National Steel Car suing Hamilton for $20M over flooding issues

20 November 2015

The city is pursuing National Steel Car for close to $8 million in unpaid taxes even as the massive railcar maker sues Hamilton over alleged flooding problems.

Councillors heard an update behind closed doors Wednesday.

City solicitor Janice Atwood-Petkovski confirmed after the meeting Hamilton is owed around $7.9 million in taxes by the company — which in turn is pursuing a $20-million lawsuit against the city.

Neither city councillors nor Atwood-Petkovski would comment on the closed-door discussion about the city's strategy to recoup the unpaid taxes.

But the lawyer said the city denies the company's 2012 claim for damages related to periodic flooding of its Kenilworth Avenue North plant, which employs about 2,300 people. "The city is not liable," she said.

The company believes otherwise in a 2012 statement of claim, arguing the city's poor maintenance of its storm sewer system and "ongoing negligence" has resulted in plant and property flooding. The claim document doesn't cite specific damages incurred, but lists lost equipment, manufacturing delays and lost contracts as consequences of flooding.

The city's statement of defence, by contrast, argues National Steel Car is to blame for any flooding because it filled in a natural inlet and "neglected to maintain" a storm-water channel to the harbour.

None of the claims have been tested in court nor have any hearing dates been set.

It's not clear if the company's unpaid taxes are related to the claim for damages.

A local manager referred questions Wednesday afternoon to vice-president of human resources Hal Bruckner. He did not immediately return phone messages.

The arrears represent a "sizable" amount of the annual industrial tax bill, said tax director Larry Friday.

He said National Steel Car would normally pay between $1 million and $1.5 million a year on its 66-acre property and one-million-square-foot facility — although a recent successful land assessment appeal has lessened that annual bill.

In theory, the city can put a lien on a property and even start the clock ticking on a potential tax sale if no taxes are paid for three years running. However, National Steel Car made at least one payment in 2014.

Friday also wouldn't comment on what the city's legal options are to recoup the cash.

National Steel Car went on a hiring spree last year as a result of demand for new tank cars that meet heightened safety regulations linked to the Lac-Mégantic disaster in Quebec.

A train carrying crude oil from the United States derailed and exploded in Lac-Mégantic on July 6, 2013, killing 47 people and destroying a large part of the town's core.

National Steel Car was also fined $140,000 last year as a result of a 2011 worker injury sustained in the operation of a hydraulic press machine.