Seasons of Tuxedo developing quickly, generating more tax revenue — but city has to give money back
Construction ahead of schedule, but $22M subsidy deal for area around Ikea means tax revenue to be given back
Construction around Winnipeg's Ikea store is ahead of schedule, which means the city is raking in more property tax revenue than it expected at this point, according to a new report.
But there's a catch: Winnipeg has to give the money back.
Under a deal put together in 2009, the development formally known as the Seasons of Tuxedo is subsidized by $22 million worth of city and provincial property tax rebates. The rebates are intended to pay back the developer for making $26.5 million of infrastructure improvements in the area, including the widening of Kenaston Boulevard at the intersection with McGillivray Boulevard.
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The province has already paid back its $8-million portion of the subsidy. But the city is still paying back its $14-million contribution to the development, which includes an Ikea store, a new outlet mall and several other businesses.
In 2016, the development generated $450,000 more in municipal property taxes than the city expected, Winnipeg finance manager Mike McGinn writes in a report to city council's public works committee.
"The development of the Seasons of Tuxedo is proceeding more quickly than originally envisioned, the result being actual incremental municipal taxes are being realized earlier than anticipated," McGinn writes in his report.
"This means that incremental municipal taxes will accrue to general revenues sooner rather than later and the city will incur lower interest expenditures than originally estimated."
In his report, McGinn asks council to approve the repayment of up to $465,000 in additional taxes this year. Public works committee will consider the request on Tuesday.
Including this payment, the city still owes the developers $6.5 million, spokesperson Alissa Clark said in a statement.