Light Rail and Development Charges

There were a few interesting things to come out of today’s council meeting, and, with a bit of grace, I’ll actually get around to writing about them. For now, I want to focus on one measure that was defeated.

The city has implemented new development charges (or DCs, which I wrote about a week or two ago). DCs are the charges the cities levies against builders when they want to, you know, develop stuff. The charges vary depending on location (greater charges in the ‘burbs outside than greenbelt than inside, lesser charges for rural lands, especially ones without much certain services), and the purpose is to fund all the infrastructure that the new developments will demand (as a side benefit, which I imagine is intentional, DCs discourage sprawl, as they put upward pressure on home prices, especially the outer suburbs). They are, in many ways, a darn good thing (especially as the OMB has usurped much of Ottawa’s ability to control sprawl these past few years).

Today, there was a motion before council to halve the development charges for all new builds around the soon-to-be-constructed LRT stations. The argument is sound. The city wants dense hubs around these stations to make the LRT more attractive to more residents. It’s also a great way to make housing within the greenbelt more affordable (more units = downward pressure on price). I have not done–and will not do–any study into the incidence of DCs, but I imagine most, but not all, of the cost of the DCs are passed on to buyers/renters (this is generally what happens when government imposes fees, levies, tariffs or taxes–businesses will pass on as much of the added cost as they can, but demand elasticity will prevent them from passing on 100%).

As a result, the DCs will prove to be a discouragement (to an extent) to developers and to potential residents (again, to an extent).

If council were to pass such a measure, I really wouldn’t have too much of a beef. It is the city’s plan to intensify around these hubs, they allow developers to build higher and denser (which developers tend to like to do), and they really want a lot of people living there. Cutting these developers on consumers a break on DCs would work towards the city’s stated (and demonstrated) goal.

But the city didn’t, and, in the end, this is the right decision. First, the city is already cutting developers a break. Zoning restrictions are relaxed around these hubs, so more and higher development can occur. As we’ve seen with some recent planning committee fights, developers generally want to build out and build high. We don’t really need to additional incentives to achieve our goals.

As well, there will still be demands on city infrastructure by these new residents. As much as we’re trying to induce people to live near the LRT, we’re also build light rail that these eventual residents will get to use. You could argue that we’re already cutting them a break by allowing more of them easy access to the LRT.

In the end, the pros and cons are pretty much a wash. Neither side is wholly right and neither side is completely wrong. In fact, each argument in favour of one side can be turned around to actually be an argument against it, and vice versa. Consequently, it appears the city did the right thing. They have decided a fair charge for new development and they’re sticking to it. In the absence of especially special circumstances, the city should stick by the decision, otherwise there was little point in making the decision in the first place.

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