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Hamilton behind on growth fees

May 10, 2017

Ontario cities are tapping into tens of millions of dollars in additional transit and waste management funding from growth fees as a result of modified provincial regulations put in place sixteen months ago by the Wynne government. Hamilton hasn’t started considering the potential windfall, despite delaying bus purchases and other HSR spending and even postponing acceptance of federal grants because of a restricted transit budget. 

Waterloo is set to collect an extra $162 million for transit capital spending over the next decade. And this week Ottawa council is being asked to approve higher development fees that will contribute over $600 million to its bus and LRT budget. Even Milton has jumped on the bandwagon.

All three municipalities have completed the studies necessary to calculate and justify how much extra they can be charging as a result of major legislative modifications approved at Queen’s Park in late 2015 after province-wide consultations that began the summer of 2013. These came into effect at the beginning of 2016 and within twelve days, Waterloo council had instructed its staff to take advantage of the opportunity.

Prior to the changes, cities could only force new development to pay for a continuation of the existing transit service levels. Expanded routes and frequency to increase ridership, including installation of LRTs in Waterloo and Ottawa, could not be charged to growth fees.

Ontario’s environmental commissioner and others pointed out this was counter to the province’s strong commitment to tackle congestion, and that it was preventing cities from improving public transit.

Development charges can only pay for the average service level that’s existed for the past 10 years,” noted the Commissioner in 2013. “This discriminates against growing municipalities that want to reduce traffic congestion and air emissions, but have historically had limited transit service.”

The HSR says it needs $250 million for buses and other transit infrastructure to implement the approved ten-year transit strategy. The federal government has offered the city $36 million of this, but requires matching city dollars, so council has delayed accepting the subsidy.

Still operating under the old rules, Hamilton charges a little over $500 in transit growth fees for each new single-family house. The new rates approved last November in Waterloo are nearly seven times that amount and those currently before Ottawa council will be almost $1800 per house.

The variations depend on a complicated calculation involving the amount a municipality plans to spend over the next decade, the number of new homes and businesses it expects to add, and to what extent the former can be attributed to growth. The theory is that new growth should pay for itself, even though it rarely does.

The old rules on transit, for example, required an automatic 10 percent deduction from the growth fee as well as exempting developers from covering expanded service. Another rule previously forbid municipalities from collecting anything for waste management.

That’s now changed as well under the new legislation which allows cities to recoup their growth costs for recycling and composting. Landfills and incineration are still excluded from growth fee calculations in order to encourage more waste diversion.

In Waterloo that’s meant an extra $255 flowing into city coffers for every new house instead of those costs being paid by existing taxpayers. At this point, Hamilton collects nothing for the growth costs associated with waste management.

While Waterloo approved the new fees last November, lobbying by the development industry convinced the region to delay collecting the transit fees until 2019 and to exempt new houses built in the four rural townships – which resulted in higher fees in the urban area.

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