Pay­ing for the City of Ottawa’s fu­ture

Ottawa Business Journal - BOMA Magazine - - Committees And Chairs -

The City of Ottawa has un­der­gone tremen­dous growth over the last decade and con­tin­ues to ex­pand. New projects, big and small, are al­ways be­ing added to the list. The ques­tion that is of­ten raised is “how are we pay­ing for all of this?”

The an­swer is not as in­tu­itive as you may think. The as­sump­tion for the typ­i­cal Ottawa res­i­dent is that “we all pay” through the prop­erty taxes levied on the homes and busi­ness that we oc­cupy.

This would not be 100 per cent cor­rect. The truth is that some pay a lot more of the share of cap­i­tal projects than oth­ers. If you re­cently pur­chased a newly built home or oc­cupy com­mer­cial space in a newly built build­ing, you are the one likely pay­ing a greater amount of the cost for the new in­fra­struc­ture.

The ve­hi­cle that the City of Ottawa and other mu­nic­i­pal­i­ties use to fund the ma­jor­ity of these projects is de­vel­op­ment charges. What are de­vel­op­ment charges? The City of Ottawa de­fines them as fol­lows:

“De­vel­op­ment charges pay for the growth-re­lated por­tion of cap­i­tal costs for new roads, wa­ter, sew­ers, drainage, emer­gency ser­vices, tran­sit (in­clud­ing light rail sys­tems), parks de­vel­op­ment, ma­jor in­door recre­ation fa­cil­i­ties, li­braries and growth-re­lated stud­ies. The charges are paid by the de­vel­oper per res­i­den­tial unit and by square footage for com­mer­cial and in­dus­trial de­vel­op­ment.”

De­vel­op­ment charges in ag­gre­gate have in­creased by over 20 per cent in the last five years. This, cou­pled with a built-in an­nual in­fla­tion­ary in­crease, has cre­ated great con­cern in the de­vel­op­ment com­mu­nity as to the im­pact of the in­crease.

The in­dus­try di­rectly and through its as­so­ci­a­tion BOMA (Build­ing Own­ers and Man­agers As­so­ci­a­tion) scru­ti­nizes these charges on an an­nual ba­sis in or­der De­vel­op­ment charges are eval­u­ated ev­ery five years, but have a plan­ning hori­zon of 30 years.

The City will en­gage staff and a team of con­sul­tants to eval­u­ate the an­tic­i­pated growth for the city. This in­cludes em­ploy­ment growth, pop­u­la­tion growth, hous­ing needs, com­mer­cial ac­com­mo­da­tion needs and, of course, the di­rec­tion the fed­eral govern­ment is tak­ing as the ma­jor con­trib­u­tor to all the other fac­tors.

Con­cur­rent with the growth anal­y­sis is an eval­u­a­tion of the needs of the City from a cap­i­tal in­vest­ment per­spec­tive, in­clud­ing trans­porta­tion, mu­nic­i­pal build­ings, in­fra­struc­ture etc. Projects are es­ti­mated, pri­or­i­tized and then mapped out on a cash flow ba­sis in so­phis­ti­cated mod­els to de­ter­mine the cash flow needs for the im­me­di­ate next five years as well as the longer 30-year hori­zon..

These “pro­jec­tions” are com­bined to de­ter­mine

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