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City Subsidy Scheme Fizzles
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by
Don McLean
September 20 - 26, 2012 |
A subsidy for greenfield industrial development has found no takers, so city staff are recommending it be terminated and its budget shifted to land banking. The move illustrates council’s efforts to convince private landowners to develop their properties for industrial uses rather than more lucrative residential or retail purposes – a major issue that also confronts aerotropolis plans.
The Accelerate Shovel–ready Strategy for Industrial Servicing and Transportation (ASSIST) program was approved in June 2010 and described as “a new incentive program which will address issues of risk in the front–ending process when servicing industrial land”. It promised to loan private owners up to half of their costs of preparing their lands for development.
“This financing would be provided as an interest–free loan with appropriate financing agreements executed and registered on title,” explained the report. “The payback of one–half of the loan to the city would be triggered by a property sale, in whole or in part, to an industrial end user. The other one–half of the loan to the city would be triggered by the issuance of a building permit.”
But staff are now reporting that since the program was implemented “no developer has entered into an agreement”, They are calling for the $2 million budget to be reassigned to the city’s new land banking program that was quietly established last December with an initial budget of $4 million.
“Some developers did not see the financing for servicing up to a maximum of $2 million as a large enough incentive for substantially large industrial projects,” says the staff report.
Hamilton has over 1700 acres of greenfield business parks designated for industrial development but many of the private owners have been reluctant to use them for that purpose. The aerotropolis boundary, if approved by the Ontario Municipal Board, would add about 2000 more acres, but owners of more than a third of those lands have appealed their designation as industrial, arguing their properties are “more suitable” for residential or retail commercial uses.
By purchasing lands, the city can cut its own deals with industries. Canada Bread, Stackpole and the Tim Horton’s coffee roasting plant have all been located on city–owned lands. Staff pointed to these examples in arguing for more land banking and said that was also a major factor in the Maple Leaf wiener factory deal.
“This windfall was almost lost because of the absence of any 50–90 acre parcels of “shovel ready” land in Hamilton, and the company’s preference for city–owned property (after the very successful Canada Bread investment) which did not exist,” stated the December report recommending land banking.
Canada Bread was charged $117,000 an acre for its location in the North Glanbrook business park, considerably less than the $200–250,000 value identified in a consultant report to the city a year earlier. Maple Leaf paid $170,000 an acre for city–owned land in the same area a year later – barely a month before council approved $585,000 an acre for nearby property to service the wiener plant.
Last December’s land banking report was approved almost at the end of a meeting that began at 9:30 am and ran until 7:40 pm. Chad Collins asked about purchasing brownfield sites and was told that wasn’t the “initial focus” but might happen later.
This week’s recommendation to top up the fund is a “prudent” move according to economic development staff and a better choice for the monies than putting the $2 million into reserves.
“With only 50+ acres left in city ownership within our business parks, it is important for the city to have land we can directly use for our business attraction efforts.” V
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