EPC approves proposals for additional $1.9M in True North Square project costs By: Aldo Santin Posted: 7:00 PM CDT Wednesday, Sep. 12, 2018

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City hall appears willing to cover off more costs associated with the $550-million True North Square project.

But officials said taxpayers won’t be responsible — the money will come from property taxes generated from the downtown site.

Members of executive policy committee voted unanimously Wednesday to increase the city’s share of the $9-million public square component of the project from $3.1 million to $4.5 million.

In addition, EPC endorsed an administrative recommendation to set aside an additional $500,000 for the city’s share of public amenity improvements surrounding the project, from $8.8 million to $9.3 million.

Both proposals will go to council for approval at next Thursday’s meeting.

The administrative report was placed on the EPC agenda overnight to ensure it would get to next week’s council meeting, and city officials admitted it was difficult to understand.

John Kiernan, director of the planning, property and development department, said the combined $13.8 million will be repaid from incremental property tax revenue from the commercial components of the project.

“The commercial and retail spaces are solely funding, in essence, the skywalk, the plaza and streetscaping improvements,” Kiernan told reporters following the EPC meeting.

The True North Square project involves the construction of four towers — a hotel, office, condominiums and rental apartments — surrounding a public square, bordered by Graham and St. Mary avenues and Hargrave and Carlton streets.

The 17-storey office tower and 25-storey residential tower at Hargrave and Graham are complete. The hotel and the other residential tower will be constructed on the west side of Carlton at St. Mary. The hotel will be connected to the convention centre with a skywalk.

The project is a partnership between True North Real Estate Development and Vancouver-based Northland Properties. True North has built the towers and square at Donald and Graham, while Northland is building the hotel and residential tower on Carlton.

City council agreed in March 2017 to cover one-third of the $9-million cost of the public square and spend $8.8 million on the construction of skywalks, improved lighting, sidewalks and other streetscaping features.

An official opening of the square is set for Sept. 27.

While the plaza is part of the True North Square project, the developers agreed to grant complete public access to the square and allow the Downtown BIZ and city hall to schedule events on it in exchange for the city and provincial governments to cover the square’s construction cost.

City officials originally expected the province to pick up two-thirds of those costs when it committed its $3.1 million but the Pallister government balked, insisting the cost be split evenly.

Kiernan said an additional $500,000 was added to the public amenities budget to cover inflation and unanticipated cost increases, explaining that the original $8.8 million had been proposed in 2014 and project work won’t be completed until 2022.

Kiernan said the city’s share will be repaid in 15 years, after which time all property tax revenue will go directly into general revenues.

Originally, city hall had expected CentreVenture to borrow the $8.8 million and be repaid through incremental tax increases. Kiernan said now the city is responsible for the funds and approval has to be obtained from council for the total borrowing.

Mayor Brian Bowman defended the allocation of additional funds, describing the project as “transformative for the city.”

“I can’t recall another project that’s private-sector led, that’s a half-billion dollars in mixed-use in the heart of our city,” he told reporters. “It is transformative. It will give a lift to the surrounding area and other property owners and finally deliver a hotel connected to the convention centre.

Kiernan said the incremental property taxes from the hotel property will be used to pay down the loan city hall took out for the convention centre expansion.

Kiernan said the report was hastily prepared because the province didn’t formally make its request for the city to increase its share of the square costs until Monday.

The developers will be refunded the additional property taxes from the two residential towers in the form of annual grants for a 20-year period, part of a joint city-province initiative to encourage residential development in the downtown area. Known as tax incremental financing, similar arrangements have been made for other downtown residential projects.

aldo.santin@freepress.mb.ca