Mayor fears devalued Stelco lands could set precedent for industrial neighbours

Hamilton's mayor fears the significant devaluing of hundreds of acres of waterfront land will spark a precedent for industrial neighbours who also want to pay lower taxes.

"It's setting an industrial land value that is $100 an acre, and we have other users in the community that would say, 'What about our lands?'" said Mayor Fred Eisenberger. "There's a bigger issue at stake."

The city learned this month that much of the vacant waterfront land, formerly owned by Stelco, has been significantly devalued for property tax purposes.

That means the land will generate $2 million less in property taxes annually for the city, which has sparked alarmed reactions from the mayor, several city councillors and Ontario NDP leader Andrea Horwath this week.

'This has been polluted lands for the better part of 100 years'

Eisenberger said the city has appealed and requested a full report from the Municipal Property Assessment Corporation about what factors led to their dramatic reassessment of the land from more than $100,000 per acre to $100 per acre.

MPAC told CBC News it did a review of the lands after an appeal for the 2017 taxation year filed by U.S. Steel. It  reviewed all relevant information and reduced the value because of the high cost of environmental cleanup.​

"There's no rationale provided," said Eisenberger. "This has been polluted lands for the better part of 100 years. And the last time they assessed it was probably not a heck of a lot different than it is now."

While city councillors were told Monday by city finance head Mike Zegarac that the reassessment affects 500 acres, MPAC said Tuesday that the significant revaluing to $100 per acre affects only 375 acres, or 152 hectares of the vacant land. That's down from $108,000 per acre.

The other 425 acres of the parcel are still assessed around $100,000 per acre. 

'The inability to find a buyer for the site'

MPAC also said the recent sale process for Stelco added some factors to the decision.

"We understand this portion of the land was marketed to international buyers," said Cathy Ranieri Sweenie, MPAC spokeswoman. 

"However, the inability to find a buyer for the site supported MPAC's conclusion that the value of the contaminated lands that are not used in connection with the steel mill had a nominal value due to prohibitive environmental remediation costs."

Eisenberger said that doesn't add up. 

The lengthy and complicated sale process for Stelco, including the company and its operations, that recently concluded should not be used as a proxy for the land's value, he said.

The court-supervised sale process "certainly shouldn't be an indicator of value," he said.

'That's some money that's not coming out of LandCo'

But while the reassessment is alarming city leaders, it may be good news for Stelco pensioners, whose future pensions and benefits are tied in part to the future of the lands.

Proceeds of the land sale are suppose to go toward pensioners and that $2 million not being paid in property means that is money available to go toward that goal. 

"That's some money that's not coming out of LandCo," said Gary Howe, president of United Steelworkers Local 1005, which represents Hamilton workers and retirees.

Eisenberger said "it may be true" that the reduced property tax bill will provide an ultimate benefit to the pensioners.

But, he said, "it's a drop in the bucket In terms of what's needed. Disadvantaging the city in terms of tax revenue is probably not going to be a significant help to the pensioners."

Steelworker pensioners contribute $24M in property tax: 2015 report

The land trust is a key component of a complicated sale of the Hamilton steelmaking company that was finalized in June.LandCo, a trust made up with provincial and labour representation, is to be the official property owner of the 818 acres of land, with Stelco leasing about one-third of that currently for steel operations.

The sale of Stelco to Bedrock Industries this summer provided $80 million to the province to be put toward cleaning up the long-standing environmental issues on the land.

A city report in 2015 estimated that one in 72 Hamiltonians are Stelco pensioners. Any reduction to steelworkers' pensions would be noticed in Hamilton, where pensioners contribute some $24 million in property tax each year, the report found.

'It's going to take a long time'

LandCo is not officially up and running yet – the lands are being held by a restructuring officer.

"It's going to take a long time to get what you want to have in place if you do it properly," Howe said.

As part of the Bedrock deal, lands aside from the active Stelco steelmaking properties were agreed to be sold for development. The proceeds of that sale will go to fund pensions and benefits, according to the province.

The province extended the time frame to 10 years for the land to be dispersed after Hamilton's mayor called the previous five-year timeline a recipe for a fire sale.

The city has envisioned using the lands for industry, movie studios and green space.

The city wants to file a former offer with an intent to buy the lands at the reduced price.

"The city of Hamilton would be the best agent to manage this property and maximize the value," Eisenberger said.

A Stelco representative declined to comment on the ongoing property tax assessment process.

kelly.bennett@cbc.ca