City Subsidizes Developers On Phase-3 LRT

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Frequent Bulldog contributor Ron Benn finds another perk for developers in the next phase of Ottawa LRT:

The city’s LRT plan (and I do use that term in its broadest sense) is flawed in many ways, with former Councillor Gord Hunter’s example being just one of those flaws.

The additional transfer will add time to the overall trip. That is axiomatic. That the travel time might be shorter going through the downtown tunnel is to be determined, but even if it is, will it make up for the extra five-10 minutes waiting to catch the LRT in the morning, and the reverse in the evening. Add to the extra travel time that wonderful feature of having to find your next bus at Tunney’s Pasture or Blair Road on a cold, miserable, windy, rainy November evening, and again at the eastern edge of Kanata or the western edge of Orleans, as you make your way home. No problem, it is only for five years, at which point the transfer point shifts to Moodie Drive for the Kanata bound passengers. At least the Orleans bound passenger has one less transfer by 2023.

To add insult to injury, the city has yet to add the estimated cost of Phase III of the LRT to the official plans of the city. As such, they cannot add that cost to the formula that defines the development fees for new subdivisions that the city continues to approve for the exurbs to the west, south and east of the Greenbelt. The subsidies just keep on piling up.

Perhaps we can name the Tunney’s LRT/bus interchange in honour of His Honour the Mayor, as a reminder of his legacy.

 


 

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7 thoughts on “City Subsidizes Developers On Phase-3 LRT

    1. Mr. Discontent, I will try to explain a relatively complicated formula in as simple a manner as possible. My apologies in advance if I have not communicated it clearly.

      The development fee per housing unit charged by the city and paid by the developer is a function of the infrastructure costs in the various official plans of the city. For example, if the city puts a recreation centre in the official plan for Kanata South, then the estimated cost of that recreation centre is incorporated into a complex formula that sets the development fees per unit. Since the city has chosen not to put the estimated cost of LRT Phase 3 (let’s say $3B for discussion purposes) in the official transportation plans, that cost cannot be included in the development fee calculation.

      A higher development fee means either a lower profit for the developer or a higher price for the purchaser of the new home. If one subscribes to the premise that the market sets the price of a new home (location, supply, demand etc.), then the cost to build the home is not the driver of the price, and therefore the development fee is not really passed on to the new home owner, which leads to a reduced profit for the developer (i.e. the price is set by the market, and it is up to the developer to manage its costs accordingly). In the alternative, and as the development industry regularly tells the elected officials (many of whom buy into the concept), the cost of the development fee is passed on to the new home owner as part of a higher price. The reality is likely somewhere in between. In either instance, the direct and indirect beneficiaries of the future LRT (i.e. the home owners) will have contributed less to its capital cost because the future cost of the LRT was not included in the development fee.

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  1. Always thought the mayor’s name should be prominently displayed on LRT as a warning to future voters.
    The coldest/windy transfer spot is my choice.

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  2. Ron Benn, I think you’re chasing phantoms here. Stage 3 of the LRT is far, far away, there are no costs yet. They’ve just come up with the numbers for Phase 2! In any case, capital costs for the purpose of calculating Development Charges do not take anything in account beyond 10 years. By law, the DC By-law is reviewed every 5 years.

    The real scandal lies much closer at hand. In a deal with GOHBA and BOMA, Council has agreed to cut the charges for roads by 25% and, in an update to the DC By-law expected this year, has promised to cut the roads component even further (by reducing standards – ha!)… to compensate the developers for the increased transit component which, as per Bill 73, the City is now required to implement. As you may know, Bill 73 mandated the end of the 10% deduction for transit costs and also mandated using forward-looking costs instead of allowing only service standards of the past 10 years.

    This means many millions of dollars that will come out of tax base instead of the DCs.

    Ref.: October 14, 2015 Council meeting, agenda item 17, endorsed by the OMB in its decision of November 29, 2016 (file nos. DC140015 and DC140030).

    I sent information about this to Ken on 19 Feb, by the way, but he hasn’t acknowledged this yet.

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      1. That’s a pretty disappointing response, Ken. I thought you aimed to be an investigate journalist, exposing City Hall scandals.

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        1. Sorry EajD but I don’t profess to be an investigative journalist.

          All journalism in its own way is investigative. The variable is the amount of time spent on each story.

          EajD I can’t spend a bunch of time on every suggestion that comes through my desk from readers. There are only 24 hours in a day and I have a product to produce. The kind of reporting you are demanding is much more than a fulltime job.

          With 75,000 page views a week, many people put demands on my time.

          I’ve spent thousands of dollars on this site for which I hope the public derives some benefit.

          I would suggest if you are looking for the kind of investigative reporting you appear to be, that you lay out some of your own money to hire a private detective.

          I do not offer a free investigative service to satisfy one individual’s curiosity.

          cheers

          kgray

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