At its next meeting on August 8th, Tantramar Town Council will be asked to approve a 50% reduction in property taxes on the six storey, 71-unit apartment building that JN Lafford Realty is planning to build at 131 Main Street.
Council approved zoning changes to make the building possible at a special meeting on July 19th. John Lafford had applied for a tax rebate under Sackville’s Economic Development Incentive Program on July 13th.
Town staff calculate that the tax rebate would be worth $1,185,920.10 over 10 years based on the estimated $16.5 million cost of the new building.
Over the same 10-year period, the town would receive an equal amount ($1,185,920.10) in property tax revenues.
Kieran Miller, the town’s manager of corporate services, told council the incentive program, adopted by Sackville Town Council in March 2020, is meant to encourage developers to build locally.
“These types of incentives are intended to act as a catalyst for increased development activities in the community, which will in turn help attract further businesses, residents and employment,” she said.
Incentive program working
“I love this,” said Michael Tower the only councillor to speak about the proposed tax rebate.
“It shows that the incentive program is working like it’s supposed to,” he added.
“We want development and this is definitely an encouragement to have a really beautiful building built.”
Tower acknowledged the 10-year delay in taxing the property at its full assessed value, but said the town would receive revenue from various permits as well as water and sewage payments.
“It helps us with residential and increases our overall development and may encourage others to come in,” he said.
How are incentives justified?
Later during the public question period, Mayor Black was asked how the nearly $1.2 million tax subsidy could be justified given that the developer has been given approval to build on a prime location overlooking the Sackville Waterfowl Park at a time when rental vacancy rates are low and there are long waiting lists for apartments.
“How can you justify that kind of expenditure that may be totally unnecessary as an incentive when that money could go to non-profit housing or some other kind of scheme to help out with your rental problems in this town,” I asked.
“The incentive program is there and he (John Lafford) has applied for it,” Black replied.
When pressed further on how he would justify such a large expenditure, Black answered that council hasn’t approved it yet.
“So we haven’t justified it yet,” he said.
“That decision will come when it comes to a motion in council. Maybe there’ll be discussion then. Maybe people will have their own thoughts about whether they want to pass it or not.”
When Sackville Town Council was considering the incentive program on March 2, 2020, then-Councillor Bill Evans expressed his misgivings about it.
“The risk that we are exposing ourselves to is that a developer who would normally build a multi-million dollar project, [who] would do it anyway, is now going to pay less tax,” he said, adding, “What we’re hoping is that we’re going to get a developer [to] do something he or she wouldn’t otherwise do.”
Evans, who eventually voted in favour of the program, also noted that although the tax rebates would need council approval, he wondered if it would be legally possible to say no if a developer qualified for them under the new program.
According to research conducted by Sackville residents Sharon Hicks and Percy Best, it appears that the Sackville economic incentive program is more generous than similar ones in nearby municipalities.
In Shediac, for example, the tax incentive is 1.5% of the full value of the property assessment, which would mean a residential property assessed at $16.5 million would receive a one-time tax rebate of $247,500.
Hicks and Best sent their findings in an open letter to Tantramar councillors on July 22nd basing their calculations on a building valued at $14 million.
To read their main findings, click here.
To read Kieran Miller’s report to council, which includes the Lafford application for the incentive program, click here.