Developer granted a break

A Penticton development hampered by construction delays has received a $500,000 break from the city, which will extend its downtown development tax break scheme to allow the project to take advantage of the program as originally planned. 

After a heated debate, council voted 4-3 Tuesday to extend the downtown economic investment program to the middle of 2020 to allow for the condo-commercial development at 120 Ellis Street to receive benefits. 

“My sympathies don’t lie with the developer,” said Coun. Julius Bloomfield. “My concerns under this case are the people that have bought into that development. We’ve got probably 25-30 sales going in that building where people have budgeted the deal that they thought they had.”

The city’s downtown economic investment zone — a bylaw enacted in 2014 with a sunset clause at the end of this year — provides a property tax exemption on the assessed value of the building for a decade after construction. The property still pays tax, but only on the bare land value. 

The company behind the project at 120 Ellis Street, Wildstone Construction, requested the city extend the program's end-of-2019 occupancy deadline to accommodate challenges with sourcing local labour and a cold winter.

The estimated construction value of the building is $13.4M, meaning over the life of the 10-year benefit period the project will receive about $500,000 in tax exemptions, split amongst the 48 strata units. 

Planning manager Blake Laven called 120 Ellis Street “exactly the type of project” the project was trying to encourage. 

While a majority of councillors agreed with providing the developer with six more months of runway to prevent a rush job on the project, Mayor John Vassilaki and Couns. Jake Kimberley and Frank Regehr were passionately opposed. 

“If a taxpayer, for example, paying their annual tax bill is a day late. I don’t think that taxpayer gets to come forward and argue in the revenue department that they just couldn’t quite make it,” Regehr said.

Mayor Vassilaki was on the same page, arguing groups who deal with the city must be expected to live up to expectations. He also questioned how hard the developer was working early on the meet the deadline.

He explained that the incentive program was brought in during a time when the community’s economy was hurting and no development was occurring downtown — a time that has past. 

Coun. Kimberley’s opposition sat with the program as a whole. He challenged city staff’s assertion that the EIZ program has encouraged the development of 19 downtown projects worth $32M. Kimberley declared market forces drive development, not tax incentives. 

“This is just a farce. This whole thing as I see it, truthfully… we’ve given away millions of dollars under this program,” he said.  “I’m sorry, I have great difficulty with this. Taxpayers in this community are paying enough already.”

Council voted 4-3 with Couns. Bloomfield, Sentes, Watt and Robinson in favour of extending the end date of the program to June 2020.

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