Guelph May Be Short $227M in Infrastructure Revenue
According to a new report, recent changes at the provincial level to the Development Charges Act could have significant repercussions for the city of Guelph. The report indicates that these changes may result in a revenue shortfall of $227 million for crucial infrastructure projects, impeding overall growth in the city.
Development charges are fees collected by municipalities from developers to cover the costs associated with infrastructure development for both residential and non-residential growth. These charges help fund essential services such as roads and sewers that are necessary for new developments. However, Bill 23, also known as the More Homes, Built Faster Act, introduced by the provincial government, has amended the Development Charges Act to restrict the amount of development charges Guelph can collect.
Given that development charges constitute the primary revenue source for building infrastructure before homes can be constructed, these legislative changes will lead to a funding gap of $227 million over the next decade, as reported in the Development Charges Background Study conducted by a private consultant on behalf of the city.
Out of the projected $1.85 billion expenditure on infrastructure during this period, costs not directly related to growth will need to be covered by the tax base, rate revenue, and other revenue sources. Nonetheless, the report highlights that the shortage in developer fees will result in the deferral of growth-related infrastructure projects. This delay in housing construction will further contribute to rising housing costs, exacerbating an existing problem.
To bridge the funding gap and maintain progress, the city could consider obtaining a loan. However, due to debt limitations, the maximum amount that can be secured is $105 million.
The completion of the Development Charges Background Study is a requirement imposed by provincial legislation, mandating its preparation every five years to continue collecting charges. City staff will continue working on the study throughout the summer, with the final proposed study expected to be released in October of this year. Notably, the city’s development charges bylaw is set to expire on March 2, 2024.
The preliminary report will be presented during a special council meeting on July 19 at 7 p.m., which will be live-streamed for public viewing.