ABERFOYLE – Potential provincial changes to development charges (DCs) may have significant implications for Puslinch Township.
On May 15 Andrew Grunda, of Watson and Associates Economists Ltd., updated Puslinch councillors on its development charges bylaw.
The updated background study that was presented is required to move forward on the renewal of the development charges bylaw.
Grunda explained that the township’s development charges bylaw “is a mechanism for the township to recover growth related costs as related to capital required for service as would arise from new development.”
These occur throughout the Development Charges Act, which allows municipalities to implement these charges, Grunda explained.
Under the act, the municipal bylaw must be reviewed and renewed every five years with the passage of a new bylaw.
Grunda said that allowing the bylaw to lapse would result in the loss of the township’s ability to impose DCs.
In addition to his presentation, Grunda commented on a letter to council from both he and Gary Scandlan that commented on Bill 108, which proposes changes to the Development Charges Act.
He noted the bill is currently in second reading and has been given first reading. It is expected to be debated over the coming months.
Grunda said municipalities must continue with the existing process to renew their development charges until such time as revised provincial legislation is approved.
He said a revised Development Charges Act “could have pretty significant implications for municipalities in terms of development charges.”
Grunda said what the province is proposing changes what services will be eligible for funding.
“Going forward, DCs will only be available for water, wastewater, stormwater, roads and related public works, police, fire and waste diversion.
“In its place, the province is providing municipalities with the power to impose community benefits charges, under the authority of the Planning Act.”
Grunda said another change is that waste diversion is currently only eligible for 90 per cent of the costs.
Under the current amendment it would allow 100% recoverable costs through DCs, he said.
Grunda said what is “pretty significant” for municipalities is how DCs will be collected.
Currently most development charges are largely collected at the time a building permit is issued, he said.
“Also for certain types of development, such as rental housing, not-for-profit housing, industrial, commercial or institutional – from the date the building permit is issued payments could be spread out over six years,” he said.
“This could create some significant cash flow implications for some municipalities.”
Even with changes on the horizon, Grunda said the township must follow the current rules required to update its current development charges bylaw.
He said the current population of Puslinch is roughly 7,700 residing in roughly 2,800 residential units.
Growth forecasts project by mid-2029 the population will have reached 8,900 requiring roughly an additional 500 homes, Grunda said.
He said employment in Puslinch is anticipated to increase by 15% in the longer term.
With that anticipated growth, Grunda projected additional need for services.
He stated anticipated capital needs is about $15.3 million of which $3.2 million could be recouped through development charges.
Grunda said 61% of that amount is for “hard infrastructure” such as roads and related services.
Compared to current charges, Grunda said DCs for a single family dwelling would increase from $5,483 to $5,916 – about 8%.
For non-residential construction the charges would drop from the current $2.56 per square foot to $1.83 per sq. ft.
Grunda said in a broader context, the overall DCs for single detached dwellings is relatively low compared to neighbouring municipalities.
A big part of that, he said, is because the township does not offer municipal water or wastewater services.
“Taking those items out could provide a better apples to apples comparison,” he said.
Questions
Councillor Jessica Goyda asked if DCs would apply to roads needing to be upgraded from gravel to pavement as a result of increased traffic.
Grunda agreed that it would.
He explained that although the bylaw has a life of five years before renewal, council can make amendments as conditions in the municipality change.
Goyda then noted the new act provides statutory exemptions for residential intensification allowing up to two apartments without incurring DCs.
“But what about a purpose-built new home with an apartment included,” she said, asking if there is a difference between purpose-built new units and intensification.
Grunda said under the existing act it only applies to intensification within existing residential units.
The township’s bylaw exempts accessory units – but not purpose-built apartments within residences.
He said one of the provisions under Bill 108 is to provide for that.
Grunda agreed there are still a number of questions to be answered regarding the provincial plans on DCs.
He noted this could result in aspects of social housing or land ambulance services being funded through the community benefit charge – which are not seen as being continued on with the new DCs.
There are still questions as to how broad the community benefit charge is – or how specific it may be, Grunda said.
“The other thing that gives us pause, especially for smaller municipalities outside the GTA is that it appears community benefit charges are based on land values,” he said.
This could result in funding gaps for municipalities.
Goyda said it sounded as if all the calculations would change if the township were to approve its DC bylaw now, before the province implements new DC legislation.
“We are kind of in this weird middle ground where we have to pass a bylaw without knowing what rules we should include,” she said.
She asked if council’s passage of a new DC bylaw now could become completely irrelevant within a few months.
Grunda expects there will be periods of transition.
Next steps
Puslinch anticipates a public meeting on June 19 with the intent of considering a bylaw for adoption in mid July.
