Paying for the City of Ottawa’s future
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