Town of Markham Rewrites Development Charges Act
Overview
When are voluntary municipal contributions not really voluntary? When Mayor Scarpitti of the Town of Markham decides that a new hockey arena accommodating 20,000 fans, the GTA Centre, be built in Markham with the "voluntary" assistance of local developers. Mayor Scarpitti had announced the initiative for the GTA Centre in September, 2011 and is now seeking financial assistance for construction.
The Development Charges Act was revamped substantially in the late 90's to limit the abuses of municipalities that were using development charges for grand community centres, city halls and various other municipal improvements that went well beyond the required local services to be expanded to accommodate a new development. Various expenditures were eliminated such as hospitals and other municipal buildings that were not considered essential or appropriate for a development charge contribution. A strict regime for calculating growth and the permitted level of development charges was established In addition, municipalities were required to contribute 10% of the cost of all of these permitted municipal improvements to ensure that there would be accountability on the use of development charge funds and the type of expenditures to which they were going to be allocated.
Unfortunately, municipalities have chafed under these restrictions for almost 14 years and sought various ways to get around them. Most recently, the Town of Orangeville and other municipalities sought to use different mechanisms for determining population growth that would allow for substantially enhanced development charges. This approach known as the "gross population" approach ignored reductions in the population due to emigration and other natural changes to the numbers of people living in a particular municipality to determine the actual number of people requiring services over the applicable timeframe. This approach was successfully challenged by BILD and the accepted "net population growth" approach was upheld at the OMB and Divisional Court.
Over the years, a number of municipalities have sought to "encourage" voluntary contributions from various developers to fund municipal projects that were not covered by the development charges or event if covered, to accelerate contribution to these projects. These projects, such as hospitals and local arenas were intended to be supported by municipal revenues from across the entire tax base or through the strict regime governing the calculation of development charges. Although these contributions were supposed to be "voluntary", those developers that did not participate in these fundraising efforts, somehow saw their developments delayed.
York Region's development charge by-law is due to be revised this summer which will inevitably result in significant increases of up to 40% for units where building permits are drawn after the date of the increase. Markham's development charge by-law is also being updated with an inevitable increase as well. Those developers whose projects are near building permit ready will not want to jeopardize the amount of applicable development charges by having their projects potentially delayed.
The disregard of the Development Charges Act and the regimen under which municipalities are required to operate is something which the province should be taking a closer look at and strongly discouraging. Developers are caught between the need to move their projects along on the one hand and on the other, to minimize their costs which will be passed on to purchasers. Especially problematic is the imposition of these "voluntary contributions" to projects which have already been planned and budgeted for and which did not include any of these amounts.
I fully understand the difficult situations that many municipalities face given their budgetary requirements and the limitations on revenue sources, but I have no sympathy for the most current attempt by the Town of Markham to seek contributions from developers to support a large scale arena that can only have as a commercial purpose a professional hockey team. The trend to "voluntary contributions" required by municipalities must end, and a better formula for funding true municipal expenditures established through cooperative efforts between the province, the federal government and the municipalities.
