While approving the city’s new development charges (DCs) bylaw Wednesday night, Barrie councillors were also preparing to delay its implementation.
City council will consider final approval of the bylaw at its June 21 meeting, but one of the options is delaying its passing until mid-September to get more expert opinion on DCs, clarification from the province and advice on affordability.
“We want to find the right balance between not passing something that is overbearing and out of line, but also not leaving fair money on the table and shortchanging the tax base,” said Coun. Sergio Morales, who withdrew his motion to refer the new DC bylaw to the city's affordability committee.
Development charges are designed to recover the capital costs associated with residential and non-residential (commercial, industrial, institutional) growth within a municipality from developers so that existing residents don’t have to foot the bill.
And residential DCs are inevitably passed onto home buyers — whether they are purchasing single-family houses, semi-detached homes, condominiums, etc.
Mayor Alex Nuttall noted Barrie is one of the fastest-growing cities in Canada and how that growth is paid for will be a delicate balance.
“I have been utterly surprised by the crickets around this increase,” he said. “It’s actually scary because I think next week (June 21) — we’re going to pass this tonight (Wednesday) — there’s going to be 23 deputations and folks will be really upset about the increases in DCs.
“This is a humungus issue for our bottom line as a community and for how we’re going to manage the financial incentives or disincentives related to growth," the mayor added.
“We all believe that growth needs to pay for growth. We all believe that the current taxpayer is paying too much and we don’t want to subsidize those coming from outside and we all believe that we need affordable housing now. So there’s a lot of conflicting interests," Nuttall said.
But there are financial consequences if the new DC bylaw is delayed until the fall.
“Any reduction in the city collecting revenues has an impact on the city’s finances,” said Craig Millar, the city’s chief financial officer. “The current framework that the province has given municipalities to build infrastructure such as roads, and water, wastewater (services) so that houses can be built to increase supply is development charge revenues.
“At the end of the day someone has to pay the bills for the infrastructure,” he added. “Any reduction or delay in the city collecting revenue hurts your finances. The longer you delay, the less revenues the city collects.”
“If we defer it (passing the new DC bylaw), we’re going to lose this money,” said Deputy Mayor Robert Thomson.
What’s being proposed now are higher, different levels of DCs within Barrie’s former boundaries and those in the former Innisfil land, the Salem and Hewitt’s properties.
Within the city’s former boundaries, for example, DCs on single and semi-detached homes would increase from $87,281 to $89,499 this year, a 2.5 per cent hike.
Those DCs would increase to $111,874 by 2027.
And in the Salem and Hewitt’s land, DCs would move from their current level of $90,455 for single and semi-detached homes to $100,862 this year, an 11.5 per cent increase, then to $126,077 by 2027.
These numbers come from the background study by Hemson Consulting.
The city is also planning to increase its DCs for non-residential development, such as retail.
In the retail category, for the former city boundary land, DCs are now $454 per square metre. That would jump by seven per cent this year, then by 6.2 per cent, 5.9 per cent, 5.6 per cent and 5.3 per cent into 2027, for a total of $608 per square metre.
In the Salem and Hewitt’s land, DCs are $466 per square metre now and would jump by 31.8 per cent this year, then by 6.2 per cent, 5.9 per cent, 5.6 per cent and 5.3 per cent to $736 in 2027.
Barrie councillors did approve the inaugural community benefits charges (CBCs) Wednesday night, which are capped at four per cent of land value. CBCs are imposed only on development with five or more storeys, and 10 or more housing units.
They can help fund master plans and studies, parking, affordable housing, parks projects, buying parkland, and library services.
The city’s total anticipated CBC revenue from 2023 to 2032 is $6.3 million.
City council will consider final approval of its new CBC at the June 21 meeting.
The proposed level of DCs and CBCs are designed to pay for Barrie’s new capital development costs as the city’s population increases from 142,000 people to a projected 253,000 by 2041.
But there are a number of factors which could affect the cost of new development in the decades ahead, along with who pays the bills.
Provincial Bill 23, the More Homes Built Faster Act of 2022, will exempt DCs for building affordable residential units and attainable residential units, for non-profit housing developments and for inclusionary zoning residential units, and include a mandatory five-year phase-in.
So it’s possible the city could see a substantial reduction in development charges during the next five years.
“It’s going to be a hit to the city of $125 million over five years, potentially,” Millar said.
The Association of Municipalities of Ontario (AMO) has estimated 80 per cent of growth costs were recovered by DCs before the introduction of Bill 23.
A 70 to 75 per cent recovery of growth-related capital costs from DCs therefore becomes a reasonable estimate.
The Ontario government says it has committed to building 1.5 million new homes during the next decade. Bill 23 is part of a long-term strategy to increase housing supply and provide attainable housing options for Ontarians and their families, the province says.
DCs can only be collected for specific services, such as growth-related capital costs for roads, water, sewer, stormwater, transit, waste diversion, policing, fire protection, land ambulances and libraries, along with parks and recreation services, except buying parkland.
There are many growth-related capital costs not funded by DCs related to services such as parking, garbage collection, landfills and related studies — such as Official Plans, master plans, feasibility studies — social housing, arts, cultural and entertainment facilities, such as a performing arts centre.
The city collected approximately $100 million in DCs last year.
