Aligning DCs with other public objectives

Issue: Conflicts between development charges and Provincial planning and transit objectives

Though DCs are often seen simply as a revenue-raising tool, the reality is that they have broader impacts, including their important role in shaping urban development patterns. Given these broader impacts, there is a need to ensure that development charges do not undermine other Provincial and municipal planning objectives, policies and investments. This means ensuring that DCs – both in their pricing structure and the spending of revenues raised– do not inadvertently discourage a transit-supportive development pattern and the desired shift from auto dependence to transit travel. It is especially important, as the Province moves forward with the $50 billion Let’s Move transit investment program, to encourage an efficient, transit-supportive urban form, so that those transit investments succeed in attracting large numbers of new riders.

The Development Charges Act lays out some basic requirements around issues such as setting the charge, and accounting practices for funds raised. However, at present there is no policy framework, guidance or mechanism to ensure that DCs are aligned with other Provincial policies and objectives.

Billions of dollars are raised and spent through the DC Act in Ontario. The most recent data shows about $1.3 billion raised and spent in 2011 across Ontario municipalities[1]. Individual municipalities establish their own investment priorities. But individual municipalities’ infrastructure investments must also add up to a land use pattern that supports investments in regional transit.

If at the municipal level there is a continued over-emphasis on greenfield development and related infrastructure, the success of planned Big Move transit investments could be undermined.

Along with the location of DC-funded investments, the type of infrastructure being invested in at the municipal level can also affect the ultimate viability and efficiency of Provincial transit investments. The relative scale of investment in roads versus transit is critical. For example, in 2011, $546 million of funds raised through development charges in Ontario municipalities was spent on roads, compared to just $85 million on transit[2] – more than 6 times as much on roads as transit. If the City of Toronto, where much transit investment is taking place, is taken out of the equation, the numbers are $536 million spent on roads versus $71 million on transit, that is, almost 8 times as much on roads as on transit. Perpetuating a car-dependent urban form as they do, current spending levels on roads cannot continue if we hope to effect a shift to transit.

It is important to ensure that when its collective impact is considered across urban regions, municipal DC spending is consistent with broader planning, investment and transportation objectives. This alignment is not required under existing DC Act provisions. Nor is current spending of municipal DC revenues necessarily consistent with broader provincial objectives, such as the Big Move, a shift to transit, and Places to Grow. To not secure this policy coordination is to risk wasting billions of dollars through underperforming infrastructure investments.

While there is of course a need to allow municipalities to respond to their own local needs and conditions, it is also important to keep the broader regional and Provincial context in mind. A mechanism is needed to ensure that DCs align with broader Provincial objectives.

The Province has a clear interest in DCs. This should be stated explicitly and a mechanism put in place to effectively coordinate municipal DCs with other provincial interests, investments, policies and objectives. A mechanism similar to that used in the Planning Act could be adopted – provincial policy statements.

Proposed Reform

Amend the Development Charges Act to allow for a definition of the Provincial interest, and the use of Provincial Policy Statements that elucidate the Province’s interest and expectations of municipalities regarding the structuring of DCs, the preparation of infrastructure capital budgets, and the spending of DC funds.
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[1] Ministry of Municipal Affairs, Financial Information Reporting, FIR2011, Provincial Summary, Schedule 61.

[2] Ibid.