Council to continue airport tax rebate grant program

THUNDER BAY – The head of the Thunder Bay International Airport Authority says the decision by city council to extend the Airport Development Grant Program doesn’t guarantee any new aerospace-related businesses will come to the city.

But it doesn’t hurt, said Airports Authority CEO Ed Schmidtke on Monday night.

“We’re very appreciative of council’s support on this incentive program. This is a very competitive sector, so for us to get any kind of help at all to keep Thunder Bay above the cutline for consideration for companies that really, can go anywhere – there’s nothing more portable than an airplane,” Schmidtke said.

Under the initial program, three companies took advantage.

Schmidtke says up to five more are on the horizon.

“We have five active files, where there continues to be conversation about growth and expansion somewhere in North America in the next 24 to 36 months.”

Essentially the community improvement plan allows businesses to invest in building infrastructure and receive a tax rebate on the difference of the tax valuation of the business when the sign the lease and when the improvements are made until the rebates equal the amount spent on their investment.

Under the initial grant program, which was instituted in 2006, the three companies that took advantage of the program will be receiving incremental rebates for between 57 and 89 years.

The new version will cap that number at 25 years.

The program will also allow the Airports Authority to expand the types of businesses that qualify.

Under the original deal, only companies that dealt with designing, engineering, manufacturing, movement, storage or maintenance of aerospace equipment or components of the equipment.

To loosen the restrictions, which hampered interest, the new program will allow for businesses directly associated with or directly related to the operation of an airport.

Mayor Bill Mauro said he understands that some in the community might question why the city is giving tax breaks to companies, but not to worry.

“Just for those in the community who may be a bit concerned about lost revenue … that one of the thing my father always told me is that 100 per cent of nothing is nothing,” Mauro said.

“If the business had not established itself, you would not have been in a position to say maybe we lost some taxable revenue. The question is what is the quantifiable benefit that comes to the larger city by having three more businesses established on airport property and five more to come?”  

Mauro pointed out the companies are still paying taxes, adding that not providing the incentive could be the tipping point in turning some companies away.

The incentive only applies to companies that develop or redevelop their properties, and the work would result in a re-evaluation. After 25 years, the company would then resume paying the full tax amount.