Paying for growth: Barrie reviews development charges

NRU
Aug. 13, 2014
By Leah Wong

While staff has recommended increases to Barrie’s development charges, developers have generally been opposed to the proposed changes to the city’s development charges by-law. But the debate is drawing to a close with council ready to votes on the new by-law August 25.

A staff report from finance director Debbie McKinnon recommends increases in development charges across the city and proposes updates for discounts and exemptions. For many of the charges the report recommends phasing in the new rates over a 12-month period. Consulting firm Watson & Associates Economists Ltd. was commissioned to assist with the report.

The General Committee at its meeting August 11, voted in favour of staff recommendations with four amendments, two of which will have a direct impact on the development charges set. The intent of the amendments is to slow the impact the increased charges may have on future growth in the city.

Many councillors were concerned that raising development charges, particularly on industrial lands or in the city centre, would slow down investment in the city.

“We have a balancing act to do between economic development and the cost of the infrastructure that’s required for the city,” said Councillor Michael Prowse.

Prowse proposed an amendment to allow the first 1.2-million square feet of industrial development to be built at a reduced rate, which would be consistent with the current rate. Staff proposes an increase from $11.11/sq. ft. to $18.82/sq. ft. for industrial properties.

By maintaining the current industrial development charge Prowse said it would provide relief for the developer while allowing council to readdress the rate if development continues. He said it is likely that by the time 1.2-million sq. ft. of industrial development occurs the city will be ready to undergo its next development charge by-law review.

Mayor Jeff Lehman said the proposed increase could make Barrie less competitive in attracting new developments despite the city being eager to attract more development and spur job growth.

“We have done incredibly well on job growth,” said Lehman. “But we have seen almost no new industrial space developed, in no small part because there is a substantial backlog of vacancy out there already.”

While Lehman acknowledges Barrie could be losing out on revenue by having reduced development charges, he said if developers choose neighbouring municipalities for new projects Barrie will lose out on the benefits of new business.

This would include increased tax revenue, development charges and job creation.

It’s difficult to determine how much money the city would lose if it raises development charges.

“This is one of those measures [where it] is difficult to determine the financial impact of putting this in place,” said McKinnon. “You don’t know if we would have had the development at the higher rate.”

McKinnon said if there is a discount applied to development charges the cost of new infrastructure will have to be picked up elsewhere, whether it’s from the general tax base or from water/waste fees. This is a concern for Councillor Bonnie Ainsworth. She said last time growth did not pay for growth it was constituents in the older part of Barrie, which she represents, who picked up the tab.

An amendment proposed by Councillor Lynn Strachan recommends development charge reductions for the City Centre Planning Area be kept in place until staff reports on a new community improvement plan, which will have a direct impact on development charges if approved. Staff has been asked to report back to General Committee with recommendations that will incent development through the community improvement plan. Incentives might include development charge exemptions or tax reductions.

If approved by council, Strachan’s amendment would continue the practice of offering 100 per cent reduction in development charges for non-residential uses and a 50 per cent reduction for residential uses in the City Centre Planning Area. The staff report proposes a 50 per cent development charge reduction for office space and phasing of rates for other uses over a 12-month period. Strachan said she thinks keeping these reductions will continue to spur development in the city centre.

Several council members, including Lehman, were not in favour of this amendment. Lehman said council has no idea how much money the city could lose if it maintains the reduced development charges in the city centre. Councillor Arif Khan said council will have to consider the implications of reductions in the weeks leading up to the August 25 meeting.

“At some point there are going to be people within the existing boundaries making up either for development charges that were not collected four years ago, or going forward,” said Khan.