Property Biz Canada

Ontario to review OMB, Development Charges Act

Derek Abma | Property Biz Canada | 2013-09-04

The Ontario government, which is poised to review some key elements of its land-use policy, is likely to be pulled in different directions by players with a horse in the development race.

Ontario Municipal Affairs and Housing Minister Linda Jeffrey announced at the recent Association of Municipalities of Ontario (AMO) conference in Ottawa that the government would launch consultations on both the Ontario Municipal Board (OMB) and the Development Charges Act this fall.

The timing and format of these reviews were not specified.

With regard to the OMB — a board that considers appeals to municipal decisions on planning — Jeffrey said she wanted a review to address delays for hearings and the complexity of the process.

“This frequently contributes to conflicts between municipalities, developers and community groups,” Jeffrey said, according to prepared remarks used for her speech at the AMO conference. “Our government wants to address these concerns, and we’re committed to improving the land-use planning and the decision-making process.”

On development charges, the minister talked about how “the current system limits (municipalities’) ability to recover all capital costs for some services and (municipalities’) ability to pay for vital infrastructure projects.” She also said developers “want more accountability and transparency.”

No problem with OMB?

John Herbert, executive director of the Greater Ottawa Home Builders’ Association, said he doesn’t see anything wrong with the current OMB process and fears an eventual loss of this board to hear appeals on planning decisions.

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“There have been rumblings over the past few years in the Liberal government about removing some of the powers or reducing some of the powers of the Ontario Municipal Board, at the request of municipal governments across the province,” Herbert said.

“That’s been of concern to us because we’ve seen over the last 30 years in Ontario a tremendous increase in government control and regulation of the private sector, not just in the housing sector but in all private-sector domains.”

Herbert said the loss of the OMB in its current format could result in developers, as well as citizens and community groups, having to take their appeals to civil court, at a much greater cost.

He added that he doesn’t see a way to reform the process to reduce conflicts between various parties in development matters.

“Unfortunately, any time there are changes made from a development perspective, it causes conflict between residents and the private sector or residents and the government sector,” Herbert said. “I think change, by its very nature, creates conflict.”

AMO executive director Pat Vanini, on the other hand, said her group welcomes the review of the OMB.

“The OMB should be more of an appellate body, as opposed to a substitute decision-maker for municipalities,” she said in an emailed statement.

“The ongoing challenge always seems to be how to develop alternatives that do not simply replicate the shortcomings of the current system.”

Who pays what?

Herbert said changes are warranted in the Development Charges Act, but he wants the charge to be rolled back rather than increased. He said the proportion of a home’s cost that goes toward government fees has risen from about three per cent in the mid-1980s to almost 25 per cent — or about $100,000 for a $400,000 home.

“One of the models that was used before development charges . . . was simply the fact that city growth should be paid for by taxpayers at large, not just one small group that are homebuyers,” Herbert said.

As to whether developers should be responsible for contributing to the costs of growth, he said almost all development charges get passed onto homebuyers, anyway.

“There’s this illusion that somehow when governments increase fees, charges, taxes and levies that somehow the developer is going to absorb them,” Herbert said. “Well, they would’ve been out of business decades ago if that was the case. They’re just making a relatively small profit margin and they’re passing all of these costs directly through to the homebuyer.”

Asked why the general property tax base should pay the costs of growth, Herbert replied: “Are we just hundreds of thousands of individuals and we’re all separate entities that should only pay for ourselves? . . . . I guess the way we’ve always looked at it, and the most successful historical way it was looked at, was that if you live within city boundaries, then you are part of that community and you pay your fair share.”

Peter Hume, an Ottawa city councillor and chairman of the city’s planning committee, said it’s inaccurate to say there was a time in recent history when all taxpayers equally shared the cost of growth.

“We’ve had development charges, whether they’ve been lot levies, frontage charges, for years and decades,” Hume said.

He added that when the Development Charges Act was passed in 1997, it took some of the burden off homebuyers to front the cost of growth, and that development charges should return to levels that better reflect the additional services and infrastructure required when municipalities grow.

“There was a time when municipalities were (saying), ‘OK, libraries, hospitals, anything related to growth, let’s put it in the charges.’ I think that, at the time, the (development) industry had a case to say, ‘You know what, we need to look at how this is and bring some structure to it.’ Unfortunately, they swung the pendulum too far and made things far too restrictive.”

A backgrounder on AMO’s website says the Development Charges Act is insufficient to pay for growth because of its “strict limits on the funds municipalities could recover through development charges.”

The law allows municipalities to collect fees from developers to pay for things such as roads, sewers, waterlines and sewers. AMO calls for these perimeters to be expanded to allow for costs associated with new parks, waste management, municipal administration buildings and cultural facilities to also be collected through development fees.

“Development charges represent about 15 per cent of total municipal capital funding for most communities and represent 32 per cent of total capital funding in the high-growth (Greater Toronto Area) municipalities,” AMO says in its backgrounder. “It is not nearly enough to cover the capital costs of growth.”

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