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.
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