TAMRMS#: B06
6.2
REQUEST FOR DECISION
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Lakeview Business District Development Acceleration Program
Presented by: Mike Erickson, Director, Economic Development
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RECOMMENDED MOTION(S)
recommendation
1. That the Standing Committee of the Whole move in camera to discuss a matter related to the Lakeview Business District Development Acceleration Program in accordance with sections 24(1)(a), 24(1)(g), and 25(1)(c) of the Freedom of Information and Protection of Privacy Act.
2. That the Standing Committee of the Whole recommend that Council approve the Lakeview Business District Development Acceleration Program funded through a $1.27 million annual transfer of assessment growth to begin in 2025; and commit this annual transfer in the Growth Stabilization Reserve until a balance of $8 million is reached.
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PURPOSE OF REPORT
To provide a framework for the establishment of a financial rebate program to catalyze and accelerate inceptual private development of serviced industrial and commercial property in Lakeview Business District.
BACKGROUND AND DISCUSSION
Employment Lands & Lakeview Business District Planning & Investment Background
The City has been planning for and investing in the Employment Lands and Lakeview Business District for approximately 15 years. In that time, the City has invested more than $75 million in capital projects that enable growth in West St. Albert, including Lakeview Business District
In 2011, the City conducted a Future Industrial Land Study and in 2015 added an Industrial Market Expansion Area Assessment. Both reports concluded a need to increase the supply of serviced industrial land available in St. Albert and highlighted the benefits of increasing the industrial tax base, both from a financial and local employment perspective. These studies also noted that the degree to which St. Albert can capitalize on additional industrial lands will depend significantly on the development competitiveness of the lands.
In 2015, the City contracted Urbanics Consultants Ltd. to develop an Employment Lands Concept Plan. The plan established 3 concept plans, with different uses:
1. Light Industrial and Office Park,
2. Business Commercial with Entertainment Uses,
3. Knowledge-Based Industries and Research Park.
Each concept presented different opportunities and challenges, as summarized in the chart below.
|
|
Light Industrial and Office Park |
Business Commercial with Entertainment Uses |
Knowledge-Based Industries and Research Park |
|
Expected Economic Impact |
Low |
Medium |
High |
|
Efficacy in Balancing Tax Base |
Medium |
Low |
High |
|
Financial Risk to City |
Low |
Medium |
High |
|
Investor/Buyer Availability |
High (lowest risk) |
Medium |
Low (Highest risk) |
|
Time to Full Absorption |
High (Shortest time to build-out/absorb) |
Medium |
Low (Longest time to build-out/absorb) |
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Employment Density |
Medium |
Low |
High |
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Quality of Jobs |
Medium |
Medium |
High |
|
Quality of Built Environment |
Low |
Medium |
High |
The Light Industrial and Office Park concept was identified as requiring the shortest expected time to develop fully and the lowest development risk. However, it was noted as having medium economic benefits and the lowest quality of built form. In contrast, the Knowledge-Based Industries and Research Park concept was projected to take the longest time to develop fully and have the highest development risk. It was also expected to have the highest economic benefit and the highest quality of built form. The Business Commercial with Entertainment Uses concept was typically scored between the other two concepts, however it was identified as having the lowest employment benefits and lowest ability to help improve the tax split.
In 2016, Council approved development principles for the Employment Lands. Council also approved $40 million for Phase 3 North Interceptor Trunk Line Project (Project 9). The total project cost came in lower than expected at $27.8 million.
In 2019, Council approved a $20 million investment in the North Interceptor Trunk Phase 2B (Project 8), enabling a sewer trunk to be constructed under Ray Gibbon Drive, with the goal of accelerating plans for development in west St. Albert, including the Future Community Amenities site, and enabling long-term jobs in Lakeview Business District. To date, the cost for this off-site Levy funded project is $15.6 million.
In 2019, the City also initiated a cost-sharing agreement with the Government of Alberta to twin Ray Gibbon Drive. Phases 1 and 2 are complete with a total investment of just over $35 million.
On September 3, 2024, Council approved St. Albert West Area Structure Plan, which includes the lands designated as Lakeview Business District.
On October 18, 2024, Council approved the Lakeview Business District Servicing capital charter and new Land Use Bylaw. On January 24, 2025, Council approved the Lakeview Business District Servicing Borrowing Bylaw. Currently, the engineering design for the servicing is in progress.
St. Albert - Current Use of Financial Incentive Programs
The City currently has several programs that offer a financial incentive intended to support a desired outcome. Most of these programs are intended for non-profit organizations, while one is available to businesses. Some notable examples include:
• Beautification Program: $12,500 is allocated annually from the City’s budget, to encourage local businesses to improve the exterior aesthetic of their commercial premises. Eligible businesses can receive up to $2,500 in reimbursement.
• Community Capital Program: $250,000 allocated annually from the City’s budget to incent not-for-profit community groups to undertake capital project that provide broad and inclusive recreational, cultural, or social services within St. Albert.
Use of Financial Incentive Programs within the Region and across Alberta
In recent years, use of financial and non-financial municipal incentives aimed at attracting businesses, development, and investment has become commonplace in Alberta and the Greater Edmonton Region.
In June of 2019, the Municipal Government (Property Tax Incentives) Amendment Act was introduced, amending the Municipal Government Act and allowing Alberta municipalities the ability to offer tax incentives for non-residential properties to help attract investment and provide longer-term certainty for businesses. In 2024, Bill 20, the Municipal Affairs Statutes Amendment Act, was passed, expanding municipalities’ powers to create tax incentives for residential properties.
While many Alberta municipalities have since introduced new property tax incentives, many make use of non-property tax incentives as well. In recent years, Edmonton Global and the Collaborative Economic Development (CED) project have produced reports and studies that reviewed and shared information and recommendations on local municipal incentives.
A jurisdictional scan, conducted by Administration, identified at least 25 Alberta municipalities that offer some form of business or development attraction incentive, with 8 of those municipalities providing a non-tax incentive. A small sample of municipal incentive examples is attached to this report as Attachment 1.
Investment Attraction Strategy
In April of 2023, Council received the St. Albert’s Investment Attraction Strategy for information. This document outlined a concentrated effort to increasing the supply of serviced industrial land within Lakeview Business District and then positioning and promoting it as one of the top industrial development opportunities in the region. The Investment Attraction Strategy also detailed the use of incentives as a key tactic in attracting development in Lakeview.
Development Acceleration Program - Rationale
The Lakeview Business District Development Acceleration Program (DAP) was designed with the intent of supporting St. Albert’s Municipal Development Plan goal of shifting the overall tax revenue split to 30% non-residential and 70% residential.
Administration’s overarching objectives and rational for developing the program framework include:
1. Providing Net-positive, Long-term Financial Benefit to the City
The financial analysis conducted by Administration demonstrates that accelerated development and construction in Lakeview provides greater financial benefit through increased non-residential tax assessment growth sooner. It also provides the benefit of earlier recovery of off-site infrastructure investments and the potential for more businesses and new job creation in Lakeview sooner.
2. Reducing the City’s Financial risk
The risk of stalled or delayed development in Lakeview could have financial impacts on the City, potentially prolonging the City’s ability to realize increased assessments and collection of off-site levies within this key non-residential district. The DAP, as a tool to stimulate and accelerate inceptual development, will help reduce the City’s financial exposure, helping to increase the probability of early-stage development.
3. Catalyzing Inceptual Development through Increased Competitiveness
Inceptual stage development, especially for large industrial or commercial lands, presents greater risk for developers and requires substantially more upfront capital and a longer-term investment horizon. A financial rebate program targeted at inceptual, initial-stage development, will help increase Lakeview’s development and investment competitiveness by offsetting some of the additional financial risk.
Additional benefits for the DAP include:
• Supporting several Business Attraction and Retention and Employment growth policies within the Municipal Development Plan.
• A recognition that St. Albert has an urgent shortage of immediate developable industrial land.
• Executing and delivering on longstanding plans to create business and employment opportunities in Lakeview Business District.
Development Acceleration Program - Framework
The program framework is attached to this report as Attachment 2, however key components of the DAP include:
• Area Specific: Program is confined to Lakeview Business District.
• Targeted: Program is aimed at inceptual/early-stage non-residential development
• Rebate Structure: Financial rebates are issued only once improved assessment has been realized:
1) Land Development Stream - Once land serviced and plan of subdivision is endorsed; or
2) Building Construction Stream - Once a building has been constructed and is ready for occupancy (subject to inspections).
• Time Specific: Program is only available for Lakeview’s inceptual first 10 years.
• Program Fund Cap: Program is capped at $8 million. The program ends if funds are fully disbursed.
• Program Thresholds: Program requires a minimum of 30 acres developed to be eligible for rebate. Program applicants are permitted to receive a rebate for a maximum of 120 acres developed.
Current Situation
With approval of the St. Albert West Area Structure Plan, the Lakeview Business District Servicing Capital Charter, and the Borrowing Bylaw, Lakeview is ready for private development. Efforts to promote industrial development and attract new employers will begin to ramp up in the coming months, as the marketing plan is implemented.
Introduction of the DAP at this time will provide a valuable tool in promoting Lakeview and improving development competitiveness.
STAKEHOLDER COMMUNICATIONS OR ENGAGEMENT
Business Leaders Forum
In 2023, Administration and members of Council engaged with local business leaders through the Business Leaders Forum to discuss business and development incentives.
The full What We Heard report is available publicly on the City’s website. As a summary of business leaders’ feedback:
• Outcomes that should be incentivized by the City include attracting developers and mid-to-large sized employers, growing different areas of the City, diversifying our economy, and creating high value local jobs.
• The City should balance competitiveness and over-incentivization through being strategic, focusing on a specific area, considering investment from outside our region, and ensure that new businesses stay and grow in St. Albert.
• Incentives should be purposeful and targeted and not broad and available to all businesses and industries. Communicating this clearly to the businesses and the public is important.
IMPACTS OF RECOMMENDATION(S)
Financial:
Robust residential growth in 2024 has presented a strategic opportunity to leverage unbudgeted assessment growth as a sustainable source to fund the DAP program without increasing future taxes. The total unbudgeted amount is recommended to ensure the funds are sufficient to support the program.
In order to utilize the assessment growth as a funding source, Council direction is required prior to the finalization of the budget adjustments at the April 15th council meeting.
Council Policy C-FS-05 Budget and Taxation Guiding Principles states, unbudgeted assessment growth will be transferred to the Growth Stabilization Reserve in accordance with section 14(b) iii:
The City shall apply new assessment growth through a balanced approach of 55% growth revenue to fund new initiatives, 20% as a contribution to lifecycle reserves, and 25% to offset the base budget property tax requisition.
The rationale for deviating from policy is to accelerate the shift of assessment dollars to the non-residential tax base. Therefore, to support this program, 100% of the unbudgeted assessment growth is recommended to be transferred to the Growth Stabilization reserve.
In administration’s view, the residential growth in 2024 has presented a unique and unprecedented opportunity to stimulate further expansion of the non-residential inventory.
In summary, recommending the reserve allocation ensures a sustainable funding source for the program in the years to come, while not recommending it would result in a direct reduction in the tax base.
As proposed within the Lakeview Development Acceleration Program framework, the maximum amount of funds that could be rebated is capped at $8 million.
Administration used forecasting to estimate the benefits of the DAP and to refine an optimal structure. The following scenarios illustrate the potential financial impact.
• Baseline - In this scenario of the average yearly rate of development is the baseline or 15 acres/year. DAP is not in place, therefore there is no impact from DAP.
• Delayed - In this scenario, development is delayed by 1 year, and the development occurs at the baseline average yearly rate of 15 acres/year. DAP is not in place, therefore there is no impact from DAP.
• Low Impact of DAP - In this scenario, DAP has no impact on the average yearly rate of development. Average yearly rate of development remains consistent with the baseline rate of 15 acres/year and DAP rebates are issued according to the framework.
• Medium Impact of DAP - In this scenario, DAP increase the average yearly rate of development to 20 acres/year for the first 10 years. In years 11 through 30, the average yearly rate of development returns to the baseline rate of 15 acres/year.
• High Impact of DAP - - In this scenario, DAP increase the average yearly rate of development to 25 acres/year for the first 10 years. In years 11 through 30, the average yearly rate of development returns to the baseline rate of 15 acres/year.
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Scenario |
Baseline |
Delayed |
Low Impact of DAP |
Medium Impact of DAP |
High Impact of DAP |
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Average Yearly Rate of Development |
15 Ac./Year |
1 year delay followed by 15 Ac./Year |
15 Ac./Year |
< 10 years 20 Ac./Year > 10 years 15 Ac./Year |
< 10 years 25 Ac./Year > 10 years 15 Ac./Year |
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DAP Rebate Paid |
N/A |
$0 |
$5 million |
$6.5 million |
$8 million |
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Cumulative Tax (after 30 Years) |
$352 million |
$316 million |
$347 million |
$383 million |
$421 million |
|
Change from Baseline |
N/A |
-$36 million |
-$5 million |
+$31 million |
+$61 million |
|
Build-out Complete |
26 years |
28 years |
26 years |
23 years |
21 years |
Compliance & Legal:
As the DAP is not a property tax-based incentive, it would not be regulated by the Municipal Government Act, and does not require bylaw approval in order to proceed.
Additionally, the program would be generally available to any applicant that meets the program criteria, complying with the New West Partnership Trade Agreement.
Program or Service:
If the DAP is successful in accelerating development in Lakeview, it may result in increased interest from developers and businesses, which will result in increased development-related applications.
The DAP may also result in increased interest in the City’s land holdings within Lakeview, which could necessitate work on the divestment, subdivision, or servicing of these lands sooner than expected.
Organizational:
If the DAP results in an increased volume of development-related applications, it is expected to increase workload for the Planning & Development and Engineering departments. Depending on the volume, this may require reallocation of existing staff resources or additional staff resources.
In the 2024 budget, Council approved funding for a 3-year term position in Economic Development specific to promoting Lakeview and attracting development and investment. Currently, it is expected that this position will be sufficient to deliver on the increased promotion and investment attraction related to Lakeview.
Risks
• Strategic: The DAP is intended to help reduce the risk of not realizing Council’s strategic priority of Economic Prosperity and advancing the development of Lakeview. If DAP is unsuccessful, other initiatives to increase the competitiveness of Lakeview should be considered.
• Financial: The project uplift, as forecast by administration, may be influenced by unexpected national or global economic conditions. While future growth expectations are supported by historical St. Albert data, short-term fluctuations-such as slower economic growth due to tariffs or a potential recession have less impact on a broad 30-year outlook. However, these factors will have a more pronounced effect in the short- to medium-term performance of the accelerator program. Financial impacts of the DAP are wide ranging, depending on the pace of development. DAP anticipated to spur increased development, which would result in recovery of levy payments and investment in servicing infrastructure sooner.
• People: The City should prepare to address staffing levels for a scenario in which DAP is successful, as it is expected to increase the volume of work for areas affected by new development.
• Stakeholders:
o Regional municipalities - Regional municipalities may view DAP unfavourably, as it may pose a threat to their own investment competitiveness. If DAP is successful, there is a risk that other jurisdiction may attempt to duplicate aspects of the program, thus reducing the competitive advantage it provides to St. Albert.
o Local businesses - While feedback on incentives from the 2023 Business Leaders Forum was generally supportive of strategic and purposeful business and development incentives, some local businesses may not be supportive, as the DAP may be perceived as providing an advantage to a potential competitor business.
• Reputational: Some residents may disapprove of the use of incentives to attract new non-residential development. Some common challenges and criticisms of incentives include:
o They provide special treatment and public funds to large, highly profitable companies.
o They undercut other jurisdictions to the point where it negatively affects both or many jurisdictions.
o They provide unequal public and community benefit.
o Their benefits and impact are poorly measured
o They do not create new investments or new jobs, they just move them from one jurisdiction to another.
ALIGNMENT TO PRIORITIES IN COUNCIL’S STRATEGIC PLAN
Economic Prosperity
Support an investment positive environment that encourages economic growth and the development of new and existing sectors.
• This strategy includes advancing the development of Lakeview Business District and completing the plans for the recently annexed lands.
ALIGNMENT TO LEVELS OF SERVICE DELIVERY
• B.4.2 - Investment Attraction
Activities that attract new industrial and commercial business to St. Albert.
o B.4.2.d - Investment and Development Readiness
Reducing barriers to investment or development in St. Albert by identifying future business needs and taking actions to address any current gaps such as infrastructure, servicing capacity, land availability, etc.
• G.10.3 - Economic Strategy, Planning and Policies
The curation of economic data and consultation with the private sector to help inform the development of strategies, plans, and policies related to growing and strengthening St. Albert's local economy.
o G.10.3.b - Economic Competitiveness
Identifying, monitoring, and promoting St. Albert's competitive economic advantages and benchmarking against key comparators.
ALIGNMENT TO COUNCIL DIRECTION OR MANDATORY STATUTORY PROVISION
Municipal Development Plan
6.1. Business Attraction and Retention
• Policy 6.1.1. - Develop and maintain an economic development strategy that reports on employment growth in the city, targets economic sectors, and identifies initiatives intended to attract, support, and retain businesses.
• Policy 6.1.4 - Support the co-location of synergistic industrial businesses and related services.
• Policy 6.1.10 - Develop efficient, streamlined and straightforward regulations and processes that continuously improve St. Albert’s attractiveness to businesses.
6.2. Employment Growth
• Policy 6.2.1. - Facilitate the availability of easily serviceable and developable, or re-developable, land for employment purposes.
• Policy 6.2.3. - Support initiative and incentives that retain and attract new businesses to the Downtown and major employers to priority areas, as identified on Map 4.
• Policy 6.2.4 - Ensure Employment Areas contain parcels of widely varying sizes to accommodate a diversity of businesses.
• Policy 6.2.5. - Explore and consider opportunities for the advancement of servicing infrastructure that facilitates new development in priority areas.
• Policy 6.2.6. - Explore incentives to attract businesses that generate significant job creation.
IMPACTS OF ALTERNATIVES CONSIDERED
If Council does not wish to support the recommendation, the following alternatives could be considered:
Alternative 1: That the Standing Committee of the Whole recommend that Council approve the Lakeview Business District Development Acceleration Program funded through:
• $2,000,000 from stabilization reserve and;
• $698,500 annual transfer of assessment growth to begin in 2025; commit this annual transfer in the Growth Stabilization Reserve until a total balance of $8 million is reached.
Financial
This alternative would provide funding through the reserve and assessment growth. If the “high” impact scenario is achieved, additional short-term funding would be required.
Compliance & Legal
Similar to recommended motion.
Program or Service
Similar to recommended motion.
Organizational
Similar to recommended motion.
Risks
Similar to recommended motion.
Alternative 2: Do not provide any business or development incentives specific to Lakeview Business District.
This Alternative would maintain status quo and would not offer any financial inducements to developers or business considering development and investment in Lakeview.
Financial
If private non-residential development were to occur in Lakeview without delay, at the “baseline” rate, then this alternative would eliminate providing rebates of up to $8 million for private non-residential development, and those funds could be allocated elsewhere.
Conversely, if the pace of private non-residential development in Lakeview is delayed or slower than the “baseline” rate, then the foregone new tax assessment could be far greater than $8 million.
Compliance & Legal
None.
Program or Service
If private non-residential development were to occur in Lakeview without delay, at the “baseline” rate, then none.
if the pace of private non-residential development in Lakeview is delayed or slower than the “baseline” rate, the City may want to consider alternatives tactics and tools, such as increased promotion, reduced non-residential tax rates, or other means to induce non-residential development in Lakeview.
Organizational
If private non-residential development were to occur in Lakeview without delay, at the “baseline” rate, then additional staffing resources to support increased permitting may be required.
If the pace of private non-residential development in Lakeview is delayed or slower than the “baseline” rate, then none.
Risks
• Strategic: This alternative presents an elevated risk of not realizing Council’s strategic priority of Economic Prosperity and advancing the development of Lakeview. Stalled or delayed development in Lakeview may result in a market perception that Lakeview is less attractive for development.
• Financial: The City has invested heavily to enable growth and development in West St. Albert. Many staff hours have been invested in advancing municipal plans and construction projects to support these capital investments. Not making efforts to increase the likelihood and pace of development in Lakeview risks reducing the return on previous investment and increasing the payback period.
• Assets and Asset Management: The useful life of municipal infrastructure, built to enable growth in West St. Albert, decreases over time. Stalled or delayed development in Lakeview may result in the underutilization of these infrastructure assets during their lifespan.
• People: Many of the Administrative staff involved in developing the MDP, West ASP, Lakeview Servicing Plan, and the City’s Investment Attraction Strategy are still with the organization today. Presently, the corporate knowledge surrounding the advancement of Lakeview is quite strong. The City may not have this benefit, if alternative inducements are reconsidered in future years.
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Report Date: April 8, 2025
Author(s): Mike Erickson
Department: Economic Development
Department Director: Mike Erickson
Managing Director: Adryan Slaght, Planning & Infrastructure
Chief Administrative Officer: Bill Fletcher