Issue

There has been concern regarding the City’s proposed solution to the development of 603-1st Street and the restrictions placed on the property, creating a project that is deemed as economically unviable without large subsidization 

Executive Summary

There is currently an ongoing debate in Medicine Hat as to how development should move forward on the City-owned 603-1st Street SE property. It has been deemed a high priority for development, but is currently subject to significant restrictions that have made it economically unviable for private developers. Due to the importance Council has placed on this project, it has given the City a mandate to implement and execute the development of 603-1st Street at the cost of the taxpayer. The Chamber recommends that the development of the property should be left to private developers, and that City time and resources cease to be expended on this project. The Chamber also recommends that the restrictions on the property be reset to those found in the Land Use bylaw and the Downtown Development plan in order to allow developers to propose economically viable projects for the site. 

Background

The property at 603-1st ST SE has sat vacant since 1978. Since then it has been purchased once with the premise of having the property developed, and had several proposals from developers, but it has never progressed beyond the planning stage.¹ Through most of this time period it has served as a parking lot, and has periodically been used as a gathering area for downtown events. 

In 2011, Council identified the Glanville lot as one of the top five priorities for the City, ² and in 2014 the City launched a request for proposal for the site, which included numerous conditions, including that the project be a multi-story project with both residential and commercial space, and include at least two levels of underground parking. While several proposals were tendered to the City, none were able to meet the City’s requirements without substantial direct or indirect subsidies from the City. 

As initial efforts to development the property did not come to full realization, Council has authorized the City to move forward on the property with the intention of ensuring that it is a marquee project that represents the optimism and energy of the urban center.³ As such, the City has moved forward with the development of the site by funding the creation of a Development Concept. Additionally, a subsequent request for qualifications closed on January 21, 2016 seeking investors interested in participating in the financing, development, leasing, sales and ownership of a mixed use development at 603 1st Street with the development constructed in accordance with the plans established by the City.

Public Feedback

In order to gauge public perception of this project, the Chamber distributed an anonymous public survey, to which 320 people responded.⁴ 

This survey found that 82% of respondents support the development of the 603 1st Street property in general, whereas 17% did not support the development. When asked as to who should develop the property, 91% preferred that private development should be the ones developing 603 1st Street, whereas 9% were opposed to private development. When the question was posed as to whether the City should be imposing additional design restrictions on a development at 603 1st Street in addition to those already regulated through the Land Use Bylaw and Downtown Redevelopment Plan, 17% stated Yes and 82% stated no. 

When asked as to what amount of subsidy would be appropriate, 67% did not support any kind of subsidy for the development of 603 1st Street and 33% support for some type of subsidy with a range of options submitted in response to what would be a reasonable amount to be subsidized by tax payer dollars. However on further query, the percentage jumped to 87% not in support of the development of 603 1st Street if subsidizing the project meant that there would no longer be any funds remaining for the downtown development incentive program (DDIP) with only 13% being in favour if it meant that the DDIP would no longer exist. There was no strong argument either way when the question was posed about moving downtown businesses from one location downtown to the 603 1st Street location. 

In addition to the Chamber’s formal survey, Mayor Clugston performed a quick survey at the Mayor’s “State of the City” event, in which he included a question regarding support for subsidizing the project. In this survey the Mayor asked “Should the City spend $6 million to incent a developer to build a $30-$40 million development at 603 First St. SE?” In response to this question 52 replied yes, whereas 90 replied no.⁵ 

These results show that the general citizenry of Medicine Hat are supportive of developing the property, but not proceeding with the development as a City project, in either scope of design or funding.

Recommendations

The Medicine Hat & District Chamber of Commerce supports the development of 603 1st Street, but recommends that the City of Medicine Hat:

1. Allow private development to be the primary developer of that property in design, build and investment; 
2. Limit restrictions of the property to those already regulated through the Land Use bylaw and Downtown Redevelopment Plan; 
3. Provide no subsidy towards the development of 603 1st Street, aside from what would typically be made available through the downtown development incentive program; 
4. Continue with the downtown development incentive program and create a more robust plan and incentive to spur development downtown;
5.  Halt further spending on the project and conduct further consultation with industry, stakeholders and developers to include discussion on other project options and uses for the property; 
6. Not proceed with the development of 603 1st Street until it is economically viable by private industry to develop without significant subsidization for development of the property.

Resources

1. City Desk. "Key dates over the 36-year history of the city’s ownership of Glanville Lot." Medicine Hat News. July 2015. http://medicinehatnews.com/news/localnews/2015/07/29/key-dates-over-the-36-year-history-of-the-citys-ownership-of-glanvillelot/. 
2. City of Medicine Hat. "603 First Street SE, City of Medicine Hat - Qualifications Submittal RFQ No. LP15-146." Alberta Purchasing Connection. January 15, 2016. http://vendor.purchasingconnection.ca/Opportunity.aspx?Guid=6167F986-EA69-48BFA2AD-6EC96AB4AE80&. 
3. "Council Identifies Top Five Priorities for 2011." Medicine Hat Media. January 11, 2011. http://www.medicinehatmedia.com/2011/01/council-identifies-top-five-priorities-for-2011/. 
4. City of Medicine Hat. "Mayor's Informal Survey during the State of the City." Informal Survey, Medicine Hat, 2016. 
5. Medicine Hat & District Chamber of Commerce. "603 - 1st Street Development Survey." Survey, Medicine Hat, 2015.

Date Drafted: January 26, 2016
Date Reviewed: February 17, 2016
Date Approved: February 17, 2016
Date Completed: January 2017