The City of Terrace is extending its Downtown Revitalization Tax Exemption program, moving the term from five years to ten.
The program, first introduced in 2009, lets projects worth more than $500,000 apply for a property tax break if they include at least five multi-family residential units. It was created to encourage more housing and redevelopment downtown.
Director of Development Services David Block explained that the five-year model hadn’t given developers enough incentive to take on housing projects. Consultants reviewed the economics earlier this year and found that returns were too low to make most builds feasible.
“It has not really driven any residential housing, it hasn’t provided an incentive. A five-year tax exemption didn’t boost the potential revenue stream for a developer into a range where they might actually consider doing a project and taking some risk,” Block said.
He noted that the new ten-year model makes more of a difference, particularly for townhouse-style developments, which are simpler and more realistic for local builders to take on.
“A 10-year made a more significant difference, particularly in the smaller-scale townhouse development, which is a bit easier to finance and much simpler to construct,” he explained.
Looking into the future, Block added that more residents downtown would not only mean new housing but also more activity around local businesses.
“Some of the real benefits are that it brings people 24 hours a day, so residents are observing what’s going on. It reduces crime, but it also benefits grocery stores, retail stores, and restaurants,” he said.
The bylaw passed third reading with one councillor opposed. Public notice will be required before it comes back for final adoption.
