City exempts $9million in development charges
August 14, 2006

A report on development charges in 2005 reveals that nearly a third weren't collected because of various exemption policies.

While the fees collected rose $3.8 million from the previous year as a result of increased charges, exemptions climbed $2.2 million to a new record of $9,001,734. This amounted to 28.7% of eligible charges, leaving $22.4 million that actually went into the city's coffers last year.

And that was barely half as much as was spent from the development charge reserves in 2005. Net spending was just over $40 million meaning that the reserves dropped by over $18 million. That left only $12.6 million in the reserves at the end of December. A little over $2 million of last year's spending went to debt payments for the Red Hill Creek expressway, while $6 million was allocated to the new four-pad arena behind Mohawk sports park.

Two-thirds of the $9 million in exemptions were for industrial developments which are charged at a rate far below the allowed level. Another $1.5 million was exempted in the schools category, and a half million for development downtown which is entirely exempted to encourage core revitalization. Hospitals, churches and affordable housing are also exempted.

Development charges are arrived at by a provincially-regulated formula that is supposed to ensure that the servicing costs required for new growth are paid for by the developers. But the province prevents municipalities from collecting for some significant growth costs including waste management and city hall renovations. City councils then have the option of how much to collect of the eligible charges.

The calculations applicable to last year allowed the city to collect $10.97 a square foot for new industrial development, but council decided to only charge $1.60 in order to encourage more business growth. A new calculation arrived at earlier this summer pushed the eligible charge to $16.03 a square foot and led council to raise the collected amount to $2.58. That is expected to climb to $3.30 next July and $4.08 in mid-2008.

Hamilton has sharply increased its development charges over the past two years, bringing them closer to fees collected in other parts of the GTA. The charges for each single-family house have doubled to $16,061 and the long-standing policy to completely exempt industrial development has been partially abandoned.

The 2005 development charges report can be viewed at http://www.myhamilton.ca/NR/rdonlyres/3136D2B0-C715-4A02-A2B3-
340BDD8EFD34/0/Aug09FCS060822005DCReserveReport.pdf .