The city’s senior management team has overruled its economic development director and ordered higher industrial development charges (DC) to reduce taxpayer–funded subsidies. And for the first time, growth fees will embrace the complete streets concept and help finance future cycling, pedestrian and transit infrastructure as well as other costs of the “movement of people and goods regardless of the mode of transportation employed.”
While the latest changes are still subject to public input and city council approval, the endorsement of higher fees for industrial development recognizes that Hamiltonians are heavily subsidizing large corporate expansions. Information presented to the DC stakeholder subcommittee last week shows subsidies in the last five years exceeded $78 million.
A portion of these exemptions are required by provincial legislation, but more than nine–tenths are the result of city council policies, including ones that currently discount industrial fees by more than half and provide a 90 per cent cut for all development in the downtown.
In March staff were recommending an industrial discount of nearly $10 a square foot, and economic development director Neil Everson was calling for even lower charges along with a fee cap on some projects. But the latest report lowers that subsidy to $7.67 a square foot and makes no mention of the capping policy advocated by Everson. It also recommends a gradual reduction in the downtown development discount to a 70 per cent discount by 2018.
In 2012 industrial discounts accounted for two–thirds of the $18.5 million DC shortfall. The annual DC losses depend on the value of new development, and last year were just under $14 million, with $4.4 million coming from exemptions for colleges and universities followed by a $2.8 million subsidy for downtown developments.
If the current proposal is approved, growth fees for single–family houses would climb $7700 to nearly $36,000. About $2400 of that increase is for the “services related to a highway” which used to be called the roads component but now is “evolving and expanding to fully embrace the transportation of people and goods via many different modes including, but not limited to passenger cars, commercial vehicles, transit vehicles, bicycles and pedestrians.”
According to the DC background study that means this part of the fee will be used to cover some of the costs of new “road pavement structure and curbs; grade separation / bridge structures (for any vehicles, railways and/or pedestrians and cyclists); grading, drainage and retaining wall features; culvert structures; storm water drainage systems; traffic control systems; active transportation facilities (e.g. sidewalks, bike lanes, multi–use trails, etc.); transit lanes, queue jump lanes, bus bays, stops and amenities; curb extensions between queue jump lanes and bus bays; roadway illumination systems; boulevard and median surfaces (e.g. sod & topsoil, paving, etc.); street trees and landscaping; parking lanes and driveway entrances; noise attenuation systems; railings and safety barriers.”
The staff report argues that the increase equals only 1.7 percent of the median new home price and means the total fees for servicing residential development will account for less than 9 per cent of the average price.
Hamilton’s residential DCs would remain $9000 lower than Burlington’s and nearly $17,000 less than DCs in Milton and Mississauga, but would be much closer to those neighbouring communities than they were a decade ago when fees in Hamilton were less than half of Burlington’s and barely a third of Milton’s.
The city’s development charges reserve account dropped precipitously last year – from over $52 million down to less than $13 million, with the roads component now over $21 million in the red. The persistent shortfalls generated by exemptions and discounts have previously been recovered by city borrowing. V