There has been a growing trend in recent years towards urbanization, not only in the United States, but around the world. In Ontario, the Canadian government has launched a program focused on downtown revitalization, called “Places to Grow”. In many downtowns across North America, there is no shortage of buildings that have fallen to vacancy and decay, many of them former industrial sites. Such properties, called “brownfields”, have become targets of redevelopment and downtown revitalization. While the benefits of developing these brownfields are many, it can be easy to forget that these areas are not blank canvasses, and there are no shortages of barriers, in particular access to money.
Organizations such as OREA and the Canadian Brownfields Network (CBN) are proposing a new property tax class for brownfield properties being revitalized that would theoretically fix the money issue. According to a study that they commissioned, it would take 3 years to remediate and develop these properties, and the average owner would save over $200,000 if such a tax policy were to be introduced. Yet not everybody agrees with this assumption; Brian Morris, a recent graduate of the University of Waterloo’s Local Economic Development Program, spoke out against it in his major research paper, The ‘Taxing’ Issue of Brownfield Redevelopment with Case Studies from Hamilton.
Hamilton, a city in the greater Toronto area, has a large number of brownfield sites, a reminder of the city’s history as an industrial center. In his paper, Morris selected six brownfield properties for his analysis, representing various types of brownfields to address the complexity and uniqueness of these properties. To understand how effective the proposed tax class would work, Morris assessed its performance with data from the sites, such as property assessment values, zoning, municipal and education tax rates, remediation costs and the estimated cost of proposed redevelopment plans, then used this data to calculate annual taxes. Morris found that not all of the properties would require re-zoning, and while some of them had existing structures that needed to be demolished, others were vacant or had structures that could be reused. Not all of the sites were subject to industrial zoning, and their varying size meant that their tax rates varied as well.
Morris’ findings have suggested that there wouldn’t be any significant cost savings under this proposed tax measure, noting that the actual performance of this proposed new tax class for brownfield properties was lower than the hypothetical “typical” brownfield scenario that CBN and OREA proposed. His study reveals that brownfields are highly varied properties that can’t be considered “typical”. He also suggests that such tax measures wouldn’t directly address the lack of up-front financing for revitalization, one of the biggest challenges to successfully redeveloping brownfields. While there is still room for further research, it’s clear that policies need to address the diversity of such properties. If you’d like to learn more about the study, you can click here!