A $50 million battle is brewing at Niagara Region: St. Catharines mayor wants taxpayer dollars to help developers

NIAGARA, ON – Emotions ran high and battle lines were drawn between regional councillors during a Committee of the Whole meeting at Niagara Regional headquarters on September 5th. At issue was an attempt by St. Catharines Mayor Mat Siscoe to convince regional council members to extend incentive programs for developers for another three years (a move that if approved will cost taxpayers at least $50 million) before they had the benefit of a planned staff report to explore the controversial matter.   

The incentive programs in question, known as Smart Growth and the Smarter Niagara Incentive Program (SNIP), provide grants to developers for large projects around Niagara. Originally set to expire in 2021, they were extended for three additional years by the previous council and are now scheduled to expire on October 1. Staff are planning to bring a report forward after the deadline to inform council on the best options for any future incentives. The policies, which are a lightning rod for controversy, allocate taxpayer funds to developers across Niagara’s 12 lower-tier municipalities, effectively doubling the financial grants they receive through matching contributions from the towns and cities.

A report presented to the councillors highlighted that since the last extension, the Region has approved an additional $46.5 million for 31 projects, creating a debt burden that Niagara taxpayers will continue to shoulder until 2040. This financial strain may only be the beginning.

The report also explains that within the next few weeks, staff expect that more than $50 million in grants may be requested as developers work to submit applications before the looming October 1st deadline. If Siscoe is successful in his bid to extend the program for another three years it could leave taxpayers on the hook for millions more to developers, something staff warned may not be sustainable. 

"We are entering a danger zone with the number of grants we have," staff said during the meeting, noting these grants could potentially result in a 2 percent increase in the tax levy for residents. Despite these concerns, the proponents on council remained undeterred.

In leading the fight for the three year extension Siscoe, and Regional Councillor Sal Sorrento, put forward a series of arguments in an attempt to bolster their stance that without these incentives, developers would not invest in Niagara.  

Councillor Brian Heit argued that incentives for developers should be reserved for projects that wouldn’t otherwise be built, like affordable housing. He criticized the current system as “backwards,” stating it offers generous benefits to developers without addressing housing prices.

“We are giving money to developers to build condos that most of us can’t afford. It doesn’t make sense,” he said. 

Siscoe firmly rejected this perspective, stating, “I’m going to say this loud for the people in the back—affordable housing is not built by private industry. This is a myth we keep telling ourselves.”

While Siscoe did not provide sources to back his claims, an online search reveals numerous instances across Ontario where taxpayer incentives have successfully enabled private developers to build affordable housing.

SVN Rock Advisors is an Ontario based commercial real estate consulting company with a specialty in affordable housing. The company bills itself as the “developer of developers” and on it’s website states:  

“Most Affordable Housing in Canada has been built by the private sector and we believe the current environment (ESG – Environmental, Social, Governance) is going to result in more capital being available for the development and acquisition of Affordable Housing. We believe this to be a tremendous opportunity for developers and we are here to help guide them. This is the next great opportunity for private developers!”

Siscoe’s arguments also contradict a 2019 report commissioned by the Region that evaluated its incentive programs. This investigation, conducted by KPMG, resulted in findings that were mostly not made public. However, during a council meeting in November of that year, Oscar Poloni from KPMG summarized their review by stating, “We do not see the value of using incentives to try to increase assessment. Statistically, it simply does not exist.” Poloni also pointed out that these incentives were ineffective at increasing building permits and that developer investment would have occurred regardless of the incentives offered.

Both Siscoe and Sorrento frequently cited the Lincoln Fabrics development in St. Catharines as evidence of a major project made possible solely by the awarded incentives. The Lincoln Fabrics project is officially known as the Harbour Club and on its website it advertises “bespoke finishes providing the rarest of opportunities for a fortunate few”. Residents can expect to be greeted by a concierge, indulge in the fitness and yoga studio as well as enjoy 30 private boat slips.  This “elite” and “luxurious” project received $7.1 million in taxpayer incentives.

Despite those incentives, the project has yet to break ground. Seven years after its announcement, initial buyers have been notified that the developer will no longer honour their original purchase prices, significantly increasing the costs. Meanwhile, progress at the site remains non-existent, leading to rampant rumours that the project has failed and will not move forward. This situation presents a questionable foundation for Siscoe and Sorrento to base their arguments upon.

Siscoe and Sorrento are actively pushing for a rushed decision from regional council, seeking to avoid the comprehensive staff report that could provide critical insights. Their urgency to bring this matter to the Regional Council meeting on September 26th raises serious concerns as council may be forced to rely largely on anecdotal evidence from the councillors advocating for the proposal, instead of a planned staff report. This is especially troubling given that the decision could result in expenditures amounting to tens of millions of dollars, with long-term implications for taxpayer budgets.

The lack of information caused at least two councillors to balk at Siscoe’s attempts.

“We don’t know the costs, we’re not going to know the costs and right now we’re looking at infrastructure that’s going to fail.The money we save (by not extending incentive programs) could go back into the infrastructure we need,” Fort Erie Councillor Tom Insinna stated. 

Councillor Diana Huson of Pelham noted that “extending these programs has a significant financial commitment to this organization (Niagara Region)”.

The battle lines have been clearly drawn. On one side are councillors like Heit, Insinna, and Huson, who argue that incentives should be exclusively directed toward projects like affordable housing or hospitals, asserting that the current system should be allowed to expire in just a few weeks. On the other side, councillors such as Siscoe and Sorrento are advocating for an extension of these incentives for at least another three years and allow taxpayer money to continue to flow to developers, seemingly undeterred by the potential cost to taxpayers.

Despite lacking substantive evidence to back their claims, they insist that without these financial incentives, developers will abandon Niagara. This position overlooks existing evidence suggesting that such a scenario is unlikely, raising critical questions about the motivations and implications of their push for continued funding. As council faces this divide, the need for careful, evidence-based decision-making has never been more urgent.

A non-binding vote during the Committee of the Whole meeting showed support for the three-year extension by a margin of 13 to 8. The final vote will take place at the regional council meeting on Thursday, September 26th.

Ed Smith is Local Journalism Initiative Reporter with The Pointer. Title image by Petra from Pixabay.