Development Charges 2019

Background on Development Charges (DCs)

To find out what happened in 2014, please go here.

To find out what happened in 2014-2018, please go here (the untold story!)

In brief:

+ Development Charges pay for a lot, but not all of the infrastructure cost of growth. A reasonable guess is that DCs cover 60-70% of the true cost of growth. Any gap is funded by all property tax payers.

+ Despite very strict rules as per the Development Charges Act, enormous discretion remains, primarily in the discount applied to project costs to the extent that the infrastructure benefits the rest of the city.

+ In the last several rounds of revision, community voices have been completely excluded from the discussion. Instead, the negotiation has been exclusively between developers’ representatives and the City (staff and a Sponsor Group of Councillors).

The “greenspace” angle on DC matters is that subsidizing suburban development promotes expansion of the Urban Boundary and loss of greenspace.

The “taxpayer” angle is that growth should pay for growth.  The best information (e.g. Hemson, 2013) says that current charges still fall well short of the objective.

What is to be done in 2019?

Council must pass a revised DC By-law by May 2019.  The Background Report will be available in March and the “public meeting” (Planning Committee) will be in April or early May.

The 2019 revision will not look further ahead than 2036; to what extent it will include capital projects that are not in the 2013 Infrastructure and Transportation Master Plans is not clear.  Nor is it clear whether, after the Master Plans have been updated and approved (in 2020?), an interim adjustment of DC charges will follow or whether instead this will await the 2024 By-law update.

As in previous rounds, staff is very happy with the Industry Group and Councillors Sponsor Group model and appears to see no need to involve the public except as the law requires: Make the Background Report available one month before Council’s decision, and the proposed by-law two weeks before.

Key to how the numbers shake out is the matter of the discount applied to account for “Benefits to Existing.” I.e, to the extent that a certain investment also benefits people and businesses that are already there, the gross dollar figure is discounted.  Apart from composing the capital program, this discount is the largest area of discretion available to Council.   Who, besides the new development, is benefiting is a fair topic for debate, whether it is about roads or transit.  E.g., are downtown and inner urban developments overcharged because fewer commute by car or even have a car?

An even larger issue is geographical distinction.  Currently the City distinguishes Inside the Greenbelt, Outside the Greenbelt-urban, Rural Serviced, and Rural unserviced. Back in 2004, a draft Background report showed significant differences in cost between various greenfield development areas.  At the 2012 Planning Summit that differentiation was held up by guest speaker Pamela Blais as an example of correct pricing.  But in the real world negotiations with the City, developer solidarity prevailed and the simpler distinctions still employed today were adopted.  They are an implicit subsidy to developments in Kanata West and Leitrim, among other implications.  Similarly, one may question whether Inside the Greenbelt is not too gross an area.  Clearly, such defects cannot be rectified in the short term but they could be a longer term objective to achieve fairer pricing.

E.D. (15 Jan 2019; edited May 6)

May 7, 2019

Today four Ottawa organizations — the Greenspace Alliance, the Federation of Citizens’ Associations of Ottawa, Ecology Ottawa and the Healthy Transportation Coalition — issued an Open Letter to Council, requesting that Council commit now to an open and transparent process of DC review for the next round, expected in 2021 or 2022.

The matter will be before Planning Committee on May 9 and Council on May 22.

Some summary notes on the main Background Study (March 15 Version for Public Consultation) are here.  A set of comments is here.  The Background Studies and the proposed By-law are accessible from here.  The staff report is here.