WinnipegREALTORS® released a major discussion paper this week on Manitoba’s acute rental shortage. One of the items noted under the city of Winnipeg is its multi-family Residential Tax Incentive Program for Winnipeg’s downtown and inner city, which holds promise to develop badly needed rental and condominium units and meet increased demand resulting from rising population growth.
Stefano Grande, a strong advocate for downtown living opportunities, below outlines the success of the city’s tax incentive program.
Another important piece of this program is the province’s new Tax Incremental Financing Act which provides $20 million in incentives to developers.
Besides recommending some modifications to Manitoba’s current rent control regime to facilitate more rental construction activity, the multi-family tax credit program is clearly one of the new tools that addresses our need for a greater housing supply.
by Stefano Grande
The early success of the new public-sector Residential Tax Incentive Program is demonstrative of the right public policy which allows the private sector to finally provide a huge breath of life into downtown revitalization through housing development. And with over $20 million of tax increment financing incentives, stimulating over 800 new units as a result, and an already over-subscribed program — only one year into its inception — this successful program must be expanded.
Housing — lots of it, of all types, shapes, forms, sizes, for people of all incomes and cultures — is the key to downtown vibrancy. And all the downtown stakeholders know that more housing, if planned within a broader revitalization strategy, is the spark that will sustain and create incredible downtown neighbourhoods, forever.
But the difference between understanding this critical fact, and encouraging the private sector to respond to get things done, is all about the public sector enabling private investment.
This aggressive shift in public policy to enable the private sector to build downtown shows the public commitment to our downtown. The right signals are being sent to the private sector: a sustained public policy direction to strengthen the marketplace, and the realization that capital flows where there is a clear vision and manageable risk. Subsequently, not expanding this program so early in the game when developers are lining up to transform our surface parking lots and underutilized historical buildings, would be a mistake.
In the past, grants and smaller housing pilot projects, facilitated through public policy, did lead to several successful housing development projects scattered throughout the downtown. In fact, thousands more people live downtown today because of these positive policies. Although successful, this slow, incremental and scattered approach has neither galvanized nor inspired the long-term needs of the private sector nor affected the monstrous housing market in a significant way. More importantly, it has not quenched the public’s incredible thirst to see downtown revitalized as an exciting and fully-developed neighbourhood — and quickly.
So it’s critical that this new policy be expanded to carry downtown housing development into the next several years. It’s good public policy to do so.
Municipality after municipality has analyzed their operating statements and concluded a healthier city — economically, socially, and environmentally — can only be achieved by building a city “up” as opposed to “wide.” Slow-growth cities understand this even more. The downtown is the centre of that “up.”
And it’s also quite common to see the tax base of a downtown area skyrocket as a result of reinvestment, which is a double win for the city and province. An empty building or a vacant lot does little to create taxation revenue. Actually, this hurts the downtown as well as the suburban property taxpayers where the tax burden is shifted.
Secondly, a significant challenge has always been that the cost of constructing housing downtown exceeds the average sale price or rent — what the market is prepared to pay for in relation to other areas of the city. For various understood reasons, it simply costs more to build downtown. This will not change in the near future. Some people may be surprised to learn that this economic challenge also exists in downtown Toronto and even New York City where tax incentive policies exist to develop its downtown housing market.
The arrival of this new aggressive policy for downtown Winnipeg not only bridges this gap, but also is a good policy whose time has finally come.
We are headed in the right direction, which is more downtown housing. Let’s make sure that this time that enough momentum is created to truly change the downtown marketplace.
(Stefano Grande is the executive director of the Downtown Winnipeg Business Improvement Zone.)