Council approves Brownfield Tax Assistance increases for downtown Kingston Homestead development

A hot-button topic since it first came to light in 2015, the two-tower high-rise development slated for Kingston’s downtown core remains a point of contention, as City Council proved at their last meeting on Tuesday, Jul. 12, 2022.

Before Council that night, a report recommending the approval of increased Brownfield Tax Assistance for the Homestead Landholdings Inc. development brought the controversy surrounding it back to the horseshoe. Citing the delays incurred through Ontario Land Tribunal (OLT) appeals processes, City of Kingston staff – specifically Peter Huigenbois, Commissioner of Business, Environment, and Projects – recommended Council approve increased Tax Assistance figures for the two sites involved in the project, which are considered brownfields.

It should be noted that prior to Council discussing the item, Councillor Peter Stroud, representative for Sydenham Ward, recused himself due to pecuniary interest, as he is “actually a current tenant of Homestead Land Holdings.” Councillor Mary Rita Holland (Kingscourt-Rideau District) was absent from the meeting, resulting in 11 of the 13 Council members debating and voting on the proposed recommendation.

The recommended increases to the two previously-approved Brownfield Tax Assistance rates in the report were amended so that brownfield tax assistance be provided for the development “in an amount not to exceed $3,989,612,” for the 51-57 Queen Street property. That amount is a 23.5 per cent increase over the same costs from the 2016 estimates. For the 18 Queen Street property, the amended tax assistance amount is “not to exceed $5,053,879,” which translates to a 13.9 per cent increase over the previous costs based on 2016 estimates.

“The amounts of new annual municipal tax revenue estimated for each project at completion are expected to be at least $486,145 and $614,962 respectively, which indicate a full ten years of future tax cancellations or rebates would likely be applied,” the report reads.

“This report also recommends the amendment of Brownfield Financial Benefit By-Laws and the enactment of Brownfield Tax Cancellation (BFTIP) By-Laws for the subject properties.”

In total, the combined recommended tax assistance amounts for the two Queen Street properties would be $9,043,491. Further recommendations regarding extending the rebate period were also included in the report.

At the Tuesday night meeting, a number of members of Council spoke to the item, many of them asking questions of City of Kingston staff, who confirmed that the new estimates were decided upon by the applicant, Homestead Land Holdings Ltd., but emphasized that the funds actually delivered to the company would only reflect true costs incurred: if those amounts are lower than the aforementioned maximum amounts, the City only covers the lower cost; if cost incurred are higher, then the City only covers up to those maximums.

Around the horseshoe

Councillor Jeff McLaren, representative for Meadowbrook-Strathcona, was first to speak and immediately shared his opposition to the recommendation.

“I have a bit of a problem with this, so I’d just like to ask a few questions to confirm: If we were to vote this down, is there an agreement in place right now?” he asked.

Paul MacLatchy, Environment Director for the City of Kingston, responded.

“There are two approvals in place for the two projects that have approvals that were made by council in 2016. The one project, 51-57 Queen Street, has a brownfield site agreement that has been signed by both parties. The other project, 18 Queen Street, does not yet have a brownfield site agreement completed,” MacLatchy said, noting that the second agreement was “put on hold” during the OLT appeals processes.

“Okay, so we essentially have an agreement. And if we were to vote this down, that original… agreement would be signed without the proposed amendments today, is that correct?” McLaren asked in response. MacLatchy said it is his understanding that the City could “proceed to completing that agreement based on the approvals that were provided in 2016.”

“That actually sounds good to me,” McLaren said. “If we have an approval already, and it’s already going to go through, what we seem to be doing here is subsidizing a billion-dollar company with an extra roughly $1.6 million.”

After acknowledging that Homestead has already sunk a lot of money into the development, McLaren noted the company has also “sold a lot of buildings lately” and that “1.6 million doesn’t seem to be something that they cannot afford.”

“Do we have any financial pressures as a result of inflation?” he asked.

Members of City staff informed the councillor that Kingston, like any other city, is feeling the pressures of inflation, but pointed out that the Brownfield program the City has in place is different, in that it is subsidized by new construction and taxes coming into the City.

“Well, if it’s subsidized by construction and taxes coming into the city, it would seem that therefore we may have a little bit less than in tax base to spend,” McLaren said. “My reasoning is that… I believe the report says that this is a minor, manageable amount over a 10 year term for the budget. But considering that inflation is coming, every little bit helps, and I think it would be better to leave it with the public rather than to pad what appears [to be a] private corporation’s bottom line.”

“I don’t think that they’re going to not build this because of 1.6 [million dollars], which is my calculation,” McLaren concluded. “So I’m going to be voting against this. I think the money is better left in our hands as opposed to their hands.”

After asking a few questions himself (which have been answered above), Lakeside District Councillor Wayne Hill surmised, “We’re simply adjusting the actual cost of the remediation, which is what our policy is all about. Because if we don’t pay for the remediation, there is no incentive for the developer to remediate the land. They simply build where they don’t need to remediate. Is that sort of the intent?”

Commissioner Huigenbos confirmed Hill’s assessment, at which point Hill expressed opposing views to those of Councillor McLaren.

“I guess, in fairness… this is our policy, [and] we should follow our policy. Otherwise I think what we’re suggesting to other developers is: don’t trust us,” Hill said. “The intent of this policy is to fairly… remunerate the developer for brownfield development, which is exactly what we want to have happen. So this is just playing fair.”

The sentiments of both McLaren and Hill were echoed by other councillors, demonstrating that the views around the horseshoe were split on the matter. Countryside Councillor Gary Oosterhof  and Mayor Bryan Paterson spoke in support of Hill’s assertions, while Williamsville Councillor Jim Neill suggested that the delays that have occurred around the development in question began when Homestead applied to do a project that was “outside the Zoning By-law and the Official Plan,” and therefore their fault. Neill agreed with McLaren’s take on the matter.

“That seems the cost of doing business, to me,” he stated. However, Neill then spoke to the need for the extended timeline, which he felt was fair, leaving where his vote would land up in the air.

After a false count of the vote – Mayor Paterson mistakenly miscounted, omitting one vote, which would have resulted in a tie and therefore a vote against the recommendations – the votes within Council Chambers were tallied again.

In the end, the recommendation passed by a vote of 6-5, with Councillors Lisa Osanic (Collins-Bayridge), Robert Kiley (Trillium), Bridget Doherty (Portsmouth), Rob Hutchison (King’s Town), and McLaren opposed.

The full meeting can be viewed on the Kingston City Council YouTube channel.