Manitoba to exert tighter control over tax incentives used to build True North Square, Investors Group Field

The Progressive Conservative government announced Wednesday it has a new framework for tax-increment financing, or TIF, a funding mechanism that uses future property tax revenue to stimulate development.

New framework announced for tax-increment financing, but details yet to come

Investors Group Field was supposed to be financed with the help of new property taxes flowing from the former Canad Inns Stadium site. The province has announced more strict rules for the funding mechanism involved in the plan. (Darren Bernhardt/CBC)

Manitoba says it's tightening up the rules for the tax incentives that helped build projects such as Investors Group Field, True North Square and downtown Winnipeg residential towers.

The Progressive Conservative government announced Wednesday it has a new framework for tax-increment financing, or TIF, a funding mechanism that uses future property tax revenue to stimulate development.

In most North American cities, TIF is used to stimulate economic development in undesirable, underdeveloped or otherwise blighted neighbourhoods. Property owners in those areas often are reluctant to invest in upgrades for fear of getting hit with higher property tax bills after they make improvements to their land.

TIF allows cities to capture the additional tax revenue generated by properties that are improved and then do a number of things with that money, such as return the additional money to developers in the form of tax rebates or spend the cash on public amenities such as better sidewalks or lighting.

Since 2010, the city and province have approved no fewer than 30 TIF projects in Winnipeg alone, most of them downtown residential apartment or condo towers.

The mechanism also was applied to new developments at the former Canad Inns Stadium site at Polo Park, the Parmalat dairy plant in the St. Boniface Industrial Park and True North Square. Concerns about the stadium and True North TIFs led the provincial government to review the entire program.

New rules more 'clear, transparent': minister

Under a new framework announced Wednesday, all future TIF requests will require developers and municipalities to demonstrate a business case for their projects and no more grants will be delivered up front, before the new property taxes flow. 

The intention is to create targeted geographic areas for the incentives, including industrial brownfields, the province said in a news release. Economic development will also take precedence over housing.

Municipal Relations Minister Jeff Wharton said Wednesday developers used to have no idea how TIF applications were approved.

"The proponents didn't know what the guidelines were. There was no roadmap forward," Wharton said. "We looked at the model and realized the model needed to be enhanced, so that we're clear, transparent."

More significantly, the province will assume more responsibility to oversee TIF requests. Downtown housing projects used to be vetted by CentreVenture, Winnipeg's arm's-length downtown development agency, but approved by the city and province.

While the specific details for the new program have yet to be worked out, applications for future TIF projects should be online by the spring, Wharton said.

Reactions mixed

Ninety minutes after the provincial announcement, the Canadian Taxpayers Federation issued a release condemning the province for continuing to allow the tax incentives.

"The provincial government's new TIF scheme is just an attempt to improve a fundamentally flawed idea," CTF Prairie director Todd MacKay said in the release.

Paul Jordan, CEO at The Forks, applauded the province for the review. The Forks hopes to use tax-increment financing to pay for new public spaces at the RailSide development, a series of four- to-six-storey buildings planned for the surface parking lot opposite the Canadian Museum for Human Rights.

City council finance chair Scott Gillingham (St. James) also praised the province. The city is about to undergo its own review of tax-increment financing.