Mono probes development charges from new Orangeville fire hall

July 5, 2024   ·   0 Comments


Mono is taking steps to enable it to recover some of the costs incurred through growth and development.

The municipality has been in the process of putting a development charges bylaw on its books. Many Ontario municipalities have done so.

A development charge is a cost-recovery mechanism for municipalities by having developers pay for expenses associated with growth. Those costs for expanded service would normally be covered by tax dollars from the town’s coffers.

“They are then costs that would not be borne by your existing property taxpayers,” said Nancy Neale, manager of municipal finance at Watson and Associates Economists Ltd. out of Mississauga.

Neale told Mono council during its June 25 meeting that the Development Charges Act has “had a refinement” since the completion of the background study into the town’s development charges bylaw.

The municipality is required to prepare a background study for the public two weeks before a public meeting. The study also has to be publicly available on the town’s website 60 days before the bylaw is adopted.

Because of the legislative changes, an amendment was considered for the town’s draft rules.

“We had to speak to that (refinement) to ensure that what’s coming forward in the draft bylaw is in line with the current legislation,” she said.

The provincial legislation makes it possible for towns to recover the capital costs associated with residential and non-residential development within a municipality. The costs funded by a development charge are in addition to the costs needed to outfit a subdivision with roads, sewers, water mains, sidewalks, and that sort of infrastructure.

“The costs that go into the development charge are larger projects that have a broader benefit to multiple developments happening throughout the town,” Neale said.

The refinements just introduced to the Development Charges Act include services related to a highway, police, fire protection, library services, parks and recreation, and expanded bylaw enforcement.

She said municipalities are able to recoup as much as 70 per cent to 80 per cent of added service costs through development charges.

Basically, such charges to developers are meant to help cover extra municipal services required but weren’t budgeted.

Deputy Mayor Fred Nix said a newly built house might come with a development charge of $20,000, as an example. But the work to service that home might not be completed in that year. By the time that house is fully serviced, the cost may have surpassed what could be covered by the development charges.

Over the last few years, Nix said, the inflation of capital costs has been enormous.

Neale said the development charge rate is indexed annually for inflation.

“And that is not based on (the consumer price index),” she said. “That is based on a non-residential construction price index which tracks tender prices for construction jobs in the province. So it’s more than CPI quite often.”

The money is put into a development charge reserve fund, which earns interest.

“That interest, as it builds over time, plus the indexing should take into consideration the future costs,” Neale said. “And that reserve fund is separate from all other reserve funds. It has to earn its own interest as per the Development Charges Act.”

Mayor John Creelman said Mono has two types of fire services. One has the municipality in partnership with adjacent municipalities. And some of more of its fire service is by way of contracts with other adjacent communities.

Orangeville is “on the verge of building a very big, expensive fire hall,” he said. “And the figures have gone from around $8- or $9-million to in excess of $20-million. I don’t know what the status of that project is, but the question I asked some time ago was, as the purchaser of a service, are we entitled to collect a development charge for our share of them having to build a new fire hall and increase the capacity?”

“If you are required to pay a capital component for that facility, then your proportionate share could be included in here for the expansion,” Neale said. “If you are not required to pay a capital component and you’re just paying toward the operating cost, then you wouldn’t include it in the development charge.

“The development charge is specifically related to capital expansion.”

“I’m going to defer to Les (Halucha, the town’s treasurer) as to whether or not there is a capital component to what we pay Orangeville,” Creelman said.

“I would say yes there would be a capital component because they’re providing us a service, along with other townships with Mono,” Halucha said. “So they need to provide an additional pumper (truck), as an example.”

“So it’s basically blended in with the operating costs,” Creelman said.

“The last time I looked at the formula that Orangeville Fire uses, that’s when we had the 25 per cent increase,” Nix said.

Neale said nothing about the expansion of the Orangeville Fire Department and the subsequent increased cost to Mono has been included in the development charges background study.

“What we have included in here is expansion for the Shelburne station that you share because you are responsible for a portion of that,” Neale said.

“Are we missing an opportunity to take the cost of the new fire hall in Orangeville into consideration?” said Creelman.

“There’s nothing being missed if they’re not asking you for a contribution,” Neale said. “If they’re going to ask you to pay for a portion of that facility or expanded facility, then yes we have not included that here.”

“I think the problem for us is that the amount they request is a blend of their operating cost and their capital cost,” Creelman said. “When they didn’t proceed with the fire hall (construction) in the year in which they anticipated, it begged the question as to why our rates went through the roof in that year.”

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