A proposed office-to-residential conversion incentive program for downtown London got its first endorsement from politicians Wednesday.
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Announced by Mayor Josh Morgan during his state-of-the-city address in January, the program made its way to city council’s planning and environment committee for a first official look and was unanimously endorsed.
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“This is going to be a really good learning experience,” Morgan said. “I think until we actually try something here, we’re not going to know what the uptake or interest is… This is a good base to start from.”
The city plans to set aside $10 million for the conversion grant as it taps into the $74 million it received from the federal housing accelerator fund.
The incentive would offer $21,000 for each bachelor and one-bedroom unit and $28,000 for two-bedroom units to the $2 million maximum for each property.
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The incentives would be offered through the downtown community improvement plan. The program has two goals: to support working and living in the core and to encourage investment and maintenance of existing space, city staff say in report to the committee.
Morgan thanked the federal government for its contribution through the housing fund, saying the city is able to “try something new” without an impact to property taxes while also tackling the high office vacancy rate. London has 4.8 million square feet of office space downtown and 28.5 per cent of it is vacant.
“One of the key strategies to the long-term vibrancy of downtown is to get more people to live there,” he said. “There is an advantage to having people walk out their front door each and every day and support downtown businesses.”
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Scott Mathers, the deputy city manager, told the committee downtown already has zoning that allows for multiple uses. What could change is the tax rate between commercial and residential uses.
Mathers said the incentive would be available to convert space of any size, whether a tower or a smaller building.
“This would apply to any size of development, so ideally we could get a mixture of those kinds of opportunities,” he said. “We’re really looking at trying to take out space that is not being utilized.”
Referencing a similar incentive program in Calgary, Ward 4 Coun. Susan Stevenson asked about how staff arrived at the figures being offered. Mathers said while the amount is less than Calgary’s $75 a square foot, it is similar to grants offered for new development under the same downtown community improvement plan.
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The city has hired a consultant to track the progress and success of the incentive, results of which will be brought back to council in the fall. Mathers explained that advice in the first year could let the city course-correct within the three year timeline attached to the federal housing funds.
Ward 7 Coun. Corrine Rahman said that she’s looking forward to seeing potential conversions, and extended gratitude to the development community for their feedback.
It is difficult to convert offices to small homes, and studies suggest only about 30 per cent of offices can be converted. Offices typically have large floor space too deep for home use, window access is limited and stairs are not near residential units. In addition heating and cooling and fire systems are not consistent with home use.
The incentive will still be subject to approval during the regular council meeting on March 5.
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