Residential and industrial development charges are going up, but they are still a long way from paying the real cost of growth. That means higher water/sewer rates and higher taxes for Hamiltonians.
By Don McLean
Published June 28, 2011
When you read today's front-page Spectator article, why didn't you learn about the following public facts?
1) The new industrial development charges are still being discounted by 30 percent. The actual charge is $15.24 per square foot but it is being reduced to $10.58, with the difference being loaded onto local taxpayers and ratepayers.
2) The city has lost nearly $62 million over the last six years because of such discounts and exemptions to development charges. $26.6 million of that was because of discounts to industrial development charges, including nearly $8 million last year alone. That's because the $6.65 current rate was barely a third of what should have been collected. The city's finance chief, Rob Rossini, summarized what that has meant for city finances.
"In total, over the last six years, the various exemptions for downtown, industrial, small commercial, the phase-ins, non-profit housing, churches, hospitals - we have a number of those - it's come out to about $62 million over the last six years," Rossini told council on June 23.
"We have a $9 million recovery annually in the water and sewer budget. We don't have an equivalent amount on the tax budget, so how we've been handling that in the tax budget is we defer projects - we just don't do them."
3) The council decision includes a $78 million windfall to developers. Council has agreed to "share" with the developers 49 percent of the grants it has received from the federal and provincial governments for the Woodward STP expansion/upgrade. That will increase water rates by at least 4 percent a year.
Instead of the federal and provincial tax money being used to lower the costs to local ratepayers, nearly half will be used to lower development charges. And another $100 million grant being sought by the city will be divided the same way, adding lowering the fees by another $49 million.
4) The "added" cost of stormwater ponds has also been subtracted from the approved $15.24 charge (which is now $19.00). Currently stormwater pond costs are included in the development charge. Now they will be excluded and commercial and industrial developers will pay for them directly.
5) As a further concession to developers, the fee increases are being pased in over 18 months rather than charged immediately as the calculation process assumed. That delay will mean millions more dollars shifted onto taxpayers and ratepayers.
6) Another new concession is lower rates for industrial developments under 10,000 square feet - a practice also being continued for commercial developments. Again, the discounts only lower costs for the developers, not the bill for servicing their growth projects, so the taxpayer has to cover the difference.
7) Provincial legislation adopted in 1997 by the Mike Harris government prevents cities from collecting for many growth costs, including the following capital costs: hospital expansions; city hall expansions; police and ambulance vehicles; all solid waste costs including landfilling, recycling, composting and even the extra collection trucks; all arts and cultural facilities (excepting libraries); and other items.
These costs are deducted off the top, before the determination of the development charge rate.
Yes, the residential development charges are going up a bit - increasing by $750 to just under $27,000 - and the industrial ones are going up quite a bit - from 35 percent of the calculated fair rate to nearly 70 percent of that rate. But all these charges are still a long way from paying for the real costs of growth. That means higher water/sewer rates and higher taxes for Hamiltonians.
Developers are still getting kid gloves treatment here - despite the 'sky is falling' screaming from the Chamber of Commerce and other builder representatives.
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