Hamilton taxpayers can expect rate hikes to make up for $54M in lost development charges: city staff

Hamilton taxpayers will soon be picking up a $54-million tab for developers.

That's a direct result of recentprovincial legislation that waives development charges for some types of projects a major source of revenue the city has relied on to build new infrastructure like roads, sewers, parks and water and fire services, staff told council on Wednesday.

City staff said the $54-million loss wascalculatedby a consultant they hired in recent months.

The Ford government has not yet provided an alternative way for municipalities to make up the funding gap other than by taxing residents more, said Coun. Brad Clark (Ward 9).

"We have no choice," Clark said. "Our residents, our taxpayers, are going to be paying much more as a result of this stealthful downloading."

City staff estimate next year property taxes will need to increase by 2.8 per cent and water rates by 8.7 per cent, or else it will have to either delay building infrastructure to support population growth or reduce services.

Taxes and water rates will both increase by another one per cent to cover infrastructure funding shortfalls from previous years, said a report by staff.

Council already passeda5.85 per cent property tax hike for this year's budget back in March.

Historically, development charges are based on the principle that "growth is supposed to pay for growth," said Coun. Craig Cassar(Ward 12).

"I want the public to be clear on what's happening here," he said. "Developers are no longer being required to pay for their fair share of development and that's being transitioned to people already paying taxes in Hamilton."

Sitting beside Cassarat Wednesday's council meeting, Clark washeard saying "shame."

Changes to spur development of affordable housing, province says

The new development charge exemptions apply to affordable housing, non-profit housing and in the future some "attainable" housing, said Victoria Podbielski, press secretary for Steve Clark, minister of municipal affairs and housing. Attainable housing has not yet been defined by the province.

Charges will be reduced for purpose-built rentals.

"Hamilton will continue to be able to charge development fees on most other market housing," Podbielski said in a statement.

Municipal Affairs and Housing Minister Steve Clark promised last November the province would ensure municipalities are "kept whole" if Bill 23 impacts their ability to pay for housing-related infrastructure.

"There should be no funding shortfall," the minister wrote to the Association of Municipalities of Ontario at the time.

The province reduced and waived municipal fees and taxes for developers to spur them to build more affordable and rental housing, SteveClark said.

'There is not sufficient funding': city manager

The province is conducting a third-party audit of six municipalities, not including Hamilton, to get a "factual understanding of their finances" including how much they have saved in reserves and what they charge in administration fees related to development charges, the ministersaid.

The audit process is ongoing and "will help ensure development charges and fees are being used to properly support increasing housing supply, rather than increasing cost and lowering supply in the midst of a housing supply crisis," Podbielski said.

Hamilton's manager Janette Smith told councillors Wednesday that while the province has begun those audits, there's no indication of what will come from that process.

And in the meantime, city finance manager Mike Zegarac said, "there is just not sufficient funding."

Provincial legislation passed in 2019 and 2020 also chipped away at development charges, which the city can no longer charge forpost-secondary institutions, for example, or some secondary dwellings, city staff saidin their report.

Coun. Brad Clark called the province's audit process "a farce" as it's already clear what municipalities spend development charges on to build up infrastructure in the specific community where the development is being built.

It's part of the Ford government's "drive-by smear" of municipalities, Clark said. The province is questioning the necessity of development charges when really it's about making "some developers in Toronto" happy, he said.