The city of Hamilton is offering its Hamilton Tax Increment Grant Program in a bid to draw developers and, indeed, investors to the city and further spur its hot housing market.
“It is a new initiative and it’s a reflection of the city of Hamilton’s willingness to support development,” Paven Bratch, a local developer, told Canadian Real Estate Wealth. “For investors, the fact that you’ve got great homes in a building and you can work with the city of Hamilton’s incentive program for tax abatement or interest-free loans, makes it easier to deliver a product with lower total cost of ownership.”
Many developers are using the program to redevelop heritage buildings and convert them into boutique condos. The incentive makes it easier for them to take on the project and pass on savings to investors.
“The program we’re involved in deals with historic building restoration in certain areas and it provides the building owner with a rebate on the net-increase in value of the property from start to finish paid over five-years,” Paven said. “Basically, 100% of the increase in value’s impact on your tax bill will be rebated … over the five years.”
According to InvestinHamilton.com, the purpose of the incentive program is to “provide an economic catalyst for developing, redeveloping or renovating residential / commercial lands and buildings located within Downtown Hamilton, Community Downtowns, the Mount Hope / Airport Gateway, Business Improvement Areas (BIAs), and those properties within the City boundary designated under the Ontario Heritage Act.”
For Paven’t part, he has decided to target the area because of the rebates the program provides.
“For us, the projected decline in vacancy rates in Hamilton coupled with this tax incentive that will be passed onto condo purchasers in the next five years and the fact that we’re creating these historic units within an existing shell ensures we can deliver a strong ROI story,” he said.
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This new government development incentive in a sought-after market will likely draw investors who hope to earn higher profits as a result.