OMB Rockfort Hearing January 18th, 2010

Evidence in Chief of Mr. Tom Mc Cormack on Fiscal Impacts to the Town and Region.

JDCL's concerns re Mr Mc Cormick's evidence on financial impacts. Mr Tzekas tried to file letters in evidence. Mr Barnett for the Town objected because McCormack's witness statement was filed in May of '09 and why wasn't this brought forward at that time? There is no opportunity to cross exam for Mr Barnett in this process.  Mr Barnett emphasized the potential fiscal impacts of an operation of this kind could be of great significance.

The Chair decided to not enter the letter as evidence and it will be dealt with in argument and perhaps in cross exam of Mr. Dorfman of the Town.

Evidence in Chief:

• The Town of Caledon approached Mr McCormack about the fiscal impact on the Town and the Region of the proposed quarry. He analyzed the amount of aggregate material and estimated that the average value was between 10-12 dollars per tonne and generate over $468 million in revenues over the life of the site. Trevor Carter estimates mitigation will cost at least 45 million dollars and as much as $270 million. This indicates that mitigation will take a good chunk of the revenues.
• Research in the USA shows there is impact in a 5 mile radius. Area within 2 km is the primary study (114 properties) are and with the secondary area is within 5 km radius. Total value was $54 million in value for primary area. The secondary area is of a value of $205 million dollars property values. If you are close to a pollution generating site, values are diminished.
• Prof. Diane Heit of Auburn University developed a study looking at a gravel mine in Ohio and the impacts on the local properties. She looked at 2500 properties. She showed that the closer you are to the mine, the lower the property value. Beyond 5 km there was no impact. Mr Erikcheck looked at a mine in Michigan. It showed the closer the mine, the greater the effect and that a property value was impacted by about 30% negative impact. The impact lowers as you move away. These results seem logical of what the likely impact would be. At Rockfort, the estimate within the 2km level will be a 19% negative impact on average, in the primary area and an 8% average negative impact in the secondary area. Since the average property is valued at about $560,000 in the area, then the average person in that area will lose $100,000 on the selling price. It impacts the rural quality of life to that extent.
• Applying the drop to the property values it will impact the total tax base in both areas together by $26.4 million dollars.
• Looking at the net benefits or losses he estimated the taxes that would be generated by the quarry. The Town would garner $2.3 million over the 30 years.
• Costs to the agencies:
  1) for the ten years leading up to hearing 
  2) for the hearing itself 
  3) for the quarrying period.
• The agencies would have to regularly deal with citizens problems surrounding the quarry and monitoring. Total costs for the agencies and future would be $9.4 million dollars
• The minimal monitoring costs would be $2.7 million so the total of those two it would be a minimal $12.1 million and a max of $25.3 million.
• The present value of revenues of the quarry is $ 6.1 million. The decline in property values is $3.2 million tax deficit. The net revenue gain is $2.9 million dollars.
• The overall impact net loss, could be anywhere from $9.2 to $22.4 million. These numbers are based on if mitigation system works. If it doesn't work, most of the damage would likely be in the 2 km radius. It's not possible to quantify what those costs would be.
• Overall conclusion is that if he were a member of Council he certainly would have voted against the proposal as not being in the financial best interests of the Town.
  

Questions by Mr Webb (CCC)

• Did you do a financial impact to the Municipalities to the west? (Erin and Halton)?
  --No I did not.
• Would you expect these costs to be similar?
  --Yes I would.

Cross Exam by Mr Tzekas (JDCL):

• Did you ask the Town if they had done a previous report during the eleven years?
  --Not that I'm aware of.
• You were retained by the Town, when?
  --Feb/09.
• You are not an expert in land-use values?
  --Not a scientific expert but I have lots of experience.
• Was your report given to JDCL for comment?
  --I do not know.
• The very day that the Town issued its report is the same day as yours?
  --Yes, but my report was the fourth draft.
• Do you agree with the statement that your report was presented to influence Council?
  -- Yes I would.
• You used the figure of 11 hectares used for setbacks, if I told you it was substantially more than that, would it change your conclusions?
  --I doubt it.
• Where you used the price of the aggregate—is that a quote specifically for Amabel?
  --No.
• You looked at the work Prof Heit did in Ohio and applied it to Michigan?
  --Agreed.
• Did you discuss the work with the authors?
  --No
• A summary analysis report by Prof Heit is accompanied by and email by her, indicates that she doesn't think it's much of a study?
  --Yes, I find that odd.
  
• In your evidence you state that many different factors are part of property value and yet Prof Heit only uses six variables?
  --Yes, but those 6 are significant.
  
• Can you think of other factors that might affect the values?
  --Of course

A Google map is handed out by JDCL of the quarry studied by Prof Heit.

• Next to the quarry you see a municipal airport?
  --Yes
  
• Do you see an industrial area? An agricultural area? Might they have an influence on the values?
  --Statistically that does not show up.
  
• Looking at your statement of the impact of a new quarry in an area...there is an initial hit on values and then after that they rise as the rest of the properties rise.
  
• When did that quarry open?
  --I don't know.
  
• Neither Heit nor the UpJohn report assessed impacts on commercial buildings? --That is correct.
  
• You assessed in your report commercial businesses when they did not?
  --The majority of the properties in the area are residences.

Tzekas (JDCL) handed out a map of where the other quarry's in the area are.

• You see the map with Brampton Brick and Dufferin Aggregates overlap the 2 km radius with Rockfort. In your report you discounted those companies by 8%?
  --Correct.
  
• Was there anything in the Heit and UpJohn report to indicate you do that?
  --No.
  
• And looking at the 5 km radius, there is no land that would not already be affected by previous quarries. Is there anything in Heit or Upjohn that indicates one should devalue a property a second time?
  --Not that I know of.
  
• In the footnotes, you note you excluded the 3 gravel properties?
  --I excluded the value of the residences.
  
• Looking at the average value around the quarry, the homes were at $520,000 which is 17% higher than the rest of Caledon?
  --Correct
  
• So doesn't that mean that they haven't been devalued by the presence of quarries?
  --No, it means that they would be even higher than they otherwise are.
  
• Looking at the High Potential Mineral Aggregate area, do you think that this would devalue the properties?
  --You would think so.
  
• The signs around the pit in the area would influence the value of the homes?
  --Agreed
  
• When the Town itself identifies the High Potential Mineral Aggregate area, aren't they devaluing the properties of the areas?
  --I'm not qualified for that.
  
• With any new quarry operation the impact is going to be felt wherever the quarry is sited?
  --Correct.

Cross Examination of Tom McCormack by JDCL lawyer:

• Please refer to Letter dated Feb 5/09 by e-mail, paragraph 3, research requirements.
• Question of transferability of one study to another – took estimates of impact of property values and applied them to the Rockfort setting.
• First there was the Ohio study and then the Michigan study then the Ontario study.
• Michigan site was 271 hectares compared to Rockfort’s 89 hectares. Is it valid to use this?
  --Size of site does not matter.
• What about mitigation, set backs etc.?
  --Very hard to answer as there might be more negative features and less negative features.
• What about regulatory regimes?  Does this matter?
  --Those were not of concern in the USA (i.e., Michigan & Ohio). Says there will be a quality of life impact. Almost impossible to measure all of those impacts.
• Many assumptions are made in your report. 
  --If you are referring to the incomplete report for Erin we never completed the costing for Erin.
• You did assessment on the basis of quarry production: This does not matter to IMPAC why would they care how much production there is.  
  -- I stand by my figures.
• There is a more direct way to assess taxes – generated less property tax but did not revise report.
• Inference is there will be a loss of tax revenue to Caledon?
  --Caledon has the option to raise rates to cover losses.  Usually a municipality will resist raising mill rates.
• One of your reference studies (Upjohn) is primarily an employment firm. Is he qualified to be used for your study?
  --Yes, he is an economist, etc.
• There is a reference to 5 other studies that say there are impacts. Could there be other studies that suggest the opposite? Exhibit entered. Witness asked to read several paragraphs to see if he agrees.
  --There are other studies. But they do not measure up to the studies that the witness used.
• Assuming all of the negative impacts there is a positive revenue stream of $3 million to the Region - does not take into consideration the contribution that the quarry will make to the education system.
• Also did you take into consideration the taxes when there is rehabilitation?
  --Did not include this.
• We assume these impacts will be felt even though this area was declared an HPMARA some 12 years ago?
  -- Cannot answer yes to this.
• Exhibit 173- Proximity Impact on property values, Page 6 of the report, Quarries should be located away from residences.
  --Agree that this means moving quarries to the country.
• If quarry was located in area 5b there would be impacts to the Cataract, Belfountain and perhaps Erin?
  --Witness agrees.
• Should quarries be moved to poor areas?
  --No, there is a whole host of criteria that should be used to locate quarries.
• Has the Town of Caledon ever applied this type of financial analysis to any other operator?
  -- No.
• Did you accept the costs that the Town gave you or did you question them?
  --Yes/No.
  - CAO’s report states that there should be a striving to remain neutral.
  - CAOs position that all of costs (loss of taxes, cost of processing application etc.) incurred should be paid.

JDCL’s lawyer now presents a copy of a proposal from the Town to Dick’s lawyer suggesting that JDCL pay some of the peer reviews, etc. …letter from 2003.

• Protection costs: You assumed $75,000.00 per year. Why would the Town have to spend 10,000.00 to protect the Rockfort house?
  -- For fire protection
  
• If a site is close to market are there not going to be fewer accidents or the likelihood of more accidents with more distance?
  --Yes.
  
• How many full time staff does the Region, Town, or CVC have to deal with quarries?
  --I do not know.  Lawyer answers – “None”.
  
• Has the witness done a report expressing the positive revenue stream that Dufferin quarry has brought to Milton?
  -- Yes.  No denying that quarries bring in revenue.
  
• Does a lake increase the value of a property?
  --Yes.
• Would it have an increase on neighbouring properties?
  --Yes.

Redirect: Mr. Barnett (Town):

• How much do property values affect your overall report?
  --The property tax loss of $3 million is relatively small compared to all the other costs.
  
• With respect to exhibit 174: Dealing within the 5km radius of Brampton Brick, if the property value has already been reduced – will it be further reduced by the Rockfort Quarry?
  --Within 2 kilometers there will definitely be an impact. Witness changed his mind that there will be an additional impact within 5 km.