Ottawa’s plan to reintroduce development charges in Centretown may be a welcome relief to the city’s coffers, but many developers are concerned the plan will do more harm than good.
For 15 years, the area bounded by the Queensway, the O-Train, Somerset Street, Bronson and Laurier avenues and Elgin Street has been exempt from the fees.
In 2004, the city considered removing the downtown exemption. Somerset Coun. Diane Holmes says city staff recommended its removal, but council decided not to follow the recommendation, and only reduced the exempted area’s size.
Holmes says the exempted area in Somerset Ward has cost the city almost $2.2 million in uncollected development fees.
She says the exemption “has been extremely useful” in furthering the city’s goal to bring people downtown to live by promoting more development in the core. “We have proven the point that people want to move downtown.”
She says she is not discounting the value the exemption has had in reinvigorating the downtown. However, she also says Lowertown and Sandy Hill, areas that did not have exemptions, have also seen a great deal of growth.
She says strong development in these areas has provided a further impetus to consider whether the fees are necessary in the future.
Rob Mackay, acting director of the city’s community sustainability branch, echoes this sentiment. He says the city’s studies found there was “brisk” development in the city’s non-exempted areas.
He says the studies allowed city staff to come to a realization. “We didn’t really think we needed the exemption going forward.”
The charges allow the city to pay for infrastructure needed to support new development, such as water mains and upgraded sewer systems.
Holmes says the charges help because “it’s incumbent on the city that we have the infrastructure to support development.”
Some developers are taking the approach that the reinstatement of the charges is inevitable.
“We’ve always taken the position . . . that growth should pay for itself,” says Jack Stirling, a Minto Development’s vice-president.
He adds if a lobby movement were formed to protest the charges, Minto would not join.
Stirling also says Minto takes the stance that if the charges are “fair, equitable, and accurately calculated,” the company will accept them.
Other developers are considerably less charitable.
“It’s certainly not going to have a good impact [in these recessionary times]," says Brian Murray, Sakto Corp.’s director of leasing.
Murray says removing the exemptions would be a new financial burden, and for smaller developers may prove to be the difference between building and not building.
Neil Malhotra, Claridge Homes’ vice-president, is opposed to the charges.
He says the reintroduction of the charges would spell the end of all development downtown. He also says the charges will kill land sales downtown because prices are currently half of what they were one year ago.
Mackay says he's not worried about "doom-and-gloom" forecasts from developers.
He adds he is confident development downtown will continue, as there will always be people who want to live there.
He says the charges are necessary.“It’s foregone infrastructure that’s needed.”
City council will continue to debate the proposed bylaw. The city has until July 14 to pass the bylaw, or be forced to maintain the exemption until 2014.