EcDev Journal

Hamilton Sees Green Through Innovative Brownfield Programs

Posted on Monday September 19, 2016
Cardio Hospital

Judy Lam, MBA, CMA, CPA

Many municipalities are realizing the importance and benefits of developing a brownfield redevelopment strategy.  In Ontario, brownfields are defined generally as underdeveloped or previously developed properties that may be contaminated. They are usually, but not exclusively, former industrial or commercial properties that have been underutilized, derelict or vacant. There are economic, social and environmental benefits of brownfield development.

An obvious economic benefit of brownfield development includes increased employment, income and tax revenues for all levels of government.  Further, the benefits to an area surrounding a former brownfield site also tends to increase once it is redeveloped resulting in increased property values in the area surrounding it.  Jobs are often created not only during the remediation and construction phase but also following project completion. Through the use of existing infrastructure, brownfield development reduces the costs of urban sprawl as well as the costs of providing hard and soft services to Greenfield areas.  It may also have a positive impact on reduced transportation costs since the development is located in urban areas where the employees live. 

Social benefits often result from the properties increasing in value in the neighbourhoods where the brownfield redevelopment occurred. An increased sense of community and pride often ensue from this improved aesthetic quality of the urban environment.

Finally, there is little doubt that environmental restoration and development of brownfield sites removes threats to workers and residents in our communities by improving the environmental quality of the soil and groundwater.  Preventing urban sprawl along benefits the environment from the reduction of air and water pollution and loss of agricultural land.

The City of Hamilton has been recognized and continues to be viewed as a national leader in brownfield redevelopment efforts.  For instance, Hamilton was the first municipality in Canada to adopt a Community Improvement Plan (CIP) specifically geared towards Brownfield Redevelopment. The Environmental Remediation and Site Enhancement (ERASE) CIP approved in 2001 was the first step in a long line of policy and programming developed by the City aimed at the efficient and effective management of contaminated property and the redevelopment of these properties back into productive land uses.

 The ERASE CIP programs include a whole host of environmental programs including financial assistance for the costs of Phase 2 Environmental Site Assessments, risk assessments and remedial work plans.  There is also a tax grant which covers the costs of remediation to property owners who undertake redevelopment.  Other programs include an innovative loan program for remediation and a municipal acquisition and partnership program for the acquisition and redevelopment of key strategic properties.

ERASE has since been expanded with the success of the programs contained within the CIP resulting in the acronym of ERASE being synonymous with brownfield incentives. Many municipalities in Canada have followed in the city’s footsteps to create similar CIP’s and incentives.

The historic development of the City of Hamilton as a port city at the western end of Lake Ontario with good rail and road access resulted in the growth of Hamilton as one of Canada’s major manufacturing centers. In the early 1900’s, Hamilton’s major steel producers (Stelco and Dofasco) located their operations in the Bayfront Industrial Area where they had easy access to the port for importing raw materials and rail for exporting finished product. As Canadian steel production became increasingly centered in Hamilton following the post-war years, the Bayfront Industrial Area expanded to just over 3,000 acres in size  largely through the placement of fill into Hamilton Harbour to create land for new industrial uses.

Significant structural changes in the post-war Canadian economy had far-reaching implications for steel and related industries and the Bayfront Industrial Area in particular.  The result has been a significant decrease in business activity and employment levels in Hamilton’s older industrial area over the last 30 years. These economic changes have resulted in some property and building deterioration in the older industrial areas, and in some cases, property abandonment. Due to the placement of vast quantities of contaminated fill and contamination from former industrial uses in the Bayfront Industrial Area, this area now contains many of the city’s brownfield sites.

 Recognizing at an early point, that this older industrial area of the city would require public assistance and leadership, the City was quick to embrace the opportunity to establish an ERASE CIP in 2001. However, Hamilton also wanted to ensure the that rest of the urban area would be included in redeveloped plans as property contamination and brownfield redevelopment were not necessarily limited to the older industrial area.  Historically, Downtown Hamilton had been the location of numerous past uses that could have potentially caused soil and groundwater contamination. This includes asphalt plants, petroleum storage, automobile wrecking yards, blacksmiths, textile mills, paint manufacturers, printers, dry cleaners and electroplaters.

Some of these uses still exist today in Downtown Hamilton. Several recent development projects on properties in Downtown Hamilton have required soil remediation and resolution of groundwater contamination. Consequently, a number of proposed downtown developments had been abandoned or delayed indefinitely as a result of environmental contamination. As the City of Hamilton expanded outward from its urban core, older industrial uses in and near the downtown core were replaced by commercial and other uses. Gasoline and automobile service stations began to proliferate to serve an expanding suburban population increasingly dependent on automobiles as their primary mode of transportation. Business and personal services such as dry cleaners began to move farther from the downtown. Industrial and manufacturing uses such as metals manufacturers, glass manufacturers, chemical manufacturers, and concrete plants, were also established in areas further from Downtown Hamilton.

Another source of brownfield sites in Hamilton includes former waste disposal sites. A 2010 inventory of waste disposal sites confirmed that there are no less than 44 known waste disposal sites in the City of Hamilton. Hence in 2005, the ERASE CIP was expanded so that the rest of the urban area was eligible for financial incentives to encourage private sector brownfield redevelopment.

In 2010, in anticipation of the regulatory reform by way of legislative amendments to O. Reg. 153/04 (Brownfield Record of Site Condition) that the Ministry of Environment (MOE) was proposing, the ERASE CIP was amended.  The result was the introduction of a new program – namely, the Downtown Hamilton / West Harbour Front Remediation Loan Program. The significance of this action was borne out with the City of Hamilton recognition through a Brownie Award from the Canadian Urban Institute for its innovative Remediation Loan program-- one of Canada’s only municipal loans for remediation. Seizing opportunity and utilizing a dynamic approach is key to ensuring that programs reflect changes in policy or trends in the market in a timely fashion, as well as to satisfy the needs of the end user of the program.

For example, recently an application to the ERASE Redevelopment Grant (tax grant) was submitted by an interested party. The brownfield redevelopment proponent did not contemplate filing a Record of Site Condition (RSC) to the MOE as it was not a requirement by law. According to the environmental consultant representing the owner, the inclusion of an RSC as part of the remediation program would add a significant time delay to the project, which in turn would cost more money for the remediation. The end result was an amendment to the terms of the ERASE program that when a signed RSC is not required under the Environmental Protection Act to permit the brownfield redevelopment, the owner may instead provide the City with a Risk Assessment prepared by a qualified person. The Risk Assessment would then be subject to a peer review by a qualified person who is acceptable to the City, certifying that the property has been remediated to the appropriate levels for the proposed use in accordance with the risk assessment.

The ERASE CIP remains a pillar of strength in Hamilton’s brownfield rejuvenation efforts and its popularity remains strong after 15 years. The stats demonstrate the following: over 128 ERASE Study Grant Applications for a total of 356 acres of land studied and estimated approved grants of $1.2 Million; 32 ERASE Redevelopment Grant Applications for a total of 168 acres of land remediated and redeveloped (or are in the process of redevelopment) and estimated approved grants over $20 Million. Construction expenditures of an estimated $305,000,000 and an estimated 650 jobs were created as a result of the brownfield redevelopment.  Over 2.1 million square feet of industrial/commercial space and 337 new residential units were created on these former brownfield sites resulting in increased annual property tax revenues.

Many communities regardless of size, who may not see themselves as brownfield challenged locales, are left with former gasoline/automobile service stations. Given that clean-up costs for former gas stations can vary, many owners either prefer not to address the potential contamination costs and pay the property taxes instead of selling the property.  Some may even assume there would be no interest from buyers to take on this liability. On the other hand, in communities where vacant lands are a rare commodity and grants exist for the remediation of the property, these sites can be turned into productive uses. One of the earliest residential projects known as the Hamilton Beaches involved a former gas station. The resulting remediation created 93 new residential units on this site with construction expenditures over $63 million and the remediation and redevelopment of 27 acres of formerly vacant and underutilized brownfields.

Another project redeveloped a brownfield site into a major expansion into the Canadian market. Lowe’s Companies, Inc. opened its first Canadian home improvement store in Hamilton on a former brownfield site in 2007. The site was used as a gas station and automotive repair facility and underground storage tanks were on site. A 140,000 sf store with a 32,000 sf outdoor garden area was constructed at a cost of almost $4 million. Remediation costs were $850,800. The City provided approved a grant for the remediation but it benefited from the increase in the municipal tax revenue of over $153,000 per year.

Increased tax revenue to the city is not the only evidence that brownfield development pays off. The expansion of a hospital did not increase tax revenue for the city but the benefits to the city were significant. Hamilton Health Sciences (HHS) partnered with private enterprise, the City and the Federation of Municipal Municipalities (FCM) to rehabilitate a five-hectare site comprised of four former industrial properties. The site was the home to the former Stelco Nail factory.  The building had failed an earlier tax sale. The redevelopment of the property included new parking and expansion of the hospital for the David Braley Cardiac, Vascular and Stroke Research Institute. The Research Institute is a six-storey building comprised of 200,000 square feet of research space, laboratories, meeting rooms, offices and breakout spaces. It also houses Canada's largest biobank, which stores more than 1.8 million tissue and genetic research samples from approximately 250,000 participants globally. The total project, including state-of-the-art equipment, totalled nearly $100 million.

One of the largest brownfield remediation projects to date in Hamilton will soon commence on an industrial property in the east end of the city. The Freeman Industrial Park is being developed on the former site of the old Otis Elevator and Studebaker plants. The property is 10.5 hectares and will be redeveloped into 18 industrial lots.  The developer has been approved for ERASE incentives to assist with the remediation of the site. This project instigated the change from requiring a RSC to accepting a peer-reviewed Risk Assessment since the use was to remain industrial.

The brownfield industry is a constantly evolving one which deals with changes in legislation and regulations as well as evolving best practices.  Municipalities have to be innovative in their policies and programs to ensure sustainability. The Places to Grow Initiative by the Ontario government is one of the Provincial Policy statements identifying where and how growth should occur for the Greater Golden Horseshoe that affects the City of Hamilton. In order to ensure that the City’s brownfield programs remain effective, the ERASE CIP will undergo a review in 2016 and recommendations will be presented to Council by the end of the year.

Judy Lam, MBA, CMA, CPA
Senior Business Development Consultant
Urban Renewal Section
Economic Development Division
City of Hamilton
71 Main Street West, 7th Floor
Hamilton, ON  L8P 4Y5