SmartCentres rapped over ‘rubble and weeds’ approach

Councillors give Mountain Plaza developer two more years to realize plans or lose $840,000 in credits

The billion-dollar developer of Mountain Plaza mall has two more years to get on with delayed construction or lose $840,000 credit for city fees.

That two-year deadline “puts their feet to the fire,” Coun. Maria

Pearson said before a 4-3 vote in favour of the extension Thursday.

But Coun. John-Paul Danko argued SmartCentres could have done the work years ago, instead of leaving the vacant parcel a “field of rubble and weeds.”

“In the meantime, the taxpayers in the city of Hamilton have lost out on hundreds of thousands of dollars of tax revenue,” added Danko, whose Ward 8 includes the Upper James Street plaza.

The city offers development charge demolition credits when builders raze buildings with plans to construct anew on sites. A mechanism to cover the cost of growth, development charges fund servicing needs, such as water and sewer pipes, that arise from construction.

The rationale behind the demolition exemption is that servicing already exists where buildings were razed for new buildings. But to discourage lots from languishing vacant after demolitions, the city sets a fiveyear limit on credit extensions.

This is not the first time

With Taco Bell and Penguin Pickup joining Walmart and other retailers in the plaza, 44,781 square feet worth of expired credits remained in 2020.

SmartCentres has received an extension.

In 2010, SmartCentres, which another real estate investment trust, Calloway REIT, purchased in 2015 for $1.16 billion, razed the 256, 957-square-foot Upper James mall at Fennell Avenue East.

The city issued permits for the construction of six buildings, which made use of 209,709 square feet of demolition credits between 2009 and 2012.

In 2015, council approved a two-year extension for expired credits, and three more years in 2017, with credits expiring for land that was still vacant.

With Taco Bell and Penguin Pickup joining Walmart and other retailers in the plaza, 44,781 square feet worth of expired credits remained in 2020.

In a report before Thursday’s audit, finance and administration committee, city staff recommended denying SmartCentres’ request for another five-year extension to hold onto the $840,000 in credits.

Staff opposed the extension request because of “the precedent it would set, the accompanying financial impact and the lack of evidence” the development delay warrants breaking with protocol.

A rare comparable case was in 2016, when an extension for the developers of the Centre on Barton gave them 10 years total to make use of demolition credits after razing the shopping mall.

The estimated annual taxes on the vacant Mountain Plaza land is $13,500, compared to $266,400 it would generate each year if the roughly 45,000 square feet was occupied with retail space.

If the five-year extension were granted, the city’s development charge reserves would have to tap other funding sources, such as other reserves, staff noted.

Addressing councillors in the virtual meeting, SmartCentres representative Kevin Rachman offered a compromise, requesting two to three more years with a more immediate ninemonth deadline to submit a site-plan application.

The $840,000 in credits is an “integral part” of the next phase’s viability, Rachman said, noting large sites can be complex and time-consuming to develop. “So we’re stuck in a bit of an impasse in that way.”

The application for the northeast corner of the plaza will be strictly retail, but a further mixed-use redevelopment, including mid-rise residential buildings, is also on the horizon, he said. “To do that, we really do need this first piece.”

Councillors expressed reluctance to extend the credit expiration date, but also noted the prospect of greater tax revenue should SmartCentres make good on the development plans.

“I understand the trepidation,” Pearson said, but pointed to the prospect of “triple the growth” through the developer’s future plans.

Coun. Brenda Johnson called Pearson’s motion for a two-year extension and nine-month siteplan deadline “very reasonable request.”

Coun. Chad Collins was also

“definitely supportive,” saying the plans for “substantive residential” development would bolster the tax base.

Coun. Lloyd Ferguson, who said, “$850,000 is a lot of money for both sides, so this is tough one,” ultimately voted in favour of the extension.

But Danko, who’s not on the committee but appeared as the ward councillor, countered the city doesn’t need to “make concessions” to developers, noting building permits have hit the billion-dollar mark for nine years. “I have development applications all the way on Upper James from end to end.”

Coun. Maureen Wilson, who voted against the extension along with Brad Clark and Arlene VanderBeek, scoffed at the notion that SmartCentres faced hurdles to development.

“These folks do a lot of business. They are huge. They know exactly what they are doing,” Wilson said. “But we just don’t have the financial means to cover this. They certainly do.”

The committee’s vote awaits final approval at council next week.