U.S. Steel has already applied to pay lower taxes, and city officials worry that the decision to permanently shutter steel-making operations in Hamilton will mean an even larger tax burden for residential taxpayers.

The corporation is Hamilton’s third largest taxpayer. It pays $9.1 million per year, $6 million of which goes to the city. It’s already appealing its tax assessment to the Municipal Property Assessment Corporation (MPAC) for 2009 to 2013.

With Tuesday’s announcement that the corporation will halt its idle steel-making operations in Hamilton, U.S. Steel could apply for an even farther cut, said Larry Friday, the city’s director of taxation.

“It’s quite significant,” Friday said of U.S. Steel’s impact on local tax bills. “To put it in perspective, at one point, they were our highest taxpayer.”

Hamilton's Highest Taxpayers

ArcelorMittal Dofasco: $13.3 million (2013)

Lime Ridge Mall: $11.7 million

U.S. Steel: $9.1 million

U.S. Steel said this week that it would permanently close iron and steel making at Hamilton Works. Coke making and steel finishing remains. The decision impacts 47 non-union workers.

The concern was one of a number of issues raised through the city as news of the shutdown sunk in: Others included could there be another buyer to restart the plant, and what might happen to the waterfront industrial lands being shuttered by the closure? And several councillors raised concerns about the future of pensions.

U.S. Steel’s tax assessment is based on two things — land value and the function of its buildings. The city has already contacted MPAC to see how those factors are weighed, said finance head Mike Zegarac.

With the Hamilton Works blast furnaces permanently closing by the end of this year, the corporation has a case to apply for an even farther cut, he said. And that’s money that has to be made up by other residential and commercial taxpayers in Hamilton.

“We won’t see a loss of the full $9.1 million in tax revenues,” Zegarac said. But “it is a file that staff are constantly reviewing.”

Taxes by the numbers

Total municipal levy (2013): $737,349,736

Total industrial: $43,213,688

Total U.S. Steel: $6 million

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, Friday said, the ratio is 70/30. That means a greater burden on Hamilton homeowners.

Burden lands on home owners

Finance staff will tell councillors more about industrial tax loss at a general issues committee meeting in late November. In the meantime, it wants more answers from MPAC.

The more immediate concern, Friday said, is U.S. Steel’s current request. It’s dragged on for six years because of U.S. Steel’s labour issues, he said.

The city is only an observer in next year’s appeal process, which starts in January, Friday said. The hearing will likely happen in the fall.

Coun. Sam Merulla of Ward 4 worries about the impact of Tuesday’s announcement on property taxes too.

“Frankly, they’re significant revenue for the city,” he said. “Any time we’re looking at decisions to decrease the amount being paid, we have to pick up the slack somewhere else. It impacts our budget and ultimately impacts our residents.”

Industrial assessment can cause 'the verge of bankruptcy'

Andrea Horwath, provincial NDP leader and MPP for Hamilton Centre, says Hamilton is right to be worried about the impact on property taxes.

“There is a huge problem with MPAC and the way it deals with assessments,” she said. “I’ve heard of municipalities on the verge of bankruptcy because of reassessments on the part of industry. If that’s something coming on the horizon with U.S. Steel, we’ll be very vocal about that.”

As for U.S. Steel's decision, Horwath would like to see another company purchase the steel-making operation.

“It would take significant investment to get those blast furnaces up and running, but I’m of the never say never school,” she said.

The province has a role to play in this. She’d like to see Ontario implement job creation tax credits and industrial tax incentives, similar to what Manitoba has done.

Heavy industrial land in demand

Tuesday’s announcement was emotional for Hamilton, she said.

“There’s no doubt that the permanency of this announcement creates a great deal of concern,” she said. “What I would only hope is that there’s either another investor that’s interested in this plant of that the current owner seize a way to rejuvenate the plant at some point in time.”

Mayor Bob Bratina has hope that someone will see opportunity in any land U.S. Steel doesn’t need anymore. Land zoned heavy industry is a valuable asset, and not every community has it.

“It’s complicated and difficult to create that kind of zoning, but we have it,” Bratina said during a live chat with CBC Hamilton Wednesday.

“If you’ve got heavy industry lands available there, you should be able to do something that will benefit your city.”