Brown v. green equals blue landowner
KEVIN MARRON
Globe and Mail Update
November 25, 2008 at 6:00 AM EST
Hamilton businessman Carl Turkstra believes he has a gold mine in the brownfield property he has purchased in the city's beleaguered north end, although it remains to be seen what else he will find as he digs out the metals and PCBs that have accumulated over more than 100 years of industrial use there.
Mr. Turkstra, who is chief executive officer of family owned Turkstra Lumber Co. Ltd. and not a professional developer, says he will have to dig deep into his own pockets to clean up the 16-acre former Frost Fence and Wire Products Ltd. site, in spite of the support he is receiving from the City of Hamilton's vaunted brownfield redevelopment program.
“It's like buying one wheel of a car,” he says of the $15,000 city grant that will fund an environmental study and close to $700,000 in potential tax relief under the city's Environmental Redevelopment and Site Enhancement program if his assessment increases after the project is completed.
What's missing, Mr. Turkstra says, is any source of interim funding to help with the purchase and remediation costs – banks won't approve a mortgage until environmental liabilities are removed.
“You're talking a lot of money here and most people would probably have trouble finding that much cash to buy the building and clean it up unless they can mortgage it. That's the huge flaw in the whole system that there's no government support for people who want to do this,” says Mr. Turkstra, who has financed this project largely with private capital.
Furthermore, a continuing controversy over Hamilton's plans for employment growth has left Mr. Turkstra and others questioning whether the city still has a commitment to promoting the revitalization of its old industrial core as it strives to encourage greenfield development in the rural area near Munro International Airport to the south of the city.
The need to clean up and redevelop hundreds of dilapidated sites that litter what was once the heartland of Canadian industry has long been seen as a key city goal.
Hamilton, in the 1990s, was one of the first cities in Ontario to adopt an incentive program and planning process for brownfields. Just a year ago, Mayor Fred Eisenberger described brownfield lands as key to regional growth.
It therefore came as a surprise when a planning study reported earlier this year that the city has only 91 brownfield properties, covering 377 acres, that are ripe for redevelopment, not 1,386 properties, covering more than 7,000 acres, as had previously been believed. The finding accompanied recommendations that the city promote greenfield lands near the airport as areas for future employment growth, prompting some council members and citizens, including Mr. Turkstra, to question whether city staff members were playing down the brownfield opportunities in order to persuade the provincial government to approve growth in rural areas.
“I think Carl is in part right that some of our staff see that our only future employment lands opportunity is around the airport. I don't happen to agree,” Mr. Eisenberger says.
City staff members say they came up with 91 sites by strictly applying the definition of a brownfield as “an abandoned, vacant, derelict or underutilized commercial or industrial property where past land use activity has resulted in actual or perceived contamination.”
According to Neil Everson, director of economic development and real estate for the city's planning and economic development department, much of the property previously considered as potential brownfield land is being used in some way and has owners who are paying taxes.
“If they're paying taxes and they're current, technically they're not a property that's there for redevelopment. Are they the highest and best use? Maybe not. But what authority does a municipality have with the exception of trying to expropriate them?”
But there is a debate among city councillors and staff as to how the term “underutilized” should be interpreted and whether more sites should be included in the brownfield inventory. Mr. Eisenberger maintains there are about 7,300 acres of brownfield land that should be included in an expanded definition.
Nevertheless, the mayor says the city has already had considerable success in promoting brownfield development with its program of tax incentives. He and city staff note that an Ontario Ministry of Municipal Affairs and Housing survey found that Hamilton exceeded all other municipalities in brownfield development activities last year, with 19 new applications under the municipal brownfield incentives program, compared with a provincial average of four.
Mr. Turkstra says the site he has purchased “for a few million dollars” is a good example of the kind of opportunity that is available in the city's north end, the broad swath along Hamilton harbour that is also home to the steel mills.
He says he originally was looking at the property for a project that didn't come through and decided to buy it anyway because he saw the potential, in spite of the serious environmental problems on a part of the site that had been a galvanizing operation.
In spite of his concerns about the difficulty of financing the purchase and clean up of brownfield sites, Mr. Turkstra readily admits he should come out ahead on the deal.
“I bought this whole property, completely paved and fenced, with 3,000 square foot of space, half of which is now rented and used, for a fraction of what it would cost to build it. When I get done with this thing, I'm looking at probably no more than 30 per cent of what it would cost to build in a greenfield.”
Mr. Turkstra says it's a shame that the difficulty of getting mortgages or other financing for the initial cost of brownfield development “puts it out of reach of anyone but an individual who has a lot of friends or is very well funded, or a very large corporation that probably doesn't want to be bothered with such a time-consuming process.”
As a business person, Mr. Turkstra is optimistic about the possibilities of his property. As a citizen, he says he's passionate about the need for redeveloping Hamilton's industrial north end.
“We have this enormous wasting asset down there which is extremely valuable,” he says. “You've got hundreds of thousands of square feet of space available. You've got all the infrastructure in place – the roads, water, and sewers. You have a port, highway access, a large supply of underused labour, all the houses, schools, sports facilities, stores – everything sitting there and it's wasted.”
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