In response to pleas from developers, city council has agreed to postpone increasing growth charges on new residential development and forego over $7 million that will now have to be made up through taxes and water rates. Extending a 60% discount on fees for new industrial development will also have to be covered.
Residential development charges (DCs) were set to rise this month by $6900 to cover new roads and pipes and other servicing but now won’t start until January when half the increase will be applied, with the full charge in place next July. Staff estimated the delay will cost about $7.3 million assuming that the equivalent of 1500 new houses will be built over the next year.
“Phasing in the increase to the residential DC would potentially result in a significant level of exemptions that would need to be funded from non–DC sources,” warned the staff report. “For every 100 homes that were built if the rate were to continue at $28,095 versus $34,974, the City would need to fund another $687,900 in exemptions from the tax and rate budgets.”
Nando De Caria, the president of the Hamilton Halton Home Builders Association, told councillors that developers support the validity of the increase set by a stakeholder committee on which the HHHBA sat, but that they wanted delayed implementation in order to avoid passing on the increase to new homeowners who have already committed to buying.
“We have no problem of growth paying for growth,” he assured councillors. “Where we don’t agree is where there’s too much burden of the growth that’s being passed on to the new home buyer.”
The staff report notes that if the entire increase is passed on to buyers, it would add about 1.5% to the $450,000 average cost of a new single family home. Staff also explained that building permit applications received by July 6 would still pay the old rates even if the application wasn’t approved until next January, and that site plan applications filed by May would get the same deal.
The first public draft of the DC increase released in March anticipated residential development fee increases that were $700 higher but that was gradually pared down. City staff started meeting with the HHHBA about DC changes as far back as mid–December.
Ontario law only permits cities to charge DCs that cover about 75% of new growth costs. Municipalities can give various exemptions and discounts – steps that lost Hamilton more than $70 million over the last five years.
A revised DC bylaw must be adopted every five years. Its preparation in Hamilton is mainly the work of a consultant overseen by a stakeholder committee composed of four councillors, two citizens and three representatives of development interests including the HHHBA. The committee met four times since March and there were an additional 12 private meetings between city staff and the HHHBA.
The delay in collecting residential DC increases was moved by Clark and adopted without opposition at the general issues committee last month. At the subsequent council meeting Clark moved to also delay increases in industrial development charges and maintain the rate at just under $9 a square foot and not impose the $11.42 recommended by staff until next July. Six councillors voted against that change – Chad Collins, Scott Duvall, Tom Jackson, Brian McHattie, Sam Merulla and Bob Morrow.
The $11.42 will still be nearly a 40% discount on the $18.76 that the city could be collecting for large new industrial development. A new discount introduced this year sets $8.57 for new industrial developments under 10,000 square feet. V