On development charges
By Chad Ingram
The County of Haliburton will be commissioning a study looking at the institution of development charges, and it’s probably time.
Development charges are fees imposed by municipal governments on land developers, homebuilders and institutions when they build on an area of land. They would be paid at the time a building permit is issued. Those funds are then earmarked for specific, growth-related purposes. New development means an increase in population, and ongoing increases in population create more demand for facilities and services. That could mean a new park, or a new fire hall. The legislation guiding development charges is fairly specific in what they can be used for, and includes a requirement that a service must incur increased capital costs as a result of new development.
In the case of the upper tier of the County of Haliburton, this applies to many of the services it provides – think roads, libraries, EMS. Under the legislation, the county’s lower-tier governments, should they wish, could create their own development charges bylaws.
Development charges are bound to be unpopular with some in the community – builders, of course, come immediately to mind. It’s also possible that realtors may not be huge fans of the concept, or anyone building a new home, for that matter. With development charges becoming more and more widespread in municipalities throughout Ontario, it is possible that the county’s lack of them has been attractive to developers who’ve built in the community in recent years.
However, according to the Association of Municipalities of Ontario, development charges, which would apply only to new homes, make up a relatively small portion of the cost of a new house – typically between five and seven per cent.
The provincial government is conducting consultations aimed at increasing the housing supply in Ontario, and development charges have been identified as one of a number of potential barriers to home ownership. However, according to the AMO, “development charges are not a root cause of the affordable housing and supply challenge in Ontario.”
Further, the AMO contends reductions in development charges would not necessarily correlate to lower housing prices.
“In addition, experience has taught that [development charge] reductions are not passed on to the home buyer,” reads an January 2019 submission from the AMO regarding the provincial consultation. “For example, Ottawa experimented with offering [development charge] concessions in a specific area. The concessions offered did not lower the price of housing compared to other areas in the city. In the GTA, on the border of two municipalities, with different development charge programs, the municipality with three lower [development charges] in fact has higher housing prices.”
Municipalities are restricted in their revenue-generating tools, the main vehicle being the property tax. As the county’s population continues to grow, and as new spending pressures become evident – the county’s land ambulance costs are about to increase substantially due to a provincial merger of ambulance services, for example – the introduction of development charges could help reduce the burden on the general tax base.