Proposed development charges to pay the costs of growth

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Ottawa – The City of Ottawa is proposing new rates for development charges to fund growth in the City over the next 10 to 17 years.

“Through the Building a Liveable Ottawa initiative, Council has approved the roadmap for our continued growth and prosperity,” said Mayor Jim Watson. “Development charges are an important tool for ensuring that growth pays for growth and the new infrastructure required to move our city forward with effective and exciting new parkland, cycling, pedestrian and transportation options for our residents and businesses, including Stage 2 of our rapid transit transit expansion.”

Development charges pay for the growth-related portion of capital costs for new roads, water, sewers, drainage, emergency services, transit, parks development, major indoor recreation facilities, libraries and growth related studies. The charges are paid by the developer per residential unit and by square footage for commercial and industrial development.

“These charges represent the cost of growth in Ottawa, and are fair in that new homeowners will pay for their share of the new infrastructure and general taxpayers will cover the portion that benefits the existing community,” said Councillor Peter Hume, Chair of the Planning Committee.

Councillor Hume also chaired a Sponsors Group comprised of urban, suburban and rural Members of Council to lead the review of the charges.

“One of the primary goals of the Sponsors was to improve the timelines associated with the construction of new parks. We are doing this by having the developer build local and community parks, similar to how they build other components of public infrastructure such as sewers and sidewalks. The City will ensure that these parks are built to City standards and will continue to build District parks,” said Councillor Hume.

In Ottawa, development charges currently account for between 2.5 to six per cent of the cost of a new house, depending on location. The current rates will remain in effect until September 30, 2014, when they will then rise in the urban area by $5,068 to $5,517 for a single or semi-detached house, depending on the charge area. This is approximately three to seven per cent of the cost of a new house.

The new proposed rates are in the attached chart.

Ontario municipalities are required to update their Development Charges By-laws every five years. The Planning Committee will consider the proposed charges on May 13 and provide a recommendation to City Council for its consideration on June 11. For more information, visit ottawa.ca.

Proposed Development Charges​


Comparison of Current and Proposed Residential Development Charges

(per unit)​

Area/Type of Use Current
Effective

June 12, 2014

Effective

October 1,

2014


Inside the Greenbelt

Single and Semi-detached
$ 16,891 $ 16,891 $ 21,959​

Apartment Dwelling and Back to Back and Stacked

Townhouse (2+ bedrooms)
$ 8,557 $ 8,557 $ 12,934​
Apartment (less than 2 bedrooms)
$ 6,948 $ 6,948 $ 9,524​
Multiple, row and mobile dwelling
$ 12,291 $ 12,291 $ 17,198​

Outside the Greenbelt (Outside Millennium Park Area)

Single and Semi-detached
$ 25,315 $ 25,315 $ 30,832​

Apartment Dwelling and Back to Back and Stacked

Townhouse (2+ bedrooms)
$ 14,742 $ 14,742 $ 16,359​
Apartment (less than 2 bedrooms)
$ 10,235 $ 10,235 $ 12,046​
Multiple, row and mobile dwelling
$ 19,706 $ 19,706 $ 23,192​

Outside the Greenbelt (Inside Millennium Park Area)

Single and Semi-detached
$ 25,315 $ 25,709 $ 31,160​

Apartment Dwelling and Back to Back and Stacked

Townhouse (2+ bedrooms)
$ 14,742 $ 14,940 $ 16,533​
Apartment (less than 2 bedrooms)
$ 10,235 $ 10,386 $ 12,174​
Multiple, row and mobile dwelling
$ 19,706 $ 19,996 $ 23,438​

Rural (serviced)

Single and Semi-detached
$ 16,082 $ 16,082 $ 19,685​

Apartment Dwelling and Back to Back and Stacked

Townhouse (2+ bedrooms)
$ 8,605 $ 8,605 $ 11,301​
Apartment (less than 2 bedrooms)
$ 7,030 $ 7,030 $ 8,321​
Multiple, row and mobile dwelling
$ 12,958 $ 12,791 $ 12,791​

Rural (unserviced)

Single and Semi-detached
$ 13,880 $ 13,880 $ 17,254​

Apartment Dwelling and Back to Back and Stacked

Townhouse (2+ bedrooms)
$ 7,969 $ 7,969 $ 9,906​
Apartment (less than 2 bedrooms)
$ 5,867 $ 5,867 $ 7,293​
Multiple, row and mobile dwelling
$ 9,019 $ 9,019 $ 11,212​

Richmond (Rural Serviced + Area-Specific)

Single and Semi-detached
$ 16,082 $ 30,739 $ 34,342​

Apartment Dwelling and Back to Back and Stacked

Townhouse (2+ bedrooms)
$ 8,605 $ 17,020 $ 19,716​
Apartment (less than 2 bedrooms)
$ 7,030 $ 13,226 $ 14,517​
Multiple, row and mobile dwelling
$ 12,958 $ 22,315 $ 22,315​

Manotick (Rural Serviced + Area-Specific)

Single and Semi-detached
$ 16,082 $ 26,277 $ 29,880​

Apartment Dwelling and Back to Back and Stacked

Townhouse (2+ bedrooms)
$ 8,605 $ 14,458 $ 17,154​
Apartment (less than 2 bedrooms)
$ 7,030 $ 11,339 $ 12,630​
Multiple, row and mobile dwelling
$ 12,958 $ 19,416 $ 19,416​

Flag Station Road (Rural unserviced + Area-Specific)

Single and Semi-detached
$ 18,880 $ 18,728 $ 22,102​

Provence Avenue (Outside the Greenbelt (Inside

Millennium Park Area) + Area Specific)

Single and Semi-detached
$ 29,421 $ 28,265 $ 33,716​

Apartment Dwelling and Back to Back and Stacked

Townhouse (2+ bedrooms)
$ 17,087 $ 16,333 $ 17,926​
Apartment (less than 2 bedrooms)
$ 11,863 $ 11,411 $ 13,199​
Multiple, row and mobile dwelling
$ 23,010 $ 21,924 $ 25,366​


Comparison of Current and Proposed Non-Residential Development Charges

(per sq.ft.)​



Type of Use Current
Effective

June 12, 2014

Effective

October 1,

2014

Non-Residential General Use
$ 17.88 $ 17.88​
Commercial Use, Institutional Use, Industrial Use
$ 14.48 $ 14.48​
Industrial (Limited) Use
$ 8.22 $ 8.22​

City-Wide

Non-Industrial Use
$ 19.64​
Industrial Use
$ 8.47​

Richmond (City-Wide + Area-Specific)

Non-Industrial Use
CW* + $20.12
$ 39.76​
Industrial Use
CW* + $0
$ 8.47​

Manotick (City-Wide + Area-Specific)

Non-Industrial Use
CW* + $14.01
$ 33.65​
Industrial Use
CW* + $5.52
$ 13.99​

*City-Wide

Frequently Asked Questions


What is a development charge?
The City levies a fee on property owners and developers whenever a building permit is issued. These development charges (DCs) assist the City in financing a portion of the cost of new infrastructure and municipal services. In effect, growth helps to pay for growth. Development charges are paid per residential unit and per square foot for commercial or industrial developments.

Which services can be funded by Development Charges?
Under the Province’s Development Charges Act, DCs can be used to fund the growth-related capital cost of:
• Roads and related services
• Sanitary sewer
• Water
• Stormwater drainage and ponds
• Police and emergency services (fire and paramedic)
• Public transit
• Parks development and major indoor recreation facilities
• Libraries
• Child care
• Vehicles and works yards
• Affordable housing
• Corporate studies

Which services cannot be funded by Development Charges?
DCs cannot be used to fund:
• Cultural or entertainment facilities such as museums, theatres and art galleries
• Tourism facilities, including convention centres
• Parkland acquisition
• Hospital provision
• Waste management
• Municipal/local board general administration headquarters

Where do the projects come from in the Development Charges By-law?

The projects funded through development charges are those set out in the Transportation Master Plan, Infrastructure Master Plan, Ottawa Cycling Plan, and Ottawa Pedestrian Plan as approved by Council.

How are DCs applied geographically?
The City’s By-law applies DCs as follows:
• New residential development is divided into four categories:
o Inside the Greenbelt
o Outside the Greenbelt
o Rural Serviced
o Rural Unserviced
• Non-residential development is based on a citywide approach
o Non-industrial (includes commercial and institutional uses)
o Industrial

What are the new DC rates for single-detached residential homes?
The different DC rates for single-detached residential homes are as follows:

Current Charge ¹ Oct 1 2014
Inside the Greenbelt
$16,891 $21,959​
Outside the Greenbelt
$25,315 $30,832​
Rural Serviced
$16,082 $19,685​
Rural Unserviced
$13,880 $17,254​

¹ as of June 12, 2014

What are the new DC rates for non-residential properties?
The DC rates for non-residential properties are as follows:

Current Charge ¹
Full rates (per square foot)
General
$17.88​
Commercial
$14.48​
Light industrial
$8.22​

¹ as of June 12, 2014

Current Charge ¹
Full rates (per square foot)
General
$17.88​
Commercial
$14.48​
Light industrial
$8.22​

¹ as of June 12, 2014

Oct 1 2014
Full rates (per square foot)
Non-Industrial
$19.64​
Industrial
$8.47​

Why have the rates increased?
These rates have been calculated to ensure that the new infrastructure required for growth is paid for through growth and not through municipal taxes. The three main factors that are driving this increase are as follows:

i. We have a better understanding of what we will need to pay for. The full scope of planned development is better understood and all planned infrastructure projects have been accounted for.
ii. We will pay for this infrastructure in a more realistic timeframe. The planning horizon in the by-law has decreased to 17 years from 22 years. This aligns the planning horizon for development charges with the Official Plan and its related plans.
iii. Infrastructure is getting more expensive to build. The cost of new infrastructure continues to increase higher than the rate of inflation, as reflected in the Statistics Canada Infrastructure Development Charge Price Index.

However, with all factors accounted for, the proposed rates remain competitive with what other Ontario Municipalities charge for development.

The proposed rates see a larger increase for new houses inside the Greenbelt, rather than outside the Greenbelt: A 30-per-cent increase inside the Greenbelt but slightly less than 22 per cent outside. This contradicts the opinion the City has advanced that development farther out costs much more. How do you explain this?
These rates have been adjusted to reflect the true cost of growth according to the Master Plans. While the new rates within the Greenbelt have increased the most, they remain lower than rates outside the Greenbelt.

In addition, development charges can only be applied for those items listed in the Development Charges Act and do not account for the long term costs of operations and maintenance. Intensification continues to be the most cost effective method for managing growth and will continue to be a key development priority for the City.

How much of the City’s infrastructure costs will be recovered through DCs?
The gross capital cost of the City’s entire infrastructure program is $6.29 billion. Of this amount, $2.36 billion has been determined to be DC-recoverable ($1.62 billion from residential development and $0.74 billion from non-residential development) over the next 17 years.

What exemptions apply?
Article 7 of the proposed By-law outlines exemptions, including, but not limited to:
• School boards
• Places of worship and cemeteries
• Agricultural buildings
• Some types of infill development

Will the proposed increases make new house prices unaffordable?
The cost of housing is driven by demand. While development charges as a percentage share of the cost of a new home are increasing by between 0.7% and 1.6%, how each developer decides to deal with the increase in the development charges will not be the same. Some may increase the price of the home, others may absorb the increase and reduce other costs. Of the 15,168 homes sold in Ottawa in 2013, 4,024 were new homes.

Will the proposed increases ultimately generate more tax revenue for the City through higher house prices?
The increase in development charges is not likely to generate more taxes as any increase in the price of a new home will eventually be reflected in increasing the assessed values for all homes in Ottawa. The City does not receive greater tax revenues through increased property values. Increased revenue will however come from growth, but this revenue will be needed to provide new residents with the same access to City services enjoyed by current residents.

What is the expiry date on the new By-law?

The City’s new DC By-law will expire in July 2019. A new DC By-law will need to be approved by City Council before it expires.

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