A brownfield boom could be coming to city of Waterloo

City expects to see increased interest in incentives for redeveloping contaminated sites

There’s been very little uptake of a city of Waterloo financial incentive program aimed at helping developers offset the cost of cleaning up contaminated sites, known as brownfields.

It was met with broad support from the development community when it was unanimously approved by council six years ago, but only one project (at the former Brick Brewing site) has made use of it since.

Despite the slow uptake city staff expect interest in brownfield redevelopment to increase. Earlier this year, city council voted to extend the brownfield program for another five years.

“A lot of the development we’ve had in the city has been in greenfield areas, or in areas where there was residential (housing),” said Justin McFadden, executive director of economic development with the city. “Typically, you wouldn’t have contamination in residential areas.”

A June staff report to council outlined 10 properties in the city that are active redevelopment sites on known brownfield areas and may apply for funding.

The city estimates those sites could account for about 1,800 future residential units and 79,000 square feet of future non-residential space that includes commercial and office use.

Brownfield lands typically are contaminated by a former use, like factories or gas stations. They can add to a builder’s redevelopment cost because of the cost of the environmental cleanup.

Waterloo introduced its incentive program, called a Tax Increment Grant (TIG), in 2013 in partnership with the Region of Waterloo. The value of the TIG is based on the estimated cleanup cost and is paid over a period of up to 10 years, using the increased taxes generated by the development.

The five-year program received a one-year extension in 2018. In June, councillors voted to extend the program by another five years until 2024.

The region funds approximately 60 per cent of the cost, with the city paying the remainder.

“We want to incentivize redevelopment of existing industrial lands rather than sprawling onto green space,” said Mayor Dave Jaworsky.

“There’s a need in our urban area for more housing, and this is a great incentive to get old sites cleaned up and put to good use.”

Across the entire region, 20 projects have used incentives through regional development charge exemptions and

TIGs since 2009.

The majority (11) were in Kitchener, along with six in Cambridge, two in Waterloo and one in Woolwich Township.

Glenn Scheels, principal planner for land-use planning firm GSP Group, said Waterloo historically didn’t have the same volume of manufacturing or industrial sites necessary to create the relatively high number of contaminated sites found in neighbouring Kitchener.

“There maybe hasn’t been as many brownfield opportunities in Waterloo over the last little while,” he said. Other major brownfield redevelopments in the city predate the region’s incentive program, introduced in 2006.

The estimated remediation cost of the former Brick Brewing site at 181 King St. S. was about $1.65 million. The majority ($1.36 million) was covered by a separate Region of Waterloo brownfield development charge exemption.

The remaining $294,460 TIG exemption was paid over one year, with the city contributing $105,164. A spokesperson for builder Hip Developments was not available.

A second property in Waterloo, 14 Princess St. W., also received a $200,000 regional development charge exemption from the region in 2015.

According to the region, the total cost of all regional and municipal brownfield incentive programs for all 20 brownfield projects since 2009 is nearly $40 million, including $13.5 million worth of development charge exemptions and approximately $26 million worth of TIGs.

The incentive has also helped remediate 185 acres of contaminated land, create housing for 6,000 people and generate $800 million in increased assessment value, according to the region.

McFadden and Scheels both said there is a larger community benefit to cleaning up these contaminated areas with the help of public funds.

“If there’s enough contamination, it can move into other areas … and it does have an impact on areas beyond the development itself,” McFadden said.

“There definitely would be a community benefit in that regard.”