Committee backs tax break for Midtown Plaza revamp
Even though the City of Saskatoon has no policy offering tax breaks for retail projects, a city council committee endorsed a five-year abatement for the revamp of the former Sears location.
Midtown Plaza is planning an $80-million renovation of the Sears department store’s former downtown location. If council approves the abatement, which seems likely, the finished project will get a five-year break from paying property taxes.
Midtown Plaza would continue to pay the $4.3 million in property taxes it’s paying now, but estimated property taxes of $565,000 a year would be abated for five years on the completed renovation.
Members of council’s planning, development and community services committee expressed concern about the lack of formal rules to allow the tax break, but decided the proposal meets the spirit of the existing policy.
“I do want to say that in a tough retail environment that Midtown Plaza is making an $80-million investment is a good sign,” Mayor Charlie Clark said Wednesday. “I think it makes a great deal of sense to support this today.”
Existing rules allow developers to apply for a five-year tax abatement for residential and commercial developments on vacant lots and renovated properties in areas like the downtown.
City officials are in the midst of studying an expansion of the tax abatement program to include retail projects. They are expected to make a recommendation on a revised policy later this year.
Michael Mehak of Toronto, who represents the mall’s owners, said Midtown Plaza gets 11 million visits a year, making it a “unique attraction for Saskatoon.”
He said the retail industry is moving forward “with caution,” despite the obvious uncertainty symbolized by the closing of the Sears chain across Canada. The renovated Sears location will provide 80 to 100 new local jobs, but delaying the tax abatement could jeopardize the project, Mehak added.
The renovated location would feature another mall entrance facing 20th Street.
If council approves the tax break, the project could begin in late August or early September. It’s expected to take about two and a half years.
Business leaders appeared before Monday’s committee meeting to express support for the tax break.
“In many ways, as Midtown Plaza goes, so does downtown Saskatoon,” said Brent Penner, executive director of the Downtown Saskatoon business improvement district. “This project needs to move forward now. We need this investment in our downtown now.”
Alex Fallon, chief executive officer of the Saskatoon Regional Economic Development Authority, noted the construction industry in Saskatoon has slowed.
“This is the type of investment we need to encourage,” he said.
The Sears location opened in 1968; the rest of Midtown Plaza opened in 1970.