A provincially-encouraged method of reducing taxpayer subsidies of new growth has been largely rejected by a subcommittee of city council. Ontario legislation enacted two years ago requires municipalities to consider imposing geographically-variable development fees that would penalize greenfield sprawl and make infill and densification more financially attractive.
The city currently uses a single fee no matter where the development occurs, and then it sharply discounts fees in locations like the downtown where council wants to encourage more growth. Taxpayers end up covering those discounts and other council-decided exemptions to the tune of about $15 million a year and effectively subsidizing greenfield expansion.
Development charges are supposed to ensure that the extra municipal spending required to service growth is paid for by the developers and not by existing residents. Even when fully implemented, these charges don’t actually fully pay for growth, but changes legislated by the Wynne government in December 2015 allow cities to collect a higher proportion of costs and also make the whole process more transparent.
One benefit for local taxpayers is that the changes now allow charging growth fees for waste diversion services such as recycling and composting (but not for landfills or incineration). They also remove the former restriction on expansion of transit services above the current service standard. This is in line with the province’s push to improve public transit and could provide a big cash boost for HSR and DARTS capital spending.
At its first meeting earlier this month, Hamilton’s development charges stakeholders sub-committee heard a presentation and recommendations from consultants on the new rules. Most are required including giving the public at least 60 days to the calculation of development fees. There’s also a new requirement for an asset management plan “to demonstrate growth-related capital spending is financially sustainable over its lifetime.”
The opportunity to charge different fees in different parts of the city was also noted, but the consultants stressed this isn’t mandatory and gave a long list of possible problems that variable fees might cause.
They concluded by recommending that variable development charges should only be studied for the stormwater component and possibly the transit portion of the fees. With support from city staff, the consultants rejected variable fees for water and sewer services, and offered no discussion about new roads which is the largest component of the fees.
Stormwater services currently make up about 17 percent of Hamilton’s development charges. Roads comprise 22 percent and water/sewer about 21 percent with so-called soft services such as police, transit, fire, ambulance, and libraries making up the other 40 percent.
Questions from sub-committee members during the two hour meeting were minimal. Councillors Conley, Farr, Partridge and Pearson are members, along with individual appointees by each of the Chamber of Commerce, the Hamilton Halton Home Builders Association and the Hamilton Burlington Realtors Association. Two citizen members round out the sub-committee – although one wasn’t present for this month’s meeting.
The city reduces growth fees for commercial expansions, new or expanded industrial development and hospitals and provides a 75 percent discount on all downtown development. Affordable housing projects are completely exempted as well as places of worship, parking garages and covered sports fields.
The decisions of the sub-committee are subject to ratification at the March 26 meeting of the audit, finance and administration committee before going on to council for ratification. The background study will be completed by the end of the summer, but restricted to internal review for several months. It’s expected to be released to the public in December and the resulting by-law approved next spring.