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City hopes to sell contaminated Hespeler properties to pay for cleanup

Abandoned Crowe Foundry properties on Sheffield Street $2.9 million in tax arrears

The City of Cambridge, the Region of Waterloo and its two school boards are being asked to collectively write off at least $1.7 million in property taxes for more than eight acres of contaminated land in Hespeler in the hope the properties can be sold at an estimated resale value of $1.2 million.

The abandoned properties at 95 and 105 Sheffield Street once housed Crowe Foundry and Crowe Foundry Limited, which produced iron castings and engine parts until the company ended operations in 2009 and filed for bankruptcy. 

The city says taxes have been owing and accumulating on the properties since 2003.

Registered with the Ontario Ministry of Environment, Conservation and Parks, the company produced hazardous wastes and was registered as a PCB storage site.

The two sites had “several chemical spills” that were suspected to have migrated to neighbouring properties.

An environmental study determined soil on the property is contaminated with petroleum hydrocarbons, PCBs, metals and volatile organic compounds, all of which were found in groundwater migrating from the site.

According to Environment Canada, exposure to low levels of PCBs in air and water isn’t considered a health risk to humans, but higher and longer term exposures have been shown to affect reproduction and newborn development.

After the contamination was discovered, the city was given two mitigation scenarios for its cleanup; one that would result in full remediation at a cost of $7.3 million, or a “risk-based” approach based on land use that would cost about $1.5 million.

The city opted for the second scenario in determining the land's value and remediation costs.

The largest property, 95 Sheffield, is 4.58 acres and is zoned M4, which allows heavy industrial uses like manufacturing and processing goods, foods and materials within an enclosed building. Other uses allowed on site include a printing establishment, a warehouse or parking lot. Nearly half of the property is deemed "undevelopable" because it lies in the floodplain. 

The property at 105 Sheffield is 3.99 acres and is zoned M3, which allows general industrial operations. Only 1.11 acres is considered developable because of its location within the flood fringe area of the Speed River. 

The market value of industrial/commercial land in the city is between $600,000 and $800,000 per acre

The city says green space is another option for the properties once the contamination is cleaned up.

The city's history of dealing with the tax arrears began in 2013, when the city appealed an original assessment value for the properties based on the poor condition of the buildings and site contamination. The assessment review board agreed, reducing the assessed value of both properties.

Three years later, fire destroyed the building at 105 Sheffield Street and the review board processed a further reduction in the assessed value.

After years of neglect, the city initiated a tax sale process in March 2018, but it closed without offers in November of last year.

Now staff is recommending writing off a portion of the outstanding balance and posting for another tax sale.

The region’s share of the write-off is about $300,000, while the school boards will share $449,600 in lost property taxes.

Cambridge shoulders the biggest loss with its share in outstanding taxes coming in at $953,860.

After the write-off is complete, staff is recommending the remaining account balance of about $1.2 million should be considered the “fair resale value” when the two properties are placed on the market. That upcoming tax sale closes Dec. 2.