Moncton expects to surpass a target set by the municipality that it says makes a tax increase unnecessary to pay for the $113-million Avenir Centre and plaza.
The target is related to new downtown development following the opening of the 8,800-seat arena. Specifically, the target is $108 million in new assessed value by 2023.
With one year to go, the city says it expects to easily meet the goal.
"We're on track, it's going well," Jacques Doucet, the city's chief financial officer, said in an interview.
Marc Landry, the city manager, told Moncton councillors during a council meeting this fall that there has already been $68.2 million in new assessment value recorded as of 2021.
Landry and Doucet said based on building permits issued already, or construction already underway, the city projects to fall between $128 million and $146 million by 2023, well above the target.
"I think hitting this target — and probably surpassing this target — is really positive for the city because we're seeing that the Avenir Centre is actually the catalyst that it was supposed to be," Doucet said.
"It's generating major growth in the city. We can see it with all the cranes in the air."
The Avenir Centre and adjacent plaza opened in September 2018. The city used a combination of funding to build it, borrowing $39 million and getting funding from the provincial and federal governments.
The city hoped new development spurred by the centre would help cover the city's costs so it could maintain a steady tax rate.
The city's tax rate has remained constant since 2016. Councillors approved a 10-cent tax rate cut for 2022 to partially offset steep assessment increases driven by rising housing prices.
The assessed property values at the heart of the target are set by the province each year. When a new building is constructed in the core, the value the province assigns it gets added toward the city's target.
The city's tax rate is multiplied against the assessed value. New construction generally increases a property's assessed value, resulting in higher property tax income without raising the tax rate.
The target has been part of the reason officials in the city have focused on attracting new construction in the city's core.
The city introduced and expanded incentive programs for developers, offering grants to offset taxes in the first few years of large new developments with the understanding the long-term benefit will outweigh the early loss in revenue.
This fall city councillors voted to extend the program through 2022.
"This program was very successful," Landry, the city manager, told councillors during a Nov. 22 meeting.
A staff report to council noted there are seven potential developments that could use the program with estimated building permit values totalling $97 million.
A series of new developments has sprung up downtown, including two new hotels within a block of the Avenir Centre.
One of the largest is a trio of 15-storey mixed-use towers off Record Street that broke ground over the summer.
Closer to the Avenir Centre, multiple new apartment buildings are under construction only a few blocks from each other. Several used the incentive program.
Few affordable units built
While the city has welcomed the cranes in the sky, staff have also noted much of the new residential construction is targeting people with higher income levels.
"We have a housing crisis in the city," Bill Budd, the city's director of planning and development, said during a Nov. 15 council meeting.
The staff report about the incentive program noted there were 709 new downtown residential units built over the last five years, but only about 21 are considered "affordable" units. The report doesn't say what criteria are used to determine affordability.
Doucet said staff expect to provide an update to city council on the financing of the Avenir Centre early in the new year.