A staff recommendation to provide tax relief to the developers of the Condos at the Royal Connaught provides a demonstration on how the program works. The Tax Increment Grant Program provides tax relief to the developers of properties on a descending sliding scale covering a five-year period. The program is designed to encourage investment in the core. When the developers took over the former Royal Connaught hotel, the vacant building was listed as commercial vacant land and had an assessment value of $472,000 and was paying property taxes of $11,000 per year. With the completion of the project which now consists of 93 condominiums—the property value is over $44 Million, and will generate property taxes of $237,000 per year.
The rebate will be 100 percent forgiveness in the first year, 80 percent in the second, 60 percent in the third, 40 percent in the fourth and 20 percent in the final year. After that the property will pay full taxes. Over the five year period the developers will receive tax rebates totaling $711,000, while the city will receive roughly $475,000 over the five years and after that will receive an estimated $286,000 per year from that point onwards.
The incentive was started 20 years ago at a time when Hamilton’s downtown core was deteriorating and had not seen significant new development in decades. The plan had the twofold objective of creating opportunities for property development and assessment, but also to encourage people to live in the downtown core.
Since that time, a number of program refinements have been added, including expanding the Program to suburban downtowns, BIA’s, the Mount Hope/Airport Gateway, and to the corridors of Barton Street and Kenilworth Avenue.