Homeowners will pay more as contamination prompts drop in tax value of Stelco lands

In a bombshell for Hamilton taxpayers, some former Stelco steel-making land will generate about $2 million less in taxes every year. That means the average homeowner will pay $8 more a year to make up for it.

The city learned this month that the Municipal Property Assessment Corporation (MPAC) has significantly devalued the worth of about 152 hectares (375 acres) of vacant waterfront land.

MPAC told CBC it had done a review of the lands because of 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.

Previously, the land was assessed at $108,000 per acre, says city finance head Mike Zegarac. Now its assessment has dropped to $100 per acre.

The assessment value does not determine the actual market value of land, but it is supposed to reflect it.

The assessment does have a tangible impact on taxpayers. It means the land will generate $2 million less in taxes next year — and possibly create a $2 million shortfall this budget year too.

That means the owner of a $315,000 home will have to pay $8 more in taxes next year, Zegarac said. Assessment wise, the impact is the equivalent of about 200 new homes.

MPAC told CBC Tuesday that it had dropped the value of the 152 hectares of the 323 hectare property after a review and after taking into account the historic pollution and the expense of cleaning it up.

It said it had learned attempts to sell it failed to produce a buyer and that affected its valuation.

"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."

It also said it advised the city in May of the pending re-evaluation.

Sam Merulla, Ward 4 councillor, wondered Monday if Hamiltonians are getting robbed.

"Anything short of calling 911 might be underreacting," he said. He led a council vote that day to offer to buy the land for $50,001 — $1 more than what the new assessment says it's worth.

The steel company land became an issue this year after Bedrock Industries bought Stelco in a court-supervised sale, and the land was transferred to a trust called LandCo.

The province says the land has to be dispersed within 10 years. The proceeds will help fund the pensions and benefits of Stelco pensioners. Bedrock will also contribute about $80 million to remediate the property.

The land is zoned K, which allows nearly any use, up to and including major heavy industry. 

The city wants to use some of the land for a plan that includes light industry, movie studios and green space. The Hamilton Port Authority (HPA) has ideas too that involve marine and transportation infrastructure, said spokesperson Larissa Fenn.

The HPA wants to work with the city, she said. "Working together, we think we would be very well positioned to make a compelling proposal to LandCo."

The reassessment, though, is bad news for homeowners, Zegarac said. Residential taxpayers already carry the heaviest burden when it comes to what it costs to run the city.

A February report shows residential property now accounts for about 80 per cent of the city's assessment. The city has tried in recent years to bring in more desirable industrial and commercial assessment. 

Zegarac said this new development is a step away from that. He also worries other industries will use this to bolster their own assessment appeals, although it's too early to know.

"We need to better understand MPAC's rationale."