Taxpayers gave developers $70M in last decade through brownfields policy

At Tuesday's finance committee, councillorsunanimouslyapproved a whopping $8.2 million brownfieldsgrant to helpTrinity Development clean up, and ultimately develop a massive project,at 900 Albert St.

• Developer granted $9M in incentives to build at 900 Albert

Trinity joins other local large developers in receiving millions from the cityto remediate contaminated lands, including Cadillac Fairviewthat received money to expand the Rideau Centre, and the Regional Group that received the largest-everbrownfieldsgrant more than $15 million to clean up and develop a 900-home community on the former Oblate Fathers' lands in Old Ottawa East.

In fact, since the brownfieldspolicy came into effect in 2007, councillors have approved more than $70 million worth of grants for about 35 projects, usually with little or no discussion.

And yet, it's not clear whether the grants are, in the words of urban studies professor Chris DeSousa, "subsidizing something that would have happened anyway without the subsidy."

City has awarded $70M in brownfieldsgrants since 2007

Ottawa is far from alone in offering developers incentives to build on contaminated lands, known as brownfields. The policy has been tweaked in 2010 and 2015, and today generally amounts to paying a developer for half the clean-up costs.

The city doesn't cutthese companies big cheques.Instead, the money is doled out over a 10-year period in the form of property tax rebates.

In theory, the grants are supposed to spur projects that wouldn't have otherwise gone ahead, so giving up a fraction of future property taxes isn't abig dealbecause the city wouldn't have been receiving those taxes anyway, right?

Perhaps.

Consider these projects:

• $15.8 million for the 900-home developmentin Old Ottawa East.
• $3.2 million for the expansion of theRideauCentre.
• $1.7 million for theWalmartOttawa Baseline Supercentre.
• $4.5 million for the big box development on West Hunt Club that included Lowes, LazyBoy and Starbucks.
• $4.5 million for Shoppers City East, home to a future Costco.

Do these projects really hinge on city money?

An inherentproblemwith economic development incentives is it's almost impossibleto prove the money is going to projects that would otherwise not have gone ahead.

It's hard to imagine, for example, that Cadillac Fairview would have cancelled its Rideau Centre expansion without the city's $3.2 million brownfieldsrebate, or that Walmart would have backed out of its Baseline location if it wasn't for that $1.7-million incentive.

That's not to say thegrant isn't part of adeveloper's overall plan. A decade after its inception, the brownfields policy is so well-established it's become baked intothe purchase price.

"When we did our due diligence it was on the assumption we'd be participating in the city's brownfieldsprogram," Ryan Moore, Trinity's VP of development, said of the 900 Albert proposal. "Soour financials had contemplated that."

Asked directly if Trinity would have gone ahead with its massive projectthat proposes retail shops,offices and more than 1,600condos in three 55-storey towers, without the $8 million in brownfieldsmoney, he simply answered: "It's hard to say."

Incentives other than money

At Tuesday's finance committee meeting, Moore and city staff both spoke about how the project is a wonderful"opportunity" for city building. That's because 900 Albert is right near the future Bayviewlight rail transit stations, the only place where the Confederation and Trillium lines will intersect.

The city wants intensification around thestations of the new $2-billion LRT system. To that end, the city has increased densities and heights in the areas surrounding mostof the new stops.

But isn'tthe light-rail system its own development incentive? After all, other cities' experience showsthat property near rapid transit increases in value because people want to live near it.

Some municipalities encourage brownfields redevelopment by changing the zoning and density of land,according to DeSousa, a professor and the director ofRyersonUniversity's school of urban and regional planning.

For example, in most major Canadian cities, rezoning industrial land to residential will increase the property's money-making potential.

In Ottawa, brownfieldsdevelopment often receive rezonings, as well as money.

Benefit to owners of contaminated land

Like other proponents of brownfields policies, De Sousa was at pains to point out that remediating contamination was a public good, and in many cases, a responsible use of taxpayer money. Mayor Jim Watson said that, as the city was sometimes responsible for adding to the contamination, the policy amounted to "paying for past sins."

But wouldn't it be fairer if property owners themselves paid for the past sins?

The brownfieldsprogram essentially subsidizes owners sometimes the very ones who are responsible for the contamination, or who perhaps bought the land in the past at a discount.

Consider that city taxpayers may be on the hook for $60 millioninbrownfieldsgrants for the Zibi development, even though it was Domtar that was responsible for the bulk of the contamination.

'Crunch the numbers'

That's why cities must examine whether their brownfields grants continue to benecessary, said De Sousa.

"Cities have to ask themselves, 'What would happen without the subsidy?'" he said. "They have to crunch the numbers to see if the subsidy is being abused or is still needed."

He pointed out that in Ontario, where urban boundaries are being kept in check, developers may becomemore willing to to take on brownfieldsprojects due to the increasing scarcity of land.

Potential massive brownfields payments coming

LeBreton Flats is a prime example.

There is no question those lands are contaminated and remediating them would be beneficial. But it's also a rare chunk of downtown land in the national capital. Is it a burden to be allowed to develop those 21 hectares, or a commercial privilege?

And should the price of clean-up be built into the purchase price the National Capital Commission is offering, or borne by the taxpayers of Ottawa?

It's a discussion we should have rather soon, as the question of how many tens of millions of dollars the city should be spending to clean up LeBreton will be coming to City Hall next month.

Mayor Jim Watson Brownfield policy

7 years ago

Duration 1:12

Mayor Watson discusses the Brownfield project