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Kingston - Decision looms on development, impost fee waiver

This Article is By: Stephen Petrick    On  Sep. - 16, 2006

Decision looms on development, impost fee waiver

New council must decide how best to lure businesses; three mayoral candidates voice their opinions

Stephen Petrick

When you cast your ballot for the next municipal election, think about what Kingston could look like in four years. As it stands now, we'll soon have a new entertainment centre - and hopefully some wider paved roads - in the heart of downtown.

A four ice-pad sports centre will go up in the sprawling industrial suburbs in the west end. An expansion of a massive sewage treatment plan will also get underway in the east.

Like it or not, the city's getting bigger and bigger and even if these projects don't raise taxes, Kingstonians will shoulder their costs in indirect ways through new roads and new sewers to handle extra growth.

Which is why development will be a crucial issue when Kingstonians go to the polls November 13.

One of the first tough issues the new council may have to consider is to what extent it wants to lure commercial and industrial companies that can take the load off the residential tax base.

In September 2004, council was so determined to lure companies to town that it voted to waive development and impost fees in order to compete with cities such as Belleville and Ottawa, which offered similar perks. The bylaw expires in January 2007. Development fees are charged to offset costs associated with a city's increased population, such as snow removal or police, fire and ambulance services. Impost fees are more specific charges for things such as electricity or sewer hookup.

Although the goal is to help Kingston in the long run, the move puts more financial strain on the city in the short. The city normally charges $3.77 per square foot of building space for development charges and $4.42 per square foot in impost fees. That would mean that a company building a 30,000 square-foot facility would save $245,700 under the new process. Councillors must decide how beneficial the waiver actually is for luring new businesses. Saud Cadoch, vice-president of logistics for office supplies distributing company Lyreco, said it contributed to his company's decision to come to Kingston.

The Montreal-based company is building a new warehouse on 10 acres in the St. Lawrence Industrial Park that will employ up to 100 people. Alumi-Bunk, a manufacturer of bunks and van bodies, also recently decided to build a 75,000 plant in Kingston that could create 80 jobs.

Kingston Economic Development Corporation general manager Jeff Garrah said while the waivers helped lure the companies, it wasn't the "deal maker." KEDCO's board of directors is currently filing a report to unveil the pros and cons of the bylaw. When it's released in August, it will likely recommend the fees for new companies be phased back in, if not all at once, in 10 per cent increments over a long period of time., Garrah said. Or it may recommend new companies be able to defer impost and development fee payments for a year, a move that won't affect tax payers in the long-run, but will still let businesses set up quickly. "The burden of those waivers are shifted to the residential tax base right now and you can only do that for so long," Garrah said, explaining he believes companies are choosing Kingston more for its geographic location and educated workforce than for the perks.

"The hope is that once we get things stimulated we won’t need those waivers to attract businesses anymore." Once the KEDCO report is out, the three announced mayoral candidates will no doubt get right on it and take a position. The incumbent Harvey Rosen said he may agree with a slow phase back of the fees. "It doesn't make sense to me to slam the door all at once," he said. "But I certainly don't want to see any more burden on the residential tax base. I'm willing to listen to the alternatives." But Candidate Kevin George believes that luring business is so important to the city that a perk in some form or another may be in order.

A reduced cost for land in the city's industrial parks could be an option or a 50 per cent waiver on startup costs. "We need to get our head around the idea of having to recoup every penny that's put into industrial because what we're really doing is trying to encourage assessment growth and job growth in our community," he said. The third candidate, Rick Downes, says the city shouldn't have to stoop to the level other communities that offer perks to compete. "When a company starts to seriously look at Kingston, it's going to look at us anyway, whether or not we waive the impost fee.

"If a company plays one against the other and nickle and dimes municipalities for the best advantage, then you have to consider what their reason is for re-locating here in the first place."

But all candidates agree that luring new businesses to town is important, especially because, as it stands now, our city is dominated by public institutions - Queen's University, the military, penitentiaries - which don't pay property taxes. The question is how best to do it. And how best to prepare Kingston for the future.

By permission of Stephen Petrick and Business Outlook – August 2006