Development charges could increase by more than 10 per cent in Innisfil for residential development as the town prepares to come to grips with the impacts of Bill 23.
Representatives from Hemson Consulting were at the recent council meeting to give councillors a first look at the proposed changes in the updated development charges background study and bylaw, set to come into effect Jan. 1, 2024. The town’s current bylaw expires at the end of the year.
It’s the first development charges bylaw the town will pass since the introduction of Bill 23, also known as the More Homes Built Faster Act. The provincial legislation, which received royal assent at the end of November, introduced “significant changes” to the way development charges can be levied by municipalities, staff indicated in a report to council, reducing some revenue streams and exempting others entirely.
Neither staff nor council underplayed the changes.
“Bill 23, in and of itself, has introduced a series of limitations and restrictions on recoveries that means there will be significant amounts of development-related capital infrastructure that is no longer funded by (development charges) and will ultimately – unless the province steps forward and makes you whole – will be funded from property taxes and utility rates,” said Hemson Consulting's Craig Binning.
Among the changes brought in by Bill 23 include exemptions for affordable and attainable residential units and non-profit housing, discounts on rental housing developments and extending the historical service level calculation from 10 to 15 years.
The changes do not apply retroactively to developments which started prior to Nov. 28, 2022.
While development charges never completely covered the cost of development, Binning said, the Ontario development charges were “quite progressive” compared to other jurisdictions in Canada and throughout North America.
Until now, at least.
Mayor Lynn Dollin said she hadn’t seen a change like this in her three decades on council.
“There was a time when things like museums, town halls (and) cultural centres were (development charge) eligible,” Dollin said. “So, it’s been chipped away. It does ebb and flow, but this is a real chop-off at the knees, in my opinion.”
Hemson is proposing an increase of 11 per cent for each single and semi-detached residential unit built in Innisfil, bringing the total cost to $53,646 per unit, up from $48,403. Because of the phased-in approach, development charges will actually decrease from today’s rates for single- and semi-detached homes in the first three years of the new bylaw.
Consultants showed councillors how the municipality stacked up against other communities in Simcoe County and the Greater Toronto Area – Innisfil is near the top, alongside the City of Barrie, in the county, and mid-pack at most when looking more widely throughout southern Ontario — but warned the comparisons needed to be taken with a grain of salt.
“They are helpful to paint a picture of where the town lies in relation to other municipalities, however the challenge with doing these comparators is that sometimes it can be a bit of an apples-to-oranges comparison,” said Hemson's Jackie Hull. “The various municipalities have different populations, they have different growth pressures, they have different compositions of their services. All of those factors contribute to what the rates end up being.”
Most other municipalities haven’t had to update their bylaws to reflect Bill 23 yet, Hull added.
An increase of 17 per cent is on the books for non-residential development, with the per square metre charge going up from $130.16 to $152.62. The non-residential development charge is uniform, regardless of the type of development being constructed. Coun. Kevin Eisses didn’t think this was fair.
“In Innisfil Heights, our employment area, there’s a whole variety of different types of businesses there, whether they’re retail or factory or storage, but when I look at the non-residential charges, it’s just one charge per square metre.” Eisses said.
He wondered if there had been any consideration to having an equal variety of charges, similar to on the residential side, where development charges are broken down into different areas of town and different types of housing.
Hull told councillors the uniform charge has been consistent in previous bylaws and making a switch could prove difficult, but would be something to consider in the future, once the town’s master servicing plan has been updated.
Eisses hoped that comes to fruition.
“With our employment lands being so diverse, I wonder if that can be explored somewhat,” he said. “For a business owner to pay the development charges for a warehouse that just stores product versus a factory or some other type of building, it seems unfair to the businesses.”
These rates will be phased in over the course of five years, with 80 per cent of the maximum charge levied in year one and increasing in five per cent increments until the total amount is hit. Whereas previous development charge bylaws had a five-year lifespan, Bill 23 has doubled that limit, giving municipalities and the development community a full decade to live with the charges.
During that 10-year span, $1.3 billion in capital spending is predicted to be undertaken in Innisfil, and about $740 million will be eligible to be paid for by development charges.
Earlier this spring, Innisfil passed its first community benefit charges bylaw, which allows municipalities to impose a charge on the development or redevelopment of higher-density residential properties, replacing density bonusing previously allowed under the Planning Act. Instead of negotiating with a developer for additional provisions in exchange for an increase in height or density beyond what a zoning bylaw allowed, Innisfil will now levy a charge to developers on buildings of five or more storeys and 10 or more residential units.
The bylaw has since been appealed to the Ontario Land Tribunal (OLT).
The development charges bylaw could too be on the docket of the OLT, however it will still be in force once passed by council, Binning said. Only if the OLT deems changes need to be made will council have to amend the bylaw.
Further consultation with stakeholders is planned before the start of the summer, with the draft background study and bylaw being released in mid-July. A public meeting on the development charge bylaw is scheduled for Aug. 16, with ratification planned for the Sept. 27 meeting of council.
