Spending spat
Memos show city bent rules in the past for developers
A Sept. 22, 2008 memo to developers written by the City of St. John’s planning department advised that the city was going outside its normal development practices to facilitate the development of land in the Torbay Road North commercial area.
The memo referenced a decision of city council during a special meeting on April 9, 2007 where council agreed “to allocate tax revenues associated with the proposed future commercial development of properties in the Torbay Road North area for the construction of infrastructure required to accommodate these commercial developments.”
That special meeting of St. John’s city council was presided over by then-mayor Andy Wells and included then-deputy mayor Dennis O’keefe, most councillors and senior city staff.
In that meeting, council voted unanimously in favour of a motion that council approve the use of tax revenues associated with the proposed commercial development on Torbay Road North for the construction of the infrastructure required for the commercial development.
The motion came after council considered an April 4, 2007 memo from the city’s chief commissioner/city solicitor. In that memo, it stated “the only way that those commercial developments will proceed is if the city takes responsibility for the road improvements.”
It also stated, “the source of funding can come from the tax revenues from the two developments.”
The memo states that though the city has not used that method of funding in the past, “without it there will not likely be any development.”
The memos shed a little more light on a current dispute between developers Basil Dobbin and Danny Williams over the potential use of taxpayers’ money for infrastructure in relation to major developments in the city.
Dobbin, president of Cabot Development Corp. Ltd., which has developments in the city’s east end, and Williams, president of Dewcor and developer of the Galway project in the city’s west end, have sparred in recent letters to the city and government members over when and whether the city should pay for infrastructure just outside the boundaries of their developments, and if developments in opposite ends of the city are being treated equally.
The letters were sent to St. John’s city council members and new candidates for council, as well as to Premier Dwight Ball, Finance Minister Tom Osborne and other government members.
Earlier this year, Williams and the City of St. John’s were at odds over who should pay for a roundabout at Ruth Avenue and Pitts Memorial Drive — an area just outside the Galway development.
Though the roundabout would be used by residents and tenants of Galway, Williams argued it would also have multiple other users.
Williams’ company, however, ended up having to cover the entire cost of the roundabout in order to keep the Galway development proceeding on schedule. That didn’t stop Williams from questioning why the city was willing to spend on infrastructure in the east end of the city that aided developers there, but not in the west end.
“If this infrastructure (in the east end) was being built because significant tax revenue was going to be generated by these projects, then I shouldn’t be expected to build infrastructure outside my boundaries when I paid for every single nickel that’s been spent at Galway,” he said. “There’s not one cent of public money spent at Galway.”
Dobbin stated that in his opinion there weren’t any issues of unfairness or inequality in the way the city has treated east-end versus westend developments.
“Mr. Williams was requesting the city pay for infrastructure outside of his Galway development’s boundary,” Dobbin stated in a letter. “I understand that further infrastructure for access to and from the development will be required by either an overpass or underpass on the Trans-canada Highway and Pitts Memorial Drive to adequately address traffic demands. Neither the city nor the province should spend taxpayer money, the result of which would be to unfairly advantage and likely enrich one developer over all other developers in the region.”
Dobbin said infrastructure installed by the city near the east-end developments years ago was done by the city after the city’s own traffic impact studies.
When contacted Thursday, Wells — given that the memos and special meeting took place 10 years ago — said council likely decided to go that route at the time because the city would recover the costs.
Wells is currently seeking the mayor’s seat again in the upcoming election.
“At the time, we decided this was worthwhile because there was the reality of full cost recovery. The taxpayers would not be left holding the hook,” he said. “That would have been how I would have been thinking about it. The chief commissioner was Ron Penney and the other person involved would have been Art Cheeseman.
“These two guys were always my two chief advisers on these matters and I had full and complete confidence in them. Always it was that the taxpayers would not be exposed to any liability and if they were temporarily exposed, as in this case, there would be a guaranteed revenue stream that would recover the cost.”
Wells noted that in 2012 Christopher Sharpe was appointed commissioner to hold a public hearing regarding proposed rezoning amendments to the St. John’s Urban Regional Plan and to write a report.
Recommendations of that report were adopted, Wells noted, except for the one that stated no changes to the plan should be made for rezoning areas above the 190 contour until the city has adopted a formal cost-recovery policy to ensure that none of the marginal costs of providing water and sewer services or major transportation infrastructure are borne by the city. All new developments must be capital-cost neutral to the city’s taxpayers, the recommendation read.
Wells said that recommendation was ignored by council when the Sharpe report was adopted by council.
“They passed over it quietly and moved to rezone,” Wells said. “Council should immediately adopt recommendation 5 of the Sharpe report to put to bed once and for all that (developers) are not going to get their hands in our pockets for any infrastructure improvements above the 190.
“As a matter of course they should adopt that policy — probably at the same time — city wide. Let developers know the ground game and everybody plays by the same rules and that business is done by the council in the public chamber.”