Proposed Off-Site Levy Clears Hurdle

Robert Thomas

How to fund off-site infrastructure while at the same time not seriously hampering development was a hot topic at this week’s Executive Committee.

The Committee was discussing whether or not to advertise proposed changes to the Off-Site Levy and in the end how much to charge and at what rate. An Off-Site Levy would be a charge assessed to all new development in order to recoup the costs for infrastructure that is not on the development but serves the development such as parks, roads, sewer and water upgrades. The Levy is required by the Province.

“Stakeholders are worried about competitiveness,” Michelle Sanson, Director of Planning told Executive regarding recent consultations.

Councillor Scott McMann asked “do you think they would be in favour of them?”

Sanson replied that developers “would be in favour, except for those on the acreage side. They’re probably still not in favour with everybody else.”

Under the proposed original Levy – defeated in first reading on February 26, 2018 - it would cost $80,580 per acre to develop greenfield or new areas while infield or previously developed areas would only be charged a levy if it increased development density. The new rate came from a study looking at developing 2820 acres of land with an estimated off site infrastructure cost of $227,264,000 over a 40 year time span.

In written submissions, a number of stakeholders were critical of the City's plan. Here are some samples below.

Shawn Robinson, President of Robinson Contracting Ltd asked how new developments could compete against existing ones who had already paid the existing lower rate? His firm has built 70 homes and three commercial projects in the last seven years.

“This will be the most damaging bylaw ever contemplated by the City since it’s incorporation in 1903,” local developer Rod van Slyke wrote.

“Please tell us the rationale behind this increased levy? We can’t sell the property as it is, and you want to make it harder. We keep hearing how we want and need the city to move forward, promote industry and be a great place to live but this levy will do nothing but harm our future,” local realtor Mike Walz wrote.

Under proposed changes in the draft bylaw commercial and residential developments in greenfield areas would pay $80,580/acre potentially phased in from 60 percent to the full levy over three years. (The report to Executive did state it could potentially be up to five years.) Industrial properties would pay $49,680/acre up from the present $32,804/acre. Residential developers could opt for a per unit levy of $16,900 per unit. Infill would require levy so long as it did not change density of the previous property.

The $49,680/acre charge was chosen as an incentive to compete against Regina, whose industrial levy is $10,000/acre more or $59,680/acre.

Regarding commercial and residential developments City Manager Jim Puffalt said “we could find no compelling reason to reduce the rate for them.”

Coun McMann continued to voice concerns about the effects of the higher levy given the fact there is still land sitting in the City's inventory with the $32,804/acre levy and not under development.

“I’m really leery this is sending the wrong message,” McMann said.

Councillor Brian Swanson echoed Coun McMann's concerns about slow development with the present levy.

“We'd be hard pressed to find any industrial development that has happened in recent years,” Coun Swanson stated, going on to say it was “a dysfunctional process based upon assumptions not in the real world.”

“We are now required by legislation now to have a fee, which I support. The first clue its not working is it took five years,” he said.

Coun Swanson continued to be critical of the process stating “you are asking people how much they should pay when they don’t want to pay anything.”

“How increasing the tax rate by 55 percent (to stimulate industrial development) is beyond me,” he said.

Councillor Dawn Luhning additionally expressed concerns stating “I too am a little bit leery about increasing the industrial rate."

Councillor Crystal Froese asked whether the rate would be the same for commercial development.

Sanson pointed out that the present rate saw taxpayers subsidizing off-site infrastructure for new developments. That subsidy is $50,000/acre for Moose Jaw taxpayers, she said.

Puffalt stated that a decision needs to be made soon or lose money and potential tenants in the new Southeast Industrial Park.

“We have tenants at the door,’ he said, previously stating the City was in discussions with companies looking at purchasing 50 more acres than they had previously indicated.

“We are standing to lose a lot of money if we don’t increase these rates now,” Puffalt said, adding “potential tenants want to know how much.”

Coun Luhning said her number one concern for industrial properties was proximity to Regina. She favoured leaving the industrial rate at $32,804/acre but not leaving it there for 20 years.

“At some point we have to start recouping costs on this it can’t keep going on as it has,” Luhning said.

Coun Swanson again advocated for keeping the off-site levies low rather than subsidizing water and sewer rates. He had previously spoken out against subsidizing the water and sewer rates to the previously proposed Canadian Protein Innovation pea protein plant. The status on the project is unknown at the present time but a reliable source stated the firm had secured a second set of investors.

“We (Council) have caused the subsidies. The money the taxpayers are going to have to subsidize on this,” Coun Luhning said, adding later “it’s a valid point. If we are going to do this we are going to have to stick to it.”

“I don’t think we have had an industrial development come to the city where we did not wave the off-site levy,” Coun Swanson stated.

“In industrial we keep saying this fantasy industry is going to ride over the hill and save Moose Jaw. There is no evidence of that,” he said.

Swanson continued to speak against discounting industrial developments’ sewer and water rates as a subsidy “when everybody else is facing a 15 percent increase. That’s your subsidy.”

Councillor Chris Warren spoke in favour of the proposal stating “the Chamber (of Commerce) has stated it’s a necessary evil.”

“Since I have been on Council I’ve seen some encouraging things,” Coun Warren said, adding “I believe in the future there will be a lot of interest.”

“These levies are to pay for the enhancement and the development of infrastructure off-site…we are asking taxpayers in terms of taxes every year to (subsidize this)."

Mayor Frasier Tolmie literally spoke loudly that there needed to be a change in how the City went after potential development and become more aggressive.

“The fact is the attitude in this city is that business is after us...we need to change that attitude.”

“We need to change the thinking and say this is a place to do business,” the Mayor stated the attitude needed to change from if you build it they will come to an attitude of go after it and they will come.

“There has got to be more of selling this as a great place to live. We have actually got to show it. It’s a global market here.”

Mayor Tolmie spoke about reading how a BC city had actually gone to China for two weeks looking for Investors as an example how to aggressively promote a city.

“Yes sometimes we have to make deals or incentives.”

“There might be a bit of short-term pain but there will be a lot of long-term gain from it,” Mayor Tolmie stated.

Coun Luhning stated she was prepared to make a move but would like to see a report in a year about it.

“I’m not going to die on this hill but I would like an opportunity to look at it in a year. We need to recover these costs sooner rather than later,” she said.

With a vote of 4-2, with Coun McMann and Swanson opposed.

Administration can now advertise the proposed Off-Site Levy Bylaw to look for public notice pursuant to Part X of the Planning and Development Act 2007 before ultimately presenting it to Council for final approval.