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Mayor challenges councillor’s claim

By Doug Hallett
Guelph Tribune

Mayor Karen Farbridge is challenging a claim by Coun. Bob Bell that the Hanlon Creek Business Park is “losing all kinds of money.”

But Bell isn’t backing down.

City hall had to adjust its cash flow projections for the new business park because of the recent recession, but “we are not losing money” on the park, Farbridge said in an interview Tuesday.

“It’s turning around. We are seeing greater activity right now,” and the city is on track to meet its adjusted cash-flow projections for the business park, she said.

Farbridge said the city’s financial “exposure” to the Hanlon Creek Business Park is about $20 million spent so far on purchasing and servicing land in the 675-acre business park, which has 380 acres of land that can be developed.

She disputed Bell’s estimate that the city has already invested more than $40 million in the park, which is to be developed in three phases.

The city’s adjusted cash-flow projections call for the city to reach the break-even point on its investment in Phase One of the park by 2017, and “we are meeting our cash flow projections,” Farbridge said.

So far the city and its Phase One private partner, Belmont Equity Partners, have sold a total of 41 acres, which is about one-third of the land in Phase One, Farbridge said. She said the city’s share of the Phase One land sales amounts to $11.7 million.

The city has sold almost all its Phase Two land to another private partner, for a profit, “so we are essentially out of Phase Two,” she said.

As for Phase Three, she said, the city hasn’t yet decided what its approach should be – develop this land itself, sell it all to a private partner or develop it jointly with a private partner.

Noting it took 20 years to sell all of the land in the Hanlon Business Park on the other side of the Hanlon Expressway, Farbridge asserted that selling 41 acres since the new park opened in 2011 isn’t a bad showing.

The creation of the park is about job creation and more industrial property taxes for the city, she said. Phase One is projected to create 3,700 jobs, while 2,600 jobs are projected to come from Phase Two and 1,700 from Phase Three.

“This is the big play for us, the job creation,” she said.

Bell said Tuesday that his $40-million figure includes about $14 million that the city is paying for the building of the Laird interchange on the Hanlon, which opened last year.

The city wouldn’t normally help pay to build an interchange on the provincially controlled Hanlon, but council agreed in 2006 to contribute toward the Laird interchange because it was needed for new industrial development the city was planning in the south end on both sides of the Hanlon.

Farbridge referred the Trib’s questions about the Laird interchange to city staff.

“Given that the interchange services the needs of a large area of the city, it is my opinion that the costs do not solely benefit, nor should be attributed to the HCBP,” Peter Cartwright, the city’s economic development general manager, said in an email sent in response to a Tribune query.

His boss, city CFO Al Horsman, said the city’s newly approved five-year development charges bylaw forecasts the city will receive $14.1 million in DCs related to the Laird interchange. The Laird interchange is “a city-wide – not a HCBP-specific – capital project,” Horsman said in a separate email.

Bell said his $40-million estimate was compiled from a variety of sources.

“It’s hard to find these numbers, because you have to piece them together from various reports,” he said Tuesday.

He said he has no issue with the city’s investment in the HCBP “and the opportunity for jobs in Guelph it creates.”

But he thinks a blended DC rate for industrial and commercial development, which is part of the new DC bylaw approved by council on Jan. 27, won’t provide enough incentive for industries to locate in the new business park.

Bell was one of four councillors who voted Jan. 27 to make the new DC rate for industrial development much lower than the new DC rate for commercial development. This motion was defeated.

“Business parks are difficult investments to manage, and all of them lose money when they are first built,” Bell said. “Our obligation is to ensure that money-losing period is as short as possible.”

By blending the industrial and commercial DC rates in the new DC bylaw, “we are lengthening the time that the Hanlon Creek Business Park will be losing money,” he contended.

“I think the best description of the Hanlon Creek Business Park at the moment is that it is a non-performing asset,” Bell said. “We have spent the money and it hasn’t yet performed.”

Farbridge said Bell “presented a compelling argument for not blending the DC rates for commercial and industrial” at the Jan. 27 meeting.

“He also expressed a reasonable concern regarding the performance of the HCBP; he acknowledged the impact of the recession. I have no issue with these matters. However, the statement that the HCBP ‘is losing all kinds of money’ is not accurate,” she said.

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