Item - 2024.EC14.4

The General Manager, Economic Development and Culture, recommends that:  

1. City Council approve Imagination, Manufacturing, Innovation, and Technology incentives for the following application:

• 29, 35, 41 and 75 Basin Street - BASIN MEDIA STUDIOS GP INCORPORATED, as general partner for and on behalf of BASIN MEDIA STUDIOS LP, City of Toronto Economic Development Corporation in the estimated grant amount of $21.6 million over 10-12 years.

2. City Council authorize the General Manager, Economic Development and Culture to negotiate and execute a Financial Incentive Agreement for the application in Recommendation 1 above in a form satisfactory to the City Solicitor.

This report provides recommendations on an Imagination, Manufacturing, Innovation and Technology Program application for a film studio complex known as Basin Media Studios in the Port Lands, an area in Ward 14 (Toronto – Danforth).

The application was submitted by Hackman Capital Partners and CreateTO on May 24, 2023, and is subject to the City-Wide Community Improvement Plan, By-law 1207-2018, which was the bylaw in effect at the time of application. The applicant has also applied for the Brownfield Remediation Tax Assistance incentive.

By-law 1207-2018 states that City Council approval is required in cases where an application for Development Grants has an estimated construction value for the development exceeding $150 million. Due to the potential financial implications to the City of approving an Imagination, Manufacturing, Innovation and Technology Program application for a project of this size, the City contracted with Hemson Consulting Limited. to provide a third-party review and detailed analysis of the subject applications (Attachment 2).

For the reasons detailed in this report, staff recommends the approval of the application for 29, 35, 41 and 75 Basin Street.

In the fourth quarter of 2024, a new City-wide Community Improvement Plan for a Financial Incentive Program consisting of development grants will be brought forward to City Council. Until any new City-Wide Community Improvement Plan by-law is approved and in force, applications received under the existing program will continue to be considered and processed under the applicable in-force by-law at the date of the application’s receipt.

This report was prepared by Economic Development and Culture division in consultation with City Planning, Finance and Treasury Services, and Social Development, Finance and Administration.

As a film studio complex, the project falls under one of the “targeted sectors” under the Community Improvement Plan by-law 1207-2018 and is therefore eligible for enhanced grants. When this enhanced grant amount is combined with the Brownfield Remediation Tax Assistance, the total maximum grant amount available is equivalent to 77 per cent of the municipal tax increment over a 12-year period.

The combined grant amount for the development, if provided, is estimated to be $21.6 million over 10-12 years, as summarized in Table 1. The financial implications of these grants will need to be included in future year Economic, Development and Culture budgets.

Over the grant period, the City is anticipated to receive approximately $7.1 million in net new tax revenues from this development. Thereafter, the development will generate an estimated $2.4 million in annual City property tax revenues.

Table 1 – Imagination, Manufacturing, Innovation and Technology Program Grant Amounts Based on Proposed Gross Floor Area

As of June 2024, the Imagination, Manufacturing, Innovation and Technology Program has approved 74 applications and disbursed or provided $268.5 million in grants, with another $45.1 million in grants projected for 2024. In addition, the estimated amount of grants that the program is committed to providing until 2038 is $422 million. In all, the total cumulative value of Imagination, Manufacturing, Innovation and Technology grants approved to date is $735.2 million.

Together, these 74 projects are forecast to yield approximately $1.3 billion in new incremental property tax revenue for the City during the 10-year term of their Financial Incentive Agreements (or a 12-year term, in the case of the Brownfield Remediation Tax Assistance). While collectively receiving $735.2 million in grants from the City, resulting in a net revenue gain for the City of $564.8 million via increased municipal tax proceeds.

If the above application is approved, the City’s total committed grants under this program are projected to be $756.8 million by 2038.

Since January 2024, 5 applications with a combined grant value of $234.1 million have been refused or withdrawn. The City is currently reviewing IMIT financial incentive applications for 12 other projects. These applications are at various stages in the review process, as described in Attachment 2. Were they all to be approved, these applications would result in financial commitments of up to $69.1 million in the form of property tax incentives collectively over their 10-year (or with BRTA up to 12-year) grant terms. However, conditions in the local property market appear to be slowing if not jeopardizing the viability of some of the projects, although final determinations can only be made following the full application assessment process. The prevailing market conditions may impact the viability of some projects to move forward and therefore decline the City’s exposure to new commitments.

The Chief Financial Officer and Treasurer has reviewed this report and agrees with the financial implications as presented in the Financial Impact Section.