Council taking closer look at tax break plan

EIZ program has granted five-year tax holidays worth a total of $1.1 million to 27 projects since 2010

Five years’ worth of six-figure tax breaks helped attract a $22-million retirement home to Penticton, but a similar 10-year tax holiday still wasn’t enough to get a grocery store built downtown, city council heard Tuesday before agreeing to a review of its economic incentive zones program.

Since its creation in 2010, the EIZ program has granted five-year tax holidays worth a total of $1.1 million to 27 different projects with a combined construction value of $34 million that created 300-plus jobs, according to development services director Anthony Haddad.

Seventy per cent of the recipients were local businesses that sought help to upgrade their facilities. Once the breaks are finished, the projects are expected to generate an estimated $223,000 annually in tax revenue for the city at today’s rates.

However, Haddad suggested council look beyond those numbers as it evaluates the success of the program, which is aimed at spurring “strategic” revitalization and growth.

“It’s definitely, I think, short-sighted to look at the results of the bylaw solely through a financial lens,” he said.

“As difficult as they may be to quantify from a financial perspective, the community social benefits that result serve our community well into the future after the period of tax exemptions is complete.”

He cited as examples a non-profit agency that was able to renovate its space to serve more clients and the new Landmark Theatre that replaced a derelict building and brown field.

Haddad did, however, acknowledge there is concern in the community about awarding tax breaks at a time when the city is struggling to make ends meet, so he recommended the EIZ program be reviewed when work begins on updating the Official Community Plan.

“It’s a really great opportunity, I think, to see where, or if, the EIZ program should be used as a tool to help support and target strategic growth in our community,” he explained.

Coun. Helena Konanz suggested the program be amended to further encourage development of affordable housing, although she noted tax breaks sometimes aren’t enough to bend developers to the city’s will.

The city had been offering through the EIZ program a 10-year tax holiday for a grocery store in the downtown core, but that wasn’t enough to spur a company into action.

“It just goes to show that there’s a point where the market takes over and decides what’s going to be where,” she said.

Haddad explained the main things blocking a downtown grocery store are a lack of large land parcels and existing competition, plus a shortage of shoppers.

“The population downtown isn’t there to support a 20,000- or 30,000-square-foot grocery store right now, so that’s definitely one of the challenges,” he said.

Conversely, amending the EIZ program to include a tax break worth $540,000 over five years for the developer of the Southwood Retirement Resort was enough to get the company to build here, which resulted in the creation of 44 full- and part-time jobs.

“They were looking at expanding their operations in Vernon or Penticton,” said Haddad, “and this is one tool that helped move that development ahead.”