City entices investors with tax credits

A new round of tax credits is now available to residential developers and investors in downtown Winnipeg, but one expert says that investors should not be forming their strategies around these types of incentives.

“It’s good to be given something, to be encouraged to develop and rehabilitate downtown. But it’s not a tax grant that’s going to drive your investment strategy; that’s just a little bonus or banking at the end,” said Stefan Aarnio, a Winnipeg-based real estate investor.

“That cash rebate isn’t the most enticing, but at the same time, if you’re going to do something, why not grab it anyway?”

The new incentive program will permit developers of pre-approved projects a rebate of any property-tax increase resulting from the improvement of their land or buildings.

It was designed to stimulate 750 to 900 rental-apartment units. Under this benefit is a de-facto property tax freeze of 12 years minimum for constructing rental properties in particular downtown locations.

Eligible projects must include a minimum of five rental units and devote 80 per cent of the space to residential housing.

The new program follows a fully-subscribed, $40-million grant program that helped build approximately 1,300 units in downtown Winnipeg – most of which were condos.

Aarnio suggested the city should go one step further and provide incentives specifically for micro units, 300-square-foot condos priced at $99,000.

“[The city council] wants people moving and living downtown, but it’s cost-prohibitive to build," he said. "If I wanted people to move downtown, I would put a mandate in for micro units and move young people in.

“Young people, who are making $30,000 or $40,000 can easily afford that. These are the people who are going to change downtown.”

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