The assessed value of vacant former Stelco harbour lands has been dramatically slashed for 2018 — leaving a shell-shocked city suddenly on the hook for $2 million in lost tax revenue next year.

The "dramatic" reassessment of nearly 500 acres of vacant Stelco land by the Municipal Property Assessment Corp., the province's arm's-length land value assessor, could result in an extra $8 tax hike for the average Hamilton homeowner, said city finance head Mike Zegarac.

"It puts the City of Hamilton in a difficult position," he said in a surprise update to councillors Monday night.

That vacant land is destined to be sold by a provincially appointed land trust as part of a complicated court-supervised settlement that allowed the sale and resurrection of U.S. Steel Canada-turned-Stelco this year.

Stelco will lease the property it needs for ongoing operations from the land trust, with the remaining lands sold to help cover pension and benefit obligations to retired steel workers.

Zegarac told disbelieving councillors Monday night the city learned of the plummeting valuation via updated assessment roll information for 2018 provided by MPAC this month. He said some of the vacant Stelco land, until recently assessed at around $108,000 per acre, has been reassessed at around $100 per acre.

A rationale for the new valuation has not yet been provided to the city, but Zegarac said there is already an outstanding Stelco appeal of the 2017 assessed land value for the steelmaker's total 818 harbour acres.

The soon-to-be-sold vacant industrial lands are considered polluted, but the province has promised up to $70 million for remediation. Zegarac said it is possible the new land valuation is based on studies or new information presented during the recent court-supervised sale process — but if so, the city has not seen that information.

Spokesperson Cathy Ranieri Sweenie said in an email MPAC has been in discussions with the city, land owner and court-appointed monitor for the Stelco sale to gather the most "up to date information and data" for the 2018 reassessment.

After a site inspection, MPAC opted to update the assessed value "to reflect the current state and condition of the property."

Mayor Fred Eisenberger said council deserves to hear directly from the head of the independent assessment agency about the "bizarre" and "mind-boggling" decision that "doesn't meet the smell test."

Other councillors were less charitable.

"I believe there should be an investigation … 911 is the only option at this point," said Coun. Sam Merulla, who later suggested the city make a purchase offer for the land based on the latest valuation.

Coun. Chad Collins said the change had the appearance of "political favours" being granted in a land sale process that has huge implications for Hamilton's industrial harbour.

The province has indicated it wants to sell the land as soon as possible to quickly realize value for Stelco pensioners, but the city has called for a slower process that respects council's evolving economic and development hopes for the industrial harbour.

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The Hamilton Port Authority recently outlined a vision for about 250 of those vacant acres it hopes to buy from the land trust, particularly a new and valuable waterfront docking area.

- McMeekin blames pollution for plummeting value of vacant Stelco lands