City to appeal — again — ‘ludicrous’ $100-an-acre tax ruling on Hamilton steelmaking land
The city will take another crack at raising the value of former Stelco lands to recoup more than $8 million in unrealized revenue after losing a drawn-out tax appeal.
Last month, the city suffered a blow when the Assessment Review Board (ARB) stuck with $100 per acre - down from a previous $100,805 per acre - for a portion of harbourfront property Stelco recently sold for $518 million.
I don't know where in this country - let alone this province, even in this city - at this point you can get industrial property for $100 an acre," Mayor Fred Eisenberger said.
From my perspective, it's ludicrous on its face, and that's why we're going to appeal the decision again."
Moreover, the city wants to ensure the monumental sale in June to Slate Asset Management is reflected in the Municipal Property Assessment Corporation's (MPAC) next examination of the land.
It should be based on market value and market value has now been established by this recent sale," Eisenberger said after council met in camera Thursday for a legal update on the ARB appeal to determine next steps.
In late 2017, city politicians expressed outrage and suspicion over news that MPAC had slashed the value of the vacant former Stelco lands for the next tax year, resulting in a $2-million revenue hole for the municipality.
The controversial reassessment followed years of complex court-ordered deliberations to restructure an ailing U.S. Steel Canada that led to the re-emergence of Stelco under new ownership.
We actually offered to purchase all of those lands for $100 an acre," Eisenberger recalled about council's reaction to the mind-boggling" valuation.
At first, the new Stelco, owned by Bedrock Industries, leased a part of the roughly 800 acres of harbourfront steelmaking property from a provincially-backed land trust. Surplus land was to be remediated and developed for sale or lease.
But in 2018, the steelmaker and land trust officials announced the company would buy nearly all the administered property, paying $114 million for 3,000 acres in Hamilton and Nanticoke.
Stelco didn't respond to The Spectator's request for comment, nor did MPAC, on the city's plan to appeal the ARB decision.
The unsuccessful appeal - which dealt with the 2018-2022 taxation years - involved roughly 400 acres of so-called residual lands" at Stelco's 386 Wilcox St. address at Hamilton's industrial waterfront.
That parcel was the focus of the MPAC's downward reassessment but part of roughly 800 acres in total, the value of which dropped to $45 million from $86.4 million in 2018 as a result.
In its appeal, the city argued the correct value of the residual lands was $125,000 an acre, making for an overall value of $106 million.
The city, Stelco and MPAC presented expert witnesses who offered their analysis on how the sales of other industrial properties and contamination should influence the land's value.
Economist Randall Bell, the city's witness, contended the contamination has no place in the valuation of real property" if it's not quantified," the ARB panel noted in its May 17 ruling.
Bell also referenced 17 steel-industry-related property sales in Hamilton, Maryland and Delaware, noting four transactions between 2006 and 2018 ranged from $91,393 and $225,907 per acre.
But Malcolm Stadig, the MPAC witness, said $250 million was suggested as the cost of remediation during a 2016 meeting between Ontario and assessment corporation officials, making the nonindustrial land use prohibitively expensive."
Stadig also noted Bedrock wanted to lease steelmaking buildings and land, but was not interested" in buying anything due to contamination concerns.
Meanwhile, the Hamilton Port Authority (HPA) considered likely remediation costs" of roughly $300 million before extending a tentative offer" of just $100 that included indemnification for contamination, but didn't end up buying the property, he told the board.
In its decision, the board says a reasonable potential purchaser" that wanted to develop the residual lands would have recognized that contamination was likely an issue" and that more serious contamination issues existed" on other leased Stelco lands.
In a news release Thursday, the city said had its case convinced the ARB, it would have recouped $8.66 million in tax revenue that it lost over 2018-22.
Further, the recent $518-million sale to Slate is evidence" that MPAC's take was incorrect" and therefore the taxes owing is much higher."
Under the deal, Stelco plans to lease back 75 acres of land to continue its steel-finishing and coke-making operations.
Slate, meanwhile, aims to transform the massive lakefront historical steelmaking property into a state-of-the-art" industrial park.
The firm declined to comment on the city's plan to appeal the ARB decision.
Teviah Moro is a reporter at The Spectator. tmoro@thespec.com