Municipalities in Ontario use development charges to recover certain costs associated with growth. Development charges support the construction of infrastructure like water and wastewater pipes, roads and transportation infrastructure, community centres, parks, trails, fire stations, paramedics, and police facilities.

The City estimates what new services will be needed to accommodate Guelph’s growing population, and uses this information to update its development charge Bylaw and development charge rates. This update must be done at least once every ten years as required under the Ontario’s Development Charges Act.

In 2021, the City passed an update to the development charges bylaw in response to legislative changes that came into effect after the 2018 by-law update was approved. The 2018 study was the last comprehensive development charge study completed prior to the current ongoing study.

The Development Charge Background Study outlines a capital program costing $1.85 billion over the next 10-year bylaw period to accommodate growth. $833 million is designated as fundable through development charges during the by-law period plus an additional $267 million after the by-law period. $747 million is designated to be funded by the tax base, rate revenue, or other non-DC sources due to costs being non-growth related.

Because infrastructure needs to be built before growth occurs, the estimated collections from growth will be less than capital costs to accommodate it. Before considering any collection exemptions and discounts, the City will collect an estimated $760 million over the by-law period.

The financial impacts of Ontario’s legislation, Bill 23 More Homes Built Faster Act, has concerning impacts for Guelph.

The Bill decreased the amount of development charges we can collect from builders of residential and commercial developments through additional exemptions, discounts, a mandatory phase-in of new rates. It also excludes some growth-related capital expenses. The estimated amount of revenue loss from these new mandatory changes is $227 million over the 10-year bylaw period.

The reduction in fees we can charge developers will force municipalities to increase property taxes and utility rates to cover the remaining costs of growth.

The financial impacts of Ontario’s legislation, Bill 23 More Homes Built Faster Act, are concerning for Guelph.

The Bill decreased the amount of development charges we can collect from builders of residential and commercial developments through additional exemptions, discounts, a mandatory phase-in of new rates, and excluding some growth-related capital expenses from eligibility for development charge funding. The estimated amount of revenue loss from these new mandatory changes is $227 million over the 10-year bylaw period.

The reduction in fees we can charge developers will require municipalities to increase property taxes and utility rates to cover the remaining costs of growth.

As the city develops to meet the growing needs of the community, we have to pay for new infrastructure, facilities and service increases to accommodate that growth.

The development industry pays a portion of project costs to the City of Guelph to aid funding of new and expanded infrastructure and to aid in acquiring the needed land. Currently these contributions comes through different channels: development charges, community benefits charges, and parkland dedication contributions.

In preparing and approving the 2024-2027 multi-year budget, the City forecasts the infrastructure both replacement and expansion projects over the next decade. Staff and community capacity to deliver projects as well as City’s ability to finance the projects are considered.

We still need to take care of the existing aging infrastructure. The replacement value of the City’s assets was estimated at over $4 billion in the 2020 Asset Management Plan, and at that time over 30 per cent of those assets were identified as nearing the end of their useful lives and due for replacement within 10 – 20 years.

There are going to be challenging decisions ahead as part of the upcoming multi-year budget as Council considers all the priorities in light of overall affordability.