1) What is a "Development Charge"?
“Development Charges” may be used to pay for all or part of the on or off-site capital cost of:
2) Why is it important for Moncton to create a Development Charge By-law?
changes (January, 2018) to planning legislation mean that the City can no
longer recover costs through new subdivision agreements. The Development Charge
By-law is now the main tool for recovering costs related to the development of
new or expanding infrastructure. The City has retained Watson & Associates,
a leading consulting firm in Development Charges, to develop a recommended
framework and By-law to be implemented by Council.
3) How can a Development Charge By-law help grow the City?
The City of Moncton requires new municipal services to grow the population and economy. These services include new or expanded facilities for water, sewage, storm water, and transportation (streets, transit, sidewalks and trails). A Development Charge By-law would provide a fair, consistent and transparent method for funding the construction of these facilities and infrastructure.
Development Charge By-law would also provide a framework with a systematic
approach to sharing the costs created by the infrastructure and facility demands
associated with new growth and development (i.e. establishing a fair and
structured manner of distributing these costs between developers, builders, and
4) In what areas will the Development Charge By-law apply?
By-law would initially be applied to lands adjacent to the Twin Oaks Drive
extension area between Ryan Street and Rennick Road. Privately owned lands,
mainly on the east side of the extension, would be subject to the requirements
of the By-law.
5) Would the By-law apply to all lands within Moncton, i.e. city-wide development charges?
The development of the By-law is currently focused on the Twin Oaks Drive
extension area. The City is not considering the collection of city-wide
development charges at this time.
6) When is the City planning to have the By-law in place?
process of developing a Development Charge By-law is regulated through
provincial law. This includes—for example—public notice, public meeting of
Council, Public Hearing, and approval by the Minister of Environment and Local
Government. It is anticipated that this process will be finalized by the end of
2019 or early 2020.
7) Will the By-law be applied to other areas of the City in the future?
a Development Charge By-law is approved by Council, the document will provide
the foundation for potential future application in other areas of the City.
Consideration will likely be given to future growth and development areas of
the City in which Development Charges may be needed to help deal with costly
infrastructure challenges (e.g. new bridges, culverts, or trunk sewers) and
spur increased development.
8) Which services are supported by Development Charges?
The new Community Planning Act (January, 2018) outlines the on- and off-site capital costs to which Development Charges may be applied:
(a) New or expanded facilities for the supply and distribution of water,
(b) A new or expanded facilities for the collection, treatment and disposal of sewage,
(c) New or expanded facilities for the provision of storm water management,
(d) New or expanded roads, sidewalks and trails required for or impacted by a subdivision or development;
(e) New or expanded streets,
(f) New traffic signs and signals and new or expanded transit facilities,
(g) Land required for or in connection with facilities described in paragraphs (a) to (f), or
(h) For any other purpose referred to in the regulations.
9) Who will have to pay Development Charges and when are they paid?
The requirement to pay Development Charges may be placed on land developers at the time of subdivision, on builders/developers at the time of issuing building/development permits, or a combination of the two.
As a part of
approving any final by-law and framework, Council will have the final say on
the time in which Development Charges are collected. Feedback from the public
process will be taken into consideration in deciding on the equitable and fair
application of Development Charges.
10) How will the funds from Development Charges be used?
If the Development Charge By-law is approved by Council, any funds collected from the benefiting properties of the Twin Oaks Drive area will be used directly to cover the costs of localized infrastructure and facility improvements.
If in the future Council decides to apply the By-law elsewhere in the City (e.g. future growth and development areas), funds will be used to pay for growth-related infrastructure and facilities outlined in corresponding capital works budgets.
Provincial law requires that any Development Charges collected by the City must be placed into a special account, which can only be used to help fund the new or expanded infrastructure and facilities for which the money was collected.
11) How does the municipality account for Development Charges collected?
As a part of the work conducted by Watson & Associates, the Development Charge framework will also include an internal protocol or procedure for how reserve funds will be managed by the City.
Since any Development Charge revenue received must only be used to pay for new or expanded infrastructure and facilities for which the revenue was collected, it is critical that adoption of the By-law must be supplemented with a systematic and transparent approach for managing funds.
The protocol or procedure will also address how any associated
interest from the reserve funds will be dealt with.
12) What impact will public feedback have on the process of determining and implementing a Development Charge?
Transparent and consistent public engagement and communication on Development Charges is a high priority of City Council and Administration. All questions, concerns, and comments will influence the content of the final draft of the study and Administration’s recommendations to Council.
Administration will document, summarize and present
all feedback to Council. Public input will influence Council’s considerations
and final decision on the matter of Development Charges.
13) Will Development Charges impact housing and commercial growth in future growth and development areas?
Initial consideration and application of the Development Charge By-law is limited to the Twin Oaks Drive extension area. However, if the By-law is adopted by Council, the application of additional charge areas may be considered for future growth areas of the City. The establishment of a Development Charge framework often requires an acceptable balance between two competing realities:
· The first is that high non-residential Development Charges can, to some degree, represent a barrier to increased economic activity and sustained industrial/commercial growth, particularly for capital-intensive uses. Also, in many cases, residential Development Charges can ultimately be expected to be recovered via higher housing prices and can impact project feasibility in some cases (e.g. rental apartments).On the other hand, growth cannot occur without new infrastructure. The City must find funding sources to build the infrastructure required for new homes and businesses. A Development Charge places the cost on the new houses and new businesses, rather than on all existing houses and business (i.e. the broad tax base). The idea being that existing homes and businesses have already paid the capital costs of the infrastructure they enjoy and now pay property taxes to maintain, renew, and replace it when necessary.
14) Will Development Charges help the City of Moncton’s infrastructure deficit?
20% of the City’s capital infrastructure budget is allocated for the
construction of facilities and infrastructure associated with new growth and
development. Development Charges would constitute a new revenue source for the
City, which could help address the existing infrastructure deficit (maintenance
and renewal of existing infrastructure).
15) What happens if Development Charges are not adopted and implemented in the City of Moncton?
Without future revenue from Development Charges, the City could fund the infrastructure required for new growth by:
· The developer front-ending the required infrastructure (in many cases, this is unfeasible without a structured cost recovery framework); or
· An overall increase in property taxes for all Moncton ratepayers to cover the cost of the new infrastructure.
Alternatively, the City may decide that new growth is not affordable at this time.
16) Do the property taxes from new homes cover the cost of the new infrastructure required?
Property taxes are mainly intended to pay for core municipal services, including protective services, infrastructure maintenance and renewal, recreation, sanitation, and transit.
All of these services increase with new residents and businesses. Property
taxes make up 86.5% of the total revenue of the City.