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North Bay City Council has officially extended the municipality's moratorium on development charges for residential construction until May 31, 2023.
Residential development charges have been at nil since October 2019 when, acting on a mandate of growth, this council 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.
One worldwide pandemic later, the real estate and building markets have boomed. Local construction activity rose across all sectors in 2021, with residential builds seeing the largest increase, accounting for $78.4 million of the record year-end total of nearly $153.5 million.
See related: North Bay construction values soar to record heights
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 of North Bay 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 was set to expire this Nov. 14, which would have restored the residential development charges just as the newly-elected council members have their initial meetings.
The range of development charges per unit that would have been collected as of Nov. 15 if the moratorium had not been extended:
- Detached and Semi-Detached: $9,814
- Entry Level Detached and Semi-Detached (1,200 sq. ft. or less): $0
- Detached and Semi-Detached greater than 1,200 sq.ft. but less than 1,500 sq.ft.: $4,907
- Rows and Other Multiples: $4,838
- Apartments: $2,797
- Rural Area: $3,878
In February, Coun. Mac Bain brought forward a 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.
"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.
Bain also 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."
Council then directed staff to begin the process to amend the by-law governing development charges. Council members then received and reviewed a Development Charges Amendment Background Study prepared by Hemson Consulting Ltd., examining the process of extending the residential development charges moratorium. The City gave notice of and held a public meeting on May 3 to hear public comments on the matter. Council then passed Resolution No. 2022-162 during its May 17 regular meeting to make amendments to the Development Charges By-Law.
Councillors George Maroosis and Scott Robertson both voted against the original motion and questioned 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."
See: Some opposition to waiving residential development charges into 2023
Said Maroosis then, "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."
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."
According to a Sudbury.com report, approved affordable housing projects that comply with city requirements are exempt from development charges. Greater Sudbury Ward 9 Coun. Deb McIntosh observed the average cost of new residential construction was nearing $600,000. “What we need is affordable housing,” she said. “People want to purchase a $600,000 home, but I don’t think that the taxpayer should necessarily be subsidizing the building of $600,000 homes.”
Another City of Greater Sudbury official noted, that without development costs, “the cost for additional infrastructure would be at the expense of existing property taxpayers rather than developers.”
See also: ‘Unusually high’ development charges increase for construction in Guelph
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.
