Ellis One

The company behind the Ellis One mixed-use development is seeking some leeway to qualify for the economic incentive zone program.

A high-profile Penticton construction firm is seeking an extension of a controversial tax incentive that would save future residents of one of its project about $500,000 over the next decade.

Council at its meeting Tuesday will decide whether to grant Wildstone Engineering and Construction a three-month grace period to finish the 48-unit mixed-use development at 120 Ellis St. so it qualifies for the economic incentive zone program.

Designed to spur development in the downtown core, the final intake of the program waives taxes on improvements for eligible projects that are complete by Dec. 31, 2019.

Ellis One was supposed to meet that deadline, but Wildstone now says it will have difficulty hitting the mark due to unforeseen circumstances, and is asking for an extension to March 31, 2020.

“We have been trying diligently to reach the Dec. 31, 2019 deadline; however, we are worried that this will not be achievable without causing excessive stress on our workers and our consultants,” CEO Jim Morrison writes in a letter to council.

Cold weather in early 2019 delayed concrete and civil works, he explains, while the company chose to use local architects and consultants who have been “unable to provide timely services.”

“Having a few months grace would allow us to finish in a more orderly fashion and avoid costly mistakes,” Morrison says.

He goes on to note the project employs 20 Wildstone workers, and sometimes as many sub-trades, and has also relied on 14 local businesses.

“A lot of people moving into our units will be young people and young families who will certainly make the best of the tax savings offered by the EIZ,” adds Morrison.

“In fact, we know of a few pending sales, where there decision to purchase was influenced by the tax.”

In his report to council, planning manager Blake Laven recommends going beyond Wildstone’s request and extending the EIZ program deadline for completion to June 30, 2019.

“The realities of planning, design and developing projects like the one subject to this request, take time, effort and risk that is difficult to account for when putting these bylaws in place,” says Laven.

“Considering that the subject development meets the intent of what the EIZ bylaw was trying to achieve with a new mixed use development in the heart of our downtown by contributing to the revitalization of our community, staff consider that denying the extension could show bad faith to the development group that has worked with the city to bring this project online and is intending further development in this area.”

Should council grant the extension, the Ellis One owners would be taxed on land value alone of $800,000, which works out to about $3,000 per year in total. Should the extension be denied, taxes would be assessed on the land plus an estimated $13.5 million in building value, which would total approximately $50,000 per year.

One-bedroom units in Ellis One start at $300,000, according to the project’s website, with penthouses listed at $1.2 million.

Since the EIZ program was initiated in 2010, it has spurred 19 projects worth $32 million, according to Laven. However, it has come under criticism as a handout to developers who would build anyway.

Council will deal with the matter during its afternoon session, which begins at 1 p.m.

The evening session, which begins at 6, will start with a public hearing on a proposed rezoning for 595 Vancouver Ave. to allow the owner to subdivide into three lots.

Five letters in opposition, and none in support, are included in the agenda package.