Council considers tax breaks for new commercials builds, expansions

·4 min read

A non-residential property tax incentive bylaw could provide five years of tax deferrals or exemptions to nonresidential properties, for the purpose of encouraging the development and revitalization of properties in Hinton, if approved.

The bylaw will come back to a future regular council meeting for its first reading. During the standing committee meeting on March 16, council made a change to the proposed bylaw to allow the Town’s administration to administer the tax incentive agreement for those that fit the requirements.

Mayor Marcel Michaels said that businesses should be able to look at the outlined parameters and know they qualify for the tax incentive program without requiring additional approval from council.

Coun. Albert Ostashek agreed that businesses should be automatically approved for the incentive if they meet the qualifications, and he hopes business will be drawn in by the absolute clarity that Hinton is the place they want to build.

Upon research of similar programs in communities across the province, administration found that the average length of the programs was four years. Council voted to extend that by one year.

This means that year one and two include a 100 per cent exemption, year three includes a 75 per cent exemption, year four includes a 50 per cent exemption, and year five includes a 25 per cent exemption.

This program doesn’t waive all property taxes for businesses looking to build or renovate and meet the requirements, but only the portion of the new assessment, explained Scott Kovatch, Hinton’s economic development officer. The Town wouldn’t lose out on pre-existing property taxes.

Adding a fifth year to the program makes Hinton’s incentive program similar to that of Edson.

Kovatch stated that an additional fifth year is a huge advantage from a business perspective.

Coun. Dewly Nelson warned council that multiple years with 100 per cent exemption may have a negative impact.

Ostashek pointed out that aside from generating long term assessment increases, there are many ancillary benefits that come from having industry or major commercial ventures moving into Hinton.

“They bring employment, employment brings people, additional people stimulates housing, additional housing with additional people stimulates future commercial development, and there’s just trickle down and trickle up benefits, however you want to measure it, that run across the whole board. It’s more than just the added value in assessment that one development brings, there’s all the other benefits to consider too,” said Ostashek.

A tax non-residential incentive program can be beneficial to a community and a catalyst for development growth, according to the Town of Hinton report.

Incentives would begin the year after completion of the renovations or expansion and only to properties that meet the criteria set out in the bylaw. One of the proposed criteria requires applicants to make a capital investment to expand, improve, renovate, or revitalize the non-residential property resulting in an increased assessment value of at least 25 per cent by the end of year two from when the development permit was issued.

Nelson asked Council how they felt about providing a tax incentive to new businesses and not pairing that with support for existing struggling businesses.

Coun. Ryan Maguhn and Coun. Trevor Haas agreed, but pointed out that there is still a surplus that council can use for programs to help local businesses in the wake of COVID-19. Nelson concluded that he hopes something can be put together on helping existing businesses, prior to this bylaw coming back to council for decision. He said otherwise it would be hard to support the non-residential property tax incentive bylaw.

According to the Town of Hinton report, based on the past five years, the average number of permits at the Town of Hinton per year has been 13 industrial, 34 commercial, and 10 institutional. The approximate average Town of Hinton annual values of each of the permits for industrial has been $37,700; commercial has been $12,500; institutional has been $40,000.

The Town reported according to the proposed four year program that if the program stimulated business growth by at least two permits for industrial and four for commercial, per year, based on a proposed $50,000 application minimum, this would increase assessment by $300,000 annually after the program is complete.

If no new development occurs during the term of a non- residential tax incentive program, there is no impact from implementing the bylaw. Kovatch pointed out that out of 15 communities they reached out to, nobody mentioned any red flags or negative impacts.

According to the report, establishing a property tax incentive program aligns with the Town of Hinton Strategic Plan 2017-2021. Goal one refers to responsible growth, development, and diversification of Hinton, while objective 1.1 refers to strategic development and diversifying Hinton’s economy.

Masha Scheele, Local Journalism Initiative Reporter, The Hinton Voice