Development charges, the fees builders pay to the city at the permit stage, will be discussed at city council Wednesday night.
Staff have brought back more information and options on these charges for council to consider. At issue is whether development fees should be phased in over a number of years. Staff have recommended a substantial hike in the residential building rates and applying fees to commercial, industrial and institutional users, all of which have been exempt to date.
A public meeting for developers and the general public is to be held on June 15 at 5:30 p.m. at Tom Davies Square. Developers have been meeting privately to discuss the fees.
Ward 5 Coun. Ron Dupuis will host a meeting for builders Friday at Marie's Restaurant in the Flour Mill at 11 a.m.
Paul Corsi, president of the Sudbury and District Home Builders Association, said now is not the time to charge additional development fees. He called them a new home buyers tax because ultimately the home buyer would pay the extra charge. He said neither home buyers nor builders can afford higher charges at this time.
“We had a meeting Monday with six well known local developers. Development is slowing down dramatically. Some indicated though they had filed 17 building permits last year, this year they would be filing only five,” said Corsi.
Development fees are collected by municipalities to fund capital expenses that result from the expansion of municipal services to meet the needs of property development. When people move into a new subdivision they expect to be able to access city services like additional soccer fields for example.
Greater Sudbury's development charges expire on July 13.
“A new bylaw is required so the municipality can continue to collect development charges to fund the cost of growth-related capital projects,” stated a city release.
Currently, when a builder builds a new house, $190 is charged for police services, $659 for roads, $1,471 for water, and $759 for wastewater for a total of $3,079.
Multi-residential and apartment builders are charged $114 for police services, $399 for roads, $888 for water and $759 for waste water services for a total of $1,859.
But staff indicate that the current amount charged is not enough to also fund expanded general services and engineered services resulting from those utilizing the new developments. General service refers to libraries, fire services, parks and recreation, emergency medical services, public transit and emergency preparedness. Engineered services refer to roads, water, wastewater and drains.
For example, the cost to build the Maley Drive Extension is estimated at $115 million with the municipal share being $38.5 million. Development charges could contribute anywhere from $26.9 million to $23.5 million depending on how they are phased in. The general tax levy would contribute anywhere from $11.4 million to $14.8 million again depending on how development charges are applied.
That means developers would bear the brunt of the cost of the project as opposed to general taxpayers.
Corsi said the Maley Drive Extension was originally meant for heavy truck use.
“Development charges are growth related. There is no major residential development there requiring upgraded roads. Why do we have to pay for that?”
Proposed general per unit charge for single family dwelling services would be $4,277 for general services and $9,531 for engineered services. Multi-residential builders would pay $2,678 per unit for general services and $5,968 for engineered services. Industrial developers would pay $1.08 per square foot for general services and $2.96 per square foot for engineered services for a total of $4.04 per square foot. Commercial and institutional builders would pay $1.08 per square foot for general services and $8.33 for engineered services for a total of $9.41 per square foot.
Kristi Arnold, a planner with Dalron Construction, said her company already pays high fees in her subdivisions.
“Hidden Valley, is a neighbourhood in Valley East. It will eventually have 600 homes. Besides being 100 per cent responsible for services inside the subdivision, we have to pay a certain amount for a set of lights eventually installed on Fourth St. outside the subdivision." She added, "We have to contribute $1,000 per lot to upgrade ValleyView Road and contribute to the Valley drain system and system management ponds outside the subdivision.”
She agrees development is down in the city due to the recession.
“The city is planning for a population growth three times our best estimate, which is 1,400 in the next ten years.”
Corsi did not argue the need for development charges for real growth related expenses. But he disputed the figures that the city's consultant, John Hemson, used for projecting future growth over the next 10 years.
“The numbers the city has are not the same numbers we in the industry have in forecasting the future,” noted Corsi.
“We think the future growth estimates are padded.”
During the 1990s when growth stalled and population declined, local communities eliminated their charges. That history should be repeated, said Corsi.
“Builders have inventory of units they still have not sold. In addition, the province is upping their taxes through the harmonization sales tax.”
Arnold said for houses in the $500,000 range that could amount to $30,000 being added on to the home price.
“If the city adds another $10,000 on to the price of a new house on top of the provincial increase, that makes it difficult for us,” said Corsi.
