Amended provincial rules allow councillors to increase city revenues without raising property taxes, but opposition is likely from powerful interests. Changes to development charges (DCs) legislation, adopted unanimously in December, boost available funding for transit and waste management. They also require cities to consider variable growth fees to reduce subsidies to sprawl development.
Growth subsidies have helped generate an unmanageable infrastructure crisis that in Hamilton already means a three billion dollar shortfall in the maintenance of existing roads, pipes and other municipal infrastructure that is growing by $200 million a year. And the continued demands of greenfield growth mean much of the city’s already inadequate maintenance budget is going instead to build more new infrastructure.
Legislation given royal assent last month will “require municipalities to examine the application of varying development charges” in different parts of the city to reflect actual growth costs in that area. Hamilton’s current one-size-fits-all development charge both subsidizes greenfield growth and also penalizes infill intensification projects in the older parts of the city.
The cost of servicing the latter is far lower because roads, pipes and other infrastructure are already in place, but inner-city residential construction pays the same DC rates as growth on agricultural land at the edge of the city which requires all new services. That means every infill unit effectively subsidizes each new greenfield residence, argues Dr Pamela Blais.
“It’s like you buy a smart car and every time you buy a smart car a certain part of that price goes to pay for somebody else’s SUV,” Blais told a late November meeting hosted by the Useful Knowledge Society of Hamilton and the Hamilton-Burlington Society of Architects.
She contended variable development charges are a key way to increase the success of the billion dollar LRT investment by encouraging higher density inner-city development. She offered similar advice to city council four years ago, but it wasn’t taken up. Her comments then were reported in the minutes of the committee she addressed in November 2011:
“Dr. Blais discussed urban form and indicated that the uniformity in development and service charges has created a development pattern that causes inefficient land-use and overspending. She indicated that prices should vary based upon the costs, density, use, etc. Dr. Blais outlined the problems with uniformities in development charges and described in detail the inequities that this can cause.”
After the 2011 presentation to council, Blais also met with senior staff. Council went on to approve a motion by former councillor Brian McHattie directing staff to consider her advice. But when a new DC bylaw was drafted in 2014, staff reported that studies would need to be done before variable charges could be considered so the single DC was retained along with compensating subsidies to infill projects including an 85 percent DC discount in the central core that cost taxpayers $11 million last year. Other exemptions add $11-19 million more.
The legislative changes also increase the amount cities are allowed to collect for transit by eliminating the previous mandatory 10 percent reduction as well as the prohibition against recovering costs for service expansions. Neither of the restrictions applied to new roads so they worked in opposition to shifting more commuting to transit.
The mandatory 10 percent discount alone costs Hamilton over $2 million. Allowing DCs to improve transit service would generate far more. For example, under the former rules, less than $4 million of the proposed $60 million bus barn was eligible for growth fees.
The new provincial rules – including the transit funding improvements – provides an incentive for Hamilton to re-write its development charges bylaw. That can be done at any time, although isn’t required again until 2019. The charges can also now include capital costs of waste management.