City to stick with $7.3M charge for delayed Hamilton business park project

A developer that's turning a north Hamilton brownfield into a business park will have to pay $7.3 million in city fees after a failed bid to avoid the expense.

DCR Holdings Inc. had hoped city politicians would extend the time for construction to get underway by three years after demolishing buildings on the site, allowing the firm to hold onto its development charge credits.

This is not about the development, but rather, the bigger picture for Hamilton," lawyer Alex Bishop told councillors Thursday.

The redevelopment of the former Otis Elevator and Studebaker factories off Victoria Avenue North, just south of Burlington Street East, has required significant" time and money, Bishop said.

The 26-acre brownfield, where the developer started demolishing old buildings in 2012, has made for a very complex site" with environmental challenges, he said.

But granting the three-year extension would send a message that Hamilton is in fact open for business to brownfield development," Bishop told the finance, audit and administration committee.

The city offers development charge demolition credits when builders raze buildings with plans to construct anew on sites.

Development charges fund servicing needs, including sewer pipes and roads, that arise from construction.

The demolition credit takes into account that servicing already exists where buildings were knocked down for plans to construct new ones.

To discourage properties from sitting vacant for long periods after demolitions, the city sets a five-year limit on credit extensions.

DCR Holdings Inc. had already received a 10-year extension, which has been the upper limit so far for such requests.

Its Hamilton Central Business Park involved the demolition of 653,469 square feet of old industrial buildings. In June 2019, the city issued a building permit for 30,356 square feet.

That left 623,140-square-feet worth of potential development charge credits worth $7.3 million for municipal coffers.

And due to the delayed redevelopment, the city has missed out on hiked property taxes, estimated at more than $240,000 annually for vacant land.

We get that, and we obviously want to avoid tax losses," Bishop said.

DCR Holdings Inc., via a letter through legal counsel, told the city it wasn't able to start marketing lots for sale until its plan of subdivision was registered in late 2017, after which the COVID-19 pandemic presented a hurdle.

But this past January, a reputable developer" bought 15 remaining lots to build self-storage, warehousing and industrial condos on the site, where construction vehicles were busy moving earth Thursday.

At committee, Coun. Lloyd Ferguson questioned the construction delays, noting Hamilton has seen one of the biggest booms" in recent years.

The city didn't stop issuing development approvals throughout the COVID-19 pandemic, said Jason Thorne, general manager of planning and economic development.

Meanwhile, the city's deficit for development-charge exemptions is in the $60-million range, noted Brian McMullen, director of financial planning, administration and policy.

In January 2021, council denied an extension that would have allowed SmartCentres to retain $840,000 in demolition credit amid development plans at Mountain Plaza mall.

I have concerns because this will set a precedent," Coun. Maria Pearson said Thursday about the DCR Holdings Inc. request.

The committee voted 6-0 to back the staff recommendation to deny the extension request. That awaits council's final deliberation next week.

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