Raise the Hammer
Instead of actually following their own planning policies, our council lurches from case to case, bending to whatever interest group has the most influence at a given time.
By Ryan McGreal
Published June 18, 2009
If you want to understand who really calls the shots in this city, you need look no further than the curious disconnect between Council's approach to residential development fees and business development fees.
A couple of weeks ago, the usual cadre of residential home builders, represented by the Hamilton Halton Home Builders Association, raised holy terror over the prospect that council might raise residential development fees. They demanded instead that charges be frozen at their current rates, even though the city actually loses over $7,000 each time a developer builds a house.
The Hamilton Spectator, a "Platinum Partner" of the Home Builders Association, echoed the call to freeze development charges on their editorial page. Bowed by relentless pressure, council caved on the issue.
As I noted at the time, the logic of greenfield residential development must be understood as a false economy. insofar as suburban homes are unaffordable once their prices reflect the actual cost of servicing them. If the city loses money every time a developer builds a house, why on earth are we encouraging them to build even more - particularly given that the Province has directed cities like Hamilton to plan for more intensification and mixed use development?
After voting to continue using our property tax revenue to incentivize new home construction that will further drain the city's coffers, council is now being asked to raise development charges on new businesses - you know, developments that actually provide ongoing jobs and generate net revenue for the city - by 60 percent for industrial developments and ten percent for commercial businesses.
Like the case for raising residential development fees - a case Council just rejected - there is also a case for raising business development fees. Fee discounts since 2005 have cost the city $17 million for industrial businesses and $10.5 million for commercial businesses. The proposed increases would put Hamilton in the mid-range of GTA municipalities, albeit still lower than Burlington.
It's not clear whether the discounts have attracted enough additional businesses to cover the cost of the discount through new property tax assessments, but staff are recommending the increases to cover shortfalls in the cost of processing the development applications.
In either case, council does not seem to understand the main principle of incentives: add them for helpful activities we want to encourage, and remove them from harmful activities we want to discourage.
Now, I'm not persuaded that the straight monetary cost of doing business in Hamilton is the biggest obstacle to more business investment, particularly given that the city has cut business development fees and property taxes pretty aggressively over the past several years.
More troublesome is the regulatory morass that prospective business investors need to navigate - particularly investors hoping to build or renovate within the current built-up area. It seems that well-connected, high-profile businesses are able to buy, bully or otherwise finagle one-off exceptions and variances to clear these hurdles while smaller players are frozen out.
Consider, for example, the treatment of Dundurn Property Management, which was granted a reprieve on cash-in-lieu-of-parkland for its planned 148 unit condominium project on the vacant site of the former Thistle Club in Durand Neighbourhood.
Now contrast the Pearl Company, which sits literally just outside the official border of the downtown and faces hundreds of thousands of dollars in fees for the zoning violation of turning a derelict warehouse into a thriving, economically self-sustaining arts centre.
Of course, it's far easier just to build on greenfields. Once again, if you're big enough, council will set aside its provincially mandated requirement to provide employment lands and grant you a variance to build single family houses or big box commercial developments on those lands instead.
Ironically, the overall cost of building industrial facilities on existing urban sites may in fact be considerably lower than on greenfields, even after taking brownfield remediation into account. However, the initial financial and regulatory barriers are much higher, so developers stick with the tried-and-true, contriving discounts and subsidies along the way.
So we find ourselves doing the opposite of what we should be doing: adding incentives for harmful activities we want to discourage, and removing incentives from helpful activities we want to encourage.
Does anyone wonder why the smart money is investing elsewhere? Our city is busy pulling itself apart.
We have a Council that enacts sweeping policies and them promptly ignores them, as Peter Graefe adroitly observed in a thoughtful letter to the editor in today's Spectator:
[Council] supported the 2007 Transportation Master Plan, which recommended spending $3 million a year on active transportation, with the goal of having 10 per cent of total trips be taken by bicycle in the near term and 15 per cent in the long term.
If they feel so strongly that spending less than half of what was recommended is still too much, why did they not speak up at the planning stage?
Given their schizophrenic approach to these issues, it seems Council either doesn't have a clue or just doesn't care what its larger strategic objectives ought to be. Instead it lurches from case to case, bending to whatever interest group has the most influence at a given time.
Is anyone surprised that this same group of elected representatives is resisting Mayor Fred Eisenberger's call to ban corporate and union donations from municipal election campaigns?
Research has found that by far the donations companies, including developers, provide to municipal candidates outpaces the amount of money unions give to candidates.
A recent staff report found that in Hamilton’s 2006 municipal election, of the $767,000 the candidates received, 42 percent of the money came from corporations, and five percent from unions. And of those donations, 77 percent of the corporation contributions and 62 percent of union money went to incumbents.
And those incumbents deliver what their corporate sponsors want, again and again. The result is a political process that sacrifices the city's long-term economic, social and environmental health for the short-term benefit of developers with deep pockets.
By jason (registered)
Posted June 18, 2009 12:46:40
same old, same old. unbelievable.
Ryan, where can one see reports or stats outlining your comment that the city loses $7,000 per new home that is built? If that's true, it's absolutely revolting. Does the city lose thousands of dollars if I choose to buy a new car, or a new suit??
why should we all be losing so much money because someone wants a new home??
We've lamented the loss of the huge industrial tax base in this town for years, and now we are going to continue to give a free ride to those who are costing us money, yet raise fees on those that we desperately need here to bring in tax revenue??
Welcome to the Hammer.
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kevlahan_rth wrote:
the land in lieu of cash deal (which is the right way to think of it) encourages greenfield sprawl and penalizes dense infill
Yes, absolutely. The decision to waive it for high-rise developments is a win for intensification, but only insofar as the interest of a developer happens to coincide with the goal of density for a change.
It also smacks of the case-by-case approach council is taking on these issues: big developers get special dispensations while small developers are stuck following the morass of arcane rules.
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By kevlahan_rth (anonymous)
Posted June 18, 2009 13:25:38
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By A Smith (anonymous)
Posted June 18, 2009 15:26:49
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By zookeeper (registered)
Posted June 18, 2009 15:35:29
Remember folks, you can always reply by pressing the "down" arrow.
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By z jones (registered)
Posted June 18, 2009 15:39:28
@zookeeper okay okay, I get the hint! ;)
Moving right along.....
Jason I think the seven grand number was in the Catch report quoting city staff.
By the way RTH is on a tear lately! nice to see so much activity from you guys.
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A Smith wrote:
If you're saying that...
That's not what I'm saying, but at least you're on topic in this thread, even if you're still playing the same one-note policy opus.
Government has a legitimate democratic role to play in framing incentives to socially desirable goals, but our current council is actually doing the opposite: incentivizing harmful activities it claims to oppose while discouraging positive activities it claims to support.
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By jason (registered)
Posted June 18, 2009 15:53:04
You know what? I think we've all been missing the biggest key to seeing Hamilton boom and prosper. The thought just hit me. What if we capped taxes at 0.5% and limited spending?? I'm certain we'd drain Boston, Toronto, New York and other cities of their top tier companies and see thousands of young professionals moving here to take the endless supply of jobs in booming, new economy businesses.
It's really that simple.
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By JonC (registered)
Posted June 18, 2009 16:04:36
Jason you fool, taxes need to be capped at 0.49%. Any higher will force those businesses to the greener pastures fomented when every other city realizes that the solution of lowering taxes to 0.5% cured all of our ills. Wake up! Your high tax rate of 0.5% will surely destroy us!
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Sad to see there are still diehard 0.49-percenters on the forum. Progressive cities have already moved to 0.48 percent tax rates.
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By A Smith (anonymous)
Posted June 18, 2009 19:10:40
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By mikeonthemountain (registered)
Posted June 19, 2009 00:09:34
Fine then. I'll make my own city. With 0.47% tax. And blackjack. And hookers. In fact forget the blackjack and the taxes. Screw this I'm going home.
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By mikeonthemountain (registered)
Posted June 19, 2009 01:21:38
Where this model of development is headed is already known:
http://www.telegraph.co.uk/finance/finan...
This region keeps going this way that is what is going to happen! Such waste ...
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By LL (registered) - website
Posted June 19, 2009 09:44:33
A Smith: from the votes, the "market" has clearly rejected your "product". Why don't you stick to your principles and go out of business.
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By grassroots are the way forward (registered)
Posted June 19, 2009 12:18:33
Corporations should not allowed to make donations in elections period. How can we trust those who accept their funding from the corporations that they will actually represent the people's needs first.
Reform for elections
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By A Smith (anonymous)
Posted June 19, 2009 12:48:36
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By nobrainer (registered)
Posted June 19, 2009 13:10:48
"LL, tax rates in Hamilton are moving down ( tinyurl.com/kkf964 ), while many other GTA communities are going up, so why would you think I'm losing?"
Tax rates in Hamilton have been moving down for years, so where's all the magic new private investment? Where's all the magic new tax revenue? Last year the city had a big fat zero in total tax assessment increase, where's all the unfettered capitalism? Maybe, just maybe....there's more to running a city or even to attracting capital than lowering tax rates.
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By A Smith (anonymous)
Posted June 19, 2009 14:27:47
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By grassroots are the way forward (registered)
Posted June 19, 2009 15:36:03
A Smith:
Anyways I will add this to the conversation. Just exactly what good are big box store developments? Are they for the greater good? Are they going to lift the working class to a live of dignity and fairness?
What about those in the green field areas, those who are the farmers, who struggle in our community. Why should they compete with corporations, your big box stores, that bring food from outside our borders, from who knows where?
Yes I know, it is all about plowing under the land, who cares about the food security issue our commuity is faced with or could in the future, when there is no more room to grow food.
As a community it is the people that should decide what is best for all and not just for the one who has the biggest pile of money.
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By A Smith (anonymous)
Posted June 19, 2009 18:16:12
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By beancounter (registered)
Posted June 19, 2009 21:41:46
And just think: There will be lots of innovations to make it easier to grow food on abandoned big box parking lots!
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By grassroots are the way forward (registered)
Posted June 19, 2009 23:48:32
A Smith: Well, it is not that I totally disagreed with you on all the taxes we pay out. Really because when you think of it, if one earns less then the low income cut off and still owes money, what does that tell you? But then it is affluent have the ways and means to influence policy that drags down the working people, of course there you are on the sideline cheering them on(the rich).
As far as your comment about the poor being apathetic or stupid, well that says something about you as an individual. They are many in the community who fight for fairness, to empower those at the bottom. I think you should be focusing in on the fact that those who have, do a pretty good job of trying to silence the voices of those that struggle.
Anyways, if you ask me, there really isn't an entity called the free market anymore, it is only the few players, the global elite who call the shots, but as usual people like you are quite daft and fall for the propoganada.
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By LL (registered) - website
Posted June 20, 2009 00:05:43
By A Smith (anonymous)
Posted June 20, 2009 01:31:31
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By grassroots are the way forward (registered)
Posted June 20, 2009 02:20:31
A Smith: Do you have any idea of the income levels of those that actually voted liberal? In my travels I do not think too many low income people voted for the liberals either, in fact you would probably find that many low income people do not vote.
I did not vote liberal, they do not stand up for those that struggle but then neither do the conservatives.
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By geoff's two cents (anonymous)
Posted June 20, 2009 12:42:19
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By grassroots are the way forward (registered)
Posted June 20, 2009 13:09:00
Geoff's two cents: Sweeping generalization? No, I do not agree with you but I respect that you have your view. During the last provincial election there was a public forum in Gore Park and I asked many people, are you going to vote? The majority of the people that attended were low income and their voices were, why bother, they do not listen anyways.
There was a forum on Poverty and Health a few weeks back that was not picked up by the main media source in this town either, why is that? I mean if I am to follow you line of thought, one would think that this important issue would of been on the front page.
Then I ask you, who is to blame, if not the system itself?
But then with the Common Sense Revolution, we seen both workers, who were strip of their rights and the poor were strip as well to be left with almost nothing. The growth of temporary work, where you have no rights, no protections, no job security. But then I get the feeling that people like you, have no gumption to actually stand up and fight for what is right.
Just actually what are you doing about it, nothing? Something? Expand your views.
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By A Smith (anonymous)
Posted June 20, 2009 14:01:12
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By grassroots are the way forward (registered)
Posted June 20, 2009 14:48:32
A Smith: If I am not mistaken , the poor have rallied over the years, only to be met by the police, not so much different then what is going on over there.
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By geoff's two cents (anonymous)
Posted June 20, 2009 15:04:01
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By A Smith (anonymous)
Posted June 20, 2009 15:45:45
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By grassroots are the way forward (registered)
Posted June 20, 2009 16:12:57
Geoff: Well, as an academic, and your interests revolve around world empires and the environment, I would be interested in knowing just exactly what your thoughts are. How do you see the world?
I am not an academic but I have done lots of reading.
We are seeing a globalized system of empire that has many across the globe living in dire poverty, wars across the globe in the name empire, the environment is not good and who exactly is behind this? Is it the poor and downtrodden?
Have you ever read the book Toxic Sludge is good for you?
Anyways, as far as your temp assignment, at least with voices like mine, temp workers in Ontario at least have won their right to termination or severance pay and the right to stat holiday pay. That helps you as you struggle, right, that is if you were in Ontario.
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Newsfeeds
By kevlahan_rth (anonymous)
Posted June 18, 2009 12:39:23
1. Greenfield developers have usually bought land cheaply, often before re-zoning, so the actual cost is much less than paying cash into a parkland fund. In fact, the greenspace is located in their new subdivision and so actually increases the price they can charge for their houses!
2. The cash amount paid is not based on the surface area of the development, but on the number of dwelling units which greatly penalizes high density in-fill and (again) favours single family houses on greenfield land. In fact, as in the case of the Thistle development, the cash amount required for a dense in-fill development can make the project unviable.
3. The money paid into the parkland fund can only be spent on NEW parks. Since there is usually no land for new parks in existing urban areas, the parkland money paid by an in-fill development will be spent on providing new parks for sprawl developments!
This issue is similar to the parking space requirement: both regulations encourage low-density sprawl.
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