Community Revitalization Levy FAQ
- Council approved a boundary for the Downtown CRL at its March 5, 2013 meeting. Does that mean the CRL is approved?
- What is the CRL approval process?
- How will the CRL work? How much money will it generate for the arena?
- Is the arena the only project that will be financed through the Downtown CRL?
- Will the tax revenue generated by the CRL always go to the arena and entertainment district?
- In a CRL does the education tax go to the project?
- What is the proposed boundary for the Downtown CRL?
- How was the proposed boundary chosen?
- If I own a business in the area proposed to be included in a CRL zone and it is approved will my taxes increase?
- Can you give me an example of how a CRL works?
- Why does the City think CRLs can be successful?
- Are there any CRLs in place in Alberta yet?
- What if new development doesn’t occur at the rate predicted, resulting in fewer tax dollars being generated? Who will pick up the difference?
- 1. Council approved a boundary for the Downtown CRL at its March 5, 2013 meeting. Does that mean the CRL is approved?
No, this is the first step.
- 2. What is the CRL approval process?
The first step in a CRL is to get approval from Council for the use of a CRL in an area identified as needing revitalization. Council approved the boundary for the Downtown CRL on March 5, 2013.
Following this initial level of approval there are 3 stages to getting a CRL in place:
- The Province approves a regulation, which includes a boundary;
- City Council approves a plan that includes a risk mitigation strategy (i.e. if development in CRL zone doesn’t occur as anticipated)
- The Province approves the plan.
The City has developed a short video that explains how a CRL works.
- 3. How will the CRL work? How much money will it generate for the arena?
The City anticipates a new arena will spark new business development in the area around the proposed site, which would result in new tax revenue for the City. A portion of this new tax revenue would be dedicated to pay some of the arena, as well as the associated public infrastructure. The CRL would first need to be approved by the Government of Alberta.
- 4. Is the arena the only project that will be financed through the Downtown CRL?
No. The arena is one of a series of projects that are part of the Capital City Downtown Plan and that will be supported by the Downtown CRL should it receive provincial approval.
Only a portion of the City’s contribution for the arena will be generated through the Downtown CRL. Funding will also be raised through other means including reallocation of current support to Rexall Place.
- 5. Will the tax revenue generated by the CRL always go to the arena and entertainment district?
No. After the amount borrowed under a CRL is repaid the tax revenue would be available for other initiatives, at Council’s direction.
- 6. In a CRL does the education tax go to the project?
Only new tax revenue, i.e. revenue that doesn’t currently exist, would go towards the project. All current tax revenue generated by property in the area would continue to go to both the City and education. The portion of new tax that would be paid to the province for education tax would also be put towards the project.
- 7. What is the proposed boundary for the Downtown CRL?
Council approved a boundary that encompasses much of the city’s downtown.
This boundary includes the proposed arena, as well as a number of other City-led catalyst projects identified in the Capital City Downtown Plan. These projects are critical in revitalizing the heart of the city.
- 8. How was the proposed boundary chosen?
CRLs are used primarily in areas to encourage revitalization and to positively impact development in the targeted area.
- 9. If I own a business in the area proposed to be included in a CRL zone and it is approved will my taxes increase?
Not as a result of a CRL. But when your property value increases, the increased taxes arising from that increased value are dedicated towards the costs of infrastructure. Increases in taxes as a result of any new development within the CRL zone are used to pay for the CRL. The example in the following question helps to explain how a CRL will impact taxes in the area.
- 10. Can you give me an example of how a CRL works?
Mr. A and Mr. B own lots in the CRL zone. Both currently are parking lots and they are located directly next to each other. Today both businessmen pay $500 in taxes.
The City approves a CRL in the area where the two lots are located. Mr. A builds a 20-storey condominium tower on his lot and Mr. B leaves his lot as is. Mr. B continues to pay $500 in taxes but Mr. A, who is collecting new revenue from his condominium tower, sees his taxes increase to $10,000 as a result of an increased value in his brand new development. The increased amount – in this case $9,500 – would go towards the CRL.
- 11. Why does the City think CRLs can be successful?
In any CRL, there is a risk that development won’t occur as anticipated. However, as part of the approval process for a CRL, the City must clearly outline its strategy to address this issue. Usually what happens with a CRL is that there is a catalyst project or projects that spark development and result in the lift in taxes being collected. Again this is not a tax increase for businesses or residents within the CRL zone.
- 12. Are there any CRLs in place in Alberta yet?
The Rivers project in Calgary was the first CRL in Alberta. In Edmonton two other areas have been identified for CRLs – the Quarters and Fort Road. The Quarters and Belvedere CRLs have been approved by Council.
Council approved the Downtown CRL Boundary on March 5, 2013. It has now gone to the province for approval.
Once a CRL is approved by the province, and enacted by the City, the CRL goes into effect and the assessment baseline is calculated as of December 31st of that year. So in some cases, a deliberate delay may occur just before this final stage so that the potential for assessment lift is maximized.
- 13. What if new development doesn’t occur at the rate predicted, resulting in fewer tax dollars being generated? Who will pick up the difference?
Considerable review and examination goes into this process so that citizens can be confident that development will occur. However, as part of its approval process, the province requires the City to have a plan for any shortfall. This plan will differ for each CRL depending on the circumstances.
For more information:
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