Special Report: Creative City

The City of Hamilton's Selective Subsidies

We need to plant the seeds for individual Hamiltonians to succeed, because this is the only type of growth that will be long-lasting and sustainable.

By Sean Burak
Published August 17, 2012

The city is poised to implement increased business licensing fees which have been deferred from previous years. Reading this brought forth many frustrations that have been bubbling for some time. It is interesting that some councillors are supporting these fees in the name of fairness.

Ward 8 Councillor Terry Whitehead says, "It's hardly fair to expect taxpayers to subsidize a cost of doing business". But a year ago, he questioned our raising development charges for businesses and homebuilders building anew: "I don't want to create a disincentive or to make ourselves less attractive."

So where's the love for our current business owners?

The 300 jobs that Canada Bread brought to Hamilton did not come for free. Citizens at City Hall (CATCH) reports that Canada Bread paid $75,000 to $100,000 less than the going rate per acre for their 24 acre parcel, required $500,000 from the city for "site preparation and road upgrades" and received $1,124,357 in tax rebate grants for LEED building practices.

They also received a $2 million grant from the federal government.

Yet the city is concerned about taxpayers subsidizing the cost for bylaw staff to monitor food trucks, visit lodging homes and inspect taxicabs for safety?

This brings to question a world of subsidies that our city officials are willing to give to other projects.

Expensive Subsidies

Did you know that the city and province are teaming up to build a cloverleaf at Clappison's Corners, where Highway 5 will go over Highway 6? The justification for this is to service traffic demand for the behemoth shopping centre slowly being built there as well as future residential growth in the area.

The cost to taxpayers? The city and province won't say, for fear of tainting the bid process. But "a very preliminary figure" from 18 months ago pegged it at over $60 million - of which Hamilton is on the hook for 25 percent. That's a minimum of $15 million from our local taxes - and the rest comes from our provincial bill.

One has to wonder: who will benefit from this expenditure? Will this improve our city? Will the general population of Hamilton see positive results? Or does this equate to a subsidy to the sprawl developers, giving them an easier-to-sell driveway-to-driveway experience for residents on the fringes of the city who commute to other communities to work?

And this is small potatoes compared to the Aerotropolis boondoggle which promises to cost us a minimum of $350 million just to build the roads and sewers necessary to offer the land to industrial developers - developers who are nowhere to be seen. See this land use table [PDF] showing that the current Airport Business Park is largely vacant.

The city has many grant programs that are tailored to bigger developments, while smaller businesses and developers are left to flounder. $8,896,486 is being loaned to Vrancor [PDF] with a five-year, 0 percent interest term for his Homewood Suites project.

Can We Do Better?

Supporting such developments can be a great idea, but could we do a better job of spreading our subsidies to the smaller businesses? When is a subsidy a burden to the taxpayer? And when is it OK?

Our city seems to be addicted to throwing money at huge projects in the hopes that one of them will be our saviour. But the success of our city is going to depend on organic growth driven by "the little guy".

We need to stop spending on pie-in-the-sky fantasies and begin leveraging our real strength, which lies in the individual citizens who care about the city on a personal level.

This means we need to make life easier for current small business owners. We need to give incentives to new small businesses. We need to encourage infill residential growth - making it easier to develop those little apartments above our small businesses, filling our downtown with residents again.

We need to plant the seeds for individual Hamiltonians to succeed, because this is the only type of growth that will be long-lasting and sustainable.

Let's stop putting our limited number of eggs in so few huge baskets. Let's give an egg to every citizen and see where it takes us. (Better yet, let's give each citizen an urban chicken instead).

First published on the Bikehounds blog on August 16, 2012.

Sean Burak was born in Hamilton but raised elsewhere in Ontario. He returned to his birth town at the turn of the century and has never looked back. Sean is the owner of Downtown Bike Hounds.

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By jasonaallen (registered) - website | Posted August 17, 2012 at 16:58:14

When I had it out with Economic Development over their glib/insulting 'End your commuting nightmare' video, their solution was to start a business. Doing the math, Canada Bread got at least $18K per employee in grants and tax breaks.. When I started my (now failed) biz in '08, an 18 large safety net would have come in really handy.

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By Jonathan Dalton (registered) | Posted August 18, 2012 at 11:43:30 in reply to Comment 79910

$18K is around what you get with the Ontario Self Employment Benefit, in the form of regular EI payments over a period of 10 months. It is meant to provide a safety net while you work to start your own business. Unfortunately, there are a lot of catches with this program (you have to be on EI, for example), and a lot of competition to get in.

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By bigguy1231 (registered) | Posted August 17, 2012 at 23:01:12

If you didn't know the city and province were going to put a cloverleaf at highway's 5 and 6 then you haven't been paying attention. They have been in talks to do so since the 80's. It's all part of the process to turn highway 6 into a limited access divided highway. It predates the lands in that area being zoned commercial. The first phase was the part from the 403 to highway 5. They are currently in the planning stage for the Puslinch bypass. Once that work is done they will procede with upgrading highway 6, from highway 5 to highway 401 in stages. Highway 6 from the 401 through Guelph is already done and has been since the eighties.

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By bikehounds (anonymous) | Posted August 18, 2012 at 10:34:18 in reply to Comment 79912

If you read the planning documents, the justification for the overpass is cited as local traffic demand from retail and residential developments around waterdown.

Most of us can see that the reality is a desire to build a separated highway from the 403 to the 401, but they do not explicitly say so.

By building the overpass, they will induce traffic on 6 making it more dangerous. This will make the argument for a puslinch bypass (and a waterdown bypass on parkside) even stronger.

It's 20km from the 403 to Campbellville road and 6km to the 401 from there. If you drive 10 over the limit, the journey is 13 minutes to campbellville rd and 6 minutes to the 401.

If we build a full divided highway, that 19 minute journey will only take 13 minutes assuming you speed at 120.

If (more likely) we build a limited access highway with a speed limit of 90, assuming again going 10 over, the trip takes 15 minutes.

Who is driving this? For the sake of saving 4 to 6 minutes from that trip? Most people spend more time than that idling in the tim hortons drive through before embarking on their commute. This is certainly an expensive way to save time....

I have a better idea - photo radar set to 90km/hr. This will generate money instead of costing money and will improve safety with zero infrastructure cost and no expropriation and no additional future maintenance costs.

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By Woody10 (registered) | Posted August 20, 2012 at 01:51:15 in reply to Comment 79923

You're kidding right? You must have been doing this trip late at night or some other strange time. I personally drive that stretch quite often and not only is it dangerous from Hwy. 5 to the 401 it's a total traffic nightmare for hours at various times of the day. I have been in a holding pattern approaching the 401 from as far back as the railway bridge on a regular basis in the morning. So when you say "who is driving this?" obviously a lot of people.

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By seancb (registered) - website | Posted August 20, 2012 at 11:02:46 in reply to Comment 79942

You completely miss the point. Putting a cloverleaf at clappison's is going to create more traffic North of 5 - making the snarl at morriston even worse.

What we should be doing is investigating ways to ease the bottlenecks at morriston/puslinch and on 5 through Waterdown.

If we don't do that first, then the cloverleaf at 5/6 will only make both of those bottlenecks even worse.

When I said "driving this" i meant "pushing for a cloverleaf at clappison's" I didn't mean "driving on the highway".

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By Woody10 (registered) | Posted August 20, 2012 at 18:11:58 in reply to Comment 79953

I was referring to your drive times etc. The cloverleaf will at least alleviate the southern congestion at #5 which is also dreadful at rush hour.

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By seancb (registered) - website | Posted August 21, 2012 at 10:48:45 in reply to Comment 79961

Come on, it's hardly dreadful at clappison's. I have driven it at all times of day and have never had to wait more than one light cycle. Aren't you amazed at how efficient it is? I am - the sensors tell exactly how many cars are in each lane and the light stays on long enough for everyone to get through without making the cross traffic wait longer than necessary. It's quite well designed.

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By Kiely (registered) | Posted August 19, 2012 at 12:46:33 in reply to Comment 79923

they will induce traffic on 6 making it more dangerous.

If the plan is to make a properly divided hwy 6 it will not be "more dangerous".

The most dangerous stretch of 6 is the 4 lane section with no middle turning lane separting the two directions of traffic.

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By seancb (registered) - website | Posted August 20, 2012 at 11:14:30 in reply to Comment 79931

What makes this stretch dangerous is traffic moving at 100 or higher instead of at 80 - causing problems turning off and on the road. A cloverleaf at clappisons will send signals to drivers that they are on a freeway, and will worsen the problem immediately.

Again, this is being approached backwards. If safety is the main concern then we either need to reduce the speed of traffic, or if we think that we have to go 100 instead of 80 then we have to build a proper divided highway.

Read the planning documents. The official plan is to build the overpass and then "monitor the situation". The highway is most certainly going to be more dangerous after the overpass is built - during this "monitoring" phase.

Comment edited by seancb on 2012-08-20 11:14:56

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By bigguy1231 (registered) | Posted August 19, 2012 at 00:41:33 in reply to Comment 79923

That might be the justification they are using now but I can tell you it has been planned for years. The addition of commercial in the area may have accelerated the process.

That road is one of the most dangerous highways in S Ontario because of the speed and volume of traffic, the sooner they upgrade it the better.

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By seancb (registered) - website | Posted August 20, 2012 at 11:15:05 in reply to Comment 79930

I am not in support of spending hundreds of millions of dollars on a separated highway because some commuters don't want to line up for 5 minutes at the 401. Will those commuters pay for the high speed rail that I want to ride between Hamilton and Toronto?

Why are highway building expenses accepted as a "given" while LRT unearths a bunch of tightwads screaming about cost?

This is a TON of money that the city simply cannot afford to spend. Their claim is that the overpass is required to service new developments in Waterdown. If this isn't the case, then why are they lying? ANd if they aren't lying then the development charges should cover this expense, not the rest of us.

Comment edited by seancb on 2012-08-20 11:15:31

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By bigguy1231 (registered) | Posted August 21, 2012 at 01:02:13 in reply to Comment 79955

The city isn't spending the money for the highway, the province is. Provincial highways are funded by the provincial government. They expand highways based on need. It is clearly needed based on current traffic patterns.

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By seancb (registered) - website | Posted August 21, 2012 at 10:49:38 in reply to Comment 79973

The city is paying 25% of the cost for the 5/6 interchange.

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By DavidColacci (registered) | Posted August 18, 2012 at 09:52:21

Yeah, but nobody gets photo ops and newspaper billings for helping out small business.

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By TnT (registered) | Posted August 18, 2012 at 22:43:07

Oh man. This is a great article. Really highlights how screwed up the system is.

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By Sigma Cub (anonymous) | Posted August 20, 2012 at 05:19:39

I disagree with many of the decisions that have been made in this city over the past few decades, butfind little use in getting exercised about what cannot be undone (or conflating provincial infrastructure planning with municipal infrastructure planning).

Moving forward, I wonder: Subsidies and enticements to large companies seems to be the way of the world. Given that, let's consider the other part of the equation.

How does Hamilton stack up against other jurisdictions with regard to its support for small business? The Globe & Mail's Report on Business team surveyed Hamilton not that long ago. What was their estimation of the City's performance on this count?

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By Robert D (anonymous) | Posted August 20, 2012 at 10:40:52 in reply to Comment 79943

Someone on RTH did a piece a while back, stating that attracting large companies was not the best way to go, because larger companies have very little capacity to grow (they're already the largest player) and vast capacity to shrink. Smaller companies and entrepreneurs might not bring as many jobs initially, but have huge capacity to grow, and little capacity to shrink.

In this sense, "betting on the little guys" is more likely to result in long term success than betting on the big guys.

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By Public space Pete (anonymous) | Posted August 20, 2012 at 12:51:58 in reply to Comment 79949

It has been well recognized that large businesses are shedding jobs whilst almost ALL job growth is coming from SME's.
However large companies and developers have a very strong control mechanism that determines what happens in the political system.
This website is hopefully a strong tool for taking back our democracy.
In Hamilton the airport lands, downtown hotels/casino's, residential sprawl into farmland and large big box developments are the current battles.
The question is how can the posters here expand/share the well reasoned discussions with a larger audience?
Worth an article in itself.

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By Kiely (registered) | Posted August 20, 2012 at 11:23:35 in reply to Comment 79949

Not to mention the atrocious ROI of subsidizing large companies to provide nothing but a poverty wage to your citizens.

Who can raise a family on $13 an hour? That's what a lot of these big companies we are "attracting" are paying. $13 an hour, 60 hour work weeks, contract jobs and no weekends off are becoming common at these slave-wage employers.

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By Ryan (registered) - website | Posted August 20, 2012 at 10:53:55 in reply to Comment 79949

You may be thinking of this piece by Adrian Duyzer:

In Hamilton, most efforts seem focused on convincing large, established companies that they ought to move here. We have acres of "employment lands" just waiting for companies like Canada Bread.

However, our efforts to bring large employers to the city are misplaced. We would actually gain many more jobs by focusing on creating new, high-growth companies right here in Hamilton.

Overall, older established companies are net job-destroyers, whereas young, small companies are collectively net job creators.

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By Robert D (anonymous) | Posted August 20, 2012 at 22:06:24 in reply to Comment 79950

That is the article I was thinking of. Thanks.

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By Sigma Cub (anonymous) | Posted August 20, 2012 at 12:47:56 in reply to Comment 79950

Thanks for that.

I have no idea about the data, but imagine it's easier for an owner-proprietor to rack up 500% growth year-over-year (from one employee to six, say) than it would be in a larger operation. (It's also entirely possible for one entrepreneur to work at multiple businesses.) Not sure how you would begin to account for that.

It might, however, explain the abundance of fantastic employment options available to Hamiltonians (as long as they're prepared to create those jobs themselves).

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By MVH (anonymous) | Posted August 20, 2012 at 09:51:52

The link you posted referenceing Vrancor has nothing to do with his Staybridge Home Suites. It is a construction loan for the Condos he's building on Bay.

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By highwater (registered) | Posted August 20, 2012 at 10:08:41 in reply to Comment 79946

Read the doc. It's for the Homewood Suites Hotel @ 40 Bay S.

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By seancb (registered) - website | Posted August 20, 2012 at 11:17:29 in reply to Comment 79947

The first paragraph of the executive summary reads:

The Hamilton Downtown Multi-Residential Property Investment Program (HDMRPIP) application for the redevelopment of 40 Bay Street South (the “Property”) was submitted by Hamilton 132 Main Street Inc. (Darko Vranich), the registered owner of the property.
The applicant is proposing to develop a Homewood Suites Hotel on the former HMP car dealership property that is presently vacant. The Homewood Suites Hotel will be 15 storeys in height, have 182 suites, 1,823 square feet of commercial space and 110 parking spaces

Again, I'll reiterate that this program is great - as long as it does not come at the expense of the smaller start ups. We need to start encouraging organic growth through the little guys or we will continue to fall behind.

What is this city doing to entice young people to start businesses or start lives here? Basically nothing.

Comment edited by seancb on 2012-08-20 11:19:58

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By Investor (anonymous) | Posted August 21, 2012 at 09:01:20

Banging my head against a wall trying to get investment help from government was an utter waste of energy. Answer was always the same: to get money you need to have money. If I had money I wouldn't need money.

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By Pxtl (registered) - website | Posted August 21, 2012 at 13:29:27

In completely unrelated news, Hamilton's real-estate market is now the hottest in the country:

http://www.thespec.com/news/business/art...

Hmm....

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By Steve (anonymous) | Posted August 21, 2012 at 16:43:13 in reply to Comment 79980

Ah yes, the ones that tell Torontonians to invest as slumlords in Hamilton. Buy cheap convert to maximum rental, collect the rent and then repeat.

Look at this testimonial, "Prior to joining, I had purchased 40 doors and considered myself a fairly sophisticated investor."

The properties Mark Torgerson purchases are called "doors". I hope he never purchases the "door" next to my house, or my street, or in my entire neighbourhood.

Our goal should be to get off their list!

Rant over, sorry for going off topic.

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By Montelimar (anonymous) | Posted August 22, 2012 at 06:37:32 in reply to Comment 79982

REIN apparently ran several bus loads of property investors through an EcDev show-and-tell gauntlet a couple of years ago.

http://www.mrhamilton.ca/2010/10/what-a-great-rein-field-trip/

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By Montelimar (anonymous) | Posted August 22, 2012 at 06:53:57 in reply to Comment 79990

Note the specific mention of areas blessed with "selective subsidies," such as Canada Bread (and the allusion to greenbelt clawback).

Here's the REIN formula that went into naming Hamilton #1. It's taken from their website (where you can buy the full report for around $60):

"In this special report, the following long term key fundamentals were analyzed in-depth:

Is the area’s average income increasing faster than the provincial average?

Is the area’s population growing faster than the provincial average?

Is the area creating jobs faster than the provincial average?

Does the area have more than one major employer?

Is the area in the RBC Affordability Index Hot Zone (25% to 39%)?

Will the area benefit from an economic or real estate ripple effect?

Has the political leadership created an economic growth atmosphere?

Is the Economic Development Office progressive and helpful?

Is the area’s infrastructure being built to handle the expected growth?

Are there any major transportation improvements in the works?

Is the area attractive to Baby Boomers’ lifestyle?

Is there a short term problem occurring that is slated to disappear in the future?

Is there a noted increase in labour and materials cost in the area?"

Despite REIN's claims to the contrary, a number of these questions invite pretty subjective answers, and are themselves speculative.

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By Steve (anonymous) | Posted August 22, 2012 at 08:56:46 in reply to Comment 79991

Mr. Hamilton brags on his website about his newest student rental house, bit.ly/Ngxgjq and how it was purchased from a homeowner and he's spending $20K to convert/improve the property to code.

Who wants to bet without a care to zoning bylaws and a building permit.

Sorry, Westdale one more student house and one less owner to add, and subtract, from the neighbourhood.

But that's okay because we are #1 at something!!! I wish EcDev would get their heads out of their a$$es.

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By Tom Vu (anonymous) | Posted August 21, 2012 at 19:26:37

Agreed. Winning national renown as a low-risk playground for property speculators is nothing if not double-edged.

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By Kiely (registered) | Posted August 22, 2012 at 15:39:17 in reply to Comment 79983

"This is not a country club! This is my house!"

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By mainstreet (anonymous) | Posted August 26, 2012 at 18:16:02

in the current downtown investment scenario,why not convert the conaught into social housing units.it could be filled with people that are now homeless complete with daycare,artists apts,artist studios,artsales and a food bank.perhaps a bycycle storage and repair area.the potentials are endless.this could be the spark that would ignite the downtown to its true potential.think of it,gore park filled with people again almost overnight,the streets alive with business people making deals,selling all sorts of art and things. I sure hope the downtown councilor is in favor of this idea,just picture it all those citizens in one area having their needs met in a place they could call home.

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By Well... (anonymous) | Posted August 27, 2012 at 00:24:10

Wesley Center on Ferguson is what you want? More poverty industry and vagrants. Let's put some wealthy people and then we won't need bike shops and food banks. We can use tax money to improve downtown.

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By Johnny T. (anonymous) | Posted August 27, 2012 at 09:24:12

In response to By well, the poverty industry is a Hamilton growth industry.It is my understanding(please correct me if this is untrue)that there are more than one hundred social service agencies in the downtown that provide services to people with special needs.Shifting those poor folks to my neiborhood(Kirkendale)is simply shifting the problem to my doorstep.Since it was cityhall that was and is totally responsible for our downtown mess in the firstplace,Ruining another area under the pretense of dealing with downtown is simply BS.Is it any wonder that no investor will come foreward with their own money in the downtown.

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By Martha G. (anonymous) | Posted August 28, 2012 at 14:26:08

If we could get the new social units in the connaught,most of the new tenents would be on ODSP(Ontario disability support payments).This would bring a much needed cash infusion into the downtown.All those social sevice agecies that actually number over two hundred could have their clients at their doorstep.Now add the artists,their studios and apts. to the mix perhaps a coffeshop and a food bank run by the artists as well as a bike shop and other support shops would would provide job training and part time work to those most needy.The main lobby on the groung floor could hold a needle exchange and a methodone clinic and counselling services.Now we can show visitors and tourists that we are truly a city that cares.The heart of downtown is the heart of a caring unselfish city. Thank you Hamilton.

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By RenaissanceWatcher (registered) | Posted August 29, 2012 at 08:18:15

There is an article by Paul Wilson on the cbc hamilton website today about the apparent lack of progress in developing the former Royal Connaught Hotel property: http://www.cbc.ca/hamilton/talk/story/20...

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By TiCats fan (anonymous) | Posted August 29, 2012 at 16:39:20

Having read the article by Paul wilson,It Would seem that Mr spilachi has been painted into a cornner by the mayors pal Mr.Vranich.Now is the time to read the reality of downtown and the Connaught.Make it into mixed social and market rental apts.This is where the artists studios with art sales in the lobby would certainly create a buzz.That way the contribution the art scene makes would be abundantly clear, and the ODSP tenants could pay a little something to help support the arts.The highly acclaimed art crawl could be extended to downtown.This would increase wine sales as well as all those people purchasing tons of art.Our local couselor would have no problem giving downtown loans money as well as forgiving development charges.The Connaught building is so far unique in our downtown because it doesnt have any bed bugs and that would be a further development incentive. Lets get the whole mob on board and make the downtown start humming again.

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