Faced with ballooning cost, the city is poised to end some growth subsidies that have been in place for more than a decade. Provincial rules allow municipalities to collect development charges (DCs) to cover about three-quarters of the infrastructure and services for new growth but Hamilton has offered nearly two dozen exemptions to those possible charges and if continued these would cost existing residents about $40 million annually.
Last week the development charges stakeholder committee endorsed most staff recommendations for modification of the exemptions. The remaining ones are still expected to require over $12 million in year in taxpayer subsidies instead of the $40 million predicted last month. At least one councillor contends the revised policies are still “riddled with hidden subsidies that undercharge the cost of development in greenfields” and thus prevent the city from reaching its infill intensification targets.
“It just doesn’t make financial sense to develop within the urban envelope,” Maureen Wilson notes. “It is cheaper, because of our pricing system, to … develop in the greenfields.”
The other side of that coin is the DC exemptions for urban redevelopment in downtown Hamilton to try and compete with greenfield sprawl. The cost to continue those discounts is expected to impose an average hit on taxpayers of $3.25 million a year. That’s despite the decision last week to lower the current 70 percent DC discount for downtown developments. If given final approval this spring, that discount will fall by ten percent a year before being frozen at a 40 percent discount rate in 2022.
That was the staff recommendation presented to the committee but it was considered too steep by Jason Farr and Chad Collins who unsuccessfully tried to have it frozen at no less than a 50 percent discount. Farr argued anything more would cripple downtown revitalization. He got support from the city economic development chief, Glen Norton, who said that without the subsidies to this point downtown “developers say [nothing] would have proceeded and I tend to suspect that’s fairly close to the truth.”
However Brad Clark recalled when he was previously on council that “a developer said if we approved the new DCs he was not going to build another house in Hamilton, and we approved them, and boy did he build a lot of houses.” He said freezing the discounts sends “an entitlement message” to developers to expect continuing subsidies.
Terry Whitehead argued the LRT should be more than sufficient subsidy for downtown developers. New councillor JP Danko responded that it was “shocking” to hear that uncertainty over LRT is already costing taxpayers “and has essentially choked off downtown development”.
Maureen Wilson expressed sympathy with the nervousness at reducing subsidies because the whole DC process “is failing to recognize” the higher development costs downtown and “as a consequence we have to put in these kinds of exemptions because we’re not accounting for the true cost of our development. If we were actually accounting for the true cost of our development we probably wouldn’t need these exemptions because it should be necessarily cheaper to develop and re-develop and re-develop some more within an already dense urban serviced area.”
The Farr/Collins motion won support from three of the citizen members of the DC committee including those representing the Hamilton Halton Home Builders Association and the Chamber of Commerce, but it was rejected by the majority of the committee including Wilson, Danko, Clark, Whitehead, Maria Pearson and Brenda Johnson.
Not debated were the consultant recommendations which called for lowering the discounts ten percent a year until they reached zero.
The largest exemption cancelled by the committee was for academic buildings that staff say would have cost $8.5 million a year. However, a 39 percent discount for new industrial development is set to continue at an expected cost to taxpayers of $2.6 million a year. Full exemption from development charges will also continue for “places of worship” despite opposition by Danko and Wilson.
The final wording of the new DC bylaw will be released in March and residents will get an opportunity to address it at two public meetings in April, one of them to be held in the evening.