Mayor calls plan to sell contaminated Stelco lands to fund pensions a 'fire sale'

The mayor of Hamilton says the plan to sell off surplus lands around Stelco within five years to as part of the company's restructuring is a "fire sale."   

The restructuring deal would enable the beleauguered company to exit bankruptcy protection after nearly two-and-a-half years. But Fred Eisenberger fears the tight deadline for the surplus land sale —meant to generate money to help fund pensions and benefits — won't produce the money needed. 

The Stelco sale plan is to go before a judge on June 9, leaving just about a month to work out the remaining negotiations – namely those with the unions about retiree and worker terms.

Eisenberger said he has "no issues with Bedrock," the company that is in exclusive talks to buy the company formerly known as U.S. Steel Canada.

"What we're mostly concerned about is the short time frame that the province has set out to dispose of the surplus lands"  — beyond the lands that the restructured Stelco would lease for steelmaking, Eisenberger said.

One big part of the deal involves setting up a land trust that separates ownership of the unused brownfield contaminated lands next to Stelco's current operations in Hamilton.

"Our estimates is that the current value of those lands is zero," he said.

The plan puts a timeframe on the sale of those lands at five years. Contrast that with it taking the better part of 15 years to get development started on piers 7 and 8, or the decades it took to start the remediation at Randle Reef.

Even though the plan calls for $80 million to be transferred to the province to help remediate those lands, Eisenberger worries about the timeframe, given those experiences with large remediation projects.

"It's essentially a fire sale," Eisenberger said. "It isn't the highest and best use of those lands."

'It will not generate what the province is hoping for'

Under the plan first released in December, the lands aside from the active Stelco steelmaking properties are proposed to be sold for development, ideally taking advantage of increased value due to interested buyers not having to take on the environmental liability for their cleanup.

The proceeds of that sale will go to fund pensions and benefits, according to the province.

The province plans to put $10 million toward getting the land trust off the ground, and then lend another $66 million toward making sure the benefits are covered even if it takes several years to get the land ready for sale.

But the plan calls for the sale of the lands to be completed within five years.

"It will not generate what the province is hoping for the pensioners nor for the city of Hamilton," Eisenberger said.

A spokesman for Stelco declined to comment on the mayor's concerns. The Minister of Finance, who announced details of the plan in December, was not immediately available for comment Monday.

At the time the details were released, Minister of Finance Charles Sousa said the deal was "an important step toward saving 2,100 jobs, protecting pensions and supporting economic development in the Hamilton region while ensuring environmental protection."

'That's a pretty difficult pill to swallow'

Those pensioners are themselves wary of the Bedrock deal. The judge has said he won't sign off on a plan until collective bargaining agreements are in place with the union chapters in Hamilton and Nanticoke, Ont. It has buy-in from all other major stakeholders so far.

The plan as floated so far calls for active and retired members of United Steelworkers Local 1005 in Hamilton to get 70 per cent of post-retirement benefits funded, compared to 100 per cent for the members of Local 8782.

Some critics from the union camp see the move as a wedge to put the two locals on different footing for negotiation.

The Hamilton chapter has about 500 active workers, but also represents 15,000 pensioners.

"It's pretty difficult for people – everyone was friends," said Gary Howe, president of Local 1005. "For only one group to get 100 per cent OPEBs (other post-employment benefits), that's a pretty difficult pill to swallow."

And steelworkers in Hamilton also have concerns about the structure of the land trust.

"The concern of everyone is you want to develop the lands properly," Howe said. "All these trusts that they want to have, it'll take a long time to work out all those issues. We've already been in [bankruptcy restructuring] for three years. Five years isn't a lot of time."

'The worst possible scenario'

Eisenberger said the city is talking with the ministers of finance and infrastructure to try to convince them to restructure the deal with a longer-term plan in mind. He said the city is also talking with the federal government about collaborating on developing the lands.

He said it's may look positive from a banking perspective to try to get a restructuring plan done "to get in and get out", but it's entirely another from the perspective of the pensioners and the city.

"From a long-term city-building perspective, it's the worst possible scenario," Eisenberger said.

But, he said, the city wouldn't formally oppose the plan if it was the last opponent standing.

"We're not going to be a barrier to moving forward on this," he said. "Something needs to happen."

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