnitude
of the financial challenges.
Remington presented the results of their
preliminary findings to Development Services Committee in December 2002. The
findings identified TIFs as a fair and workable funding mechanism with the
potential to address the order of magnitude of the financial challenge.
Remington requested that Council endorse TIFs as a key component of the Town’s
Markham Centre financial strategy and for Council to make a request of the
Province to bring forward enabling legislation to permit a TIF to be used to
help finance the Town’s Smart Growth plan.
FINANCIAL MECHANISMS:
TIF-based funding
strategies
Powers granted to municipalities under Section
28 of the Planning Act have been expanded and provide a potential solid
platform for developing a comprehensive financial strategy for Markham
Centre. Under the new legislation,
municipalities have access to a broader range of tools including the ability to
use tax increment equivalent grants and loans.
Tax increment financing is widely employed in the U.S. in over 40
states, usually to help fund downtown redevelopment, or urban renewal
projects. A TIF captures the tax
assessment from the increases in property value over an existing base
assessment made possible in part by public investment in infrastructure, parks
and open spaces and transit improvements.
TIFs have also been identified as potential tools in a number of recent
studies into municipal financing in an Ontario context. Currently the ‘tax increment equivalent
grant or loan’ provision under Section 28 of the Planning Act (Community
Improvement Plans) is intended to be used as an incentive to stimulate
development through tax abatement directed to the landowner. Fine tuning of Section 28 legislation to
allow the municipality to capture the new tax growth in a community improvement
plan area and reinvest it in needed infrastructure for a defined period of time
would allow needed infrastructure to be expanded.
TIFs are attractive because landowners within
the TIF area are taxed at the same rate as comparable properties in the same
municipality. As such, TIFs are set up so that no funds are directly
transferred from government to support private interests and no tax dollars are
used from one business to subsidize another.
Although not without risk, TIFs have the ability to generate the order
of magnitude of revenues to fund the public expenditures required to implement
the urban downtown. Exploring the full
potential of the TIF mechanism will require Regional and Provincial cooperation
for the use of their assessment components.
Special Tax Districts/Area Tax Rates
Municipalities already impose special levies
such as development charges to capture value from private development to fund
public infrastructure programmes generated from new development. In the U.S. special assessment districts
have been used to capture the uplift in property value as a result of proximity
to rapid transit facilities particularly around stations. Empirical evidence suggests as much as a 25%
value increase to assessments within the district can be achieved as a direct
result of rapid transit improvements.
The special district assessment is a new tax
and has a number of inherent challenges such as whether the tax would apply to
existing and/or new development and whether new development in the same
district would be exempt from normal development charges. Notwithstanding the
challenges associated with levying a new tax, a special tax district would have
the potential to generate significant revenues in support of rapid
transit. These types of mechanisms as
well as others will be identified and assessed as to their feasibility and
impact as part of the future report to Council.
Provincial discussions
In October 2002 the Town submitted a request
to the Province to be considered for the Province’s Tax Pilot Incentives
programme. Through discussions with
provincial staff it became evident that the thrust of the programme was
intended to provide economic stimulation to derelict or under performing
communities in Ontario. Although
Markham Centre does not fit the intent of the programme, provincial staff
indicated an interest in pursuing further discussion with the Town to determine
if specific assistance from the Province may be warranted.
To that end, Town staff has been actively
engaged in discussions with the provincial staff to identify ways in which the
Province can support the Markham Centre Smart Growth Plan. Senior staff are scheduled to meet with
deputy ministers from key provincial ministries on January 30th,
2003 to identify areas of consensus and explore areas where the Province can
provide specific assistance.
FINANCIAL CONSIDERATIONS:
The Finance Department is part of the internal
drive team. The financial impact of the
various funding mechanisms on the Town will be assessed as part of the
financial strategy programme and recommendations brought back to Council in
future reports.
OTHER BUSINESS UNITS CONSULTED:
The identification and assessment of the
various financing tools may require input from other departments within the
Town. The inputs will be solicited in
reporting back to Council with the financial strategy recommendations.
CONCLUSION:
Implementing the new downtown will require a
financial strategy with the ability to generate funding support for a range of
public improvements and qualitative uplifts to parks and urban squares,
streetscapes, special design features, structured parking and rapid transit
facilities. No single mechanism may be
adequate to finance Markham Centre and a range of financing mechanisms and
techniques will likely be required.
There are however, identifiable real estate related financing mechanisms
that have the potential to generate the revenue support for the order of
magnitude of the funding challenge.
Implementing the financial strategy for Markham Centre including one or
more of the real estate related mechanisms will likely require policy or
legislative enhancements at the local Regional and Provincial levels. The funding mechanisms and policy
enhancements should be identified and thoroughly assessed in consultation with
key stakeholders and recommendations brought back for Council’s consideration
in the context of finalizing agreements with Markham Centre landowners.
|
|
|
|
|
Andy Taylor
Commissioner of Corporate Services
|
|
Mary-Frances Turner, M.C.I.P., R.P.P.
Commissioner of Innovation, Strategy and
Partnerships
|
|
|
|
|
Jim Baird, M.C.I.P., R.P.P.
Commissioner of Development Services
|
|
|
|
|
|
Q:\Development\Planning\Teams\Markham
Centre\Finance\MKMFIN$report.doc
