Industrial/commercial sector stunting tax growth to tune of $4.8 M
Billion dollar years for Hamilton building permits aren't translating into big gains in the city's tax base.
But for all the buzz about growth and back to back years where building permits have been valued at more than $1 billion, cuts to the value of big industrial and commercial properties are keeping assessment growth at very modest levels.
The biggest loss comes from cuts to production at U.S. Steel, which have reduced its tax burden to the city by $2.2 million.
$5.6 Million - The total increase in taxes from new assessment
$4.8 Million - Assessment dollars lost because of appeals and market adjustments
$2.2 Million - Lost assessment attributed to production changes at U.S. Steel
0.9 % - Assessment growth in the residential sector
–0.4% - Assessment decline in industrial sector
3,900 - Number of existing properties that had their assessments increase.
1,250 - Number of properties that experienced a decrease in their assessment
According to a report going before city councillors Tuesday, the city is losing out on $4.8 million in municipal taxes thanks to tax assessment appeals and corrections.
The city’s overall tax assessment growth inched upwards at 0.8 per cent in 2013, resulting in $5.6 million in new tax revenue for Hamilton. That's the same amount as 2012 and down slightly from 2009’s 1.3 per cent levels.
The residential sector had the biggest gains at 0.9%, with Ward 11—Binbrook and Glanbrook—having the biggest jump.
The tax assessment figures — which refer to the value of properties from which tax payments to the municipality is calculated — are lower than what was expected considering strong permit activity last year, the report reads.
The city issued more than a billion dollars worth of building permits last year for the second straight year , as 15 condos are on tap for 2014 — mostly in the downtown core.
Other big assessment reductions last year came from Smart Centres, Lime Ridge Mall, National Steel Car and Flamborough Financial.
U.S Steel is Hamilton’s third largest taxpayer. It had been paying $6 million in municipal taxes.
Hamilton has lost millions in industrial taxes in recent years. During the industrial heyday of the 1970s, the tax burden was split 60/40 — 60 per cent residential, 40 per cent commercial/industrial.
Today, the ratio is 70/30. That means a greater burden on Hamilton homeowners.
All told, about 1,250 properties experienced a decrease in their respective assessment, which means the city is missing out on $175.4 million of assessment value.
But not everything is gloomy. An outlook compiled by Credit 1 Credit Union and the Ontario and Hamilton chambers of commerce says that construction is leading Hamilton’s economic growth, and the city is in store for a sunny 2014. Non-residential construction was a major economic driver in 2013, creating jobs and keeping Hamilton’s unemployment rate below the provincial average.
According to the tax assessment report, just over 3,900 existing properties experienced an increase in their respective assessment totaling $508.6 million. Some of the more significant increases that were either previously vacant land or partial development include the Staybridge Hotel, the Walmart Supercentre on Barton Street East and three new Target stores.
The report will be discussed Tuesday at city hall. You can read the entire report below: