Underlining the growing housing crisis in Hamilton, a number of residents and groups will be appearing before Hamilton’s General Issue Committee to oppose a tax increment grant to the owner of a central Hamilton apartment block. The opposition is not likely to succeed, however, since the application by Malleum Properties meets all the requirements of a program that has been in place for 20 years. The apartment complex at 540 King Street east was one of several similar properties purchased by Malleum—in this case in November 2018. By the following June all of the tenants were displaced as the building underwent renovations. The renovations are complete and the apartments are back on the market at $1500 for a one-bedroom unit.
The staff report says the renovation costs “are estimated at $2,775,000 and it is projected that the renovations will nearly double the assessed value of the property resulting in a property tax increase of $56,000 per year. Under the program, Malleum will get a 100 percent rebate in year one, with the rebate declining by 20 percent per year until year five. In all the company will receive almost $170,000.
The Tax increment plan was introduced in 2001 when the Hamilton Core was languishing in a real estate slump. At that time banks would not issue mortgages for properties in the core. In response, Hamilton Council implemented several stimulus programs to encourage development. One would supply down payment loans to encourage condominium development. Another was this tax increments rebate plan.
At least seven members of Acorn Tenant Union which has been advocating against so called “reno-victions,” will appear before council. But as the staff report indicates, “declining a grant and/or approving a reduced amount would undermine the principles of the Hamilton Tax Increment Grant Program and regeneration efforts in general. This alternative is not recommended.”
For many years Hamilton had developed a reputation as a magnet for low wage earners because of the relatively affordable housing. For instance, an apartment in any number of low rise units along King and Main Streets East were renting at under $700 per month-a rate that remained stable for more than a decade. That all changed when the Hamilton LRT project came to life, and many of these properties were purchased by Malleum and other developers who saw the enhanced possibilities for profit with LRT. Now the going rate for the same apartments is between $12-$1500.
Earlier this year Hamilton council implemented a grant program to assist tenants fighting evictions with their legal costs. In the discussion around that move Ward 3 councillor Nrinder Nann, who supports LRT, said renovictions are resulting in the loss of affordable units and affecting residents who just want to stay in their homes. “It appears as though property owners and landlords are evicting tenants for improvements that many of us as homeowners usually live through and get through just fine,” she said. In addition to the apartment renovictions, the LRT project has already resulted in the demolition of more than 60 houses, many of them duplexed into rental properties, with dozens more expected in the coming year.