Development charges increase in the works
Contrary to popular opinion, growth does pay for itself, says the Greater Barrie Home Builders Association.
The city has the opposite opinion, and Barrie councillors have given initial approval to increase development charges on new houses and larger apartments this year.
They could increase by 6.4% and 5.2% respectively by month’s end — if council gives final approval to changes to its Development Charges Act (DCA) on Feb. 11.
“As far as the increases go ... it’s what we have to deal with,” said Sheila Hissa, the builder association’s executive officer.
“Our concern is there’s a philosophy that development’s not paying for itself, that somehow development is being subsidized. And that simply isn’t true, from our perspective.”
Development charges are used by municipalities to pay the capital costs of major work related to new growth.
They are charged on residential, industrial, commercial and institutional development —when building permits are issued or engineering services are approved.
The DCA doesn’t allow municipalities to recover landfill costs, those for administrative headquarters, culture, tourism or entertainment facilities.
“The DC Act does not permit the recovery of all growth related costs by excluding certain services, including waste management, as well as limiting recoverable costs based on historic 10-year averages,” said Craig Millar, the city’s deputy treasurer. “Ultimately, the DC Act does not permit the full cost of growth to be recovered through development charges.”
In addition to costs that cannot be recovered through DCs, the Act requires a 10% reduction on ‘soft services’ such as libraries and recreation centres. It also deducts amounts of more than the 10-year service calculations — which hurts municipalities that grow quickly in short time periods.
But Hissa says there are issues which have not been addressed in the DCA increases. Services needed for growth, such as community centres and roads, can be used by all city residents.
“This development charge is based on a certain number of years, and there will be benefit outside of those years for the community as a whole,” she said.
Hissa said the DCA doesn’t take into account all of the other contributions developers and builders are required to make, such as building permit revenue, or the spinoff effect of the employment created by the residential construction industry, which outpaces all private sector building.
“That’s money in city coffers that had nothing to do with development charges,” she said.
Hissa says the builders also take issue with city data that Barrie’s residential development charges are low compared to comparator cities. Her information says Barrie is near the top, second only to Hamilton.
If council approves the bylaw changes, development charges on a single-family house would increase to $30,707 from $28,867. Those on two-bedroom and larger apartments would jump to $17,756 from $16,878.
“We are looking to pay the share — with the understanding that all of these costs are passed on to the homeowners,” Hissa said. “So in actual fact, it’s being passed on to the people who will pay those taxes down the road.
“And the key point is it’s not the builders and its not the developers, it’s the homeowners (who pay for DCA increases).”
Hissa says the home builders aren’t as concerned with the DCA bylaw increases as with the philosophy behind them.
“The attitude that growth doesn’t pay for growth ... we disagree with that. As far as that philosophy, we would like to continue to work with the city and to show them the contributions of what we do,” she said. “We’ve made our opinions known.
“The thought is if we can’t work with the city on the philosophy, the whole idea that growth isn’t paying for itself, then when the new (Innisfil) lands come available, we’re going to be in for a much more difficult time.”
The Annexed Lands Secondary Plan and the City-wide Infrastructure Master Plans project are expected to be complete by mid-2013.
The city is using a two-phased approach to update its DCA this year. The first phase will exclude these two reports, the second, in December, will include them.
Barrie’s current development charges bylaw expires June 16, 2013.
If city development activity this year is similar to 2012, DC revenues from March to December are expected to be $7.5 million — but another $1.2 million would be lost because of discounts in the bylaw.