Slashing Developer Fees Small Potatoes: Reader

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Frequent Bulldog contributor Sheridan takes issue with The Bulldog’s stance on slashing fees that developers pay.

To read The Bulldog’s opinion, click here.

Sheridan’s position is below:

I don’t have such a problem with this change, at least not from what I read in the newspaper.

Matthew Pearson (Ottawa Citizen: “City considers slashing building-permit fees”) reported that: “The proposal comes after members of the planning committee in November questioned why there are millions tucked away in three separate reserve funds, which were set up to make sure the city could enforce the provincial building code despite downturns in construction activity. The combined balance, as of Dec. 31, exceeded $51 million …. The city collected $21.6 million in fees last year, but spent just over $23 million. A reduction in the number of building permit applications resulted in about $1.5 million less in revenue.”

Anyone who has had their home renovated can identify with a “permit” cost, as they probably would have seen the city inspectors visit their site to ensure that the electrical, plumbing, heating, etc., has been done to code, i.e. the provincial construction standards. Indeed, Mike Holmes’ mantra, apart from “make it right,” is “get a permit.”

This building-permit price is a small component of the broader development charges. Development charges usually account for about five per cent of the price of a new house. And development charges have to be reviewed by the city every five years. The current development charges were approved by city council in 2014.

Development charges are used by the city to fund many city infrastructure costs, as Mayor Jim Watson explained in 2014: “Through the Building a Liveable Ottawa initiative, Council has approved the roadmap for our continued growth and prosperity. 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 expansion.”


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5 thoughts on “Slashing Developer Fees Small Potatoes: Reader

  1. A key question to be asked before deciding to drop building permit rates it how well a job the city is currently doing in enforcing building permits. One constantly hears of stories where developers (particularly in-fill) are not following their plans, are chopping down trees they weren’t supposed to, encroaching on neighbours properties, allowing adjoining historic properties to continually deteriorate, illegal parking, etc. In our neighbourhood, we even had construction waste from elsewhere being dumped on a building site and it took months for the city to stop this and only after numerous complaints from the neighbours. Is the City properly inspecting these building sites right now or should it be using some of these reserves to hire more inspectors and actually up the level of inspection? Hopefully these questions are being asked as part of any review.

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  2. First I should admit that (along with Councillor Cloutier) I was the person who raised building code fees in a submission to Planning Committee on November 23. I wrote “My first question is whether the Planning Committee is comfortable with the unusual funding pattern of the principal city departments within your mandate. Most of the cost of the two arms of the Planning & Growth Management Department is paid through fees assessed from applicants. I see nothing wrong in that as a general principle but I am surprised that one arm of the Department, Building Code Services, is expected to generate a surplus of over five million dollars. The other arm of the Department generates considerable revenue as well but does not cover all its costs. This also makes sense to me because that part of city operations is tasked with general planning responsibilities which are rightly paid by the taxpayer, rather than by an applicant. So while it may be appropriate for applicants to pay for the regulatory process to which they are subject, you might wonder why Building Code Services seems so profitable.”

    Since raising the issue, I have learned that fees for building code inspections cannot be redistributed to other purposes. In a sense, the province has given municipalities a monopoly in delivering inspection services so it makes sense to limit to the degree that the city can use this privilege as a source of revenue.

    But now that you are thinking about how the Planning Dept. receives funding, it is worth thinking about the other side of that department. In receiving payment for zoning changes and for official plan amendments, the Planning Dept. manages to cover much of its costs of operation. For a cynic this would suggest that by maximizing the flow of changes and amendments, the Dept. can best avoid seeking funding through taxes. Sinking deeper into cynicism, this would mean that keeping the zoning by-law out of date and maybe out of touch with reality, the better the finances look. Each spot re-zoning is a money-maker. By contrast, any neighbourhood zoning study is a money-loser since it would need to be paid out of tax revenue. Fortunately no reader of the Bulldog is cynical.

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  3. … and now we know how the city could afford to create the concierge positions … the planning department had money that it hadn’t spent.

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  4. I agree with all of Brocklebank’s comments. I, too, want to untangle this confusing accounting of development services funding. Again, this surplus in the permit fee reserve fund cannot be used by the city for other purposes than building code enforcement. So, this surplus (permit fee reserve fund) could be used to hire more city building inspectors.

    This peculiar issue (large surplus of the permit fee reserve) should be looked upon as an opportunity to discuss reforms in planning and development services, as well as the bigger issue of whether development charges are adequate to help support city infrastructure projects.

    Moreover, Mayor Jim Watson has been going around saying how development charges are going to support so many city projects (not least of which is LRT expansion), and yet he is never taken to account over whether his funding models are economically viable.

    The recent delays in the airport parkway widening is a prime example of this, as Councillor Riley Brockington explained after the city announced in December that expected development charge revenue has not met expectations: “The parkway widening was one of a number of projects included in the 2013 transportation master plan. These projects are still on the books. It’s just when they can actually be paid for is being pushed ahead into the future.”

    Mike Maguire claimed in the 2014 mayoral election that Watson had not properly accounted for the heavy cost of the LRT project (especially Phase 2). Will this be an issue for the next election? Will we be debating on the 2018 election trail whether property taxes, as well as development charges, need to be sharply increased to meet the infrastructure demands that Watson has been promising?

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