If we build it, will they come? Expropriating land for economic development dreams

Elizabeth Brubaker

In April, the Ontario city of Brockville announced its plans to expropriate a 43-acre parcel of land, in order to include it in a future industrial park. The announcement called to mind Windsor’s decision in February to expropriate two homes to make way for a to-be-determined manufacturing, industrial, or commercial development. Or Orillia’s expropriation in January of a shopping plaza, with the promise that it would prepare the site for private development opportunities. Or the expropriation, by the Montreal suburb of Kirkland, of two strips of land, held by the same two families for more than 50 years, in order to sell them to still-unknown high-tech firms. Or Chilliwack, BC’s, expropriation and demolition of a heritage building to make way for future redevelopment of the downtown core. Or numerous other examples of municipalities forcibly taking property from homeowners or businesses in order to have vacant land on hand to lure new businesses to the area.

It’s a perplexing trend. Whatever happened to private land assembly? Can businesses no longer obtain land on their own? Has the market failed to provide sufficient industrial or commercial lands? Are local governments qualified to act as developers? If they are, can they not purchase land from willing sellers, just as private companies do? Has private property come to mean so little?

Development-ready land

Behind Brockville’s expropriation announcement was the belief, typical of wanna-be municipal developers, that a supply of vacant, serviced land was essential to accommodating new businesses. Mayor David Henderson explained, “Every different industrial, commercial user has a very specific size … and servicing that they need…. The challenge is to have enough variety in what you have, fixed up and ready to go, so that when they come looking, we can take advantage of it.” Councillor Jeff Earle echoed such thinking: “You can’t talk about economic development if you haven’t got any land to develop … You can’t take the chance of someone asking and telling them no.” (Note: All of the quotes in this blog entry, unless otherwise attributed, come from articles written by Ronald Zajac for the Brockville Recorder and Times.)

Last year, Brockville commissioned a study into whether it had sufficient development-ready land. It learned that under some scenarios, large new serviced parcels might be needed between 2016 and 2021. And so it decided to acquire five properties, totalling 130 acres, for a new industrial park. City manager Bob Casselman explained, “We’re just not in the business, or don’t have the supply, to entertain any large developments…. We’re just not in the game, and we want to be in the game.” The city admitted that it didn’t have any specific tenants lined up. But it wanted to be ready for any inquiries. “We’re crossing our fingers,” the mayor said.

Phantom jobs

Brockville referred to its proposed industrial park as “employment lands.” That may well have been a misnomer. In a presentation to council, planning consultant Greg Bender admitted as much: “While businesses are expanding, they may not be hiring more people … Businesses need more land and less people.”

The industrial-park jobs initially envisioned by the city failed to materialize. Last summer, in order to speed the development, the city gave one homeowner – who sold her land to the city under the threat of expropriation – just 60 days to move. Economic development director Dave Paul attributed the city’s haste to a potential client’s interest in setting up a business as soon as the land was rezoned. He claimed that hundreds of jobs were on the line. But those claims didn’t stand up. The client – and the jobs – vanished.

A planning fiasco

Mr. Paul’s other claims proved equally unreliable. Last fall, he envisioned rapid progress, expecting planning to be completed early in 2016 and servicing a few months thereafter. Eight months later, the property has yet to be rezoned, let alone serviced. Last fall, the economic development director also claimed that the city had completed its purchase of the five properties it desired. Wrong again: The city announced in April that one of the purchases had fallen through, and that it would expropriate one parcel.

Another problem was soon revealed: The wooded land that is targeted for expropriation provides “safe harbour” to endangered and threatened species. In 2011, the owners of the land entered into a long-term agreement with a local solar power company to manage, preserve, and protect wildlife and habitat to enable the solar company to offset losses that could occur when it cleared its own land. According to a local citizens group, Citizens for Progress Without Hardship (CPH), the agreement effectively renders the land un-saleable until at least 2035 – and possibly until 2061.

CPH asked why the city had hired consultants to conduct environmental studies only after it had acquired much of the land – why the land’s suitability for development was not ascertained before lands were purchased or expropriated. CPH flagged a number of other environmental challenges, including the proposed project’s effects on well water, septic systems, wetlands, and stormwater management. It also raised concerns about the effects of blasting and construction on the 50-plus year old gas pipeline that runs through the site; the creation of nuisances, such as traffic, noise, and light pollution; and the interface with a neighbouring landfill site and a closed sewage lagoon. It explained, “From a practical perspective this area could not present any greater challenges for development.”

Economic risks

CPH also questioned the economic viability of the project. It pointed out that easements, buffers, and development restrictions would reduce the amount of saleable land, increasing selling prices and making it difficult to market. It noted that the market was already competitive, since several nearby municipalities had recently made available large tracks of inexpensive serviced land. And it warned that the proposed industrial park would not be easily accessible to larger trucks – accessibility would require a transportation study and road upgrades, the costs of which had not been factored into estimated development costs.

Mayor Henderson’s response was to look to the province for eventual assistance with highway upgrades. The mayor wasn’t alone in hoping for subsidies to make the project more affordable. Councillor Earle had earlier noted that he’d like to see the servicing of the proposed industrial park funded by provincial or federal infrastructure money – although he acknowledged that growing provincial and federal debts could imperil funding.

Subsidies or no subsidies, if the project can’t proceed, or doesn’t succeed, it may be a costly mistake. The city’s 2016 budget allots $1,920,000 for industrial park land assembly. That figure includes the cost of installing water and sewer pipes to service the area. Taxpayers and water and sewer rate payers will foot the bill.

What the hell just happened?

Ronald Zajac, the local reporter who has covered Brockville’s proposed industrial park most extensively, summarized the mess on his blog in late April: “There is no client in sight for the still-vacant land … Now, rezoning seems a long way away and the final done deal will have to be done, it appears, through a land acquisition method made infamous by Donald Trump…. Critics fault council all the time for ‘not creating jobs.’ Well, when you’re tiny, border-confined Brockville, this is one of the ways left of doing that. But expropriation? Pressure sales? Imminent deals failing to materialize? What the hell just happened? In the words of the city manager, the land sale in question ‘went a little bit sideways.’ The whole process, however, appears not only sideways at the moment, but at an oblique angle to reality.”

What happened is that the municipality took on a role that was better suited for the private sector. A business that wanted to set up a warehouse or another facility – or a developer that wanted to assemble land for several businesses – would be disciplined by the need to make a profit, rather than driven by a dream of creating abstract jobs that may never materialize. Such a firm would do its due diligence. It would purchase only the amount of land warranted by demand. It would ensure that the land was accessible by its intended users. It would not acquire land encumbered by environmental restrictions. The firm would bear the costs and risks of the project – if things went south, it would foot the bill. And the firm would have to respect private property rights. Its success in negotiating voluntary purchases would signify that its proposed use was more valuable than the existing uses – if current owners valued their uses more highly, they would refuse to sell. Such development would be truly sustainable.

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One thought on “If we build it, will they come? Expropriating land for economic development dreams

  1. In 1953- The Ontario Govt , expropriated lands in North East Scarborough in effort to prevent developers from making excessive profits. These lands were banked in anticipation of the baby boomers coming of age and seeking affordable housing. In 1971- 90, these lands were developed as the Malvern Project. Sadly in Phase 2, some of the lands were classed as radioactive waste contaminated. This lead to a successful legal action against the Crown for Ontario, writing case law as it applies to waste on land. See the published book ” A Radioactive Waste Dump in Malvern; A Citizen’s Account” ISBN 978-0-9948268-1-7 .

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