Most city malls, office buildings seek tax break from city

An ‘avalanche of appeals’ by commercial businesses threatens to add to Hamilton homeowners’ tax burden, city officials warn

Nearly all local malls and office buildings have appealed recent property assessments — raising the prospect homeowners will shoulder more of the city’s total tax bill.

Hamilton homeowners already pay higher-than-average taxes compared to other Ontario cities and account for a disproportionate share — around 77 per cent — of the city’s total tax levy. Farms, industrial and commercial businesses pay the rest.

The collapse of traditional industry juggernauts like Stelco is often blamed for the growing tax burden on residents. But the city also faces 897 assessment appeals this year — a third from commercial businesses, said city budget chief Mike Zegarac.

“Virtually every mall and (large) office building has appealed,” Zegarac told councillors at a Friday budget meeting. “It presents a budgetary risk for us.”

In the short term, the city will shell out more cash to hire outside lawyers to deal with the biggest, most complicated appeals.

Down the road, the city risks a major clawback of commercial taxes, although Zegarac said he does not yet know the potential dollar impacts of the latest appeals.

The overall trend appears destined to stall the city’s slow effort to shift more of the residential property tax burden back to businesses, said Coun. Chad Collins, who expressed frustration at the “avalanche of appeals.”

“It seems like (never-ending appeals) represent one of the biggest threats to our municipal budget process,” Collins said.

Industrial assessment appeals — including 166 ongoing — continue to hurt the city, too.

Once-mighty Stelco ranked as the city’s third-biggest taxpayer as recently as 2013, but a succession of successful assessment appeals gradually cut its annual tax bill from nearly $7 million to under $4 million.

Now the city is braced for a further $2-million drop as a result of a controversial reassessment of vacant former steelmaking lands.

Right now, CF Lime Ridge Mall is one of the city’s top taxpayers at close to $7.5 million. But it has appealed its 2017 property assessment, as have other large Hamilton mall locations like Centre on Barton and Eastgate Square and smaller plazas around the city.

This shouldn’t surprise city officials, as bricks-and-mortar outlets are under assault by the online retail revolution, said Doug Stephens, founder of the Retail Prophet consultancy firm.

“There’s no question that many shopping centres find themselves at an existential crossroads,” said Stephens, adding regional and smaller strip-mall plazas in particular are suffering compared to luxury and destination malls in more populated areas.

“Their appeal and convenience has been significantly marginalized and their traffic decimated … It’s safe to assume that municipalities are going to have to deal with ongoing pushback by mall owners and management companies.”

Zegarac acknowledged the demise of past mall anchors like Target and Sears has contributed to the growth in appeals by large retail outlets. Further big box losses will likely prompt more property value appeals, he said.

City planning officials and councillors are looking ahead to prospective changes to major mall nodes — perhaps residential development, or a gradual replacement of box stores with restaurants or entertainment facilities.

Coun. Donna Skelly has even suggested a prospective new hockey arena would be a good fit near Lime Ridge.

“The retail sector is in flux,” she previously told The Spectator. “This (mall) is the Mountain’s downtown … We can’t afford to ignore this trend.”