The Hamilton Downtown Multi-Residential Property Investment Program (HDMRPIP) application for the redevelopment of 150 Main Street West was submitted by 150 Main West Holdings Inc. (Darko Vranich), the registered owner of the property. The applicant proposes to develop 142 condominium units with commercial space at the first and second levels of the existing seven (7) storey former Revenue Canada building together with a five (5) storey addition. The lower level will be excavated to supply a six (6) storey combined underground and above ground parking garage. The HDMRPIP offers a 0% interest loan for projects that result in predominantly residential development including converting existing commercial space into multiple dwelling units, renovations to existing multiple dwelling units and the creation of new multiple dwellings on vacant land. The maximum loan amount is 25% of the cost to construct budget to a maximum of $5,000,000 per development.
The maximum loan amount advanced under the Program to a single developer or related group is not to exceed $18,000,000 at one time. City Council previously approved loan commitments to Darko Vranich under the HDMRPIP for 68 George Street and 40 Bay Street South that total $13,639,143. Therefore, in accordance with the terms and conditions of the program, a balance of $4,360,857 can be committed at this time. However, Darko Vranich will commence repayment for the loan advanced for 68 George Street in August 2013, therefore staff is recommending a total loan amount of $5,000,000 be approved with the proviso that no more than $18,000,000 is outstanding at one time for Darko Vranich. The property at 150 Main Street West is a condominium project. Therefore, upon the sale of individual condominium units, the City will be repaid upon closing 25% of the sale price of the unit until the total loan amount has been paid in full.
Financial: The cost to fund the HDMRPIP is the interest lost to the City which is funded through the Urban Renewal Section’s operating budget contained in Account Number 52901-815010.
City Council, at its meeting held November 28, 2012, authorized an increase to the maximum loan amount that could be advanced at one time under the HDMRPIP from $20,000,000 to $35,000,000 (PED12220/FCS12090); maximized the loan amount per development to $5,000,000 (with City Council having the sole discretion to increase the maximum loan amount at the time of initially approving a loan); limited the loan amount to a single developer or related group to $18,000,000 at one time (this is the term that affects the loan amount recommended for approval to Darko Vranich for 150 Main Street West); and, limited the amount advanced for the development of all-suite hotels to $18,000,000 at one time. At the same meeting, City Council also approved an additional $200,000 for interest costs of the Program. Estimated interest costs for 150 Main Street West for 2013 is $65,000 based on the construction schedule submitted by the applicant and when the loan would be advanced (first advance at 60% construction completion). As of December 31, 2012, $11,984,827 was outstanding in loans that are in various stages of repayment or redevelopment and $4,746,333 is committed but has not been advanced, to date. Therefore, based on a maximum of $35,00,000 in loans being out at one time, there is the potential of an additional $18,268,840 in future loans being approved by City Council and advanced. Therefore, the approval of Report PED13047 will result in the potential of $13,907,983 in future loans being approved by City Council and advanced. Total development costs are estimated at $48,630,000 and it is projected that the proposed redevelopment will increase the current value assessment (CVA) of the property from its current $1,601,000 to approximately $43,300,000. This will increase total annual property taxes generated by the property. The municipal share of the annual property tax increase (municipal tax increment) will be approximately $510,446.03. As per the terms of the HDMRPIP, the applicant paid an application fee of $270 at the time of application and, an administration cost of $300 per unit will be charged to the applicant at the first advance of the loan (at 60% completion). Therefore, the applicant will pay a total of $42,870 in administration fees. Staffing: Applications and loan payments under the HDMRPIP are processed by the Urban Renewal Section and Taxation Division. There are no additional staffing requirements.
Legal: Section 28 of the Planning Act permits a municipality, in accordance with a Community Improvemnt Plan, to make loans and grants which would otherwise be prohibited under Section 106(2) of the Municipal Act, to registered/assessed owners and tenants of lands and buildings. A Community Improvement Plan can only be adopted and come into effect within a designated Community Improvement Project Area. Changes to a Community Improvement Plan or Community Improvement Project Area require formal amendments, as dictated by the Planning Act.