Developers are responsible for establishing infrastructure within their developments, including interior roads, services and waterlines. If this pumping station in Millbrook breaks down, its repair/replacement is paid by Millbrook Water customers. If new development requires an additional pumping station, that cost can be funded by development charges.
At the August 10th meeting, the public was invited to hear from Watson and Associates which provided an overview of and receive feedback on the Development Charges background study issued in June that will influence the charges from the municipality for residential and non-residential growth in the community over the next five years.
Development charges are paid by developers and are reflected in the selling price to buyers to ensure that people who purchase new homes are paying for the costs of new supporting infrastructure. The intention is to prevent existing ratepayers from bearing the cost of new development, so growth “pays for itself”. Municipalities establish their own development charge schedules based on current educational levies as well as local servicing costs following a process outlined in the Development Charge Act of Ontario. The municipal bylaws that establish these charges must be supported by a current back-ground study, which outlines the estimated amount, type and location of development within the municipality, and the related calculations of how the new development will affect municipal services. These charges are typically calculated and imposed at the time the building permit is issued, but recent legislative changes allow payment to be deferred to the time of issue of the occupancy permit.
By-laws establishing these formulae must be revised at least every five years to ensure they reflect current cost realities, and revisions are preceded by mandatory public meetings. The last by-law dates from 2022. The new DC study indicated a increase of roughly 1300 new homes in the next ten years, and an additional 2616 new residents. Looking further ahead, the study forecast an additional 3350 new homes and 6354 new resident by 2051.
Provincial legislation regulates how revenue from these charges can be used. Funds received through development charges pay for increased capital costs that are beyond the normal infrastructure which are internal roads, sewers and sidewalks that are required to service more homes and businesses as they move into the municipality. Among the eligible services are water, wastewater, fire and police projection services and highway related services as well as soft services such as parks and recreation facilities and libraries. Residential DC’s are applied per unit, whereas non-residential unit charges are applied per square foot.
There is pressure to reduce these charges, which are deemed to add costs to new building and to streamline process- aka cutting “red tape.” Legislative changes are ongoing, with multiple changes each year, making it difficult for small municipalities to keep up. It’s important to note that DC’s cover only 90% of the identified growth-related costs, meaning the remaining 10% is covered by the tax levy.
The August 10th report included an Addendum incorporating updates to the Parks and Recreation, Public Works, Fire Protection, and Water Services capital programs. Key revisions include the addition of Downtown Park Infrastructure Phase 1 design costs, adjustments to incorporate all growth-related debt allocations for Parks &Public Works Depot, Fire Station and the Public Works Operations costs for the Advanced Metering Infrastructure software project. As a result of these revisions, the calculated development charge for a single or semi detached dwelling in the Millbrook urban service area has increased from $38,910 to $39,425 per unit. Township-wide residential charges have risen from $18,293 to $18,806 per unit, while non-residential rates have increased from $6.27 to $6.40 per square foot in Millbrook and from $2.84 to $2.97 per square foot in the remainder of the Town-ship. As a point of comparison, the proposed DC charges for Single or semi-detached homes with water services sit below those of Peterborough, Kawartha Lakes and Clarington and slightly above those for Selwyn, Cobourg, Port Hope, Clarington and Scugog. For properties without water services, our rates are very close to those charged by neighbouring municipalities, including Alnwick/Haldiman Asphodel-Norwood, Otonabee South Monaghan and Douro-Dummer.
The revised Background Study updates growth-related capital costs and development charge recoveries, with remaining costs to be funded through grants, reserves, and other municipal sources. The Addendum remains consistent with the requirements of the Development Charges Act and provides a more accurate assessment of growth-related infrastructure needs.
Municipalities can chose to waive development charges as an incentive to encourage specific development, for example, to entice industrial projects that create jobs. In that case, these costs would be covered by tax revenue. Larger municipalities have benefited from additional grants from the Build Faster Fund, a $1.2 billion fund to help municipalities who meet housing growth targets offset growth-related costs but despite promises for similar opportunities for smaller municipalities, no new growth funding opportunities have been implemented.