Behind the bafflegab: This is a bad idea

Posted July 10, 2012

When the Mayor speaks, duck! Because it’s likely about spending your money before she gets it.

Case in point.  Members of the corporate administration, finance and enterprise committee, voted to approve a $3.1 million grant to the London, Ontario based -developer of an 18-storey condominium property at McDonnell and Woolwich Streets.

While the mayor acknowledged that her feedback indicated the natives believed this was a grant – read that—taxpayer incentive to private developers to build downtown.

The Mayor said that these “grants” were based on the anticipated increase in property assessment.  That means the city could be receiving more taxes over the years.

It works this way. The developer completes the project and after meeting the city criteria, receives his grant. The catch is if the assessment on the completed structure does not produce increased taxes, there is no recovery of the grant.

This is a house of cards if there ever was one. It’s based entirely on the property being assessed at higher levels over the years, resulting in increased property taxes.

But what happens if the economy in Ontario turns south and assessments decrease instead of increase? The city has no say in assessing properties. That is done by a provincial agency operating at arms length from the city.

Essentially, this handout is nothing but a further drain on city finances and will not be the responsibility of this council.  It’s an unnecessary financial hand-me-down to future councils.

Our city has no business providing incentive grants to private residential developers. This is a competitive field and does not need grants. Developers need timely, efficient and fair adjudication of projects. This has not been the case in Guelph during the Farbridge years.

The Farbridge administration has made doing business with the city a struggle for entrepreneurs.  Two independent consultants have reported that Guelph is not friendly toward business.

On the surface, the light bulb has apparently clicked on. So that steps are being taken to streamline and fast-track residential development applications. You have to wonder how this sits with the group of Guelph developers and builders who sued the city for $2 million because the impact fees on their projects were almost doubled by this council.

Before reading on, remember it’s a major element of the Mayor’s personal goal to revitalize downtown.

In the past six years, her determined drive has delivered a public transit terminal on the edge of downtown; a skating rink in front of city hall, complete with imported roadway bricks; demolition of three properties on Wyndham, Street costing $5 million; Spending $15.5 million on a new civic museum, resurrected from the derelict Loretto convent on land not owned by the city.

This stage of the Mayor’s dream has been supported by a majority of like-minded councillors.

Yet the ratio of 84 per cent residential assessment to 16 per cent commercial/ industrial has barely changed in six years. Meanwhile, the University has exploded with growth in the same period. Its meager provincially mandates payment in lieu of property taxes exacerbate the crushing financial load on residential taxpayers.

The Mayor and her cohorts have failed to manage the nightlife problems downtown. This has left the area blighted with human waste and bereft of little control. An attempt two years ago to install temporary pissoirs for men only turned into a disaster. All it proved was that night visitors downtown pee etcetera, in public.

To turn the area into her personal dream, she decided what was needed was more people downtown. So, in the past few months we have witnessed a new system of fast-tracking, higher density condominium projects.

This is yet another example of bureaucratic bafflegab.

The city has a number of tools to encourage development, giving grants to residential developers downtown isn’t one of them.


Filed under Between the Lines

6 responses to “Behind the bafflegab: This is a bad idea

  1. When I lived in Toronto, I was very critical of the Miller administration and their aggressive pursuit of condo developments to litter the skyline with. One thing I was ignorant about however, was the amount of revenue that was brought in from both application fees and development charges.

    If a developer wants to build a condominium, surely they have a viable business case for wanting to do so and have done the analysis to enter the project confident that the end result will be profitable and worth the risks, and the costs.

    From what I have seen in Guelph, there are no risks for developers, and plenty of costs – to the taxpayers! Farbridge uses our money to subsidize the project and justifies it as necessary to revitalization. This “if we build it, they will come” mentality is the reason for several new industrial buildings down the Hanlon with for sale or lease signs on them but nobody occupying the space. It’s pathetic!

    I can only assume that we are so eager to hand out grants to developers in this town because our government feels that the city, on it’s own, does not offer enough of an incentive for builders to want to build here.

    Developers should be paying us for the right to develop here … not the other way around.

    In the three years I have lived here, I have seen my property taxes rise dramatically only to see the money pissed away on unbelievably bad decisions.

    Of all the municipal governments that occupied city hall in my 38 years as a Torontonian, none came remotely close to touching the levels of incompetence, stupidity and arrogance that I have seen in Guelph.

    City Hall and its current occupants are truly right out of a bad sitcom and I can’t wait for the next election.

    • Jaymophoto: Whew! For a relative newcomer to our city, I believe you have figured it out. Stay in touch there is more to come as we dissect the blundering for another two years.

  2. Geoff

    You should do some research on how these grants work. Believe or not the Mercury explains them in a recent article. I guess that’s why they fired you. Why bother getting actual facts!

    • Geoff:The last thing I need is a lecture from you about investing. There has been a a substantial roar back from the public about these “grants” that the Mayor describes as “investments”. The city is playing a game called futures. This council is setting a policy that is binding on future councils. To become an investment that benefits all taxpayers, there has to be some assurance the grant, loan or investment, depending on one’s interpretation, must be based on facts. The idea that future increased assessments of these projects will repay the upfront funding by the city is an extremely risky venture. And it’s done with taxpayer’s money. The Mercury’s column in which the Mayor was interviewed about the “grants” was a typical Farbridge attempt to explain the unexplainable. Better the city should invest in tangible projects that benefit the entire community.

  3. The Mercury is Farbridge’s Der Sturmer anyway. I try not to accept most of what I read there as fact. There’s a real gem in there this morning called “Municipal Wins for Minimal Cost” … almost spit up my coffee reading that one!

    • jaymophoto: That’s what happened when the local papers are run by outsiders. The Mercury and Tribune have to follow the mothership’s corporate news policies. That is, don’t rock the boat or don’t bite the hands that feeds us.

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