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Posted Dec 28, 2013, 1:04 PM
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Industrial parks reaching capacity
(Hamilton Spectator, Steve Arnold, Dec 28 2013)
Hamilton is heading toward a land crunch that will cost it jobs in the future.
Neil Everson, the city's director of economic development, said the shortage of available land for new office buildings and factories isn't a crisis yet — but it will reach that point soon if action isn't taken.
"We get paid to attract and retain business in the area, but we also get paid to look five and 10 years down the road and this is what we see," he said.
By the numbers, Hamilton's inventory of land for new employers consists of 9,831 acres of ground in nine business parks as well as 600 acres controlled by the Hamilton Port Authority. The problem is that only about 5 per cent of the port authority's land remains available and the inventory is expected to be exhausted in two to three years. In addition, the city business parks are almost full. Even the newest — the 400 acre Red Hill South Business Park, home to the Canada Bread and Maple Leaf Foods plants — is about 25 per cent occupied.
Hamilton's industrial vacancy rate is only 1.3 per cent consisting mainly of former plants now sitting idle in the bayfront industrial area.
The vacancy rate has been in steady decline. It was 2.3 per cent in the second quarter of 2012 and 3.7 per cent in the second quarter of 2011. In comparison, across the bay, Burlington's vacancy rate in the second quarter of 2013 was 2.7 per cent, according to Colliers International, a commercial real estate company.
Guy Paparella, the city's director of growth planning, argues without action to increase its inventory of employment land the city could face a dismal future.
"They are critical to creating jobs, municipal assessment and economic development in the long term," he said. "The bottom line is if you only have residential development, it's not a balanced assessment base and you'll constantly need to increase taxes. When there is balance, there is a fair municipal assessment process and the community tends to thrive a lot better."
The chance for more jobs in Hamilton, he added, also means residents have to commute less, they have a better quality of life, there is less congestion, a better environment and more support for transit within the city.
In economic development jargon the business parks are called greenfield sites and the idle locations are called brownfields. Each is considered important to the future, but each comes with its own set of problems.
Brownfield sites, Everson said, are impossible to sell to clients such as food processors and software firms that simply will not locate on a site that once hosted heavy industry. Other issues include what can be staggering costs for environmental remediation and the fact most of the city's brownfield sites are small, scattered parcels that would be difficult to assemble into a package large enough to interest a major new employer. Another issue is the potential cost of modernizing water and sewer pipes and other services for new users. Other sites are owned by the steel companies and just aren't for sale.
"Take Canada Bread and Maple Leaf — if we didn't have a greenfield site to offer them we might have lost that chance," Everson said.
Two competing visions to solve the coming problem have been offered. Hamilton's answer is the 1,800-hectare Airport Employment Growth District, or aerotropolis, a plan that includes 555 hectares of potential employment land. Backers of that plan say it will give the city shovel-ready land needed to support hundreds of new jobs in addition to $50 million a year in taxes when the area is built out in 2031. Opponents argued the city should focus first on brownfield sites before embarking on what would amount to the largest expansion of its urban boundary in Hamilton's history. They said the expansion was too large, it will take valuable farm land out of production and cost $350 million to run municipal services and roads out to the site.
Those arguments were rejected by the Ontario Municipal Board which approved the expansion and Divisional Court which recently denied opponents leave to appeal the OMB decision. All that remains is for the OMB to approve the specific boundaries of the area, a decision expected in 2014.
City planning director Steve Robichaud has estimated the airport district will give Hamilton enough employment land to meet its needs for at least 10 years.
"In the short term it would be premature to say the city is running out of land, but the city must also look to the long term and our ability to accommodate growth over the next 15 to 20 years," he said. "For example, the OMB recently approved an Airport Employment Growth District that will accommodate the city's projected employment growth over the next 10 plus years."
A potential addition to the stock of employment land appeared in late October when U.S. Steel announced it will end steelmaking operations here. That prompted some people, such as Hamilton Port Authority president Bruce Wood, to cast covetous eyes at the company's 328-hectare Wilcox Street complex.
"We find ourselves running out of land for new investment; if the U.S. Steel property became available, we could put it to productive use, generating jobs and economic growth for the city," Wood told The Spectator.
U.S. Steel has refused to say if any of the excess land might be offered for sale. In the past, however, it has sold surplus land to the port authority — the 2006 sale of the former rod mill property.
Getting new land approved by development can be a lengthy process of public hearings usually filled with neighbours screaming "not in my back yard" and expensive lawyers arguing for housing development rather than industrial uses. That's why Everson and others are urging the city to start the process now.
"Doing all of that takes time," Everson said, and time is the enemy of economic development. "The companies we deal with know how to navigate the approvals process, but once that's done they want to get a shovel in the ground and get on with it."
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