The City of Winnipeg has launched a tax-increment financing (TIF) initiative designed to spur private-sector investment in urban development projects. This approach, which has so far seen the city forgo $49.3 million in potential tax revenue since 2022, aims to leverage over $1 billion in capital investments. This article explores the impacts of this bold strategy, its financial implications, and the transformative projects it supports.
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What is Winnipeg’s Tax-Increment Financing (TIF) Program?
Winnipeg’s TIF program allows the city to offer grants of up to 80% of property taxes on new developments for periods ranging from 10 to 25 years. These grants reduce the tax burden on developers, encouraging them to invest in projects that might otherwise be financially challenging. Mayor Scott Gillingham has called the program a success, emphasizing its role in attracting private investment, supporting construction, and spurring growth across the city.
Since the adoption of this policy two years ago, 18 TIF grants have been issued, which total $49.3 million in waived future taxes. These incentives have fueled various developments, creating 1,500 housing units, including nearly 600 affordable units.
Key Projects Funded by TIF Grants
Among the transformative projects benefiting from Winnipeg’s TIF program are affordable housing initiatives and the redevelopment of major commercial spaces. Here are some of the notable projects supported by TIF:
- Portage Place Mall Redevelopment
- TIF Grant: $13.6 million
- Objective: Redevelop a central retail space and incorporate affordable housing, breathing new life into a longstanding Winnipeg landmark.
- Hudson’s Bay Building Transformation
- TIF Grant: $9.7 million
- Objective: Convert this iconic building into a mixed-use facility, adding affordable housing units and revitalizing the downtown area.
- Affordable Housing at 308 Colony Street
- TIF Grant: $5 million
- Objective: Construct 214 housing units, including 108 designated as affordable. This project directly addresses Winnipeg’s growing demand for affordable housing.
Since 2022, TIF grants have been applied to 12 affordable housing developments, the conversion of a downtown parking lot into a mixed-use building, and the development of a new hotel and heritage sites.
Benefits of TIF: A Catalyst for Economic Growth
Mayor Gillingham believes the TIF program is instrumental in securing private investments that support Winnipeg’s economic development. TIF grants have encouraged the construction of essential infrastructure without putting immediate pressure on the city’s operating budget. By providing these incentives, the city has attracted developments that may have otherwise been financially unfeasible.
Greg MacPherson, Winnipeg’s affordable housing concierge, highlighted the program’s importance in enabling deep affordability, particularly for projects led by Indigenous and Black organizations. From an economic development perspective, TIF has allowed Winnipeg to “make a lot of good things happen,” MacPherson stated.
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Financial Concerns: A Balancing Act
Despite its benefits, some officials are concerned about the long-term financial impact of TIF grants. City Councilor John Orlikow expressed caution, arguing that the city may be “maxed out” in terms of available revenue. Orlikow suggested setting a maximum cap on TIF grants, similar to a debt ceiling, to prevent excessive reliance on these incentives.
In response, Mayor Gillingham clarified that TIF grants do not exempt projects from all tax obligations but allow the city to defer part of the property tax collection to encourage development. The mayor emphasized that while TIF helps foster growth, it requires careful oversight to ensure each project justifies the tax break.
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The Road Ahead: A Sustainable Funding Model
To reduce dependence on property taxes as the primary source of revenue, Gillingham is calling for a new funding model from Manitoba’s provincial government. The city’s property tax base is limited, and TIF grants, while beneficial, could strain revenue sources if overused. To mitigate risks, city officials are exploring each project’s viability before granting TIF, with Winnipeg’s senior manager of economic development, Matt Dryburgh, stressing the importance of evaluating “the determination of need” for each project.
Winnipeg’s TIF program exemplifies the city’s commitment to economic revitalization, providing strategic support to large-scale projects that address housing and infrastructure needs. As the city navigates its funding challenges, it must balance the desire for growth with long-term financial sustainability. The success of Winnipeg’s TIF program demonstrates the potential of tax incentives to drive substantial investments, fostering an inclusive, growth-oriented urban environment.
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