The Resurrection of Downtown Kitchener
Before they purchased a hulking former leather tannery in Kitchener – a symbol of disappearing traditional Ontario jobs in the city’s core – two Toronto-based developers asked to meet with this city’s planners. When they arrived, Cadan Inc. partners Lana Sherman and Gary Maister were greeted by a contingent of top city officials and Mayor Carl Zehr, who broke off his vacation to head the meeting in the summer of 2007.
“That sent such a positive, strong signal to us,” says Ms. Sherman, managing director of Cadan, still astonished by the reception which put their Tannery project in motion. “It meant the city was going to work with us.” The meeting highlighted Kitchener’s strategy of tax tools, zoning and an open-door attitude to woo investors to shed its blue-collar image. One recent success – renewal of the Lang Tannery as a 21st century home for digital media start-ups and giants – offers lessons for municipal leaders and developers.
“The city of Kitchener really put its money where its mouth was,” observes Karl Innanen, managing director of the Waterloo region office of Colliers International. “We have overcome inertia and things are happening.”
Three years before Cadan’s visit, the city imposed a special property tax levy of 1.25 per cent a year for a decade for an economic development investment fund worth $110-million. Its focus was postsecondary education and knowledge industries, not manufacturing, as catalysts for growth. “We needed to make a bold statement,” Mr. Zehr says. “We had a number of older buildings and sites without buildings that could be ripe for employment lands.” The city invested $30-million to locate the University of Waterloo’s $147-million school of pharmacy on a former eight-acre industrial site, purchased earlier by the city for $1, across from the Tannery. The city also put up $6.5-million to bring Wilfrid Laurier University’s faculty of social work to a vacant school several blocks from the Tannery.
“The combination of those few things really got people’s attention that something is happening here,” Mr. Zehr says. In 2005, picking up on city signals, Andrin Homes sold out residential lofts from a $40-million conversion of a former rubber plant, one block from the Tannery. The quickening pulse caught the attention of Cadan, which bought the Tannery for $10-million in 2007.
“The city’s involvement with the university frankly gave us confidence that the whole area was about to change,” Ms. Sherman says. Significantly, the Tannery is three blocks from a new transit hub that, by 2017, will bring a new regional light-rail service, Via Rail, GO Transit and buses under one roof. In purchasing the building, a mix of storage and workshops since leather production ended in 1954, Cadan embarked on an environmental cleanup to convert 350,000 square feet to Class A office and retail.
Under a brownfields incentive program, Kitchener will reimburse the developer over a 10-year period, starting in 2013, for $891,000 in cleanup costs. In effect, the city funds the reimbursement from increases in property taxes tied to building upgrades.
