TIF Grants: Giveaways or Good Policy?

A recent letter to the editor in a local paper decried the use of brownfield grant incentives given to Tricar, the developer who is building on the former Marsh Tire site on the corner of Wellington and Macdonell.  See letter here.

This is the not the first time I have heard the sentiment “we shouldn’t be giving away taxpayer money to developers.”   But is that really what we are doing?  In reality, grant recipients give much MORE back in taxes than they receive from the city.

The Downtown Activation Grants and brownfield grants are tax-increment financed (TIF) grants.  This means that:

a)  the grant amount is calculated based on future taxes generated from the site post-development,

b) grant money is not paid until the site begins generating revenue through new tax assessment,

c) grants are time-limited,

d) grants are earmarked for projects that have barriers to construction (such as contamination, bedrock, risk), and

e)  if the site does not generate the anticipated assessment, the grant is adjusted.

TIF grants are risk-free, pay for themselves, and pay back into the city revenue stream over the long-term. Let’s take a closer look at a project (simplified for clarity):

  • Site P is a brownfield, a former gas station, that must be cleaned up prior to development, and has been sitting vacant for over 10 years.
  • Infrastructure adjacent to the site (water, wastewater, hyrdro, roads, transit, etc.) is underutilized, but already fully paid for.
  • Current tax revenue generated by the  vacant, contaminated site is $1,000 per year.
  • The owner plans to develop a 25-unit, 4-storey stacked townhouse on the property, which will generate $15,000 per year in taxes to the city once constructed and occupied.
  • A portion of the increased tax revenue, $10,000 per year, generated from the developed site is granted back for 5 years ($50,000) is granted back to the developer in the form of a TIF grant.
  • The city still receives additional revenue ($4,000 per year) and yields the full benefit of increased taxation after five years and in perpetuity.
  • The developer receives the money after construction is complete and the site is generating the anticipated assessment.

CONCLUSION:   TIF grants are a win-win-win.  The city wins because a vacant and contaminated site is cleaned up, the developer wins because the project moves ahead and the grant offsets clean-up costs, and the taxpayer wins because increased revenue is generated and contributes to the cost of infrastructure and future operating budgets.

 

LP

 

Posted in City Services, Economic Development | Leave a comment

PD: A Wise Investment

I can’t think of a single profession that doesn’t benefit from professional development.  I want my doctor to learn the latest research on prescription medication or a new diagnostic tool.  Teachers need to be on top of new curriculum, and IT professionals should be able to troubleshoot new software and hardware systems.  An auto mechanic should know how to fix  the latest engineering under the hood of my car.

Investing in professional development is what leading organizations in both the public and private sector do if they want to recruit, retain and get the highest level of performance out of their employees.

Recently, the City of Guelph Information Technology Annual Report red-flagged PD as an area that we are sorely lacking.  During past budget cuts, PD was cut or eliminated in many departments, and we are now seeing a ripple effect.  Staff are expected to be up to date on best practices, latest research, legislative change and to establish networks with their colleagues to brainstorm, innovate and problem-solve.   Slowly, our PD budgets are being restored, thank goodness, and everyone in the city will benefit from the learning gained through keeping the best and brightest staff in Guelph.

But what about PD for members of Council?  Since they are expected to guide us forward  — on city-building, wellness, fiscal responsibility and economic development among many other things — shouldn’t councillors also be expected to know best practices, understand new regulations, share innovative ideas with colleagues, and develop their leadership and communication skills?  I think so.

Guelph city councillors receive a $3,250 limit to engage in professional development.    In the annual remuneration for Mayor and Council, it shows up as “Sundries”.  I use this line for professional development and choose wisely each year how best to enhance my skills and knowledge to serve the best interests of the citizens I represent.

Over the past years, I have used this allowance to attend workshops at the Federation of Canadian Municipalities (FCM) and Association of Municipalities of Ontario (AMO).  I have also attended training, conferences and workshops offered by the Centre for Civic Governance, Canadian Urban Institute and Project for Public Spaces.  I have learned about new community engagement models, using social media, watershed protection legislation, Greenbelt economic development, and much much more.

In 2014, I will be attending the Livable Cities Conference in Portland, OR, which is considered one of the North America’s model cities for active transportation, parkland restoration, family-friendly neighbourhoods, cultural districts, and lowering per capita energy use.   The program can be found here:  Livable Cities Conference Program.  I use the knowledge gained from PD to make better, more informed decisions on your behalf.  I am also better able to critically read and ask for a deeper level of detail in reports and recommendations that come to Council for approval.

LP

 

 

Posted in City Issues | 1 Comment

Blame…and Credit

Anyone who knows me has heard me repeat many times that the most frustrating part of local politics is that Council is “to blame for everything, but gets credit for nothing.” Never has this been more true than this week.

The recent judge’s ruling in the Urbacon case is a blow to all of us, inside and outside of City Hall.   I won’t sugar-coat how I feel: angry, disappointed, and frustrated to say the least.   Until I understand the reasons behind the decision, there is no point in me offering any commentary about the case.

However, it is an election year and the ripeness of opportunity was just too tempting for some candidates.  Blame was swift and aimed squarely at the Mayor and the 2008 Council.

To help you navigate the blame game, here are some facts:

  • Council does not manage or oversee construction tenders, contracts or capital building projects
  • A decision to terminate a construction contract is not a Council decision
  • The Urbacon contract was terminated September 19, 2008
  • There was NO resolution or direction to staff from Council to terminate Urbacon
  • The matter was brought to Council in Closed Session on October 27, 2008

This is the governance context under which the Urbacon decision occured.  Despite these facts, in the minds of many constituents, “the buck stops here” will always rest with Council, whether we have the authority to receive the buck or not.

But since we are playing the blame game, let’s hand out some credit too.  Afterall, 98% of capital projects are completed on-time and on-budget, without litigation.

  • The new Organic Waste facility was under-budget and ahead of schedule.  Way to go Mayor Farbridge and Council!
  • The award-winning new Provincial Court House (old City Hall) was on-budget and on-time.  Thank you, thank you very much.  Please, hold the applause.
  • $99 million in infrastructure projects completed in ONE season, $48 million funded from grants, roads kept open, on-time and on budget with no litigation.  It was the largest single season infrastructure renewal effort EVER undertaken in Guelph (remember “Guelph Remastered” in 2011?   You’re welcome, really, it was nothing.

Disclaimer:  yes, I am being tongue in cheek.  But I think you get my point.  When blame is due, I can take it, it’s part of the job.  But if vultures plan to use it for electioneering, get the facts straight, and spread a little credit too.

LP

 

Posted in 2014 Election | 3 Comments

How Can We Help You?

Super easy!  The City of Guelph’s new online customer service site is a giant leap forward…have you tried it yet?  Potholes, street maintenance, tree limb down, and so much more — simply go to :

 

http://guelph.ca/how-can-we-help-you/

 

Yes, it’s that easy!   Once you fill out your work request, you will get an email confirmation (so that you know your request has been received and logged) and you can track it.

 

If you have a good experience (or not so good) with our new web portal, let me know.

 

LP

Posted in Uncategorized | Leave a comment

Downtown Investment an Election Issue?

Both local papers have recently featured headlines posititioning downtown investment as a potential election issue.

Guelph Tribune article

Guelph Mercury article

Is it really an “election battle zone”?   I think perhaps it is being positioned as such by the media because mayoral candidates Karen Farbridge and Cam Guthrie voted differently from each other on whether to move forward on the idea of an Economic Investment Fund (EIF) to support major capital investments on key strategic projects.  Whenever you have two election candidates at the opposite end of an issue, it becomes part of the election debate.

But let’s look deeper at the issue itself.   An Economic Investment Fund idea is nothing new to Guelph, nor is the concept of a temporary special levy.  In fact, a special tax levy was once the norm.  Historically, rather than build reserves or debenture major capital projects, past councils historically implemented a special levy for most things, even sidewalks and park equipment.  Sometimes, special levies were only taxed to households who benefited from the improvement (like sidewalks or streetlights) and city-wide projects (such as building Waterworks or hospital capital campaign) were assessed to all ratepayers.

Today, it is recognized that all residents benefit from infrastructure renewal and economic development initiatives.   Taxes collected are used for the common good, not an a la carte approach.  Many services are supplemented by user fees (ie. transit, recreation programs, etc.).  Capital and infrastructure funding also comes from development charges (DCs), grants for other levels of government, reserves, and debentures.  Debt financing is used when successive generations derive benefit from the project, so that the burden of cost is not borne only by current residents.

So what about the Economic Investment Fund special levy?  Here are some of my thoughts….

First of all, it’s not about downtown.  There will be temptation to position the EIF as a downtown vs. suburban issue, and use it to create a wedge between different geographical areas of Guelph.   This is unfortunate, because the EIF is intended to create revenue to further invest in facilities throughout the entire city — such as the South End (Clair Road) Community Centre, invest in the redevelopment of IMICO lands and the Guelph Innovation District (former Guelph Reformatory) in the East End of Guelph.

Second, the EIF is all about timing.   It is essential that the City is in a position be at the table and ready to ‘put skin in the game’ when the timing is right.  Private investment in our city is gaining momentum right now.  The current focus on downtown has a strong business case for several reasons:  the return-on-investment is much higher, Places to Grow requires us to intensify our urban centre, and finally, market demand for downtown is hot.  Boomers are downsizing, residents want to reduce their carbon footprint, the innovation economy is looking to set up shop downtown, and arts and culture downtown are thriving.  Ten years ago, Waterloo was at the same crossroads, and are now seeing the returns on their decision to create a special levy and EIF to springboard investment in downtown Waterloo.

Third, the EIF will lower household tax increases in the future.  Yes, I wrote lower.  We all know growth does not pay for itself (it is not allowed to under current provincial DC legislation).  So if we ever want to be able to reduce the impact of growth, it can only be done in two ways:  a) increase revenue and/or b) reduce expenses.   Revenue comes from assessment.   It is the increased assessment that will be generated from the Baker Street development (and adjacent spin-offs) that will help to keep tax rate increases to a minimum in future years.   In other words, the old saying “you have to spend money to make money” applies here.

Fourth, and finally, the EIF is about having a say in our own destiny as a city.   Our capital budget financing over the past many years has been affected by decisions that are outside of the Council’s control.  For example, the construction of a new Public Health facility and a new Police Headquarters are not Council decisions.  I am not saying these are not needed facilities in our community, but only that they impact our ability to finance other strategic economic development projects, such as a new library and community centres.  The EIF means that we can choose — strategically and with a sound business case — where and when to invest in building our community.

What do you think?  I would love to hear your perspective on this issue….

LP

Posted in Uncategorized | Leave a comment

Thanks Grassroots Guelph…

No really, thank you.  Any group of citizens who care about the city — its people, its programs, its prosperity, its future, and its finances — who have a concern and bring it out into the open, it is a favour to all of us.  That is the essence of civic engagement and accountability.  It provides the city with an opportunity for true transparency and brings public attention to an issue that might otherwise be overlooked or ignored.

Grassroots Guelph submitted a petition to the Ministry of Municipal Affairs requesting a full independent audit of the city’s finances.   After meeting with the Grassroots group leadership and city officials, the Ministry responded that they feel no additional action is appropriate.  Read the Letter from Minister Jeffery here.

Although the Minister indicated she felt the matter was in good hands, and I have full confidence that the city’s finances and economic future are in excellent shape, the health of our city is still worthy of a robust discussion.

The petition of the Grassroots Guelph group got people talking.   This group is not really my cup of tea, as their mandate to date seems narrowly focused on curmudgeonry.

But I like to see the bright side of things.  In this case, kickstarting a community dialogue on the state of the city’s books is a good thing.  I urge the Grassroots leadership to take up the city’s offer to meet and address any outstanding questions and to offer full transparency on Guelph’s finances and financial management policies.  Please….look at our books, ask questions and dig deeper if you don’t understand.

More importantly, if Grassroots Guelph comes up empty and all their concerns and questions addressed, it will be most telling to see if they are able to overcome their political agenda to publicly declare “the financial management of the City of Guelph is in good hands”…..

LP

Posted in Finance & Administration | 2 Comments

Tips, Snitches or Ombuds?

Due to a previously scheduled commitment, I was not able to attend Monday’s Council meeting.  Chris from the Merc asked the next day how I would have voted on the subject of a city hall “tip line” for residents or staff to anonymously submit comments.  Here was my response ….

 
I see both sides, so my vote would have reflected the discussion on the floor.  For me, the issue is about how it is framed — is it a “tip line” or is it a “customer service” response line or is it an “ombudsperson”.? 

A “snitch line” so that residents can call and tell us they saw a city truck in the Tim’s drive-through is a waste of money.   A “tip line” where residents can write or call with suggestions, innovative ideas, constructive criticism, experiences, etc. has merit.   Some of the best ideas for improvements and potential efficiencies come through citizen feedback.  But do we need to spend thousands of dollars setting up, staffing and administrating a line so that we can duplicate what we already have?    I would like to think that any resident of Guelph can already do this, safely and securely, and with our enhanced IT strategy, there will be more opportunity for resident outreach and feedback.    There are already anonymous ways to contact city to provide feedback — email and blogs.

Now, an Ombudsperson is something I can support wholeheartedly.   Having an independent adjudicator role in place when a customer needs assistance navigating a policy, has a disagreement on how a policy is interpreted or implemented, or has a concern with city staff or level or service  — this position would be a valuable addition to our level of accountability.   If it gets through the Governance committee in this form, I think it has a much better chance of making it through to Council.

My two cents….

LP

Posted in City Issues | Leave a comment