Airport area expansion plans costly
Hamilton would have to hike industrial development charges across the city
July 05, 2010
Meredith Macleod
The Hamilton Spectator
http://www.thespec.com/News/Local/article/801765
The city is predicting the future employment district around Hamilton's airport will pay off directly with 24,360 jobs -- and $66 million in yearly tax revenue -- when it's fully developed in 2031.
But building the roads, sewers and other infrastructure needed to develop the 1,173-hectare parcel the city has dubbed the Airport Employment Growth District (AEGD), could mean the city has to make the tough call to hike industrial development charges across Hamilton, according to a report going to council committee today.
It's projected that the development's infrastructure would cost about $351 million -- $115 million of which would be paid directly by developers, with the remaining $194 million through development charges.
But that leaves $42 million that isn't recoverable through development charges.
As well, between 2011 and 2031, it's projected that the city will lose revenue of $185 million in the aerotropolis due to the reduced development charge and another $46 million from water and wastewater subsidies.
City staff will bring some options to council aimed at reducing the municipality's financial risk.
Most controversially, that would include raising the industrial development charge from the current subsidized rate of $6.65 per square foot to the full $19.80 needed to cover growth and infrastructure.
That is sure to raise the ire of developers and lead to questions about whether that will discourage just the sort of industrial development the city needs to make the aerotropolis plan fly.
The city now has the lowest industrial development charges of area municipalities surveyed for the report.
The report envisions lands being available for development in 2014 and that about 56 per cent of the parcel would be "absorbed" by 2031.
The consultants recommend a "private-sector driven approach to developing the AEGD."
The consultants project the average land value for vacant serviced land in the aerotropolis would be in the $250,000 to $300,000 per acre range.
That's less than the average of $400,000 in Burlington and $800,000 in Mississauga, but more than what is demanded in Brantford, London, Cambridge, Kitchener-Waterloo and Guelph.
The consultants point out that a growing shortage of available industrial land on the western and northern ends of the GTA will enhance Hamilton's potential.
The 97-page financial and marketing report by consultants Watson and Associates Economists Ltd. also finds:
* Direct, spinoff and indirect jobs from the aerotropolis could ultimately top 63,600.
* The AEGD offers a developable area of "critical mass" at competitive prices.
* Proximity of Hamilton airport is a significant asset.
* Other area major airports -- including Pearson and Buffalo -- have limited off-site employment land, which enhances Hamilton's position even further states the report.
* There is competition from other industrial/business parks in the Greater Golden Horseshoe.
* There is significant vacant land in the Ancaster Business Park and the North Glanbrook Business Park.
* Development potential would be concentrated in advanced manufacturing, warehousing, transportation and logistics, business services and accommodation and food services.
* The aerotropolis would generate more than 130,335 person years of construction employment or 4,000 to 6,500 jobs over 20 years.