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The majority of North Bay City Council members are backing a plan to extend the moratorium on development charges for residential construction until May 31, 2023.
Council passed the motion during Tuesday's regular meeting by a vote of 9-2, directing staff to begin the process to amend the by-law governing development charges. Councillors George Maroosis and Scott Robertson both voted against the motion, questioning the measure's effectiveness.
"I'm definitely not convinced of the impact that waiving those charges has had on development," Robertson told his colleagues. "Overwhelmingly, the forces of the market are what's driving the development here and not these couple thousand dollars per unit saved by the development."
Residential development charges have been at nil since October 2019 when this same Council — acting on its growth mandate — voted to do away with the fees on developers that range from approximately $3,000 for apartments to nearly $10,000 for detached and semi-detached homes with square footage greater than 1,500.
Robertson did not support the moratorium back when it was introduced and later approved.
The absence of the development charges "is revenue we could use for our growth-related projects," said Robertson, later adding "that lost revenue has to be made up by other means — property taxes, water/wastewater rates, debentures, finding grants — we could have a much greater impact on the issues in our city if we did not have to use other sources of revenue to make up for those development charges."
By reinstating the development charges, Robertson maintained the increased revenue could see property taxes lowered or the funds redirected to affordable housing and community safety initiatives.
See related: North Bay construction values soar to record heights
Construction activity rose across all sectors in 2021, with residential experiencing the largest increase, accounting for $78.4 million of the record year-end total of nearly $153.5 million. According to figures from the City, in 2021 there were 245 new dwelling units built. Using the maximum development charges that could have been applied, the 86 single-detached dwellings, 138 multi-residential units, 10 semi-detached units, nine secondary units and two duplexes could have amounted to approximately $1.5 million in revenue.
The City first introduced development charges in the late 1990s, shortly after the Development Charges Act was introduced in 1997. These development charges remain in place for commercial builds and the City does not charge for industrial developments. The present moratorium is set to expire this Nov. 14, putting the residential development charges back into effect just as newly-elected council members will take their oaths,
Coun. Mac Bain tabled the motion to extend the moratorium until May 2023. He said the idea was not to debate the merits of development charges, but rather to allow planning for future development to continue, as it has for several years and until the next group can determine its direction.
Bain shared he foresees a time when he will support reinstating the development charges as a means to pay for growth-related projects but that was not the purpose of this motion.
"The next council may or may not continue the 'nil' development charges," said Bain, "that is something for them to decide. Supporting this motion is a step toward giving them time to contemplate their options," and give developers an opportunity to plan ahead.
According to the City, the principle behind development charges is that "growth pays for growth, so the cost of growth is placed on the new development itself. When capital costs associated with new development are not recovered through the imposition of development charges, the result is competing resources for development-related costs and infrastructure renewal which could lead to changes in service levels; and/or increasing costs placed on existing residents and businesses in the form of higher property taxes and/or water and wastewater user fees."
Development charges fund the capital costs of services constructed throughout North Bay. The funds are earmarked for development-related capital costs that provide services such as roads, water and wastewater services, police, fire, and transit. Development charges are only applicable to the initial capital cost of major development-related services, not for ongoing operating costs or life-cycle renewal costs.
Deputy Mayor Tanya Vrebosch advised much of the recent development had services installed and were considered "shovel-ready," thanks to collected development charge funds.
"I would hope developers see this as a good-faith offering from the City," Vrebosch said, "and hopefully they can come back to us with a plan to help us start building the things we also need," such as affordable housing. "We're always talking about low-income people but now the middle class is not being able to afford housing."
"Anecdotally," said Bain, "I hear the waiving of development charges is being appreciated by homebuyers with some developers leveraging those savings for upgrades to the build."
He later added, "I've also heard the nil development charges have levelled the playing field so some families are choosing North Bay for their home and not the surrounding community."
Vrebosch acknowledged "we do need the development charges to help pay for the development and if I am here in the next term, I would want to bring them back. They have to come back at some point. If we don't bring charge development charges the taxpayer eventually pays for it and that's the truth."
Maroosis added to the discussion with, "Quite frankly, one of the reasons the developers are building larger, single-family homes — especially many up in the Airport region and the West Ferris area — is there is more profit in them...I do believe what's happened with the lack of development fees over this term of Council is it's just saved the developers a lot of money and since we can't go out and audit their prices, it would be interesting to know if they pass this on to the new houses."
Bain acknowledged the lack of affordable housing in North Bay and across the province.
"Hopefully, the waiving of the fees until the end of May 2023 will incentivize several multi-residential developments in the city to help with that pressure."
The approval means City of North Bay staff will undertake the work necessary to amend the development charges by-law. Coun. Johanne Brousseau, chair of the council's community service committee, says this will include $5,000 for consulting services for the necessary background study. This report will be forwarded to the committee and a public meeting will be held. If the committee approves the recommendation, the matter will go to a vote at a regular meeting of council.
The three-year moratorium was intended to encourage home construction and, according to record construction values, that has been accomplished. How much of that development can be attributed to it is up for debate as other factors, including the unique migration circumstances created by the pandemic, have undoubtedly played a role.
See also: Census shows population growth in 3 of 5 largest urban centres in northern Ontario
Demand is high and our municipal leaders are positioning North Bay as a desirable place to live. Are those development charges (or lack thereof) still a consideration for developers? Do those fees even affect their bottom line or does the consumer absorb the brunt of it?
And: Mayor sees positives in population bump: 'More work to do'
In 2019, Mayor Al McDonald supported the three-year moratorium and said he believed it would level the playing field. "The one thing we are not competitive on when it comes to building is homes. And that is what we are targeting. We want to see homebuilders build family homes for our citizens.
"There is no question you can say the taxes are a little bit lower in Callander and East Ferris and Powassan. But I think by the time you start factoring in travel costs, increased insurance costs, the fact that some communities do not have natural gas — when you do those comparisons, we can make a good case that North Bay is a very good place to build."
With files from Linda Holmes
