Ottawa city council has voted to replace a development charge bylaw from 2019 allowing the fees to rise between 11 and 12 per cent.
“The new bylaw enacted by Council today ensures that those benefitting from new growth within Ottawa are the ones paying for the initial capital costs needed to service it,” the city says.
Development charges are “fees charged by the municipality for the recovery of growth costs. … to build new infrastructure supporting growth, pay down existing debt for past growth works and avoid taxpayers paying for costs that serve growth,” the city says.
The charges pay for facilities, water delivery, roads, sewers, public transit, police, libraries, parks and recreation facilities, stormwater management and ambulance services.
The Development Charges Act requires municipalities to pass a new bylaw every five years, with the deadline for Ottawa being next week.
The city also faced pressure from the federal government. Housing Minister Sean Fraser says Ottawa wouldn’t qualify for the $6 billion infrastructure fund because it requires cities to freeze development charges as of Apr. 2.
Viv Chi, the interim general manager of planning, development and building services, told councillors freezing development charges would’ve cost the city $130 million in lost revenue.
“I think the idea of freezing development charges at this time is very challenging for us,” Mayor Mark Sutcliffe said after the council meeting.
The city’s current development charges make up five to six per cent of the cost of a new home. This has stayed consistent over the past 10 years, however, the price of homes has not.
In 2013, the average price of a new home in Ottawa was about $500,000. Last year, the average price was more than $1 million.
“Growth is not currently paying for growth,” said Somerset Ward Coun. Ariel Troster. “We need an entirely different model to fund municipalities.”
This sentiment was echoed by Capital Ward Coun. Shawn Menard who referred to the current plan as an “outdated model of taking up more and more farmland and keeping our addiction to roads.”
Stucliffe said that “a better structure is needed where we have other sources of revenue or more sustainable commitments from other levels of government so we know that we can tackle these challenges.”
While the motion was passed, the city still has a lot of work to do.
“Development charges do need siginfacnt reform to build the dense housing we say we need and to discourage expensive sprawl,” Menard said.
“If folks are serious about reducing development charges in a way that doesn’t come at the expense of taxpayers, the best way is to stop expanding the urban boundary.”
Rideau-Jock councillor David Brown was reluctant to support the bylaw and added that he believed the city was between a rock and a hard place with this bylaw.
“I think we need to look at how we’re driving growth in the rural part of the City of Ottawa and how we’re contributing to enlarging the tax base of the municipalities around us,” Brown said.
