City offers deep discounts to encourage king-sized industrial buildings

Posted Jan 12, 2012 By Bill Hutchins

EMC News - In the retail world, stores will often let customers 'buy one item and get another at 50 percent off.'

City Hall is taking page from that sales tactic by offering large-scale industrial developers a sharp discount the bigger they build, in order to show that Kingston is open for business.

Councillors approved a reduction in development fees for industrial buildings larger than 100,000 square feet.

"Many municipalities across the province are starting to offer this reduced rate on industrial buildings only," explained Terry Willing, the city's director of building and licensing.

The new strategy will reduce the usual $12 industrial permit fee the city charges for every $1,000 worth of construction activity. The $12 fee will still apply to the first 100,000 square feet of building footprint but anything larger will get a 50 percent discount, or a $6 fee per $1,000 in construction value.

"It certainly helps to encourage people to bring those kinds of projects to town," said Willing.

For example, the city would normally collect $360,000 in development fees for a 300,000 square foot warehouse costing $30 million. With the change, the city would instead collect $240,000 in fees to recover the cost of building and fire code inspections and other administrative work.

The pro-rated fee reduction does not apply to large-scale commercial or residential buildings, just industrial projects.

"It's purely industrial because they tend to be a simplistic single storey design in industrial areas where there's not the complexity you'd have in a commercial location," Willing explained.

At least eight other Ontario cities currently offer discounted permit fees in order to attract large warehouse-type development, and city officials say Kingston must match the trend.

Kingston collects about $2.7 million in building permit fees every year. The building department estimates the loss in revenues from the new fee structure will have a small impact on its revenues.

Willing says there are no current industrial expansions or new projects that would immediately benefit from the reduced fees. But he says the incentive program should make Kingston more competitive with other cities.

The most recent example of an industrial building that would have qualified for the discount is the 130,000 square foot Tim Hortons warehouse in the St. Lawrence Business Park.

The fee discount, approved by council last month, comes at a time when the mayor's task force on development is already looking for ways to streamline municipal policies and practices to encourage economic growth. The task force may make recommendations to reduce other kinds of development fees when its final report is issued later this year.