Windsor approves 70 per cent development charge cut

Home construction in Windsor, Ont., on Monday, Jan.7, 2018. (Bob Bellacicco ./ CTV Windsor)

Windsor city council has unanimously approved a plan that could eventually reduce development charges on new homes by 70 per cent, a move city officials say could help unlock thousands of housing units and bring millions of dollars in provincial and federal funding to the city.

The vote came during a special council meeting Wednesday, just two days before a key application deadline for the Development Charge Reduction Program — an $8.8-billion housing fund jointly funded by the provincial and federal governments.

Development charges are fees paid by builders to help fund growth-related infrastructure such as roads, sewers and watermains.

For a builder constructing a new single-family home in Windsor, development charges currently sit at roughly $45,000. If Windsor’s application is approved, that cost could fall to about $13,500 for the next three years.

Mayor Drew Dilkens said the reduction is intended to help move projects that already have approvals but have yet to break ground.

“The reduction of the 70 per cent of the development charges can actually help the math make sense,” Dilkens said.

“And the idea is to unlock that development that’s in the pipeline waiting to be built.”

The city estimates approximately 2,933 housing units could move forward over the next three years if the program succeeds in encouraging more construction.

While the development charge reduction program drove Wednesday’s special meeting because of its June 19 deadline, council also authorized applications to two additional funding streams: the Trade Diversification Corridors Fund and the Build Communities Strong Fund.

Together, the applications are aimed at helping fund major infrastructure projects already identified by the city, including improvements to Howard Avenue, 6th Concession Road, portions of Cabana Road and Lauzon Parkway, the Ojibway Storm Trunk Sewer and infrastructure supporting future growth around the new regional hospital area.

Dilkens described Windsor’s proposal as one of the most aggressive likely to be submitted in Ontario.

“This is the last arrow in the quiver that we have,” Dilkens said, referring to development charges as “the only expense we can control on the city side” to encourage more housing developments.

The Windsor-Essex Home Builders’ Association welcomed the decision.

Chair Norbert Bolder said builders have been pushing for relief on development charges as housing construction slows and projects become increasingly difficult to finance.

“I think this is a great move for Windsor. I think it’s going to make a big difference,” Bolder said.

Bolder argued the savings will ultimately benefit buyers, not just builders.

“That’s quite a bit of money back in the customer’s pocket,” said Bolder, adding that builders want homes to sell and therefore have an incentive to pass savings on to consumers.

“If they give us that, we’re going to pass it on to the customers.”

Still, much of council’s discussion focused on risk.

The city estimates it could forgo approximately $62.7 million in development charge revenue over three years under the proposal.

In return, Windsor is seeking nearly $50 million through the Development Charge Reduction Program while also pursuing funding through the additional infrastructure streams.

Finance commissioner Janice Guthrie said administration intentionally structured the proposal so the amount being sought from senior governments closely aligns with the revenue being given up.

“We have strategically moved forward with the 70 per cent reduction,” Guthrie said.

“That will arrive at the relatively same amount as grant funding that we are leveraging, at which point we would not have to then reach back into the tax base and fund these projects.”

Guthrie said staff reviewed thousands of housing units already moving through the planning process before arriving at the city’s projections.

“Our number of units that have actually been approved through site plan control, rezoning and various planning stages is actually north of 4,000 units in our community,” she said.

But administration also acknowledged there are no guarantees.

The province has not yet indicated how applications will be evaluated, and municipalities across Ontario are competing for a share of the funding.

The city also acknowledged risks if projected housing construction does not materialize.

During council’s debate, administration noted funding could potentially be clawed back if housing targets are not met, though officials stressed they used what they described as conservative projections when estimating future development activity.

The vote does not immediately reduce development charges. Instead, it authorizes Windsor to submit its applications and signals the city’s willingness to implement the reduction if the province approves the proposal.

Administration has said it will return to council if the funding offer differs materially from what the city is seeking.