Paying for growth: Halton demands DCA changes

NRU
July 23, 2015
By Edward LaRusic

Halton Region chair says the municipality will stop implementing the Places to Grow Act unless the province gives it the money it needs to pay for future growth.

Regional chair Gary Carr told NRU that the region will stop building new infrastructure to accommodate growth unless the province addresses two issues. The first is that the Development Charges Act - including proposed amendments - does not allow municipalities to collect the full costs of growth. The second is that province isn’t paying its fair share of municipal operating costs.

“Our next round of [population and employment] allocation is supposed to come in 2016. We will not be proceeding with that. We’re going to say to the developers, ‘Thank you very much, but as long as the province can’t fund its share of the operating costs and until they change the development charges, then we’re not going to proceed with any new growth in Halton Region.’ Basically we’re going to shut growth down.”

Carr said the region’s issues spring from decisions made by the Ontario government under former premier Mike Harris following his election in 1995.

Along with provincial downloading, which placed a higher financial burden on municipalities to pay for operating costs, amendments to the Development Charges Act in 1997 made it difficult for municipalities to collect the full costs of growth.

And Carr said the recently proposed amendments in Bill 73, Smart Growth for Our Communities Act, don’t come close to addressing the region’s concerns, as outlined in its submission to the province.

Unless the province makes five specific changes to the Development Charges Act no growth that requires new municipal servicing will proceed in Halton Region.

The region is asking the province to include all growth-related services in the calculation of development charges with no exemptions and no 10 per cent mandatory discount services. It is asking that all development charges be based on forward-looking service levels - not the preceding 10 years - and that municipalities be allowed maximum flexibility to use alternative funding tools - such as voluntary payments - to finance growth.

Halton Hills mayor Rick Bonnette, who introduced the motion asking for changes to the Development Charges Act, said that Carr is getting a bit ahead of himself in declaring no new growth for Halton. That decision won’t be made until staff bring an infrastructure financing plan to council. But he said it is something “that would be definitely considered” by regional council. The big problem is there are many capital costs that municipalities cannot include in development charges.

“As an example, waste management services, hospital contributions and general administrative headquarters are all ineligible services that you can’t [levy] development charges for. That really compounds the financial pressures by creating these funding gaps for municipal infrastructure. And that hinders the concept that growth pays for growth.”

Halton chief planning official Ron Glenn told NRU that when the next infrastructure financing plan comes forward, council will have the opportunity to decide whether to allocate growth past 2016.

“We have regional official plan policies that say prior to the release of any phase of development, there has to be an infrastructure financing plan put forward for council’s approval. The principle and the basis of that report going forward is that the existing taxpayers aren’t burdened with the cost of growth. Council would have the option - the next [plan] is scheduled for some time in 2016 or 2017 - at that point in time of saying to the province and to the development industry that the region is not in a position to recover the full cost of growth...and council isn’t going to proceed with the next release of development.”

Carr said that due to the 1997 amendments to the Development Charges Act, the region has lost about $148-million over the past 15 years in development charges that it could have previously collected. With an estimated $10-million gap per year - representing about 5 per cent of the total municipal taxes paid - funds must be recovered from the tax base. Operating cost shortfalls make up another 5 per cent of the municipal taxes collected. Carr warned that the region risks its credit rating being downgraded if it is forced to take on debt to pay for growth.

“We look to our friends in York and Peel. Both of those [regions] have proceeded with large growth without having the development charges. York has been downgraded out of triple A status because of its outstanding debt. We are triple A status here in Halton Region. And our council has made a decision that we are not going to become a York Region.”

While Halton Region has proceeded in the past with infrastructure financing plans despite threatening to shut down growth, the province wasn’t actively reviewing the act. In the current context with reviews underway, if the province doesn’t make the changes requested, the region will fight any growth until its two issues are settled.

“We will be taking everybody and anybody to court. We are not just going to sit back. If the province [objects] then it better get ready for a long drawn out court battle.”

An email to NRU from the Ministry of Municipal Affairs and Housing senior spokesperson Conrad Spezowka said the government “continues to work with municipalities to provide the tools and capacity needed to support local infrastructure investment.” Spezowka said the government is not aware of any suggestion by Halton Region that it would refuse new development post-2016.

“The ministry is reviewing the Development Charges Act and is open to hear the region’s concerns and take into consideration its recommendations regarding the act through the Bill 73 process.”

Regional council’s request to the province for amendments to the Development Charges Act was unanimously approved at its July 15 meeting. A similar resolution related to provincial funding for municipal operating costs will be considered at a council meeting later this year.