Startling comparisons to city airport numbers
May 31, 2006

Pearson airport in Toronto. Pearon is paying $146 million a year in rent to the federal government which owns the facility. That's more than 3000 times the $50,000 that the Hamilton is hoping to extract this year from the managers of its airport, even though the Toronto airport is only 60 times the size of the Mount Hope facility.

The public corporation managing Pearson airport in Toronto is paying $146 million a year in rent to the federal government which owns the facility. That's more than 3000 times the $50,000 that the Hamilton is hoping to extract this year from the managers of its airport, even though the Toronto airport is only 60 times the size of the Mount Hope facility.

Several other startling figures were shared with Hamilton councillors yesterday by Steve Shaw, the vice-president of corporate affairs for the Greater Toronto Airports Authority (GTAA). One that particularly caught the attention of Hamilton councillors was the amount that the GTAA is paying in municipal taxes.

Shaw said the airports authority provides $26 million a year to Mississauga in property taxes, while private companies on airport lands add an additional $24 million. By contrast, Tradeport International, the private company running Hamilton's airport, doesn't pay any municipal taxes. Its deal with the city in 1996 included a property tax holiday than runs until 2012.

Shaw also provided councillors with the GTAA's estimate of Pearson's economic impact on the surrounding community. He said about 130,000 jobs are generated by the airport and its associated activities, but was unable to estimate the effect of the airport on other area businesses. Shaw said the GTAA recently launched a study to determine this. Some city officials think that the Mount Hope facility will become Hamilton's economic engine and attract over 50,000 jobs during the next quarter-century.

The GTAA has been vilified by numerous councillors for promoting the construction of a new airport in Pickering - a project that has been presented as a major threat to Mount Hope and a huge waste of federal government money. Shaw dismissed these concerns during an extensive question and answer session with councillors.

He also debunked suggestions that the federal government will sink billions into a new Pickering facility. "I wish it was true," Shaw said, and "we'll certainly ask for it" but he held out little hope. He repeatedly argued that Pickering is not a threat to Hamilton 's airport, but that rather the GTAA sees a need for both facilities - one to the east of Pearson at Pickering, and one to the west in Hamilton.

The meeting revealed that there have been virtually no direct relations between Hamilton officials and the GTAA up to this point. Shaw noted that they had approached Hamilton about cooperation in 1992 and the regional government of the time had turned them down.

Earlier in the meeting, councillor Whitehead had recalled a meeting last year with Shaw in Mayor Di Ianni's office. That led Bob Bratina to ask "how many times you've met with the mayor, or had meetings with the city of Hamilton?" Shaw replied: "You can [ask], and I'm not certain that I'm allowed to tell, but I think only once."

The meeting was also addressed by representatives of Tradeport who obtained delegation status. That gave Brian McHattie the opportunity to try and determine exactly how much the airport management company plans to pay to the city this year in rent. Early in the year, city financial staff had pegged the amount at $50,000 but subsequent media reports have suggested it will be less.

McHattie asked Stewart Steeves of Tradeport several times, but was unable to get a commitment as to the exact amount. A CATCH transcript of this exchange is provided below.

In response to questions from Terry Whitehead and Bill Kelly, Shaw dismissed concerns about the impacts of peak oil on the airline industry. "The effect is actually minimal," said Shaw referring to recent calculations by Transport Canada that predict a 1-2 percent drop in air travel by 2020 as a result of higher fuel prices.

Shaw pointed to increasing fuel efficiency of new planes and the fact that airline companies are building ones today that will have a life span of 35 to 40 years. "Air travel is part of the modern global world," the GTAA vice-president declared. "It's going to happen one way or another."

CATCH (Citizens at City Hall) updates use transcripts and/or public documents to highlight information about Hamilton civic affairs that is not generally available in the mass media. Detailed reports of City Hall meetings can be reviewed at www.hamiltoncatch.org. You can receive all CATCH free updates by sending an email to CATCH@cogeco.ca.

CATCH transcript of an exchange between councillor Brian McHattie and Tradeport vice -president Stewart Steeves during the May 30, 2006 meeting of city council's committee of the whole:

McHattie: "Richard [Koroscil, CEO of Tradeport], I know you've talked to us before about some of the financial arrangements between Tradeport and the city, but just with the numbers up for Toronto, for Pearson, just now, thinking about it again. Do you know offhand the same kind of payment we just spoke about - the payment in lieu of taxes, the property taxes and the lease cost. Can you provide those? I don't know if you have those off the top of your head at this point".

Stewart Steeves : "There's a number of components, I guess, of the returns that we would pay to the city. We have a different arrangement than the GTAA in that our landlord is the city. So when you look at PILS which is payment in lieu of taxes that the GTAA would pay in Toronto, the equivalent here would be our property taxes that we pay the city which we've been given a property tax holiday til 2012, at which point they kick in at the level of about half a million dollars. It's a little bit difficult to compare, but when you look at the value of improved access to the airport that Tradeport has made versus the GTAA - in fact the mill rate in Hamilton could be even a bit more than the effective mill rate in the GTA. Okay? And that doesn't consider the fact that because the city's our landlord here, the improvements that we make at the airport actually vest back to the city as opposed to [hesitates]" McHattie : "As opposed to the federal government". Steeves : "Right."

McHattie : "And the lease that's paid to the city per year? Just remind us what that is. I know it starts this year." Steeves : "It's a combination. It starts this year and it's a formula based on a percentage of revenue and then a percentage of essentially operating income, which isn't completely different than the GTAA type of lease formula. But I would say that it's less than on a percentage basis and that's largely because of the fact that Hamilton airport, when it was transferred, was subsidized by the federal government and had been sold to the city of Hamilton for $10, whereas the GTA or rather the Pearson airport was an airport that made money for the federal government and had yielded greater returns in the rent. So it's more difficult to compare the rents between the two airports."

McHattie : "So is there a dollar figure you can provide to us? I think we had a dollar figure from Mr Shaw - $146 million, I think, to Transport Canada, I guess, that Pearson paid. I understand we're in a different circumstance." Steeves : "We're in a completely different circumstance. We pay rent to the city as I mentioned, but we also, because we're a private corporation, can pay federal and provincial income tax. So it's a completely different framework. You're really comparing apples and oranges, and they didn't get into that."

McHattie : "So there's not going to be any lease costs to the city at all. I just asked for a number." Steeves : "Rent payment to the city?" McHattie : "Yeah." Steeves : "Well I know the budget for the city considered $50,000 for this year, and we would see that upgrading over time in line with the success of the airport."

McHattie : "That's what we're likely to - I know it's been awhile since the budget process. That was around January we were thinking about that. We're half way in, getting close to half way into 06. Do we know is it still $50,000?" Steeves : "I wouldn't suggest materially different at this point, but I definitely would see it increasing in future years."