Tuesday, February 3, 2009
Eye-glazing issue impacts all of us
(February 03) - Like a band of Detroit auto executives going to Washington, the Guelph land developers went to Carden St. last week. They sang from the same karaoke disc. It was a hurting song, the kind that used to bring tears to the eyes of hardened politicians. The fiddles were crying, the pedal steels were wailing. Sadly, for them at least, everyone on the dance floor had heard the song once too often. Enough tears didn’t flow from enough eyes. The boys had their hands out, but all they went home with was a fistful of Kleenex.
What got them excited enough to show up at city hall? The very thing that would ordinarily put the rest of us to sleep. Development charges. The city wanted to increase them. The home builders wanted to freeze them. As it turned out, council had the good sense to tell them no. A freeze would have cost all of us money. Possibly as much as $20 million over five years.
This is roughly how it works. Developers buy land as cheaply as they can get it and sit on it for a while, until there are enough people coming to live here that more homes need to be built. The developers build the houses, sell them at a tidy profit, and move on to wherever they have more empty land to speculate with. Everyone is happy. Families have homes, developers have profits, and the city has an expanded tax base. Life is good.
The fly in the ointment, though, is that the city has to run storm water drains, waste water drains, clean water pipes, and other mundane things to the places where people want to live. That costs money. Under the routine rules of city life, it is paid for through development charges. It’s a cost recovery arrangement. The home builders pay and pass the cost over to the home buyers. Everyone is still happy. Life is still good.
The other fly in the ointment is that developers are never content with being happy. They always want to be happier, which is what they would be if they didn’t have to pay higher development charges. They would prefer to have the city eat the cost and spit it out into the bottomless property tax bucket. The cost could have been as high as $4 million a year if development keeps going like gangbusters. It could have been as low as $1 million a year if everything slows to a crawl. Either way, there would have been a cost. Nine of the 11 councillors and one mayor in attendance had the gumption to say no. Life is still good. Everyone is still happy except for a few home builders.
There was some freezing in the air. Industrial development charges were frozen for two years. Increases will be phased in over the following three. At the high end, this could run us up a bill of a little over one and a half million per year. Or it could be as low as $400,000. The councilors did some arithmetic and looked at all the jobs going south. They don’t want them going any further south than the emerging Hanlon Business Park. Without industrial development, there will never be a need for new housing. Council made a compromise, but it seems to have been a wise one.
It didn’t happen without some peculiar political positioning. The motion to freeze the industrial charges was made by Maggie Laidlaw. She has often been stereotyped as an anti-business maverick. Her motion passed unanimously. Then Karl Wettstein moved to freeze residential development rates. He likes us to see him as a friend of the hard done by tax payer. Yet there he was leading the charge for the option that would have cost us the most money. It didn’t pass. Then Bob Bell went over the top by moving a motion to freeze everything on the table. Take the full $4 million a year and hand it off to the home builders. It didn’t pass either, but isn’t he the one who recently had his knickers in a knot because the province pulled a $1.5 million grant out of the city’s budget?
Life is always good. Sometimes it’s also fun.
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