City prepares major development charge increases

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            OMB appeal anticipated as transit, water system projects costs loaded on developers, home purchasers

Ottawa Construction News staff writer

The City of Ottawa and homebuilders/developers almost certainly will face off at the Ontario Municipal Board (OMB) after the city passes proposed development charge increases, increasing fees by almost 25 per cent for homes within the greenbelt.

Planning committee chair Peter Hume told an April 30 technical briefing at city hall that an OMB appeal is almost inevitable, assuming city council approves the increases on June 11 (following a planning committee meeting on May 13).

“I’m pretty confident that given how high the charge is for transit and other things, that this bylaw will be appealed to the Ontario Municipal Board … so we have to make sure that we’re bulletproof,” he said.

Municipal officials say the OMB can only approve or reduce the development charges – not increase them – so there is good reason for developers to appeal the decision, that would increase the costs to $21,959 for new single family homes within the greenbelt, and $32,875 in urban areas outside the greenbelt, or $7,500 per home.

City briefing notes indicate these charges currently account for between 2.5 to six per cent of the cost of a new house, depending on location. The current rates will remain in effect until September 30, 2014, when they will then rise in the urban area by $5,068 to $5,517 for a single or semi-detached house, depending on the charge area. This is approximately three to seven per cent of the cost of a new house.

The development community believes the city is loading far too much of the cost of the transitway expansion on new home purchasers, rather than the general tax base, and that the fund-raising for planned water works in the last two years of the current development charges horizon should more rationally be deferred until closer to the time the money is needed.

“We’re concerned that the increase the city is seeking in part is intended to fund a massive investment in the city’s water system,” GOHBA builder/developer council chair Josh Kardish said in an earlier interview. “But this investment would only occur in the last two years of the development charge period, which concludes in 2031.  They are thinking of investing in that infrastructure in 2029. Why are they putting it into the bylaw now, and not closer to when the city needs the funds?”

A similar, but even more imminent, challenge relates to differences in perception about how the LRT expansion should be funded.  The homebuilding industry believes that the LRT will primarily benefit existing homeowners and communities, with perhaps 25 per cent reflecting growth (and thus appropriate for development charges.)  The city, however, believes that current ratepayers will only benefit by one-third of the LRT expansion costs, and attributes two-thirds to growth.

The LRT and water treatment facilities are the biggest causes for development charge increases, but there are plenty of other smaller issues, such as “refurbishment of community centres in the older parts of Nepean” that would seem to have little to do with municipal growth and more to maintaining services and facilities for existing ratepayers.

The proposed development charge increases are lower than the GOHBA had feared – there were concerns that the costs could increase from $10,000 to $20,000 – but of course, developers don’t just pay development fees for city projects; there are separate school district levies, as well.

One area the city and developers agreed on was to remove community parks from the development charge system.  Under the new process, builders will incorporate and develop community parks in their plans of subdivision, allowing for the park to be built as the homes are constructed (and providing efficiencies as the builders will have their equipment on site to complete the grading and land preparation.)

Councillor Hume chaired a sponsors group comprised of urban, suburban and rural city council members to lead the review of the charges.

“One of the primary goals of the sponsors was to improve the timelines associated with the construction of new parks,” he said. “We are doing this by having the developer build local and community parks, similar to how they build other components of public infrastructure such as sewers and sidewalks. The city will ensure that these parks are built to city standards and will continue to build district parks,”  Hume said.

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