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Council Trips on Objective Democracy

Wolfgang Guembel

Wolfgang Guembel is a St. Catharines business owner, entrepreneur and former candidate for St. Catharines Council – Port Dalhousie Ward. Supplied Photo.

In my opinion, the latest City Council meeting in St. Catharines demonstrated three key areas of failure.   While much of the aftermath has focused on the negative message that St. Catharines is not actually open for business, I would propose the three paramount mistakes include the following:

  1. The vote for reconsideration should have passed unanimously. There was sufficient evidence and precedent to justify at least a new debate.
  2. The merits to CIP in general are important and valid. This project in particular may be the best example for CIP’s use. The selling price of the property was predicated on being eligible for CIP.  The proceeds of the sale went straight to local charity and we as a community benefited from the higher selling price.
  3. Councilors need to take more responsibility to be educated on how the Corporation of the City of St. Catharines works, and therefore how CIP impacts economic development, job creation, tax revenue, and our ability to provide for essential services such as affordable housing and public health and safety.

 

  1. Vote for Reconsideration

At the Monday, November 4th, council meeting a well-researched Karrie Porter tabled a motion to reconsider a vote first held on October 7.  The original vote was in regard to an application for a tax incentive within our current community improvement plan (CIP).  The application was on behalf of the Harbour Club, a condo project built with a repurposed Lincoln Fabrics building in Port Dalhousie.  Despite being recommended for approval by city staff the application was denied by council.  Karrie was one of the people who originally voted “No” on October 7th.

After the October 7th vote, there was immediate reaction from members of the business, development, media, and leadership communities, all very swift to point out that council had made a significant error in judgment.  The initial criticism of council’s decision was based on the fact that the property immediately adjacent to the Lincoln Fabrics site was approved for CIP.  Rankin Construction is developing the old Legion site into an 8-story condo and was approved for over $800,000 in tax easement over a period ten years.  To an outside observer it looks like the hometown developer is getting help to build a brand new building and the out of town developer is getting no help despite their plans to restore and save a significant heritage building.

The real problem here is so profound and based on errors far more serious than a lack of fairness than simply comparing similar projects on immediately adjacent properties.

Porter’s motion was to simply to reconsider the vote from October 7th.  Passing her motion would have done nothing to guarantee CIP for the Harbour Club.  It would have merely allowed for further debate and for the introduction of further information and evidence that may help shape better decision-making.  This means that council members who were determined to vote “No” to approving CIP could still vote “No”, and in theory, defeat the motion again.  Approving Porter’s motion would only allow for additional, more robust, debate; meaning, they as leaders could ensure the best possible vote.

The reasons to justify further debate were partly outlined in Porter’s lengthy monologue at the outset of her motion.  She admitted that she didn’t fully understand the magnitude of the project and how CIP is designed to generate greater over all tax income for the City, nor was she aware of the history and precedent set by council on matters of CIP.  Since 2004 council has approved 98 applications for CIP.  Since 2014 every application that was recommend for approval by city staff was then approved by council.  Only two applications were rejected by council, both of which, were also not recommended by staff.  For this reason, a councilor having voted “No” on a particular motion, then learning that there is historic precedence dating back over 15 years, one might seek to reopen the debate to ensure that all the facts were understood and that good corporate leadership was being exercised.

However, entrenched opposition councilors had an advantage in their pockets and I believe they used it to further their biased agenda at the expense of fair democracy.  That is, a vote for reconsideration requires a two-thirds majority rather than a simple majority.  Their success in avoiding a new debate would ensure they don’t lose a new vote that would no doubt be very close.

If each of the councilors who voted “No” on the motion to reconsider actually believed in educated, objective, and factual dialogue, all with the intention of determining the ideal outcome for our city, they would have freely voted “Yes” to reconsider the original vote.  Then, they would reexamine all the previous and new information, and subsequently cast a new, more informed, vote.  If they still believed that CIP was not warranted they could simply vote “No” again.  But, they knew that several members of council were now more educated on the facts and the program and were now in a position to change their vote in favour of the project.

If one is not afraid to uncover the truth, then open the floor and invite all the new data, information, and dialoged and vote again.  What is the risk?  If the correct answer is still “No”, then everyone could vote “No”.  Instead a group of anti-business, anti-job-creation, anti-revenue generating councilors used the two thirds majority rule to their favour.  A brave, honest, educated, leading, professional councilor would have voted “Yes” to reconsider, then examine the facts, and make the best possible vote.  In my opinion, voting “No” on the motion to reconsider was just an easy way to avoid being responsible.

Shame on those who voted “No”.  Only ignorance, lack of experience, lack of leadership, and lack of education was demonstrated by those who voted no.  To councilor Kushner’s credit, and to my point, he addressed council and said under no terms would he change his original vote, but in light of the objective reasoning to reopen the debate he would vote “Yes” to reconsideration.  He’s been there long enough to at least know what democracy looks like. 

  1. Merits to CIP

There are several programs within CIP, but the general premise is to provide a development incentive for projects that 1) may never happen otherwise Or 2) may not happen fast enough.  That second point is often overlooked but may be even more important.

I’ll use the subject Lincoln Fabrics building as an example.  In it’s vacant form (which it’s been since 2017) it generates roughly $30,000/year in tax revenue.  Once it’s occupied as a condo it will generate approximately $450K-$500K a year in tax revenue.

The BTIFF program in CIP would credit back up to 80% of each years tax assessment for a period of between 5 and 10 years.  It’s intended offset the additional costs of taking on this particular development.

In this case, the Harbour Club project was eligible (based on establish criteria) for 80% up to 10 years at a total value of over $3M.  Even at this rate, the city would stand to gain an additional $30K-$100K/year in tax revenue.  The building has a 100-year life span as a minimum and the remaining 90 years the city would benefit from 100% of the new tax revenue.  The fact is, if the rest of us as current residents don’t want our own taxes to increase (they have been increased greater than the rate of inflation almost each year since 2014) then we need to be open to new sources of revenue and luxury condos are a great source.

If you’re the Harbour Club: you will understand that the project is excessively costly due to being an old delicate heritage building and located directly on a Federal water way (have you ever built or developed a project on a federal waterway?  I opened a 20’x 30’ biergarten kiosk in the hallway of the Pen Centre and it took over 8 months to get through the city building department and the region.  I’m guessing the Ministry of Fishers and Oceans will be extremely difficult to navigate).  It’s worth noting that the Rankin project next door developing on the old Legion site was allowed to tear down the old legion and start a brand new build with all new construction.  The Harbour Club is repurposing a building that is over 100 years old (and I have one of those too.  My partner and I purchased the old CIBC bank building and the Wellington Hotel in Port Dalhousie, the latter built in 1855.  We spent 200% of the best prepared estimate to restore and remediated those buildings and it took 2 years longer than estimated).

When the prospectus went out for the purchase of this building it was advertised that the City of St. Catharines has CIP available and the resulting purchase price was a function of this.  No one from the City put a guarantee in writing, but they did point out that every project recommended by staff in the history of CIP was approved.  The listing realtor penned a 3-page letter to council indicating that the spirit of all sales meetings between the realtor, city staff, and potential buyers hinged on a provision of CIP, and hence the higher final selling price (which you’ll remember all went to local charity)

If you’re the NO Vote: you will say that this project would have gone ahead anyways even if it doesn’t get CIP.  This may be true, however, we benefited unfairly from the higher selling price of the building, and more importantly as I indicated above, this will likely slow down the project.  Herein lies a further problem.

We as stakeholders should be looking to get projects developed and developed without unnecessary delay.  If CIP gets construction started in 2020 we can be collecting our new higher tax amount in 2022.  If we delay this project to 2021 or 2022 then we are pushing our new tax collection potential into 2024 or 2026.  There is a significant opportunity cost to not collecting new tax revenue sooner.

That said, the two primary goals that we should be excited to use CIP for is moving a project off the ground that otherwise would not necessarily get developed (think about the old GM lands on Ontario Street), and secondly, moving projects forward faster such that become part of our tax base sooner (have you tried counting the years of missing tax revenue from the original Port condo project that is still sitting derelict?  Circa 2005??)

  1. Councilors need to take more responsibility!

Karena Walter summarized the key opposition points in this article.

https://www.stcatharinesstandard.ca/news-story/9636618-tax-incentives-denied-for-high-end-condo-development-in-port-dalhousie/

These arguments of opposition to CIP continued to dominate the “No” vote’s position on the vote to reconsider.  It’s difficult to understand how these arguments, and others, can be tabled in a reasonable debate if they are unfounded and not fact checked.  Here is some of what was quoted in Karena’s article and an explanation of how problematic the arguments are.

Bruce Williamson, was quoted:

“This is a classic case of a project that does not merit incentives being received from the general public,”

“It’s a high-end luxury condo project.”

City staff said this project merits the incentive.  That staff is comprised of professional engineers, urban planners, economic development officers, and lawyers.  What logic is Williamson using to suggest otherwise?  Then he’s quoted saying they are high-end luxury condos.  That “is” the whole point.  We want high-end condos.  They produce a lot of tax revenue!  The merits of the project all hinge on the very thing Williamson and Garcia champion so much, which is heritage.  They both claim to be experts in knowing about and understanding the preservation of heritage buildings but neither one of them has ever done one themselves nor are they prepared to listen to, or learn from, someone who has.  This theme of not heeding the advice of actual experts continues below.

Carlos Garcia, was quoted:

Fellow Port Dalhousie Councilor Carlos Garcia said, “It’s a luxury condo project with some units going for more than $1 million.”

“This is not what the program was intended for originally,” he said. “It was supposed to be there for projects that would never otherwise be developed or go ahead without this assistance. This project was going ahead regardless and we’re still going to get all those taxes.”

This argument is too easy to say when the property is already sold and when the premise of the sale was based on help from things like CIP. This is a heritage building with serious remediation (both environmental and structural) and one that needs arguably the most help from municipal programs like CIP.

Garcia has been leading a path of not believing experts be they city staff economists, or engineers and biologists.  How can we accept his actions in a leadership position if he’s going to reject information from actual experts?  He’s challenged expert advice on the pier heights and on the presence of natural wildlife in Port Dalhousie.

Pier height: https://www.stcatharinesstandard.ca/news-story/9617663-st-catharines-council-notebook-height-of-piers-high-enough-dfo-says/

All Garcia can argue is that he’s heard from lots of people who are very concerned.  Are any of these people environmental engineers or hydrology experts?  I, myself, am a graduate of environmental engineering from the University of Waterloo and I challenged Garcia on the science of this issue at a recent Port Dalhousie BIA meeting and he simply said he and his peers don’t believe it.

  Joe Kushner said:

Joe Kushner said the CIP program is out-dated and was introduced when the economy was not doing well. He said now the city is seeing very affluent developments receiving the grants.

“I’m not willing to subsidize the rich people who can afford these apartments by having them pay a lower price for it. I think that’s grossly unfair to our taxpayers.”

Once again, similar to comments by Williamson and Garcia, why does it matter if the condos are luxury?  In fact, we should be trying to ensure the condos are as valuable as possible and the more expensive condos only lead to higher and higher tax revenues.  Why are we concerned with luxury?

Most importantly, it has been decided that our current CIP program is, in fact, outdated and needs retooling.  Our council decided to keep using our current program until the end of this year and then until we have a new program in place.  Here’s the key point to my criticism.  On Wednesday, September 8th, the City held a public session at City Hall in council chambers to collect advice, feedback, and concern about the current CIP program and how it should look in the future.  I was there.  So were the most well-known and respected development people in the city.  Want to guess how many councilors where there?  There was only one and she’s the one who did her homework before launching the motion to reconsider.  The most vocal critics of CIP, Townsend, Kushner, Dodge, Williamson, and Garcia were not there.  They didn’t offer any input, ask any questions, or even show up.  You can’t be critical of CIP but then not participate in making it better.

Kevin Townsend

I left Townsend to the end because I don’t have any public quotes from him to share.  Instead I met him for a few hours after work to talk face to face about the merits of CIP and about what it’s like to restore a heritage building and negotiate the building department, the region, and the heritage committee.  At our meeting, he was really concerned about the overall value of the CIP at $3M.  He was fixated on that number as being too big.  I was trying to explain and make the case that at this scale it’s not a big number.  The value awarded to Rankin cannot be compared to the value being proposed to Harbour Club because the value is based on a function of the overall costs and the increased tax revenue.  Bigger project gets a bigger credit.  Why don’t many councilors understand this?  When Townsend explain his “No” vote on the motion to reconsider he again made reference to the overall value of $3M.  To me it means he doesn’t understand the capital costs of development.  They don’t get upset when a culvert replacement on Lake Street just north of Lakeshore is a $1-$2M project.  A simple concrete culvert and we spend $1M.  When it’s a 100+ year old heritage building on a protected and historically significant waterway; how much does $3M really move the needle?  Maybe we could argue they should get $6M in CIP?!

Culvert Costs: https://www.stcatharinesstandard.ca/news-story/9304815-repair-crews-set-to-hit-the-roads-all-across-niagara/

Whether our councilors are going to vote “No”, or “Yes”, they need to do their homework on the issues at hand and how city policies currently work.  They also need to review all of their correspondence (Williamson read all prepared statements indicating to me that he didn’t much care for the content of the 10+ delegations to council, and Townsend seemingly didn’t read the letter from the realtor who sold Lincoln Fabrics).  If they are going to tout themselves as champions of democracy and leadership, then they can’t be afraid of objective debate and they need to vote in favour to ensure that all the facts are known and understood before making final decisions.

The final takeaway here is for our councilors and voters to understand that our City needs new tax revenue and a lot of it if we are going to continue to support the existing, and increase the amount of, our social, environmental, and physical infrastructure.  Our councilors cannot be critical of our current policies if they are not going to heed the advice of experts or if they’re not going to participate in developing new ones.

Full disclosure;

Sheldon Rosen, the primary partner in the Harbour Club development donated $1000 to my election campaign in 2018.  Not he, or anyone on his team has ever asked me for a favour related to their project (I did donate a stainless steel sink to their sails centre that I had stored on the roof of the brewery; to be fair I was paid in bottle of red wine by KC Media for carrying it over).  My comments in relation to CIP and the vote to reconsider are universal and apply to all development sites and all votes to reconsider in Niagara.

I am an environmental engineering graduate so I understand issues of water cycles (pier height). I have a masters degree in public policy and therefore appreciate deeply the nuances of the CIP programs and how they are designed to work within our municipal economy.

I’m the Founder and President of Lock Street Brewing Company and the Wellington at Port.  The former employs 10 people in St. Catharines and the latter redeveloped two heritage buildings one of which was condemned an unsafe of occupancy.  I did much of actual work myself and have a detailed understanding of migrating through the building department, the region, and the heritage committee.

Wolfgang Guembel, OCT, M.Ed. – Founder, Lock Street Brewing Company

@WolfofLockStreet

Wolfgang Guembel

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