Should growth pay for itself in Guelph, as it largely does now? Or should existing residents and businesses cover more of the cost?
It’s time for a community conversation about development charges – fees paid by developers to cover the expense of expanding city services due to growth – believes deputy CAO Jayne Holmes, pointing to council-approved reductions in Mississauga and Vaughan.
“Some other municipalities have provided temporary reductions to development charges in an effort to spur building in their communities,” she told council during Tuesday’s session.
“To date, the city’s policy principle has been that growth should pay for growth, to the maximum extent possible within the legislative framework. That does not have to continue to be the city’s approach moving forward.”
Though individual project amounts vary, DCs are typically considered to cover between 70 and 80 per cent of the cost of delivering services to new development – from underground water and wastewater services to fire and police services, etc. The rest is generally paid for by existing property taxpayers.
Guelph currently sits in the middle of the provincial pack when it comes to collecting DCs, a staff presentation showed. A two-plus bedroom apartment in the city results in a little over $40,000 to cover city expenses.
In Vaughan, collected DCs hit about $195,000, with Mississauga sitting closer to $138,000.
At the other end of the spectrum, Chatham-Kent comes in at about $15,000.
Late last year, however, Vaughan city council approved a 50 per cent reduction to DCs, Holmes said, adding that this past January, Mississauga city council endorsed a 50 per cent reduction to DCs for large apartment buildings.
“In both cases, the actual reductions will have to be funded by other sources. The total cost of that will depend on the building activity within the reduction period,” the deputy CAO explained, noting Mississauga and Vaughan are two-tier municipalities while Guelph is a single-tier.
That means there are DCs applied at the regional levels in Vaughan and Mississauga, while the City of Guelph charges for the full slate of services (minus social services which are handled by the County of Wellington and partially paid for by city residents).
Currently, the City of Guelph forecast includes $645 million worth of projects funded through DCs.
“We’ll be shifting more of that burden onto property taxes and utility ratepayers without another non-municipal funding source. This will have a detrimental impact on housing affordability overall.”
On a related note, council heard staff is working on a “use it or lose it” bylaw for water and wastewater allocations granted to developments. The goal, Holmes noted, is to “expedite housing development and reduce waste.”
That bylaw is being drafted in combination with a water and wastewater servicing capacity tracker.
There was a 65 per cent drop in new housing starts within the city last year, as noted by the Canadian Mortgage and Housing Corporation (CMHC), to 462 from 1,280 in 2023.
That’s less than one-third of the provincial target set for the city, which called for the construction of 1,500 new units last year. Meeting that threshold is what triggers provincial funding meant to be put toward the cost of infrastructure supporting the creation of more new housing.
Last year, the city received $4.68 million for meeting 98 per cent of its 2023 target.