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“Borrowing beyond our ability to pay”

October 5, 2013   ·   0 Comments

Dear editor:

It is not that often that a “letter to the editor” draws a rebuttal from his Worship the Mayor and I wish to thank him for joining the discussion regarding my previous letter.

Why did the Provincial Development Charges Act come into law?

The provincial government of Ontario wanted to remove barriers that held back local municipal governments from encouraging large local housing developments. Local governments had been required to borrow large sums of money for the installation of the required infrastructure at a significant cost to the local taxpayers through their property taxes.

To alleviate this situation, Queens Park passed the Development Charges Act. The developer of Previn Court West End Victorian Village would have been required to pay the DC’s for the full 1,700 units included in their approved site plan. This provided the Town with funds from the developer to pay for the required new infrastructure.

During this current term, Council adopted an amendment, which allows developers to defer paying the DC monies to the Town. The developer now does not pay until an application for the final building permit is made.

The Town therefore is back in the position that it has to borrow the monies for the infrastructure, whether through a bank instrument or the issuing of credit notes to the developer.

The developer still owes the DC’s however if the subdivision is not developed now or in a piece-meal fashion, over  several years, no DCs will be forth coming to pay for the same said infrastructure. A further problem would be if an approved and serviced development were temporarily shelved.

Regardless of the provisions of the DCs the issue is still the same, someone has to put the first dollar in the ground for the required infrastructure and each time the subject comes up. The Mayor, in my opinion, does not state who pays for what.

The recent Hemson report was prepared for the Town and adopted by council. It supported an increase in DCs and clearly stated and identified both allowable DC funding of infrastructure and the “Benefit to Existing Capital or Soft project Share” which is never more than 35%.  In other words, up to 35% of the costs of infrastructure are covered by the tax base.

The Mayor has to be ignoring the fact that his penchant for development growth of the Town results in up to 35% of the costs of most new infrastructure will be funded and paid for by the local property taxes and are not covered by DC’s. In addition, all subsequent upkeep, repairs, etc. on projects funded by the DC’s are paid with general taxes.

It is no more than a smoke and mirrors quick fix to provide the illusion that economically everything is going well. In fact, it is merely an instrument whereby, our governments and we are continuing borrowing beyond our ability to pay.

The Mayor and the delegation of mayors have asked Premier Wynne for the Government to allow the borrowed DC debt not be considered when municipalities request loans for other purposes.

Perhaps rather than working on ways to borrow more monies, the Mayors should be considering having the developer pay all or some of the DC upfront as well as working on reducing the overall debt of the municipality

Gordon McInnes,

New Tecumseth

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