St. Catharines council says no to pausing tax increases; Council lets the horse out of the barn on rent control …again

The budget process was completed in St Catharines in early February and if taxpayers thought they may get a reprieve as result of last year's 10.5 percent increase they were wrong.  

There had been two main issues in contention, mayor Mat Siscoe’s move to close the city’s forestry services department and Councillor Carlos Garcia’s amendment to ensure a zero increase from the city this year. 

On the issue of forestry services council was united and unanimously blocked the mayor's attempt to privatize the forestry service. His logic for doing so was criticized as employing “fantasy math”, and raised the ire of a packed house of citizens in January. Under new legislation from the provincial government Siscoe had the power to veto council’s decision and force the closure of forestry services, but the public pressure coupled with Council’s unanimous stand against the mayor won the day and Siscoe did not play his trump card.

The second significant issue, Garcia’s quest for a zero budget increase, was far more contentious and amplified lines of division within the council. For the past several months Garcia has advocated that last year's 10.5 percent increase on the City’s share of the property tax bill caused pain and difficulties in the community and therefore local elected officials must do all in their power to come in with a zero budget increase for 2024. 

The 2023 increase was the largest in the city’s history and caused shock and anger among citizens when it was introduced. According to Garcia the 10.5 percent hike caused “significant hardship to many taxpayers, particularly seniors and others on a fixed income”  and these facts created a “need to do more” with the 2024 budget. In response he had proposed 3 amendments to the mayor’s budget that, if adopted, would result in a zero increase for 2024, while having no reduction in services. His plan would have re-allocated surplus funds remaining from last year’s budget as well as drawn from reserve funds that, he argued, were created for just such an event.

A majority of St. Catharines council members including Mayor Mat Siscoe chose not to protect tenants.

(City of St. Catharines) 

Council was divided along predictable lines on the proposal. In support of Garcia’s motion, Councillor Joe Kushner made the point that increases already announced at the region put the tax rate perilously close to a provincial ceiling for rent control, which protects tenants, like taxpayers, from excessive increases. The problem in a financial environment like today’s is that two key groups in the housing market find themselves at odds with each other: landlords who were shocked by last year’s 10.5 percent property tax increase in the city can request exceptions to provincially established rent increases, meaning tenants would have to shoulder much of the burden of excessive tax hikes. These measures are meant to protect tenants and landlords, which is especially critical now as Ontarians continue to face crippling inflation and high interest rates. But the system pits home owners and large property managers who rent out units against their tenants, as both groups scramble to cope with unprecedented property tax increases being seen in municipalities across the province. 

With Niagara Region concillors already approving a 7.02 percent increase on its share of the property tax bill for 2024 (which is blended with each lower-tier municipality's increase) and St. Catharines' Mayor's budget for the city already ratified, local residential property owners will pay an extra 3.83 percent when the rates are blended. This puts the City just over the 3.75 percent tax increase threshold that limits rent increases for the year, meaning tenants will be at the mercy of landlords who can raise costs by much more than the established annual provincial limit of a 2.5 percent rent increase. It's unclear why councillors at the Region and City didn't use some small measures such as tax rate stabilization reserve accounts to keep the increase below 3.75 percent to protect tenants, when they were so close.  

Kushner expressed concerns and asked questions to determine how close St. Catharines is to the number that would trigger the lifting of rent controls to help landlords cover excessive tax hikes, something that could put tenants across the city in financial danger, if the cost of housing moves well beyond income gains. Staff was ill prepared and visibly stumbled in attempting to answer his questions.

They were unable to answer Kushner’s request to “clarify the provincial requirement with respect to rent” and the discussion was forced to move on without a response. The information was finally provided more than 20 minutes later after staff dug it up. By that time the debate had long since moved on and the information was never fully assimilated into the discussion.

Councillor Bruce Williamson also spoke in favour of a zero increase, while describing himself as not normally a “zero person”. For him this was a special situation and he explained his support of zero increase for this year in part by the fact that “leadership can sometimes say enough is enough…we got the feedback, there was a lot of people that were hurt, a lot of people struggle with affordability, so I’m going to support it (zero increase)”.

Others on council were apparently unmoved by tales of financial hardship and were in no state of mind to halt tax increases, regardless of the effect it would have on rent control. The divide on council reflected the same divide that existed when they were debating the 10.5 percent increase last year.  

For 2024 the provincial control on rents is 2.5 percent. Under the legislation if a municipality increases property taxes by more than 3.75 percent they are deemed to have created an “extraordinary circumstance” that unfairly burdens landlords. This unfair burden on landlords allows them to submit a simple form for an “Above Guideline Increase” (AGI) explaining the high increase in property tax and the province then removes the 2.5 percent rent control, allowing landlords to apply as much as an extra 3 percent for rent. The region’s previously reported increase meant St. Catharines taxpayers were already on the threshold of that 3.75 percent and any further increase from the City would certainly remove rent controls, for the second year in a row. Council knew this but those in favour of tax increases showed little concern.

That lack of consideration for tenants across St. Catharines was perhaps best reflected by the words of Councillor Greg Miller who stated, “I’m not sure this (holding taxes to zero) should be a top of mind consideration right now, and frankly the horse left the barn in terms of rental rates a long time ago”. 

Other supporters of increasing taxes made note of the hard work of staff in preparing the budget, the need to raise rates now to prepare for further increases expected soon and referring to other cities that have also raised rates or are contemplating it.

When the debate was done and the issues put to the vote, council did not give Garcia enough support to pass his amendments as presented. They approved the re-allocation of funds remaining from last year's budget to this year, but they would not approve any funds to be drawn from reserves. It was roughly 10 percent of what was required for a zero budget and the result is that  taxpayers will, for the second year in a row, be hit by a significant property tax increase, an increase that will be felt by homeowners and tenants alike as provincial rent controls are lifted to allow for significantly higher increases as a direct consequence.

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