Hamilton’s General Issues Committee passed two resolutions that will provide tax breaks totalling about $5.3 Million in tax forgiveness over five year on two apartment complexes; but at least one member of council has signalled that the program may come to an end with the arrival of LRT. The LIUNA apartment tower on King William will stand to have $4.5 million in taxes rebated and the Royal Connaught Condo project stands to recover over $700,000. The rebate will consist of 100 percent forgiveness in the first year, 80 percent in the second, 60 percent in the third, 40 percent in the fourth and 20 percent in the final year. After that the properties will pay full taxes.
The incentive was started 20 years ago at a time when Hamilton’s downtown core was deteriorating and had not seen significant new development in decades. The plan had the twofold objective of creating opportunities for property development and assessment, but also to encourage people to live in the downtown core.
But in voting against the measures today Councillor Lloyd Ferguson suggested the time may have come to end the program, especially should LRT become a reality. LRT has been touted as resulting in increases in property values, making artificial inducements potentially no longer necessary. Ferguson said the money the city is now spending on subsidizing apartment development may be needed to offset the operating and maintenance costs of an LRT system.
The Tax Increment Grant Program provides tax relief to the developers of properties on a descending sliding scale covering a five-year period. The program is designed to encourage investment in the core. When the developers took over the former Royal Connaught hotel, the vacant building was listed as commercial vacant land and had an assessment value of $472,000 and was paying property taxes of $11,000 per year. With the completion of the project which now consists of 93 condominiums—the property value is over $44 Million, and will generate property taxes of $237,000 per year. In the case of the LIUNA property its assessed value increased from less that $2 Million to $147 Million.