Centre Wellington council will consider providing approximately $3.8 million in grants to Elora South Inc., part of Pearle Hospitality, over a period of around 15 years.
The money, which the company has applied for through a township incentive program, would be used to offset tax increases as a result of major development at its site on the south side of the Grand River and cover some eligible construction costs.
Council will vote on the matter at Monday’s meeting.
According to a report on Monday’s council agenda, Elora South Inc. has applied for a Tax Increment Equivalent Grant (TIEG). The township program reimburses eligible property owners for a portion of their tax increase as a result of “substantial” development.
In the case of the Elora South Inc., its proposed six-building development will see the site’s assessed property value increase from $2 million to approximately $130 million at full build out.
“The purpose of the program is to defer a property tax increase for a period of time in order to help finance ‘substantial’ property improvements that would otherwise be considered cost prohibitive by a property owner,” township staff said in the report.
Grant applications must include estimates of eligible costs, such as site preparation and construction. Grant payments cannot exceed eligible costs.
Township policy allows for property owners to receive TIEG payments equal to 80 per cent of the increase in taxation over a 10 year period. A separate TIEG agreement would also be required at the county level. Wellington County’s TIEG program pays out the grant on a five year sliding scale, covering 100 per cent of the increase in year one and 20 per cent in year five.
The proposed agreement with Elora South Inc. stipulates development at its site will occur in phases over a maximum of 15 years.
Based on high level calculations, the township estimates the company would receive approximately $3.8 million in TIEG payments from the township and $930,000 in TIEG payments from the county over approximately 15 years.
At full build out, the increase in the property's assessed value is estimated to generate an additional over $475,000 for the township and over $900,000 for the county in annual taxation revenue, based on 2021 tax rates.
“While a portion of this tax increment would be provided back to Elora South Inc. over a 10 year period (for each phase) in the form of a TIEG, the township and the county would benefit significantly in the long term from this additional assessment and taxation,” the report said.
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