Mayor’s Minute: Understanding Penticton’s Economic Investment Zones

Many struggle at quantifying the value of programs or incentives used to foster economic growth.

Andrew Jakubeit is the Mayor of Penticton.

I think everyone on some level understands the importance of having a strong, diverse economy, but many struggle at quantifying the value of programs or incentives used to foster economic growth.

Penticton’s Economic Investment Zone (EIZ) Program was created in 2010 and is intended to stimulate building development and job creation in general, as well as direct investment in specified areas of the city where it will have the greatest impact. It is also intended to encourage reinvestment in existing businesses already established within the community.

The 27 EIZ projects that have qualified to date have generated over $33.5 million in construction activity and created 300 jobs. 70 per cent of this development came from local business and industry re-investing back in the community to grow their business.   When the exemptions are complete for the current slate of applications, more than $223k will be added to the annual tax role. Not only will we collect substantially more tax due to higher valuations, we will continue to collect it over the entire life of the assets, which often extends to 40 years and beyond.

In most cases, tax breaks are for five years on the improvements that a development brings to a property – taxes are still payable on the land and any other improvements that previously existed. Tax exemptions are for the municipal portion of taxes only; hospital, regional district and school taxes are still collected and benefit the community.

One of the frequent criticisms about the EIZ Program is the waiving of municipal taxes, since adding up the effects on the tax role is a lot simpler than measuring the community benefits resulting from new investment. The cost of incentives must be top of mind as we move forward, but we must also factor in the many benefits of revitalization which extend beyond the purely financial aspects.

The land now occupied by the Landmark Cinema downtown used to house a rundown building on a brownfield site with contaminated soil. After development it became a catalyst for further activity in the surrounding area and we now have Bad Tattoo (also a brownfield site) Cannery Brewing, Old Order Distillery and TIME urban winery. Economic incentives helped drive the creation of a new industry cluster and have revitalized this section of the downtown core. Funds that may have previously flown out of town to larger entertainment centers are now being spent locally.

Not only does the Landmark have an economic effect, it is also a good example of the social and environmental benefits of the EIZ program. The new construction transformed an environmental problem into an amenity that the community enjoys and helped establish an entertainment hub.  Businesses have increased staff, created new jobs, and are playing a major role in making downtown vibrant, safe and attractive to visit.  The social benefits of added amenities and local employment have important spillover benefits for other family members and improve the overall quality of life, although they can be difficult to measure.

The city is in competition with other regions to attract development and keep our existing businesses here.  Measuring the benefits is an important part of the creation of our EIZ bylaws and it is crucial we review, rethink and retool based on the successes and lessons learned.  During our Official Community Plan review we will consider how EIZ’s can be used to target growth both on the economic and residential fronts.

We will never be able to definitively validate if a given development would have taken place without an incentive in place, or what the exact tipping point is for any development decision. What we can say with certainty is that we have benefited from the economic activity and community benefits our EIZ program has created both in the short-term and over the long run.

Andrew Jakubeit is the Mayor of Penticton and provides the Western News with a column twice a month. Contact him via email Follow him on Twitter @AndrewJakubeit


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