Moncton expects to exceed a target set by the municipality, which it says makes a tax increase unnecessary to pay for the $ 113-million Avenir Center and plaza.
The goal is related to new urban development after the opening of the arena with 8,800 seats. Specifically, the target is $ 108 million in new appraised value by 2023.
With a year left, the municipality says it expects to reach the goal easily.
“We are on the right track, it’s going well,” Jacques Doucet, the city’s CFO, said in an interview.
Mayor Marc Landry told Moncton City Council members during a council meeting this fall that $ 68.2 million in new valuation value has already been recorded by 2021.
Landry and Doucet said that based on building permits already issued or construction already underway, the city expects to fall between $ 128 million and $ 146 million by 2023, well above target.
“I think hitting that goal – and probably surpassing that goal – is really positive for the city because we see that Avenir Center is actually the catalyst it should be,” Doucet said.
“It’s generating big growth in the city. We can see it with all the cranes in the air.”
The Avenir Center and the adjacent space opened in September 2018. The city used a combination of funding to build it, borrowed $ 39 million and received funding from provincial and federal governments.
The city hoped that new development spurred by the center would help cover the city’s costs so that it could maintain a stable tax rate.
The city’s tax rate has been constant since 2016. Councilors approved a 10 cents tax rate cut for 2022 to partially offset steep valuation increases driven by rising house prices.
The assessed property values at the heart of the target are set by the province each year. When a new building is built in the core, the value that the province assigns to it is added to the city’s goals.
The city’s tax rate is multiplied by the assessed value. New construction generally increases the property value of a property, resulting in higher property tax revenues without raising the tax rate.
The goal has been part of the reason why city officials have focused on attracting new construction in the city center.
The city introduced and expanded incentive programs for developers, to offer subsidies to offset taxes in the first few years of major new developments with the understanding that the long-term benefit will outweigh the early loss of revenue.
In the fall, city council members voted to extend the program to 2022.
“This program was very successful,” Landry, the mayor, told council members during a Nov. 22 meeting.
A staff report to the council noted that there are seven potential developments that could use the program with estimated building permit values totaling $ 97 million.
A number of new developments have emerged in the city center, including two new hotels within a block of the Avenir Center.
One of the largest is a trio of 15-story mixed-use towers off Record Street that broke ground during the summer.
Closer to the Avenir Center, several new apartment buildings are under construction just a few blocks apart. Several used the incentive program.
Get affordable devices built
While the city has welcomed the cranes in the sky, staff have also noted that much of the new housing construction is aimed at people with higher income levels.
“We have a housing crisis in the city,” said Bill Budd, the city’s director of planning and development, during a council meeting on November 15.
The staff report on the incentive program noted that 709 new downtown housing units had been built over the past five years, but only about 21 are considered “affordable” units. The report does not say what criteria are used to determine affordability.
Doucet said staff expect to provide an update to the city council on the funding of the Avenir Center early in the new year.