Councillors here are supporting Woolwich Township in its bid to eliminate development charge calculations that include funds received from the provincial or federal governments.
The Woolwich resolution noted that development charges are fees levied on new development to pay for the infrastructure required to service growth.
Those charges are then used to help finance capital projects that would otherwise be financed through property taxes.
But the Development Charges Act states that the charges must be reduced within the regulations as a result of capital grants, subsidies, and other contributions.
Woolwich noted that numerous municipalities have received Infrastructure Stimulus Funds or Building Canada Funds.
As a result, municipalities will be unable to collect the development charge component when they receive funding from other sources.
Councillor John Matusinec asked, “What exactly are we saying here?”
Treasurer John Jeffery said when Wellington North calculates its development charges, capital projects are identified.
“If we know for a fact, we’re going to get contributions from someplace else, whether it is a grant, a subsidy, or assistance from a neighboring municipality, then the gross cost of that particular expenditure must be reduced using estimates or the exact amount of the contribution.
He used the example of a $1 million expenditure and getting a grant of $250,000. Therefore the amount to be raised as a result of development charges would be only $750,000.
Jeffery said what Woolwich is alluding to, is if the municipality does not know for certain it is getting a grant for a project and a lot of the time it wouldn’t, such calculations are difficult, if not impossible.
Many projects are set three to four years in the future.
Woolwich council appears to be concerned that as soon as the grant is received, the municipality would then have to amend its development charges bylaw.
Jeffery said that with the amount of funds recently being distributed, “You’d be amending your bylaw all the time.”
He said the other solution could be that when the bylaw is next slated for review, the impact of the grants for those projects could be considered as credits when creating the new rates.
“The problem with that is that any building permits issued now, would have paid a higher rate than seven years from now when they might be getting the benefit of the (current) grants,” he said. “It creates a real complicated mess as far as I’m concerned.”
He added, “I never realized the consequences of this until I did some research. I never thought this was an issue, until I started asking questions.”
He recommended supporting Woolwich Township.
He said the municipality does not typically know in the long term whether it will be getting funding for specific projects.
Council chose to support Woolwich, asking the province to make changes that would eliminate the requirement for municipalities to deduct grant funding received for the eligible portion of development charges.
