Category Archives: Uncategorized

Port Tower: New Developer, Fortress Real, Named in Class-Action Lawsuit

The controversial Port Tower project in Port Dalhousie has dragged on for over a decade. Many greeted the announcement of a new developer and new site plan this past June with a sigh of relief. In St. Catharines, the feeling could be summed up as “we don’t care what it looks like, or what it is, just build the thing.” Years of empty lots and empty promises will do that. You could forgive people for wanting to simply move on to the next phase: a condominium project in the area once occupied by bars like Jailhouse, My Cottage and Rum Jungle. The community was done with the divisive controversies and ready to embrace a new vision of developer Fortress Real. A vision they call “Union Waterfront”. While the design received a communal thumbs up, it may not be all smooth sailing just yet.

Investors have launched a proposed class action against a high-profile Toronto-area condo development firm, with projects across Canada, that raises millions from mom-and-pop investors through risky pooled mortgage products—many of which are advertised as safe and “secure.”

The suit, filed earlier this month in Ontario Superior Court, claims $27.5 million in damages, as well as the return of any profits, in relation to a troubled condo project in Barrie, Ont., which was marketed to investors by Fortress Real Developments, Fortress Real Capital and their various affiliates. It also accuses the Financial Services Commission of Ontario (FSCO) of failing to properly regulate the sector, dubbed by critics as a wild west of lending. “They were aware of the issues we’re complaining about in the suit for many years, but have done nothing to protect the public,” says Kevin Sherkin, the lawyer acting on behalf of two investors who hope to become representative plaintiffs if the suit is certified as a class action.

The allegations, which have yet to be proven in court, accuse Fortress and its principals—CEO Jawad Rathore and COO Vince Petrozza—of misleading investors by suggesting they were putting money into a relatively safe product, called a syndicated mortgage, that offered exposure to Canada’s booming condominium market and promised eight per cent annual returns, plus more if the projects performed well. The suit focuses on a condo project in Barrie called the Collier Centre that was forced into bankruptcy protection last year.

That, from an article from Maclean’s called “Lawsuit targets Ontario’s $4-billion syndicated mortgage industry” (http://www.macleans.ca/economy/angry-investors-seek-class-action-against-high-profile-seller-of-risky-syndicated-mortgages/).

More from that story:

Rathore and Petrozza founded Fortress in 2008, according to the suit, after previously working in the province’s securities market. In fact, the pair received a 15-year ban from the Ontario Securities Commission, or OSC, as part of a $3-million settlement agreement they signed in 2011. The agreement said the pair, along with another colleague, “engaged in conduct contrary to the public interest” when they sold shares of two companies later implicated in a B.C. stock scam to clients of their debt management business. However, the ban did not include “mortgage instruments,” which fall outside of the OSC’s jurisdiction.

Though sold like securities, syndicated mortgages are loans made by group of investors to a developer. They are typically used to fund the “soft costs” of condo projects—like building a sales centre or commissioning drawings. In exchange, investors are promised regular interest payments on their loan—generally around eight per cent annually—and may be entitled to receive more once the project is completed. In addition, the loans are secured against the property in the form of a mortgage, which is why the marketing for many syndicated mortgage products often touts them as safe or “secure.” (For more on the industry and Fortress, read Maclean’sstory from last April here).

In reality, however, such investments are quite risky. The loans made by syndicated mortgage investors are usually subordinate to a project’s main bank lenders, making the chance of getting one’s money back if something goes wrong—and there’s plenty that can go wrong in a large, complex commercial development—highly unlikely. Hence the attractive eight per cent interest rates offered.

It should be noted that Fortress adamantly denies the lawsuit’s claims and that, even if true, the implications for the Port Dalhousie development are not clear.

But, for Niagarans who have waited a decade for this project to come good, another shade of controversy will be an unwelcome sight. It’s safe to say that the developer, and the proposal, are now firmly under the microscope.

 

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JCI Debate – Why Each St. Catharines Candidate Can Best Represent Youth in Niagara

Heading into tonight’s JCI Federal Election (7:30 p.m. at the Holiday Inn on Ontario St.), I asked five members of the emerging generation why the candidate they support is the best choice to represent Niagara.

This debate promises to be an interesting one, in particular as it features all five registered candidates.

Question: Why do you think [Party] and/or [Candidate] is the best choice for young people in Niagara and/or Canada?

Answers (Party, Candidate, ThreeHundredEight riding vote projection [details here], 2011 election redistributed results)

TBD – (Green Party of Canada, Jim Fannon, 4.1%, 3.83%)
Jason Brown – (Liberal Party of Canada, Chris Bittle, 30.5%, 20.69%)

I fundamentally believe we need better government in Canada, not just different government. Justin Trudeau and the Liberal Party of Canada have laid out one of the most comprehensive plans in a generation to do government differently. This includes reviewing our current electoral system and alternatives to strengthen Canadian democracy, making parliament open by default (including the Prime Minister’s Office, Minister’s Offices) through access to information requests, and committing to having 50% Male and 50% Female representation in the Federal cabinet. Additionally, the Liberal Party of Canada and Justin Trudeau have committed to implementing a Prime Minister’s Youth Advisory Council that will allow the Prime Minister to remain up to date on issues of importance and concerns youth may have.

As for why Chris Bittle is the best choice for St. Catharines and the Niagara region. Chris knows the struggle of being a young person and trying to make ends meet. He has stood up for those without a voice for years with his involvement in the Quest Community Health Centre. I first met Chris earlier this year and I was impressed with his ability to relate to young people and the struggles we go through. I was impressed by his thorough grasp of the issues facing the city of St. Catharines.
Mickey Calder – (New Democratic Party, Sue Erskine-Fournier, 21.1%, 23.95%)

Drew Garvie – (Communist Party of Canada, Saleh Waziruddin, 0.3%, 0.2%)

Saleh Waziruddin is the best choice for young people because voting communist demands a youth and student agenda. St. Catharines-Niagara has some of the worst unemployment rates in Ontario and Canada, and youth unemployment is double the average rate. The average undergraduate in Canada graduates $27,000 in debt and in Ontario it’s even higher. Our generation is the first since WWII which will have a lower living standard then their parents’ generation. Under Harper, Canada has become a voice for oil corporations in international climate negotiations. Saleh and the Communist Party think that education is a right and that youth should have decent jobs with higher wages. We support the elimination of tuition fees, the establishment of a living stipend for students, and the cancellation of all student debt. We demand that the minimum wage federally and provincially be raised to a living wage of $20/hr and that youth unemployment be eliminated through massive public green job creation, building affordable housing, expanding infrastructure, social services and funding for arts and culture. We would facilitate the unionization of young workers with a new Labour Bill of Rights.
We need to scrap CETA negotiations and the TPP and withdraw from NAFTA. Free trade has resulted in huge job loss in manufacturing that used to be the backbone of communities such as St. Catharines. Saleh is taking a strong stand against corporate greed by saying that if profitable companies don’t want to produce in Canada, we can take over the plants and the government can run them under democratic control. Saleh is a consistent fighter against racism, sexism, homophobia and transphobia and the Communist Party of Canada demands full equality. The Communist Party supports closing the Tar Sands and expanding public green energy, as does the environmental movement. This is the kind of bold agenda, demanded by the youth and student movement, that can move Canada in a new direction. Voting for Saleh is a recognition that there will be a long-term fight for this future, but that voting for these policies is a small step towards the necessary goal of a socialist Canada.

Michael Ramnanan – (Conservative Party of Canada, Rick Dykstra, 44%, 50.66%)

Rick Dykstra is one of the best local MPs in Canada. He’s done way more for St. Catharines than anyone else before him.

Personally I didn’t have to pay tax on my scholarship like my older brother did. I also got to save with lower taxes and a Textbook Tax Credit. Those are Conservative policies.

Balanced budgets are better for people our age than optional deficits. I don’t think it’s a good thing that Kathleen Wynne is supporting the Liberal plan. I bet the Ontario Liberals seemed a lot better 12 years ago, but reckless spending catches up to you and now our generation is paying the price.

I help Rick Dykstra because he’s great at his job. Rick is active in the community and cares about delivering results for people like us.

Dykstra Story: A quick response to the response to the response

So, this story came out: “An Underage Girl Says She Was Offered A Bribe To Deny Drinking With Conservative MP Rick Dykstra”

Then people (over)reacted to that story in a fairly predictable way (partisans on both sides reacted with typical extreme shock/derision or obfuscation/defensiveness; almost everyone at least thought the story was “interesting.”)

Then Grant Lafleche in the Standard wrote a response to that response: When Is A Scandal Not A Scandal

I’m not going to do a point-by-point review of Mr. Lafleche’s article, but a quick response:

(Also, the Standard’s headline of the story including “scandal” (and Grant using that word in his column) when very few had referred to it as such, isn’t helpful.)

The problem starts early when Mr. Lafleche writes “some young women apparently posted to social media that they got some drinks from his table where the bottles of vodka were.” That’s obfuscation. The truth is, two underage girls alleged Mr. Dykstra purchased them drinks; which is very different than merely wandering over to his table and taking drinks he bought for his party.

So what we have is a fairly significant accusation (buying booze for minors), which Buzzfeed then attempted to corroborate and found more info (screen grab of the alleged ‘bribe’, another witness at the end of the story.)

I believe that the accusation is unproven and that Mr. Dykstra had nothing to do with the bribe, which I agree with Mr. Lafleche was hardly a bribe offer at all. But I think it is wrong to suggest that there’s “no story here” and criticize another outlet that took the time to look into it when, apparently, the Standard’s investigation was only to speak to Mr. Dykstra at the time of the incident.

It’s worse of Mr. Lafleche to say, as he does, “if true, so what?” So what? Supplying alcohol to minors results in a fine and appearance in court for any adult. (Also, Mr. Lafleche propagates the falsehood that if you’re in a bar you assume everyone is of age by writing “You’d just presume that everyone there is old enough to drink.”. As anyone who has ever been to a bar or been a teenager knows, that is either absurdly naive or just an attempt at mitigation. Mr. Lafleche himself later in the same column calls out this falsehood when he writes “beyond some teenagers getting into a bar (as though that has never happened before).”

Suggesting a significant accusation is only a story because Niagara is bored is quite unfair. I have a great deal of respect for Mr. Lafleche, but would have expected more from his response column.

The accusation appears to be unproven, so maybe we should all move on to something else.

N1agara: Cui Bono?

Hubbub about One Niagara City (N1agara is my chosen, 21st-century moniker) has cropped up again recently, due to a meeting of local business leaders.  (http://www.stcatharinesstandard.ca/2015/06/23/region-gets-blast-from-business-sector)

Let me start by saying George Darte and Tom Rankin are great business leaders and great community leaders. Each has made a large, lasting and positive impact in Niagara through both their businesses and their community work. It is important, however, to remember that they are not a Business/Community Leader. Being successful in business does not necessarily mean you’re going to become a community leader, and being a community leader does not require you to be a business person. In a similar vein, it is important that we are able to separate “what’s good for the business community” and “what’s good for the community.” These will (often) be one and the same, but not always.

I’ve discussed N1agara previously (https://niagaranext.wordpress.com/2014/09/16/oneniagara/) but wanted to try to answer a more specific question this time around. Namely: Cui Bono? Who benefits from N1agara? Without re-stating my previous post in its entirety, a quick summary: Niagara does not have a single urban centre the region revolves around, amalgamation has not found success where it has been tried and finally, amalgamation does not lead to a decrease in municipal spending (http://www.thestar.com/news/gta/2014/01/13/amalgamation_brought_fewer_ontario_cities_but_more_city_workers_report_finds.html).

The last point is an important one, as cutting costs leading to reduced taxes is the most frequently cited argument for N1agara. In many ways, amalgamation is more about taxes than it is about governance. Improved service delivery and “cutting red tape” are usually cited as potential byproducts of amalgamation. But make no mistake, the crux of the pro-N1agara argument is about cutting costs.

In fact, in the very Standard article that kick-started the recent outbreak of hubbub, here are some quotes from local business leaders:

“[W]e want one City of Niagara. That’s your first line item in cutting costs.”

“We have to do something, we’re almost bankrupt. We’ve got seniors who can’t afford to pay our taxes. We’ve got working people who can’t afford to pay our taxes”

“If (the interest rate) spikes — if Putin decides to start shooting, which he probably will and the interest rates start climbing, you are bankrupt,” Fox said, referring to Russian President Vladimir Putin and his aggression in Ukraine. You are going to be going the way of Detroit. There’s a part of me … that actually would like to see that happen, because it would solve the problem. So if you don’t want that to happen … stop spending money. We need a plan to significantly pay off the debt over time.”

(I included that last one for comic relief; the idea that an outbreak of a large-scale war with Russia would be particularly worrisome for us locally because of Niagara Region’s debt load is hilariously single-minded, and only topped by comparing us to Detroit, a city that claimed bankruptcy for a multitude of reasons but had a debt load 3600% higher than we do currently. Maybe don’t use the “Detroit” comparison quite yet…)

Sounds like our taxes compare negatively to the rest of Ontario.

http://www.niagararegion.ca/government/budget-taxes/municipal-tax-comparisons.aspx

It would appear our tax rates for similar residential, commercial and industrial properties is actually close to the lowest among comparable municipalities in Ontario . In fact, businesses seem to get a big break in Niagara, considering the lower tax rates for residential, commercial and industrial properties. Certainly, at worst, our tax rate could be considered “normal” if not “low”. This leaves alone other ways businesses are aided in Niagara, like development charges being waived (http://www.niagarafallsreview.ca/2013/01/18/region-waives-development-charges-for-industry), or money simply handed to businesses by government  to the tune of 19.7 million dollars (http://www.stcatharinesstandard.ca/2015/04/22/speedway-incentives-approved ) (talk about picking winners and losers.)

What about that pesky debt rate, how does it compare?

Long-Term Liabilities (debt)/Capita
Hamilton  $                     702.83
Durham Region  $                     343.47
Waterloo Region  $                     840.46
Niagara Region  $                     606.58

So, amalgamation wouldn’t help cut costs, and Niagara doesn’t currently have significantly higher taxes or debt load even if it did. So why is the business community crying out for lower taxes (by way of N1agara)?


Cui Bono?

If taxes aren’t the reason businesses are staying away (as our tax rates are good or normal), lowering them further won’t help attract more businesses. Even if N1agara did lead to lower taxes, (which we’ve seen it hasn’t), who would benefit from this? Currently established businesses (like I don’t know, all the ones at the roundtable at the Region this week) would save significant amounts of money right away if taxes were lowered. Cuts to services would be required, as we have seen that attrition alone isn’t enough to put amalgamated municipalities in the black. Even if laying off staff was enough, it just means a higher unemployment rate when those municipal workers are laid off. So unemployment goes up, services get worse and this benefits Niagara how?


 

Conclusion

The main problem with Niagara’s problems is that we have not even articulated, let alone agreed upon, Niagara’s problems or possible solutions. We have just consistently heard from the business community about its problems because it has a loud voice and a united goal ($$$). Again, I like George Darte and Tom Rankin, but this isn’t about the greater good. I’m not discounting the business community, I think good, responsible and successful businesses are important to any community. But that is just one part.

Is status quo acceptable? I think any reasonable person would say that it is not. We know that the jobs issue is a big one, but is it the only one? Is it a cause of problems or a symptom of problems or both?  Is the problem that we are spending too much or not spending enough to provide better services that may attract businesses and people? Are we overgoverned, misgoverned or adequately governed? Should we amalgamate or better collaborate while maintaining our municipalities? Do we want to become a commuter, bedroom community? There are a myriad of complex questions that N1agara seeks to solve with one solution. It cannot.

It is fine (and great!) to have an opinion on the proper way forward, but it should be backed up by facts, precedents and impact if it is to be taken seriously. An absolutely exhaustive statistical analysis of amalgamation is beyond my scope, but it also hasn’t been carried out yet, so why are still putting the N1agara horse before the analysis cart?

My opinion? Sure, you’ve come all this way: leverage our advantages (like tourism dollars and proximity to the border) to provide better services (roads, transit, community programs) without increasing taxes. Instead of a flat tax cut across the board, give the thousands of non-local students who graduate every year here a reason to stay in Niagara by providing property tax breaks for hiring Brock or Niagara College grads. Grow the population by making Niagara attractive to all, not just corporations. Address the complex issues with intelligent, nuanced solutions. Simple? Yes. But it requires a lot of cooperation and hard work.

Just one citizen’s opinion.