Niagara council rejects bid for $40M taxpayer incentive to fund luxury homes
Despite an attempt by the developer to reduce an exorbitant request for $40 million of taxpayer money to build luxury homes in Welland, and a push to delay the vote by Welland Mayor Frank Campion, Niagara Regional Council voted down the request for funds last week after reports showed it would put significant financial strain on the municipality.
Niagara Region, councillors heard, is seeking to cut back on spending, not add tens of millions on the backs of taxpayers, to increase profits for a developer.
During council’s meeting last week, proponents of the Lock & Quay project by L!V Developments offered to lower the builder’s requested grant from 80 to 70 percent of future tax revenues, while also defending its contentious classification of the site as a brownfield. The last minute concession gave Mayor Campion grounds to move for a referral back to staff for further study—a maneuver that if successful would have sidestepped what was shaping up to be a likely defeat of the $40-million request.
As reported by The Pointer, Thursday’s meeting was expected to bring a final vote on a months-long debate over Welland’s development proposal. Mayor Campion, whose City has already committed just over $40 million to the project, was pushing the Region to match that figure. The sheer magnitude of the request forced the issue to come before council for approval and shone a light on the region's history of developer handouts through programs like Community Improvement Plans (CIPs), which have not resulted in the types of affordable housing the region’s municipalities desperately need.
Regional staff warned councillors such a grant would put the Region in long-term financial jeopardy, straining budgets for decades. They recommended capping support at $5 million, and only if spent on proven land remediation.
A taxpayer grant that would offer L!V Developments significant property tax reductions for the next 25 years for its phased Lock and Quay project was denied by Niagara Region council.
(L!V Developments)
Debate at the committee level was in-depth and highlighted a broad spectrum of concerns, including the massive development project’s lack of any affordable housing and the application’s stretching of the intention of the grant program. It was launched to encourage the development of properties previously used for industrial operations, but several councillors questioned whether the site qualifies as a brownfield. The developer’s own studies pegged cleanup costs of contaminants on the site at only $181,000, calling into question why $40 million in incentives should be handed out.
At the committee level, council members already voted to deny the request, recommending council provide no financial support to match the roughly $40 million already pledged by the City of Welland.
A brownfield is generally defined as a property where past industrial or commercial use has left contamination that complicates redevelopment. Programs like Niagara Region’s Brownfield Tax Incentive Grant (BTIG) exist to encourage cleanup and reuse of these lands, offsetting remediation costs for developers, to encourage their investment in future projects. The contaminants left on brownfields are generally thought of as any hazardous substance, pollutant, or compound released by past industrial, commercial or agricultural activities that pose a potential danger to human health or the environment. In this case the developer and the City of Welland argued that although none of those hazardous materials existed at the property, the sheer amount of clean fill that would have to be removed should be considered a contamination to the site.
The committee vote was not final and full council was set to decide Thursday, with options still ranging from the zero funding recommended by the committee, to the full $40 million requested by the City of Welland and the developer.
Addressing council early in the meeting, a representative from L!V Developments emphasized that based on work already conducted at the site and reports it had commissioned, the land qualifies as a brownfield. The representative also detailed how L!V had been paying close attention to the debate that has been unfolding over the past few months and addressed the “fear” over providing $40 million upfront which might trigger suspicions of a developer “taking the money and running.”
It was made clear that no money would be provided upfront.
L!V decided to reduce its ask from an 80 percent discount on future taxes for the next 25 years to 70 percent, framing it as “giving a little back” and proceeding “step by step” to reassure council that the developer could not “take the money and run”.
Mayor Campion immediately asked that the matter be referred back to staff for further study, to consider the altered request. His move, if successful, would ensure a vote on the $40 million grant would be delayed until a future date. It’s a tactic that has been employed numerous times in the past, with varying degrees of success at regional council.
His motion was seconded by Welland councillor Pat Chiochio and with that the vote was held.
The procedural rules on a referral motion require it to be voted on immediately with no questions or debate allowed.
The tactic failed, with the referral motion losing 16-12.
The mayors of Welland, St. Catharines and Niagara Falls voted in favour of sending the report back to staff and delaying the vote, so the multi-million-dollar grant request could be kept alive. Campion, Mat Siscoe of St. Catharines and Jim Diodati, the mayor of Niagara Falls, have been ardent supporters of grants to developers.
An independent study two years ago found the handouts to developers failed to generate any public benefit. Critics have also pointed out that incentives are not needed to bring projects online, and that claims of property tax generation are misleading, as investors are more than happy to profit from development projects that create additional tax dollars, without the need to subsidize these lucrative deals so builders can make even more money.
Some developers across Ontario have said recently that the current economic climate is making it more difficult to do business, but this has been challenged by many who have pointed out that other sectors facing the same pressures are not getting handouts from property tax owners, while wealthy developers will eventually enjoy a rebound in the up-and-down building sector which has been flying high for more than a decade.
Following the failed political maneuver by Campion and Chiocchio, the ending came quickly and was anti-climatic. With the defenders of the grant left with no other delay tactics the final vote was held and the committee’s recommendation to deny the request was upheld by Niagara’s full council.
Al McKay is the Niagara manager of the Property Taxpayers Alliance (PTA), a provincial not for profit that advocates for greater accountability and responsibility around taxpayer dollars. He called the outcome “a victory for taxpayers” but expressed concern over the support by 12 councillors, including the three powerful mayors who face little opposition when approving developer giveaways at their own council level.
McKay described how businesses and homeowners have watched helplessly in recent years as property taxes across the region have been raised at record rates, while household incomes have struggled to realize only modest gains. He pointed to the alarming increases in the number of properties that are falling into tax arrears and called out “tone-deaf politicians who continue to support giving millions of tax dollars to developers to build luxury homes” with policies that have created a sense of entitlement among developers seeking increasingly “ridiculous” amounts of taxpayer dollars.
McKay challenged statements made by Mayor Siscoe about the supposed benefits of these grants stating that they lack credibility and show a “shameful disregard for the people’s hard earned property tax dollars”.
Councillor Brian Heit of St. Catharines has been a vocal critic of the grant request from the outset.
“The proponents didn’t offer anything new to the discussion regarding any contaminated soil which would qualify for brownfield assistance,” Heit explained when contacted by The Pointer. “Offering the region a better deal by changing the formula at the last minute from an 80/20 share to a 70/30 share of the tax revenue, it still would have cost the regional taxpayers well over $35 million.”
Heit also said that making the motion to refer the file back to staff was a move by Campion who was simply “trying to stop us from ratifying our decision to deny the grant”.
For Heit and 15 others on council that new math just did not add up.
For the taxpayers of Welland, they will be on the hook for $40 million for decades to come, thanks to their mayor.
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