Subsidy package could cost less than estimated

AURORA CANNABIS PLANNING HAT FACILITY

A subsidy package offered to lure Aurora Cannabis to the City of Medicine Hat could cost about $900,000 less than first estimated, the Medicine Hat News has learned.

Last March city council approved using up to $6.6 million in reserve funds to pay a large portion of development fees related to the cannabis producer’s planned 1.2-million-squarefoot growing facility in northwest Medicine Hat.

A city report into the off-site levy program released in December noted different figures however, and officials now state $5.7 million is the size of the city’s contribution to extending utilities to the site.

After recalculating the land involved and several other factors, the developer’s payment will total $1.6 million, which officials say has been collected.

“That (original $6.6 million figure) was an estimate we made without knowing the (land) plan or the legal area of the lot,” said Kent Snyder, the city’s general manager of planning services. “If you look at the picture in pieces it’s confusing, but we’re now confident that we have the correct number.”

Because the change in funding is essentially an inhouse item at the city treasury, Aurora neither gains nor loses due to the difference.

Officials with the Aurora said the company has no position on what is an internal city accounting matter, and stated their plans for the site had not changed.

Off-site levies are collected to pay for municipal infrastructure, like major roads and storm sewer and water lines, to the edge of a development.

As part of a development agreement and power supply contract worked out between the city and Aurora in early 2018, council passed a motion to increase a off-site levy subsidy that it offers to all developers, with additional dollars coming from the city’s Community Capital Reserve.

Council unanimously approved the deal with many stating the gain of 400 permanent jobs and a major power contract with the city’s utility company was a landmark economic development opportunity.

That rate at the time was 40 per cent in most areas of the city, rising to 90 per cent in areas where planners hoped to encourage intensification.

The complex formula in the Aurora deal offers different rates of subsidy for three separate parcels, totalling 72 acres, including land for the main facility, a potential expansion and a potential commercial zone.

“It’s a blended rate that works out to about 78 per cent (for the Aurora property,” said Snyder.

In late 2018, city administrators prepared an overview of the off-site program as council debated the future of the assistance program, and stated that a schedule of deposits did not yet include $7.4 million related to city’s contribution to the Aurora off-sites.

That figure is made up of $5.7 from the city, said Snyder, and $1.6 from the developer, which is this case in the Box Springs Business Park.

Off-site levies involve a complex calculation of how a fund municipal road and storm sewer projects that connect new development. But because such infrastructure needs to be brought property lines behind development can take place, levies collected often are used to reimburse the city for construction that has already taken place.

Also complicating matters in the Aurora case, the Edmonton-based firm purchased a custom plot that encompassed some land that was located in already registered subdivision on which the levy had already been paid. Such fees can’t be collected twice, and after the current subdivision was finalized in the summer, the levy was again recalculated to carve those amounts out of the final number, said Snyder.