Hume looks at development charge hike to pay for light rail

The head of the city’s planning committee is warning developers that he wants to make them pay for a larger portion of the city’s $2.1-billion light-rail system.

“We aren’t collecting enough development charges to fund that portion of the program over the longer term,” said Coun. Peter Hume, who will play an influential role in updating the city rates later this year.

The city is scheduled to begin construction of the light-rail line later this year. The current plan calls for 12.5 kilometres of track to go along with 13 stations and a 2.5-kilometre tunnel underneath the downtown core.

Part of the project is being funded by development charges, the money the city collects from property owners and developers every time they receive a new building permit. That money helps pay for growth-related municipal infrastructure such as transit, roads, sewers and libraries.

City staff said in a December presentation they expect that, as it stands now, development charges will make up close to $300 million of the project’s budget. However, Mr. Hume said he’d like the city’s development community to help fund a greater share of transit-related infrastructure.

What exactly that means to developers and their project costs won’t be known until this fall at the earliest, which is when the city will start formally reviewing its development bylaw ahead of the expiry of the existing rates in July 2014.

Ottawa developers say the city needs to be careful it doesn’t end up depriving itself of tax revenues by levying fees that are too high and discouraging new developments.

“If you have more development, that also increases your top line,” said Pierre Azzi, president of the Ottawa chapter of the Building Owners and Managers Association. “If you have higher rates, that could also increase your top line but it could come at the cost of certain projects.”

The city is hoping the LRT project will lead to high demand for condos and other developments around the areas where the stations are located.

Mr. Hume said his proposed development charge hike will apply across the city but will go towards paying for all kinds of transit infrastructure, not just the light-rail line.

“With LRT coming in, it’s clearly apparent we’re not where we need to be in terms of development charge funding to support transit everywhere,” he said.

SIDEBAR: Development charges across Ontario

City of Ottawa: $14.10 per square foot inside the Greenbelt.

City of Toronto: $13.11 per square foot (converted from square metres).

City of Hamilton: $16.03 per square foot in the urban area.

City of Sault Ste. Marie: no development charges.

City of London: $16.14 per square foot in the urban area (converted from square metres).

City of Kingston: $12.60 per square foot in the urban area.

City of Windsor: $3.97 per square foot for retail, $3.43 per square foot for other commercial developments.

(Source: municipal websites)