A sweet deal for developers

The other shoe has finally hit the floor. Or, as the radio journalist Paul Harvey often said, “Now we know the rest of the story.”

In yesterday’s Sun, it was reported that Brandon City Council is exploring a plan to provide wastewater service to the J&G Homes Arena, and eventually annex the land on which the arena is located from the RM of Cornwallis (see “City eyes J&G arena servicing, annexation,” Feb. 20).

An agreement for the city to supply water to the facility was reached prior to the arena’s opening in 2021, and according to city manager Dave Wardrop, there was an “expectation that annexation of the property into City of Brandon would follow.” Half a decade later, however, that still hasn’t happened.

What that means is that despite not being located within city boundaries and not being subject to city property taxes, the facility has enjoyed access to the city’s water supply for the past five years. Few, if any, other non-Brandon properties benefit from that privilege.

The arena currently relies on a septic tank to handle its wastewater, however, and that’s the reason for the request made to city council this week. In support of that request, Steve McMillan, the vice-president of planning services for VBJ Developments, said “We always knew that the 34th Street lift station was going to be built,” and that “We knew that it was kind of a matter of time before we can switch over from the system we have now to hooking in straight to the city.”

Take a moment to read that quote again, and then consider McMillan’s remarks in the context of the public outcry that occurred regarding city council’s decision to borrow tens of millions of dollars to finance the construction of the wastewater lift stations in the southwest corner of the city.

At the time, it was argued the expenditure was a massive subsidy for millionaire developers, made worse by the fact that those developers were paying little, if anything, toward the cost of the lift stations.

In response, Brandonites were told that development charges would cover a large part of the cost. That wasn’t true.

We were told that property taxes collected from all the homes and commercial properties to be constructed in the southwest area would more than cover the cost of the lift stations.

That wasn’t true. It will be decades before all that construction happens, if ever.

We were told the building of the lift stations would create a housing construction boom. That wasn’t true either. It could be years, if not decades, before large-scale residential construction happens in the southwest area.

We were told the lift stations were desperately needed because there was a housing shortage in Brandon, and there was nowhere else in the city to build homes. Given all the construction that has happened on the North Hill, we now know that also wasn’t true.

What Brandonites weren’t told, however, is that one of the first properties to be connected to the new lift stations would be a developer-owned facility that isn’t located within city boundaries and pays its property taxes to the RM of Cornwallis, not the City of Brandon.

That reality would change if the property was annexed by the city, but the water supply agreement was signed five years ago, and the annexation process has barely begun. Yesterday’s report notes that it could take several more years before annexation actually happens, and that’s the best-case scenario.

In other words, it could be a long time before the city collects any property taxes from the facility, yet the facility will benefit from unfettered access to city water and sewer services. That’s a sweet deal for the property owner and the RM of Cornwallis, which collects the taxes without incurring any infrastructure costs — but it sets a dangerous precedent for Brandon.

In yesterday’s report, McMillan is quoted as saying that switching the arena onto the city’s sewage system will allow for future development on the land.

“There’s possibilities for future growth, for possibly another rink in the future, or another recreation facility of some sort,” he said. Until annexation of the property occurs — if it ever happens — that would mean even more lost property tax revenue for Brandon, yet even higher infrastructure costs for the city to bear.

Even worse, it would send a strong signal to other developers that they can construct properties in Cornwallis and Elton, close to the city boundaries, and derive the benefits of city services without the burden of paying city taxes.

After all, if city council says yes to VBJ Developments on the arena and future buildings at that site, how can they say no to other developers? How could they say no to residential and/or commercial developments in Elton and Cornwallis that also want to hook up to city services?

If that happens — and there is every reason to believe it will — Brandon will face a migration of businesses and homeowners to locations just outside of the city, resulting in higher costs and lower tax revenues. It’s a plausible scenario that threatens the fiscal viability of the city.

What a dangerous, costly mess this is. The best way to avoid making it worse is to decline VBJ’s request for now, annex the arena property as soon as possible and never make the mistake of offering city services outside of the city’s boundaries again.