I am often confronted with the comment: Growth doesn’t pay for growth. This is usually followed by the question: why should taxpayers finance growth? And I smile. You see, I believe that generally growth DOES pay for growth. And I believe if it was broken down for people, they might just be a little surprised at what they find.
Let’s look at Mrs. Smith – even though she works in Mississauga, she can’t afford the price of a new home there. So Mrs. Smith and her family put down a deposit on a three bedroom townhouse on the Hamilton mountain. It will be ready next year.
Before the construction even begins on Mrs. Smith’s house, here’s what she has paid for: her share of the infrastructure in her new subdivision (sewers, watermains, roads and sidewalks, street lights, hydro, gas, telecommunications, etc). Each new resident pays 100% of their share of the costs to build these items. She’s even paid for the tree to be planted in her front yard. She’s paid into a fund at City Hall for the construction of new parks, even though there isn’t one planned for her subdivision. She’s also paid development charges (DCs) which are separate and in addition to the above costs: this covers her share of larger infrastructure, stormwater management ponds, sewage treatment plants, water towers, roads, etc. outside of her subdivision, that needed to be larger to accommodate growth. She paid a Development Charge to the local School Board to fund the construction of new schools (even though her kids are college aged), and paid another DC for the expansion of GO Transit (every new home buyer pays into this whether they commute or not). Part of her DC went to expansions to the local police and fire departments, for libraries, recreational facilities, and local transit. She’s paid for a whole host of services. I’ll call it the “initiation fee for new neighbours” – this is the fee required to be allowed to join this exclusive club – becoming a resident in a new home in our City.
Now in addition to this, Mrs. Smith paid her share of fees for City staff to review and approve the design of, and oversee the construction of her subdivision, and her home. She paid fees to the Conservation Authority and the Ministry (MOECC) for them to review the files as well. She’s paid all of this, and her house isn’t started yet. She hasn’t even bought the land her house sits on. The list goes on and on.
People who balk that growth doesn’t pay for growth often cite the 10% mandatory reduction to development charges for many hard services, that are covered by the tax payer. I explain there is good reason for that: Mrs. Smith has just paid for a brand new infrastructure system, a new hockey rink, bus and a new police station. They don’t require maintenance immediately – they are brand new, and typically under warranty for which she has also paid. Yet the day she moves in she is required to pay property taxes regardless, even though she’s paid for brand new services. It makes sense that she not be dinged twice for this: thus the mandatory reduction policy which has been around for decades to recognize this. Because it’s fair.
Sometimes, local councils elect to promote certain types of development, and waive or reduce DCs for certain projects. Many times, projects like churches or affordable housing get these reductions. In Hamilton, there are incentives downtown to promote residential development (amongst other incentive programs). But these are choices made by people we elect to represent us, as they consider it beneficial for the City as a whole, and it is they who decide to incentivize these types of projects. All home buyers don’t benefit from these things.
Of course, this says nothing about the other benefits: the jobs created in our community to actually build the home and the subdivision (think about the skilled trades, the lawyers, engineers, architects, construction workers, etc. all employed), the economic spin-off of having new residents, growth to our tax base, etc.
So after I explain all of this, I want to ask: when Mrs. Smith pays all of these fees, tell me what else are you expecting her to pay for? What is it we are expecting from new residents to consider them to have fairly paid for growth, and the right to join our club as a resident in a new home in our city?