Staff are warning that undercharging for growth will cost taxpayers $40 million per year if the city continues to exempt many types of expansion from full development charges (DCs). They are proposing to pare down some of those exemptions but some councillors contend this is not enough and are challenging other growth subsidies particularly to greenfield sprawl.
After nearly four hours of presentations and questions, the development charges stakeholder sub-committee refused to endorse the staff recommendations without further debate. Led by new councillors JP Danko and Maureen Wilson and citizen member Yonatan Rozenszajn, the committee forced the unusual scheduling of an extra meeting to hear a staff presentation and debate the proposed changes. At Wilson’s urging, the committee also ordered an evening public meeting to receive public comments on the proposed new growth fees bylaw.
Provincial rules permit municipalities to collect development charges to recover about three-quarters of the costs of pipes, road, and other infrastructure and services needed for growth. But the maximum allowed fees can then be decreased by city council and Hamilton currently provides nineteen different exemption categories. The most costly over the last five years has been for development in the downtown core which gets a 70 percent discount.
“The cost of providing the existing portfolio of DC exemptions far exceeds the city’s current funding [$15.5 million a year imposed through the tax and rate budgets],” warns the staff report. “To maintain the existing discretionary DC exemption policy the city is forecasted to need approximately $40 million annually.”
The downtown discounts have been justified because most of their required infrastructure is already in place. They also support council’s efforts to revitalize the core of the city and increase its density of both jobs and residents. However, finance chief Mike Zegarac estimated that downtown exemption alone will cost the city $11.8 million annually.
On the other hand, most actual growth costs are spent on greenfield residential expansion that requires all new services. Up until now Hamilton has charged a uniform growth fee across the whole city making no distinction between greenfield and infill development. Some municipalities like Ottawa have separated the fee calculations to capture this difference in real costs so greenfield expansion is charged much more than infill redevelopment.
Hamilton is now starting to move in this direction by proposing to divide the costs of stormwater infrastructure. The effect is dramatic, with new houses in greenfield areas to be charged $10,000 more than those in all ready built up areas of the city.
Wilson and Danko both questioned the lead consultant on other greenfield costs such as roads which are not being treated in a similar way. “Services related to a highway” (roads, bridges, traffic signals and the associated equipment and vehicle needs) are the largest cost component of new growth in the development charges calculations, but continue to be charged at the same rate across the whole city.
Danko asked “why isn’t there a differentiation based on new infrastructure when we’re talking about roads or water that is specific to that area?” He pointed to “roads that are already built, water systems that are already there” in the older parts of the city.
Wilson also pressed the consultant on this issue asking pointedly if DCs are being used by Hamilton as “an incentive or disincentive to intensify” and suggesting that if greenfield development can’t pay for the required servicing then “maybe we shouldn’t be having that development.” Both new councillors specifically cited road costs but the consultant’s response to their questions didn’t address that part of the DC calculation.
When it became apparent near the end of the meeting that staff didn’t plan on making a presentation to the subcommittee, but expected it to approve the recommendations in their report, committee members revolted.
“I’m not in agreement with a bunch of stuff in the report,” declared Rozenszajn. “To be asked to approve this right now is not proper. I’m totally against that.” He was verbally backed by Danko and subsequently by a unanimous vote of the sub-committee. A motion by Brenda Johnson was also adopted demanding “that the full entire draft policy be released as soon as possible” rather than just the “Coles notes” that had been presented to the sub-committee. The date of the next meeting isn’t determined yet, but must occur before staff finalize their recommendations in mid-March.