Area-rating preview offers hints of potential tax changes on Hamilton’s horizon

Hamilton city council will delve into the great you-pay-for-what-you-get taxation debate during February budget talks.

Area rating is a tool that distributes the burden of municipal taxes based on service levels and where properties are located in the city.

It's divided along rural-urban lines and the former borders of the old city" of Hamilton and preamalgamation municipalities.

If the intention is to have a holus-bolus elimination of area rating, the suburban councillors, I'm sure cannot support that," Coun. Brad Clark said Friday.

That could lead to significant" hikes for some, but the upper Stoney Creek councillor said it would make sense to eliminate area rating for some services, such as recreation.

That, along with street lights, sidewalks, sidewalk snow removal, parkland purchases, urban/suburban infrastructure and transit, make up the suite of area-rated services.

This variety makes Hamilton an outlier, according to a city staff scan of 13 other municipalities that shows none has more than three such location-based levies.

So that's a reg flag," Coun. Maureen Wilson said.

On Friday, with formal recommendations to come in February, staff offered a preview of potential changes to area rating, a system adopted with amalgamation in 2001, when Stoney Creek, Ancaster, Dundas, Glanbrook and Flamborough joined the Hamilton fold.

In 1999, before the municipal merger, special adviser David O'Brien recommended area rating for only fire and transit services. But in 2001, more services were included in the mix before the city settled with the current contingent.

During Friday's budget session, Mountain councillor John-Paul Danko said he looked forward to staff's recommendations and bringing the city in line for the original intention for area rating to be just transit and fire."

Changes to area rating are revenue-neutral," staff note, but the shifts redistribute the burden depending on where residents live.

Axing the tax tool for sidewalks and street lights over a four-year period starting in 2022, for instance, would result in a hike of roughly $4 to $6 in rural areas.

Recreation is area-rated along preamalgamation borders, but data show users typically travel up to 13 kilometres to reach centres, and several new buildings are planned for rural areas, a staff report notes.

Staff, who advise recreation services do not meet the criteria" for area rating, forecast a four-year phase out starting this year would tack $10 and $13 onto rural tax bills based on an average residential assessment of $381,000.

That valuation is based on 2016 property assessments, which haven't been updated to reflect Hamilton's soaring real estate market amid a provincial pause on reassessment during the COVID-19 pandemic.

That $13 could end up being much higher with local homes selling for no less than $500,000 and up to $1 million, said Flamborough councillor Judi Partridge, warning of the potential for a huge sticker shock."

The staff report notes more than 3,480 acres of parkland across hundreds of locations are accessible for all residents" no matter where they live in the city, but green-space purchases draw upon an area-rated levy.

Firefighting is taxed according to an urban and rural split and delivered through career, volunteer and composite levels of service. Last year, with density building in lower Stoney Creek and Glanbrook, the city reclassified about 5,800 properties from rural to urban.

Currently, the city offers limited clearing of sidewalk snow, except in certain parts of Ancaster, where residents pay a fee for residential plowing.

But next winter, the city will start servicing sidewalks along transit routes citywide, meaning Ancaster will no longer have a differential service," the report says.

Transit, which isn't covered in finance staff's preview, is perhaps the most contentious area-rated levy, with advocates long arguing an across-the-board tax would lead to better service.

In February 2020, a subcommittee exploring the question stopped short of making a decision, asking for more information from staff amid a transit (re)envision" exercise.

On Friday, the city wasn't able to say when the topic would be revisited, but Wilson, who represents Ward 1 in the west end, said it should happen this year.

I think it's critically important to the future of this community for it to be full service and fully funded," she said. And so to do that, we've got to address the area rating and we've got to do it this term."

Clark, however, argues transit costs should be split along rural and urban lines. The challenge, of course, in my ward is that 85 per cent of it does not have transit."

Teviah Moro is a reporter at The Spectator. tmoro@thespec.com