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Development charges leave councillors with no easy choices

The charges are fees developers must pay to build a new home, apartment building or commercial structure.
Development charges are helping fund major infrastructure projects such as the $60 million biosolids plant. But with construction of new family homes slumping in Greater Sudbury, developers are calling on city council to freeze the fees. File photo.
The charges are fees developers must pay to build a new home, apartment building or commercial structure. Based on the principal that growth should pay for growth, builders are charged for the increased demands on city infrastructure (water, sewer, roads, etc.) that the new development will create.

For example, the city is spending more than $60 million on a new biosolids plant, and estimate development charges could pay $4.8 million of that cost. The city plans to recover $2.9 million of the $5.7 million it spent building the South End Library, while it estimates the fees would cover $12.8 million of the $125.2 million Maley Drive extension.

However, local developers say they are being forced to pay for more infrastructure than their developments cost the city. When other fees are included – such as road and sidewalk improvements the city will require for larger developments – they say homes are being priced beyond the reach of local consumers.

That has led to construction being focused on apartment buildings, where the fees, at around $9250 per unit, are much lower. Or homes are being built outside city limits. In a presentation to city council May 6, Terry Del Bosco, of Tulloch Engineering, said city council may be unaware of the flurry of construction just beyond city limits.

“A lot of my clients are moving out of the city – Sturgeon Falls, North Bay, or even Markstay,” Del Bosco said. “They find it cheaper.”

Development charges soared in 2009, going from more than $3,000 to more than $14,000 for each single family home. The current proposal would increase the rates for a single family home to $17,163, an increase of 16 per cent. The fees must be paid when the developer buys the building permit.

However, city staff says that without the charges, the city will be facing a $4.6 million shortfall, which represents a two per cent tax increase for homeowners. Some areas are exempt from the charges, in an attempt to encourage development, including the downtown Business Improvement Area. Affordable housing projects are also exempt.

Meeting May 27, councillors considered a host of options on how to bring in the fees while helping the ailing construction industry. Among the ideas included not charging the fees until the homeowners take occupancy, freezing the rates temporarily and phasing the increases in, charging higher DCs for larger family homes.

Ward 4 Coun. Evelyn Dutrisac supported some form of freeze to boost the ailing construction industry.

“We need to listen to our developers,” she said. “Growth is stagnant.”

But Ward 11 Coun. Terry Kett said it was “interesting” that some councillors wanted to freeze rates, without saying who will cover the budget shortfall.

“You're putting the burden on taxpayers,” Kett said.

“If we have less money, we'll have to tighten our belts,” said Greater Sudbury Mayor Marianne Matichuk. “We have to make the tough decisions.”

Darren MacDonald

About the Author: Darren MacDonald

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