The city has approved another $1.6 million grant to Maple Leaf Foods. It’s the latest in a series of payments and direct subsidies provided to the company since Maple Leaf brought its wiener plant to Hamilton four years ago in a still secret deal that out-competed twenty-three other municipal governments.
Councillors agreed last week to top up an earlier LEED (Leadership in Environmental and Energy Design) grant in response to additional measures adopted by the company to make its meat processing plant more environmentally friendly. A $2.6 million LEED grant was previously approved in 2012, and last week it was bumped up to $4.2 million.
The initial grant assumed the facility would achieve ‘silver’ status under the LEED standards, but staff say Maple Leaf now believes it can reach the ‘gold’ level through additional steps including “measurement and verification, green power, thermal comfort verification and green building education.”
The staff recommendation for this additional payment was originally brought to council in March but then withdrawn without public explanation. It has now been revealed that backtracking was because Maple Leaf was appealing its tax assessment for the last three years. The new report says those appeals were withdrawn in July.
The staff report argues that “there is no actual loss of tax revenues to the city” because “the grant paid by the city to the owner is actually paid out of increased taxes generated by the development.” The annual tax payment to the city by the factory is now just over $1.5 million a year – a decline from the $2.2 million previously estimated.
While the exact promises made to entice Maple Leaf to Hamilton have not been revealed, a general description of the methodology was provided in 2012.
“The decision to locate this major investment in Hamilton was based on a number of factors,” stated the 2012 report. “They included: the cost of employment land; affordability of development charges; a DC deferral agreement; the city’s LEED program; Hamilton’s superior transportation infrastructure; its excellent, available labour force; but most of all, the city’s quality customer service and the ability to deliver on municipal actions to meet Maple Leaf Food’s established deadlines.”
The dollar amounts of at least some of those enticements have since leaked out. City land was sold to Maple Leaf at $415,000 per acre less than the city was paying to buy land nearby to build a new road to the business park where the meat processing factory is located. The tender for the road project just closed this summer, but a year ago the price tag was given as $16-18 million.
The ‘affordability’ of Hamilton’s development charges translated as a $3.4 million discount to Maple Leaf – monies the city uses to build new infrastructure for growth that now must be replaced by taxpayers. And the company’s payment of the remaining $2.7 million in development fees was deferred for ten years.
The city also provided a $3 million stormwater facility for Maple Leaf despite an earlier decision to require industrial developers to build their own storm retention ponds. And the ‘transportation infrastructure’ turned out to include a commitment to provide HSR service to the Maple Leaf facility – a step so costly (over $1 million) and inefficient that it’s been replaced with a full-time free taxi service paid for by the city.
The ‘superior transportation infrastructure’ also clearly referred to the $250 million Red Hill Valley Parkway. Councillors and senior city staff repeatedly claim that the road was a great investment because it helped attract Maple Leaf. The remaining city debt on the parkway is about $70 million.
The new wiener factory employs just over 1000 workers and replaces facilities in Kitchener, Toronto and other cities including a Bromley Road plant in Hamilton that had provided jobs to about 1550.
Subsidies to attract new industry are the centerpiece of council’s economic strategy and its hope to increase the non-residential portion of the tax base, but gains like Maple Leaf have been few and the expected assessment growth has been partly cancelled out by successful tax appeals from older industries.