One of the challenges the average Hamiltonian faces in trying to sort out the LRT question is the explosion of facts and figures being cited to support opposing positions. In a recent article, Raise the Hammer’s Ryan McGreal –an LRT supporter writes: By attracting hundreds of millions of dollars in new dense, urban, mixed-use developments along the transit corridor, LRT helps us achieve the goal of raising the density of uses on our existing infrastructure – and generating more money to help pay for it.
He provided a similar claim about potential new development on the Bill Kelly Show. Writing in a similar vein, the Hamilton Spectator’s Paul Berton wrote: …LRT is not just about transit; it is about economic development. LRT has the ability to transform the Hamilton economy. We know from the experience in other cities that it will spur development along the route, create its own environment of investment, and that these businesses will pay taxes. On a visit to Hamilton to announce the awarding of the contract for the James Street North GO station, Transportation Minister Glenn Murray repeated to Kelly that LRT was the best option for attracting development and raising property values. To test these assertions, we went to Metrolinx’s Hamilton Main-King Benefits Case February 2010 to see what the transit agency itself had to say about potential development along the LRT route. The benefits cited by Metrolinx are over a 30-year period (2009- 2038).
Referring to the proposal for a full implementation of LRT along the “B” Line route from Eastgate to McMaster—Metrolinx’s most optimistic projection is that there could be an uptick in property values of $144 Million. Given that Hamilton’s commercial tax rate is about 3.4 percent of assessed value, $144 Million would produce about $4.9 Million per year in incremental tax revenue. If, as expected, Hamilton were to assume roughly $300 Million in debt, it would take roughly $10 Million in extra taxation just to service the debt, which would require development and property value increases totalling almost $300 Million, more than double Metrolinx’s most optimistic figure. Much of the route is already fully developed as largely commercial assessment with some medium density high rise between the Queenston Traffic circle and Eastgate. Commercial property expert Syd Hamber a Senior Vice President of commercial real estate firm Collier’s International, says there is no compelling reason for existing property owners along the route to demolish and build new, although undoubtedly there is some potential for redevelopment of the most distressed section of King Street from Gage Avenue to Victoria Street. “If they build new, the assessment goes up, but the kind of rents they would have to charge would be out of the reach of the average renter,” he said. “At today’s interest rates people who can afford, say $2000 a month, can buy a home.”
The Canadian Urban Institute prepared a study of the potential property value increase in 2010 and concluded that the total increase in property values along the “B” line would yield approximately $81 Million in new taxes over a 15 year period, or roughly $5.4 Million per year. The chart on page 3 illustrates the disparity between capital and operating costs on the one hand and projected increase in assessment value on the other. For the range in the amount of new taxes we took Metrolinx’s most pessimistic figure as the low number and the Canadian Urban Institute’s projection which was about 10% higher than Metrolinx’s most optimistic projection.