Developer grants polarize St. Catharines, but may finally result in affordable housing 

What a difference two years makes. Or does it?

On August 12th, St. Catharines City Council will be holding a public meeting regarding proposed amendments to the City’s Community Improvement Plan (CIP). The changes will allow extending completion deadlines for projects approved under the municipality’s 2015 CIP and 2020 CIP.

The proposed amendments are the result of an approved “housekeeping” motion put forward by Mayor Mat Siscoe at council’s May 27th meeting. The amendments will allow “projects that have substantially progressed, with building permit issuance for works above grade, construction above grade, or project specific criteria” to be eligible to request a project completion deadline extension, subject to a “detailed timeline for project completion, and completion of all major development components.” 

Currently, depending on the program applied for within the CIP, the project must be completed within 3 or 5 years from the date of execution of the CIP Agreement for any of the eligible incentives to be realized by the applicant.  

It means that developers who may have struggled to get projects off the ground could request an extension and still receive the taxpayer-funded benefits from the CIP. 

The notice for the public meeting also notes that potential changes include extensions greater or less than one year; allowing staff the ability to approve short-term extensions and revoke approval for projects that have not executed a CIP agreement within “one-year from the date of receipt of the CIP agreement.”

Mayor Siscoe rationalized the need for extensions because “development project timelines over the last several years have been significantly impacted by housing market fluctuations, rising interest rates and construction costs and pandemic related restrictions,” his motion reads. 

At the May 27th meeting, the City’s Director of Planning and Building Services, Tami Kitay attempted to assure council that any proposed amendments would not be “open ended” and would only be available to proponents who were “deep into the process”. “It would be disadvantageous to cut them off at the knees,” Ms. Kitay added. 

The public notice confirms that the amendments would only apply to projects that have “substantially progressed but have experienced minor delays due to project complexities.” 

In recent years, the topic of CIPs has driven a wedge between councillors and St. Catharines residents alike.  From the opponents, criticisms include labels of “corporate welfare” to well-heeled developers—pointing to luxury condos receiving such incentives; projects receiving financial assistance that would have been developed anyway; and incentives coming on the backs of the taxpayer. Proponents counter that the program, in its various iterations over the years, has been successful remediating properties that would have sat fallow; increased assessment for the tax base; preserved facades and heritage properties; and, despite the perception and mischaracterization, has not been funded by taxpayers.  Proponents also argue that the incessant review of the program only creates uncertainty among developers, hampering any progress, including any efforts to construct affordable units. 

Unlike federal and provincial levels of government, municipalities have limited tools to incentivize development. A CIP allows municipalities to offer grants to preserve heritage elements, or long-term tax breaks to the private sector to help stimulate investment in redevelopment projects that support local community improvement and renewal. 

“[I]ncentives help to offset a portion of project costs related to redevelopment, remediation, and rehabilitation. In turn the completed project enhances the value of the site, the neighbourhood, and the municipal property assessment base while delivering on outcomes aligned with local strategic priorities,” a City of St. Catharines staff report released in May reads.

The assumption is that the completed projects under the CIP will enhance the value of the site, improve an often derelict area of the community and increase the municipal property tax assessment base; however, there is a lack of scholarly research to confirm the benefits of CIPs. 

For the Coalition For A Better St. Catharines, a citizen watchdog group, the CIP was an issue that they hoped would galvanize voters during the last municipal election. The group described CIP approvals during the previous municipal council term (2018-2022) as “giving $20 million of our (taxpayers) money to luxury condo developers.”

(Coalition For A Better St. Catharines)

One of the Coalition’s members, Barb Scollick, registered so the group could undertake third party advertising in the 2022 municipal election. The results were flyers and social media posts imploring the electorate not to vote for those city councillors who had voted in favour of the CIP approvals: Mat Siscoe, who was running for Mayor, and incumbent City Councillors Matt Harris, Bill Phillips, and Kevin Townsend. (The group had also called out Sal Sorrento, who had been on City Council from 2018 to 2022 but was running for Regional Council in the fall election.)

The project that has engendered much criticism of the City’s CIP program is the Harbour Club, a proposed condo development that will convert the former Lincoln Fabrics building. While the remediation of the former factory meets the typical goal of a CIP, the proposed end result marketed as “The Lake. The Luxury. The Life” is not in keeping with another goal of most CIPs: affordable housing. In addition, the Harbour Club had twice been rejected for CIP approval, but a new iteration of the program in 2020 allowed for it to eventually qualify. Critics argued the project had been “manipulated” to meet the new program criteria, with the addition of some mixed use commercial development for its first floor and the provision of bike racks. 

A rendering of the proposed Harbour Club.

(Harbour Club)

Despite the Harbour Club’s future presence in Port Dalhousie, the two ward councillors, Carlos Garcia and Bruce Williamson, have been vocal opponents against the CIP’s current configuration. The latter referred to the CIP program as the “the luxury condo incentive model.”

In the fall of 2022, Garcia told The Pointer, if re-elected, he was committed to reforming the CIP programs, while Williamson, at the time, felt there was no need to incentivize development because of the “huge demand.” 

In early 2023, the new council—which included all of the councillors targeted by the Coalition For A Better St. Catharines and the aforementioned two Port Dalhousie councillors—passed a motion during budget deliberations that “staff be directed to prepare a report on Terms of Reference for a Working Group of Council and to review the City of St. Catharines Community Improvement Plan (CIP).” 

The related report was brought forward at the April 17th, 2023 meeting, but it lacked the Terms of Reference, as requested, due to the varied opinions amongst St. Catharines City Council.

“Following interviews with members of Council related to the CIP Working Group, staff found that feedback varied considerably, and it was difficult to ascertain a prevailing single direction from the interviews,” the report states. 

The following council meeting also illustrated the opposing views on the effectiveness of “CIP 2020” and CIPs, in general.

Local resident Don Sawyer, who had been part of the 2019 public consultation process to reform the CIP program, called for the council to “freeze” CIP 2020 because despite the best efforts, the program had not incentivized affordable housing, as intended. He was also critical of the staff suggestion that a member of the development community be part of the CIP Working Group.  

On the lack of affordable housing resulting from the CIP, staff stated that despite the program being approved in late 2020, it was still too soon to gauge its effectiveness, with only three intakes of the program having occurred. It was remarked by delegate Wendy Wing of Rankin Construction that most development projects have a “long runway” between conception and completion. 

Councillor Williamson brought up a KPMG study commissioned by the Niagara Region, which concluded that various Regional incentives had no proven incremental impact on assessment growth and that about a third of the incentives did not align with Regional priorities.

Ms. Kitay pushed back on the comparability of the KPMG report, describing it as not a case of “apples and apples’, noting that St. Catharines did not have public realm, gateway or development charge related incentives, like the Region. In addition, she argued that the Regional study was not related to the effectiveness of CIPs, but a financial audit of services to identify where discretionary funding could be cut. She noted that the study concluded that the Region could realize savings if it eliminated its homelessness program.

Ms. Kitay also attempted to illustrate the broader benefit of the CIP program.

“[T]he entire purpose of the KPMG report was to look at increased assessment. Is a $10,000 facade grant going to substantially increase assessment on the property? The answer is no, but it contributes to a snowball effect. If one property invests in their facade, then the property next door will and the property down the street will. The next thing you know, you have an entire streetscape that's been dramatically improved. We can look to St. Paul Street to see the effects of that. It also entices other businesses to locate in that area and invest in their properties, create businesses, or create places for people to live.”

Tom Richardson, a long-time municipal lawyer, argued that the City’s CIP programs over the years had achieved their goals of redevelopment and intensification and that any reconsideration of the CIP 2020 would only create uncertainty in the development community, making it difficult for the municipality to achieve its provincial housing targets. He also said labeling the CIP incentives as being subsidized by the tax base is “erroneous”. 

CIP 2020, like most CIPs, has incremental tax finance programs. It provides the development a rebate on its taxes for a certain number of years once the project is completed.

Mr. Richardson provided the example of a small affordable housing redevelopment, from some years earlier, on Abbott Street. 

The property had taxes before development of $2,000. The tax payable at full build out would be $23,000. The rebate realized by the developer was $17,670, per annum. As a result, the municipality was receiving $5,330 in taxes, a 166.5 percent increase from the $2,000 they would be receiving if the property remained undeveloped. 

Mr. Richardson concluded, “the money did not come out of the ratepayers pockets. It came from the taxes which were generated by this development, which in turn could only occur because it was under the CIP program.”

Opponents of the CIP would argue that the project would have been developed anyway and, as a result of the incentive program, the tax base was missing out on $17,670 a year for 10 years. City staff, during CIP related meetings, would offer that there is no methodology to determine whether a development would proceed without incentives. Some councillors, during the feedback sessions that informed the staff report, questioned return on investment methodology and wondered if the rebates could be shortened to less than ten years.

Councillor Greg Miller (Ward 1 Merriton) challenged the notion that there was no impact on the taxpayer, noting that increased development often leads to increased services, funded through the tax base. Mr. Richardson responded, citing the six-figure property taxes paid by a list of well known local projects, albeit ones from earlier CIP iterations, such as the Keg property and the old Domtar property that houses Johnny Rocco’s.

Councillor Miller concluded that the program was working in respect to brownfield remediation, but that he had “lost his enthusiasm” for the CIP 2020 to deal with affordable housing. He did not blame any failings on staff’s efforts or the program’s criteria, but that interest rates and rising supply costs had impacted the possibility of affordable housing development being economical to developers.  

After much discussion at the April 2023 meeting, council reached a consensus that a potential working group would proceed and they would “give more consideration to affordable housing and brownfield development during their deliberations.”     

Before the vote occurred, however, Mayor Siscoe said his piece:

“[T]his was an election issue. There was a third party campaign that was run against a number of candidates and every single person who was a supporter of the CIP that was targeted got re-elected. And in most cases, it wasn't even close,” he began.  “I keep hearing from the opponents of the CIP who say we need to use the CIP surgically. It needs to be surgical. But the only surgery that opponents of the CIP suggest is a decapitation of the City's ability to direct development. That's not good surgery. 

The focus is always on just one project, one project that they didn't like. There is too much going on in this community right now that is going to need the help of the community improvement plan. Now is not the time to pull the rug out from underneath the plan.”

A week after the April 17th, 2023 meeting, Council held a Special Council meeting that included an education/training session on its CIP. Unlike some municipalities, the education session was conducted in public and streamed like a regular council meeting. The session outlined the grants and incentives available under CIP 2020 and responded to “frequently asked questions”.

Staff claimed that between 2004 to 2020, the CIP accounted for 76 construction or redevelopment projects, 43 facade improvements, 2,761 dwelling units, 500 permanent jobs and a $569 million assessment increase.

It was noted that the focus areas of the CIP 2020 were affordable housing; mixed use and intensification opportunities; heritage restoration; and remediation of contaminated properties. Despite the four noted focus areas, some councillors remained skeptical of certain elements of the regime, including its Project Evaluation System and how it was applied to the Brownfield Tax Increment Finance (BTIF) Program. 

It was under the BTIF Program that the Harbour Club/Lincoln Fabrics project qualified. A review of the criteria illustrates that weight given to the project’s overall cost and estimated assessment increase played a large part in the project succeeding under the scoring, along with the proposed mix of residential and commercial uses and heritage preservation of part of the building. During the education session, staff admitted that project costs in Port Dalhousie are influenced by the “cost of building a parking garage in the lake” and that the requirement to have to dig deeper foundations in the downtown contributes to high redevelopment costs in that area of the municipality, which translate into high scores under the Municipal Financial Benefit category of the scoring criteria.

The session did try to dispel some public misconceptions. The perception that once a project is approved under the CIP that the developer is getting a cheque from the City was debunked. Ms. Kitay explained that a project does not “receive a dime” until the project, including remediation, is completed. Also, it was explained that an approval rests with the applicant and not the property, so if a speculator was to sell the property, it would require the new owner to come before council for consideration of the CIP approvals being transferred.

Subsequent to the April 2023 meetings, five CIP applications came before council for consideration at meetings in May and September 2023. They were as follows:

The development proposal for 88 James Street, before and after.

(Dean Iorfida-The Pointer/SRM Architects)

88 James Street - the former Gord’s Place property, is proposed to be a mixed-use, 30-storey tower consisting of 276 dwelling units, commercial and office space located in the Downtown Priority Neighbourhood. The project scored full marks in the categories of Municipal Financial Benefit (increased assessment, investment), Mixed Use and Density Generation. The project scored no points for heritage preservation or affordable housing. 

It was approved for a Tax Increment Finance (TIF) incentive, with Councillors Garcia, Williamson, and Dawn Dodge voting in opposition.
 

The development proposal for 10 Pleasant Avenue, before and after.

(Google Maps/IBI Group)

10 Pleasant Avenue - a redevelopment and remediation of a former industrial zoned site that would see a nine-storey apartment building with 351 dwelling units, 14 townhouse dwelling units and residential convenience commercial uses. The project scored full marks in the categories of Remediation and Municipal Financial Benefit (increased assessment, investment), but no points for heritage preservation or affordable housing. 

In both of the cases noted above, the proponents, in response to councillor questioning, indicated that the CIP program was a factor in the project moving forward. 

It was approved for a BTIF incentive with Councillors Garcia, Williamson, Dodge  and Joe Kushner voting in opposition.

Councillor Miller, who voted in favour, noted, ”I am philosophically against CIPs, but these projects would not have gone forward without the incentives.” 

The development proposal for 16 Lock Street, before and after.

(City of St. Catharines)

16 Lock Street - a redevelopment containing six new mixed-use buildings and the conservation of three heritage buildings, that will result in 155 dwelling units and eight commercial units accommodating an estimated 248 residents and 32 new jobs located in the Port Dalhousie core. The project scored full marks in the categories of Heritage Preservation, Municipal Financial Benefit (increased assessment, investment) and Mixed Use. There were no points for affordable housing.

Peter Clewes, the planner for the applicant, noted the project would be akin to Toronto’s Distillery District, would include a community use facility and that the developer was investing in additional electrical capacity that would benefit all Port Dalhousie residents. Mr. Clewes concluded that the project was “marginal, almost not viable” and was only proceeding due to the incentives available through CIP 2020.

It was approved for a BTIF incentive with Councillors Garcia, Williamson, Dodge  and Joe Kushner voting in opposition.

The before and after for the development proposal at 235 Merritt Street.

(City of St. Catharines)

235 Merritt Street - A redevelopment containing one commercial building and two mixed-use buildings, consisting of 116 total dwelling units and nine commercial units, accommodating an estimated 185 residents and 43 new jobs located in the Hartzel Road / Merritton Priority Neighbourhood. The project scored points in most categories, with the exception of heritage preservation and public area contribution. The project consists of environmental remediation and the provision of 24 affordable rental dwellings or approximately 20 percent of the dwelling units.  The applicant, Evan MacDonald, indicated that while his preference was to have more affordable units, going beyond 20 percent would not make the project economically viable

It was approved for a BTIF incentive with only Councillor Williamson opposed.

The development proposal for 180 Queenston Street, before and after.

(City of St. Catharines)
 

180 Queenston Street - A development at the current parking lot of the Westminster United Church, the project will consist of 39 rental units, accommodating for an estimated 62 residents located in the Queenston Priority Neighbourhood. Thirteen of the proposed units will be affordable. The project just passed the 50 percent scoring requirement with a 52 score, but qualified due to the affordable housing components and some value added sustainability features, such as solar panels and permeable pavers. 

It was approved for a TIF incentive with the only unanimous vote of Council for a CIP application so far this term. Councillor Kushner, who was opposed to 16 Lock Street, felt that in light of council’s approval of that project, he was compelled to vote in favour of the latter two applications with their provision for affordable housing units.

In November 2023, council approved a new Strategic Plan to guide the municipality for 2023 to 2027. The review of the CIP was identified as a high priority even though the CIP 2020 already contemplates a “comprehensive review every five years.”

On May 13 of this year, the Community Improvement Plan Review Task Force proposal returned to council for consideration, 13 months after first broached. Unlike the 2023 report, there was no suggestion that a member of the development community sit on the task force, though such “experts” could be invited to meetings where agendas “would benefit from a private sector perspective and expertise.” 

The composition of the Task Force was recommended to be the mayor, a council representative from the high priority wards of Merriton, St. Patrick’s and St. Andrew’s, and one other council representative from one of the other wards to provide a city-wide perspective. The Task Force would meet once every two months with final recommendations prepared for the second quarter of 2025.

Council approved the Task Force, the related terms of reference and populated the committee with Mayor Siscoe, Councillor Jackie Lindal (Merriton), Councillor Kushner (St. Andrew’s), Councillor Robin McPherson (St. Patrick’s), and Councillor Williamson. 

Two weeks after the approval of the Task Force, Mayor Siscoe brought forward his Notice of Motion for the housekeeping amendments that are the subject of August 12th’s Public Meeting. His motion was approved, with Councillors Miller and Townsend voting against, but neither offered a rationale for their negative vote, though some discussion at the meeting revolved around the need for timelines to spur development and not be “open-ended”. None of the projects approved by council in 2023 appear to be any closer to the construction phase and the boarded up Lincoln Fabrics building shows no sign of transforming into the luxury Harbour Club condo development anytime soon. 

While various Councillors have bemoaned the inability of CIP 2020 to provide affordable dwelling units, another public meeting on August 12th may provide some hope. 

As part of the Housing Accelerator Fund, the City will be holding a public meeting to consider a proposed increase to the grant amount for the Accessory Dwelling Unit (ADU) program, currently offered as part of the CIP.

Earlier in the year, the municipality secured $25.7 million from the $4 billion federal fund to help alleviate the current housing supply shortage.  

The ADU program provides a one-time grant to help offset project costs for the construction of an (interior) accessory apartment dwelling unit within an existing principal dwelling unit or an external apartment dwelling unit within an existing or new detached accessory structure. The goal of the program is to to support a greater mix and size of housing types in the city, and the increased availability of affordable rental housing accommodation.

Currently, the value of the grant is up to 70 percent of eligible project costs incurred, to a maximum of $20,000. The proposed amendments will increase the grant value to $40,000 for internal apartment dwellings and $80,000 for exterior apartment dwellings. The increased grant is seen  as a way to alleviate the “financial burden (that) often hinders homeowners and developers.”

The proposed program would be funded entirely through the municipality’s Housing Accelerator Fund monies and will take the place of the existing ADU program in the CIP.

The notice for both public meetings are listed, as follows:

When: Monday, Aug. 12, 2024 at 6 p.m.

Where: Council Chambers, 3rd Floor City Hall, 50 Church Street, St. Catharines

The public can also participate electronically. Visit stcatharines.ca/Council for information on how to access and participate in the meeting, and how to request and make a delegation before Council.

Livestream: youtube.com/citystcatharines

Email: [email protected]

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