(Image credit: CFJC Today).

By Stephanie Swensrude

TAX INCENTIVES

City council considers changes to tax exemption bylaw, wants to incentivize redevelopment of nuisance motels

Jan 27, 2022 | 3:40 PM

KAMLOOPS — This week, Kamloops City Council met for a first reading of a program that will incentivize new daycares and the revitalization of old hotels and motels: a tax exemption on a portion of municipal taxes. There are already two revitalization tax exemption (RTE) areas in place — one for the downtown core and one for the North Shore.

The existing RTE area downtown. (Image credit: City of Kamloops).

City planners say that there is a lack of daycare space in the city and that this program will help ease the financial burden of starting a new one up.

“If we can provide a ten year tax break, on the municipal portion only, for a business to start up a new daycare… that’s really to encourage more daycare spaces,” said the director of development for the City, Marvin Kwiatkowski.

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The second kind of property targeted in this proposal is hotels and motels. Developers who buy old hotels or motels and turn them into multi-family units or mixed use will get a tax break.

“Most of the hotel, motels we’re talking about are not actually operating as [one]. They’re permanent stays; they actually don’t even abide by the zoning bylaw that’s in place,” said Kwiatkowski.

It doesn’t say it in the bylaw but nearly everyone involved agreed that the bylaw targets motels like the ones on Columbia Street, some of which were deemed nuisance properties in 2020. One councillor brought up the concern that some people live full-time out of these hotels and motels.

“We also need the rooms, there’s another factor there, too. We’ve given a lot of those rooms to social housing. We’re already shrinking the availability of hotel-motel affordable housing,” said Councillor Denis Walsh.

The proposed tax exemption program could cause the City to lose out on up to $9 million of tax revenue, but the executive director of Venture Kamloops, Jim Anderson, said that’s not the whole picture. He said that the proposal would grow the tax base and benefit the city.

“One of the main goals of economic development, community development is to increase the tax base. And while this mechanism is a tax exemption, it actually increases the tax base because once a property is developed, even if there is a tax exemption, the city still realizes more revenue from a newly-developed property,” said Anderson.

“That’s always the first thing people say. ‘Oh tax exemption, who’s getting a tax holiday?’ It doesnt work like that,” said Anderson.

Anderson is calling it a win-win-win situation: the City gets more tax revenue, the developers cash in on the incentive and the tenants of the new units should pay less in rent or tax due to the exemption.

Joshua Knaak of ARPA Investments has dealt with properties on the North Shore that fall under existing RTEs.

“It certainly is a consideration and it certainly is a good incentive for people who buy in those buildings,” said Knaak.

He says its impossible to know whether buildings in RTE areas would be built if not for the tax exemption, but that it is a factor.

“The City can’t build buildings. You look at an area like the Tranquille corridor, and the City has a vision for it that really came from the residents… but neither of those can build buildings. The one thing they can do is they can facilitate those buildings being built.”

The bylaw will go before council for a final time on February 15.

(Image credit: City of Kamloops).