Vol. 21 No. 8 • February 26 - March 4, 2015 In Our 20th Year Serving Greater Hamilton

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Battle Looming Over Growth Fees

by Don McLean
May 29 - June 4, 2014
An increase in growth fees that is going before councillors on June 4 is expected to face resistance from local developers despite nearly a dozen private meetings between staff and the Hamilton Halton Home Builders Association (HHHBA). At issue is partial funding for conservation authority studies and for implementation of the city’s complete streets policy.

    Developers are also arguing for reduced fees to recognize benefits from growth–related spending to existing residents. Provincial figures show that Hamilton already makes one of the highest deductions from growth fees to account for “benefits to existing residents”.

    Councillors will receive written and oral presentations on June 4 before deciding the fees for the next five years. Over 200 builders and their employees attended the 2009 meeting where council was convinced to postpone recommended fee hikes — a decision that apparently cost the city over $10 million.

    Ontario legislation allows cities to collect about three–quarters of the costs of new growth to reduce the burden on water rates and taxes paid by existing residents. The appropriate development charges are determined through a complex calculation that starts with expected infrastructure expenditures over the next 18 years, then exempts or discounts the costs of some city services, deducts subsides from senior levels of government, and divides the remainder between residential and non–residential development.

    Council can and does provide numerous additional exemptions and discounts that have shortchanged city coffers by nearly $32 million in the last two years. The most costly lowered growth fees for industrial and commercial expansions, with lesser amounts lost to exemptions for downtown redevelopment. These policies help explain why the development charge reserve funds are currently nearly $87 million in the red.

    In Hamilton, the process of determining fees is primarily conducted by an outside consultant overseen by a development charges stakeholder subcommittee made up of four councillors, two residents, and individual representatives from each of the HHHBA, the realtors’ association and the Chamber of Commerce. The subcommittee met publicly four times between March 5 and May 5, but the HHHBA was accommodated with a further eleven private meetings.

    Staff reported at the May 5 meeting that “HHHBA have provided memorandums outlining issues and concerns for both ‘Services Related to a Highway’ and Hamilton Conservation Authority.” Funding growth–related studies by the latter is a new step for Hamilton, while the definition of road work has been expanded this year to include pedestrian, cycling and transit stops to cover “the movement of people and goods regardless of the mode of transportation employed.”

    That’s helped push the “services related to a highway” component on the fees from $6137 per single family house to $8545. That increase is down from initial calculations in late March that had the charge at $9008 per unit. The proposed conservation authority fees would add $44 per unit.

    Staff warn that the HHHBA also has concerns with the calculations to pay for new stormwater, water and sewer infrastructure and that “the primary unresolved issues are related to the determination of benefits to existing” residents. Staff contend their approach has “remained consistent” with previous calculations but warned councillors that “this issue is unlikely to be resolved” prior to the June 4 meeting.

    The consultant’s report examined $1.66 billion of infrastructure spending planned over the next five years and calculates that a third qualifies as benefitting existing residents and just under half ($792 million) could be recovered from development charges. “Hence, $870.15 million (or an annual amount of $174 million) will need to be contributed from taxes and rates or other sources,” the report notes, of which $126 million can be charged to future development. V
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