The share of gaming revenue is a tempting aspect of every new casino proposal, as cities across Canada receive millions of dollars annually from every gambling operation within their borders. The City of Delta, British Columbia, is now considering a new CA$70 million casino complex which will come with a hotel, restaurants and convention space. Despite the great excitement, however, the proposed casino may not benefit the city budget, at least not significantly, as the facility would be eligible for tax breaks.
According to estimates by the British Columbia Lottery Corporation (BCLC) the project would create up to 700 jobs and pay between $2.5 and $3 million to the city each year. The complex would require an investment of $70 million and the casino developer, Gateway Casinos and Entertainment Ltd., has said that the gambling offering would include 500 to 600 slot machines, as well as 24 gaming tables. The casino and hotel complex is said to built at the junction of highways 17A and 99, on an 11-acre parcel of land where the Delta Town & Country Inn is currently standing.
Last week, the City Council gave a preliminary approval of the rezoning application for the new facility. A public hearing is scheduled for May 1, as well as a third reading in the City Council and plenty of other procedures and permits. It is expected, however, that the city would give the project the green light for one major reason – the share of revenue that would be brought into city coffers. It is not that simple, though. It turns out that the rezoning application approved last week is for a parcel which falls within a special economic investment incentive zone.
This zone is determined in the Delta Industrial and Tourism Revitalization Tax Exemption Program and it covers quite a large portion of the city. Projects in the Delta Industrial and Tourism Economic Investment Incentive Zone may be eligible for property tax exemptions and municipal fee reductions if they meet certain requirements. The goal of this program is to promote the development of industrial and tourism projects and to encourage the diversification and expansion of tourism accommodation and facilities.
Special Tax Break for the Proposed Gateway Casino
According to the aforementioned tax exemption program, eligible projects qualify for a reduction of up to 60% in municipal fees. This includes building permit fees, plumbing permit fees and land use application fees. Moreover, property taxes may be frozen for up to five years for projects with a minimum investment of $5 million if one of the four criteria is met – city approval of rezoning to a higher value industrial or development zone; consolidation of four or more industrially-zoned lots; tourism expansion; redevelopment of an existing facility with construction costs of at least $10 million.
If the proposed Gateway casino in Delta receives approval, construction work should start by the end of the year. In case the project is eligible for tax exemption, property taxes would be frozen at the 2018 level for up to 5 years, which means that the casino would pay $157,000 a year. After construction is complete, the tax benefit for the developer could reach a maximum of $450,000. Gateway could save up to $265,000 in municipal permit fees.
In the meantime, the BCLC says that the City of Delta would receive 10 per cent of the net revenue that goes to the province. According to estimates, this would be around $2.5 to $3 million in annual revenue from casino winnings. This may sound as a fair deal, but the casino would probably enjoy annual savings of up to $500,000 during the first three to five years. And while this would help the development of the complex, it may not be as beneficial to the city as initially thought, especially when considering concerns expressed by the public such as increased gambling addiction and crime rates in the area.