Guelph-Eramosa Township is undergoing a development charge review.
“Development charges have been around for about 60 years now,” said Gary Scandlan, director of municipal finance for Watson and Associates Economists Ltd. at a council meeting on April 9.
“They used to be called lot levies when they were done under the Planning Act but since 1989 we’ve had a piece of legislation called the Development Charges Act.”
He explained that the Development Charges Act lays out a process to ensure the developer builds localized services.
For example, the developer with a plan of subdivision will pay for sidewalks, streetlights, internal roads and urban services like water and wastewater.
However, development charges are collected to pay for those costs that are outside the subdivision like additional wells, water storage, parks and expanding the fire service.
“It’s not mandatory that you have a development charge bylaw, it’s a permissive piece of legislation,” Scandlan said.
“But if you don’t collect the development charges now, 100 per cent of the cost of those services go onto the existing taxpayers and water and wastewater users.
“Development charges are not full cost recovery but if you implement them it should allow for you to recover somewhere in the range of 75 (to) 80% of the cost of growth.”
Development charges for residential units are measured on a per unit basis whereas development charges for non-residential buildings are calculated through cost per square foot. Non-residential buildings could be commercial, industrial or institutional in nature.
Currently, the development charges for a single detached home in Rockwood are approximately $24,000, whereas elsewhere in the township the charge is $7,802. The cost is higher in Rockwood because water and wastewater services are included.
Non-residential buildings outside of Rockwood were exempt from development charges for services like roads, fire, outdoor and indoor recreation and administration, Scandlan explained.
For non-residential buildings within Rockwood the only development charge is for water and wastewater, which is $6.76 per square foot.
Under the new bylaw, if adopted by council, the development charges for a single detached home in Rockwood would be approximately $36,000, whereas elsewhere in the township the costs would be $10,500, Scandlan said.
For non-residential buildings the development charge township-wide would be 24 cents per square foot. For a non-residential building in Rockwood that charge would jump to $10.49 per square foot because the water/wastewater charge would be $10.25 per square foot, he added.
Mayor Chris White said that upon passing the bylaw at a future council meeting, the township will offer a one-year implementation period for the new non-residential charges. After 12 months the new fees will be in effect.
“And I think it’s reasonable,” White said. “If we’re going to introduce another charge those who have already begun things under a certain regime will now have a window of time to adjust.
“It’s not a significant charge but it’s a change so it’s important to be fair to those who are doing business in our community.”
The province some mandated exemptions to development charges.
“These are situations where the municipality may not impose the charge,” Scandlan said. “So basically you can’t recover the growth related cost from those types of developments.”
These exceptions include:
– a 50% expansion to an existing industrial building. “If they expanded by 75% than that 25% portion over the 50% mandatory exemption would be chargeable,” Scandlan said.
– mandatory intensification provisions. “If you’ve got a single family home and, as long as the planning allows for it, you can add two additional apartments as long as you don’t exceed the original size of the house and you don’t have to pay the charge,” Scandlan said. “If you have medium density townhouses or high density apartments you could add one additional unit.”
– local governments exempting each other from development charges. “If the county decides to build any type of facilities in your municipality you cannot charge them for development charges,” Scandlan said. “If you build a building they wouldn’t impose the charge on you and same goes for school boards that have jurisdiction in this area.”
Scandlan also said there were various discretionary exemptions that council could consider including, like a complete or partial reduction to classes or types of development. For example, a class of development would be industrial and a type of development would be a place of worship or affordable housing.
“They’re something that you would provide direction on and we would incorporate those discretionary exemptions into the bylaw,” Scandlan said.
Another discretionary exemption would be a redevelopment credit to give the building-owner the opportunity of rebuilding if something like a fire destroys their building.
“Most municipalities will give a four- or five-year time horizon to replace what was there and if you do than you get a credit because really all you’re doing is replacing kind for kind,” he explained.
“If you’re going to knock down a 5,000 square foot commercial building and replace it with a 10,000 square foot, the first 5,000 would be exempt and you’d be charged for the extra five.”
Development charges bylaws have a five-year lifespan before they are revisited.
“Over five years inflation can erode your revenue stream, so (it) allows for it to be indexed annually with the Statistics Canada construction cost index,” Scandlan said. “Your bylaw currently is on January first.
“That lines up with the county so it’s all done at the same time and it’s done in advance of the development season.”
On April 9 the township held a public meeting and no members of the public spoke in support or against the new bylaw.
Council will consider the new development charges bylaw at a future council meeting.
