Provincial rules mean at least a quarter of growth costs are paid by existing taxpayers, says the city, so reforms to development charges (DC) legislation under consideration could help reduce Hamilton’s $2 billion shortfall in infrastructure maintenance. But a formal submission to Queen’s Park doesn’t mention that Hamilton-determined discounts provide more than $10 million a year in additional subsidies to new development.
The city’s input to a province-wide consultation seeks more developer monies for transit expansion but makes only passing references to other reforms that could reduce preferential treatment for greenfield sprawl over redevelopment and intensification. Councillors rubber-stamped the submission last week without any discussion nearly a month after it was sent to the province.
It declares that the Development Charges Act imposed in 1997 by the Mike Harris Conservatives “does not support the premise that ‘Growth should pay for Growth’,” because it “places a number of restrictions on the growth-related costs that a municipality is eligible to recover” by excluding waste management, museums, cultural and tourism facilities, and general city administration costs. A 10 percent deduction is also imposed on transit, libraries, recreational facilities and other “soft” services.
Even though that deduction only applies to one-eighth of Hamilton’s current development charges, the submission says that “statutory deduction has cost the city of Hamilton approximately $3.5 million over the last 5 years [and] the costs to the taxpayer of the other restrictions cannot be as easily calculated, but would easily exceed the cost of the 10% statutory deduction.”
One of those restrictions says municipalities can’t charge for improvements over historical service levels. That means new growth can’t be charged for an LRT or other enhancements to transit even though the province supports those changes. This restriction has been waived for Toronto and York Region transit initiatives, but remains in place in the rest of Ontario. Hamilton wants them dropped entirely, arguing that they “should not exist for any service that has been made a priority for investment by the province.”
Developers in the Ontario Homebuilders Association counter that “funding high order transit should not be placed on new home purchasers”. They also claim there’s a “clear disparity between the rising cost of development charges and the stagnate nature of property tax increases,” and contend higher growth fees will mean higher house prices.
The city’s submission contends that development charges have little effect on housing prices so even “a significant increase in DC’s of 25 percent would only result in an overall increase in costs of 1-2 percent, which may or may not be able to be absorbed within the selling price, depending on market conditions.”
Comments from the environmental commissioner’s office demand changes to the perverse economic incentives that favour sprawl.
“If lot size is not factored into development charges, then houses built on narrower lots pay the same charge as those on much larger lots, even though infrastructure would have to be extended further and would be more costly. If an average-cost-per-housing-type development charge is applied (that does not take location into account), the result is that the urban home is overcharged, and the greenfield development is subsidized, which is basically the situation in most municipalities at present.”
A submission from Ottawa’s Greenspace Alliance echoes this demand for change: “The use of area specific development charges will ensure that lower development cost areas will not be paying the development charges of higher development cost areas thus reducing such areas' development charges.”
Hamilton recognizes that redevelopment costs are far lower, but chooses to exempt some of these areas from development charges such as the downtown rather than charging higher fees to cover the much more expensive servicing required for subdivisions on suburban farmlands. Discounts like these add over $10 million a year to city taxes and water rates.
The city’s comments on shifting economic incentives from sprawl to intensification are muted: “Given that the type of development that is intended to be incentivized (intensification & increased densities) may, in theory, have somewhat lower growth related cost it would be reasonable to shift that cost from incentives to the greenfield development (and more specifically to the lower density greenfield development).”