100% business expansion propertytax rebate in Windsor proposed. Model for Detroit?

[davewindsor]

From today's Windsor Star, Windsor's Mayor is finally starting to listen and announced a 10-year 100% business expansion city portion property tax rebate for Windsor for 10 years. For example, the article notes, if somebody buys a downtown parking lot with $20,000 a year in city property taxes and builds a $20m office building on the land, only the original $20,000 a year in city property taxes would be paid for the next 10 years. So, if a $20m office buildings is taxed at a city rate of around 3.1%, a new office building would have the $600,000 a year in property taxes waived for the next 10 years. Does Detroit offer something similar if someone where to develop the Statler and Hudson sites? If not, maybe they should follow suit.

http://www.windsorstar.com/business/...771/story.html

Francis tax rebate plan 'very unique'


Strategy meant to create jobs, diversify economy

WINDSOR, Ont. -- A plan to rebate Windsor property taxes on new businesses and business expansions for 10 years was welcomed Friday as an aggressive job generator that will produce prompt results.
"That would be very unique, I don't know anywhere in Ontario that's doing that today," said London Economic Development Corporation president Peter White, when told of Windsor's Economic Revitalization Community Improvement Plan unveiled by Mayor Eddie Francis earlier in the day. White, whose corporation competes for the same kinds of companies that Windsor is looking for, called the plan "an aggressive and business-friendly opportunity."
His counterpart at the WindsorEssex Economic Development Corporation, Ron Gaudet, said the plan "puts more tools in the basket of economic development" as this region seeks investments in a "very, very competitive market."
"Even in the short term, I think we'll see companies avail themselves of this," Gaudet said.
The mayor was even more absolute. When asked if there are any companies intending to use the incentives, he replied: "Yes," but declined to identify them.
"I already know, once this gets out, investors are going to respond very positively," Francis said, describing scenarios where new plants and office towers could save millions in taxes over 10 years. City planner Thom Hunt said: "Certainly, nothing as comprehensive as this exists today in Ontario."
If a new company built a $10-million plant here, the newly assessed property would be subject to a 3.7 per cent tax paid to the city [[$370,000 annually), plus a 2.4 per cent tax that goes to the province for education. Under the new plan, $370,000 would be rebated each year for a decade, a $3.7-million savings.
"That's a big incentive, very big," said Jim Williams, a commercial and industrial real estate specialist. "It will help bring business here, no question."
An existing business that expands would be rebated the 100 per cent of the resulting tax increase for 10 years. Another program would do the same thing for small businesses, encouraging them to expand and create jobs. And a fourth program would rebate the development charges normally paid to the city for any of the projects that qualify for the other three programs.
Public open houses are scheduled for Jan. 18: from 2 to 4 p.m. and from 6 to 8 p.m.in room 409 at 400 City Hall Square, to gather input on the plan. The mayor hopes a finalized plan will be approved by city council Jan. 31.
"Now's the time for us to grow our economy, now's the time to diversify our economy," the mayor said.
The city currently collects $398 million in property taxes. What this plan does is lock in that number for a decade, the mayor said. It's targeting 10 sectors: manufacturing [[particularly automotive and aerospace), health and life science, professional and back-office operations; renewable energy; education; creative industries including digital media; logistics and warehousing; and tourism. He said the tourism category doesn't include a retail operation like a big-box development.
Consider a mom and pop business worth $400,000, the mayor said. If that company wanted to make a $300,000 expansion, it would be rebated the extra city taxes normally assessed for the expansion - $9,300 annually for a commercial enterprise, or $93,000 over 10 years. Another example he gave was for a vacant downtown lot that's subject to a property tax of $20,000 annually. If someone built a $20-million office tower there, only the original $20,000 would have to be paid each year for a decade.
Francis said the city will have to survive without the extra taxes from assessment growth. To prove it can be done he pointed out that during the last two years, assessment has actually declined, yet the city has held the line on taxes.
Ward 5 Coun. Ed Sleiman, one of three councillors attending the news conference, said the plan responds to the two main priorities he heard from residents while campaigning in the fall - the need for jobs and a diversified economy.
"I hope this will send a message to the rest of the world that we are open for business."
Developer Joe Mikhail, who owns a number of commercial and industrial properties in the city, said while he applauds "anything the mayor's office does to improve things," he hopes the incentives don't ignore the investors who are already here and "continue to struggle."
He wouldn't like to see existing businesses placed at an unfair disadvantage because new businesses get a tax holiday.
At the news conference, Francis emphasized there are also incentives in the plan for existing businesses. Neil Robertson, the city's manager of urban design, who authored the plan, said the plan includes tax-rebate strategies that reward businesses for locating in existing, vacant properties in the city.
Windsor-Essex Regional Chamber of Commerce chairwoman Jennifer Jones said it's "heartening" to see a plan that addresses what her members want from the city: job creation and economic diversification. "It's very progressive and it's very bold," she said of the plan, adding she senses Windsor is entering a new era. She cited recent news about Samsung's wind tower plant being located here, and reported plans for a multimillion-dollar hangar project at the airport as signs that the city is finally diversifying.
"I think we're going to look back on this time, 10 years from now, and say 'This was really the turning point.'"
Fact box:
Windsor collected $398 million last year from taxpayers, with $312 million going to city coffers and the rest going to the province for education. The amount collected has actually shrunk since 2007, when $405 million was collected. The tax rate for general commercial is 4.8 per cent of assessed value, with the city keeping 3.1 per cent. The rate for general industrial is 6.1 per cent, with the city keeping 3.7 per cent.
Source: Onorio Colucci, city treasurer
© Copyright [[c) The Windsor Star

Read more: http://www.windsorstar.com/business/...#ixzz1AVRXnrV7

[Novine]

I never understand these gimmicks. Why force existing taxpayers to subsidize new development, placing existing businesses and taxpayers at a disadvantage? If you can afford to forego taxes from new development, then you can afford to give all of your existing taxpayers a reduction in taxes. With that tax reduction, perhaps those existing businesses would move forward with expansion plans or new businesses would be attracted by the reduced rates. But asking those who have already located in Windsor or Detroit or any community to subsidize those who have never paid is unfair and counterproductive.

[davewindsor]

I never understand these gimmicks. Why force existing taxpayers to subsidize new development, placing existing businesses and taxpayers at a disadvantage? If you can afford to forego taxes from new development, then you can afford to give all of your existing taxpayers a reduction in taxes. With that tax reduction, perhaps those existing businesses would move forward with expansion plans or new businesses would be attracted by the reduced rates. But asking those who have already located in Windsor or Detroit or any community to subsidize those who have never paid is unfair and counterproductive.

How is it that "if you can afford to forego taxes from new development, then you can afford to give all of your existing taxpayers a reduction in taxes"? In the former scenario, the overall collection of tax revenues has not been decreased. In the latter scenario, there is an overall reduction in tax revenues. If nothing's getting built because of a piss poor local economy, how is a city worse off than if something new gets built because of the 10 year waiver? Whether it's a parking lot or office building on that same parcel of land, the same revenue is collected by the city. Plus, the city will make money on building permits, business permits, increase in school portion taxes for a commercial building, etc. This waiver doesn't apply to residential or multi-res.. They still have to pay the increase for the school portion of the property tax bill. These aren't new city residents living in these buildings. Plus you'll get new jobs in a high unemployment area. It doesn't sound counter productive. It sounds like win, win to me.