Events

Exposing the Hidden Subsidies for Sprawl

In her book and upcoming lecture, Toronto-based urban planner Pamela Blais argues that hidden subsidies promote sprawl and penalize the inner city.

By Don McLean
Published October 25, 2011

Hamilton exempts downtown growth from development charges. This is presented as a progressive measure that supports smart growth over sprawl, but the facts suggest otherwise.

Not only is this a taxpayer-funded subsidy, it is also part of a pattern of subsidizing greenfield sprawl and penalizing the most helpful forms of development.

Dozens of examples of such perverse public policies are detailed by Dr Pamela Blais in her 2010 book Perverse Cities: Hidden Subsidies, Wonky Policy and Urban Sprawl.

That's also the title of the November 7 Spirit of Red Hill Valley lecture that Dr Blais will deliver at First Unitarian Church on Dundurn South starting at 7:30 pm.

Development Charges

The downtown example works like this: Hamilton imposes a one-size-fits-all development charge (DC) on new housing and businesses. Even though the vast majority of the city's actual growth costs are associated with greenfield development, a new house on a vacant 40 foot lot on Hughson Street is billed exactly the same development fee as a mcmansion on half an acre in Ancaster.

That means the downtown house subsidizes the mcmansion. To counter that, the city waives the fees for the downtown house - but under the current system, those lost fees can't be recovered, so the taxpayers eat them.

According to Blais, policies like this and other mis-pricing explains why sprawl development continues unabated despite the 'smart growth' objectives formally endorsed by cities like Hamilton.

The geographic aspect of this particular mis-pricing is simple, and permitted by provincial legislation on development charges. For the purposes of determining growth charges, policy should divide the city into geographic segments and assign the actual growth costs in each segment to the new development occurring there.

The City of Ottawa has started down this path, creating two segments - infill and greenfield - and resulting in development charges that are 80 percent higher for the greenfields.

But this is just one change Blais recommends.

Lot Size and Building Form

She notes that small lots subsidize large lots. In Hamilton (and most municipalities) every new single family house faces the same development fees, no matter how much space it occupies.

"But the cost of hard services - water, sewer, roads, transit - is more directly related to the size of the lot (i.e. the density)," she notes.

"When one considers the cumulative impact of larger lots, multiplied over hundreds of thousands of new units as cities grow, the implications are clear for regional capital costs - more kilometres of regional roads, water and sewer pipes that would otherwise be needed."

A similar argument applies to variations between detached houses, townhouses and apartments. There is some variation, but it still strongly favours sprawl. Development charges in Hamilton are just under $27,000 for a single, $19,300 for a townhouse, and $16,600 for an apartment of two or more bedrooms.

"A one-hundred-unit apartment building will account for much lower demand for linear infrastructure on a per unit basis than will one hundred single detached units," argues Blais.

The mis-pricing gets even worse for commercial and industrial development - even before the huge discounts offered by Hamilton, especially for the latter that meant the new wiener factory got a $3.5 million subsidy from lower DCs.

Development charges are calculated on the floor area of the building so "denser development is discouraged", says Blais, because the more you build, the more you are charged.

"Charging according to a per-square-metre-of-floor-area-built basis is a distinct disincentive to using land more intensively and efficiently."

Parking and Traffic

This is exacerbated by a zero DC for parking lots, which also has major impacts on commercial developments. The latter are also treated in a one-size-fits-all manner, paying no attention, for example, to the amount of traffic different uses generate.

Blais cites figures from the Institute of Transportation Engineers who estimate PM peak hour traffic generated by 1000 square feet of floorspace at 1-3 vehicle trips for an office, 3-14 for a shopping centre and 26 for a fast food restaurant.

"By ignoring these significant variations in trip generation, the DC creates a situation in which uses that generate relatively low numbers of trips subsidize those that generate high numbers of trips," writes Blais.

And of course, this is also true of the subsidies for sprawl development - despite earnest declarations from planners in support of 'transit-oriented' development.

Smart Growth

Blais made her mark in municipal planning in the mid-1990s with a detailed report [PDF] for the Golden Commission documenting sprawl development costs as far higher than denser growth - a still controversial idea at that time.

That helped create the 'smart growth' movement and multiple new policies that were supposed to make it happen. But it isn't happening, and it won't if the hidden subsidies aren't eliminated.

Blais has been okayed to speak to the city's public works committee on the morning of November 7, and councillor Brian McHattie is pulling together an informal afternoon gathering with senior staff.

Her free evening public talk - the Seventh Annual Spirit of Red Hill Valley Lecture - will take place at 7:30 pm in First Unitarian Church at 170 Dundurn Street South.

Don McLean is chair of Friends of Red Hill Valley and coordinator of Citizens at City Hall, a volunteer group that has monitored city affairs since 2004 and distributes free news articles via email. The group can be contacted at info@hamiltoncatch.org.

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By Undustrial (registered) - website | Posted October 25, 2011 at 14:33:06

This lecture series always brings in such great speakers. Kudos once again.

This reminds me in many ways from the old theories of Henry George, who proposed taxes based on land rather than building "values" as a means of encouraging the most efficient uses of land possible.

http://en.wikipedia.org/wiki/Henry_Georg...

http://www.econlib.org/library/YPDBooks/...

Comment edited by Undustrial on 2011-10-25 14:33:37

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By Pxtl (registered) - website | Posted October 25, 2011 at 15:02:47

Wait, you mean that none of the development charges consider lot size as its own element?

Okay, this city doesn't just fail at governance.

It fails at basic geometry.

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By jtford (registered) | Posted October 25, 2011 at 15:14:59

The example cited does not make sense. A non-existent empty lot on hughson and a lot in Ancaster. First, the fee is waived because it is downtown for some reason. Taxpayers should not be picking where in the whole city limits people should live. Second, no doubt the lot in Ancaster has hundreds of other lots to go with it which adds up in fees.

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By Jim (anonymous) | Posted October 25, 2011 at 18:00:09 in reply to Comment 70877

it's true, the example doesn't make sense when you're a total moron. What doesn't make sense, you don't think there are empty lots downtown? As for taxpayers not ticking where people live, that is exactly the point my dim friend. Right now taxpayers DO pick where people live because we pay the developers to build there, by picking up a great deal of their service costs.

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By Lucified (anonymous) | Posted October 25, 2011 at 15:34:07

Comments with a score below -5 are hidden by default.

You can change or disable this comment score threshold by registering an RTH user account.

Comment edited by administrator Ryan on 2011-10-25 19:02:49

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By kevlahan (registered) | Posted October 26, 2011 at 05:57:35

It is not just me who thinks that road crashes (especially with pedestrians) are not some fact of human nature that cannot be reduced, please see this report from the WHO. Talking about these crashes as "accidents" makes them seem somehow inevitable and shifts to blame to motorists or pedestrians being "careless".

http://www.who.int/mediacentre/news/rele...

Here is a quote:

"“Thousands of people die on the world’s roads everyday. We are not talking about random events or ‘accidents’. We are talking about road crashes. The risks can be understood and therefore can be prevented,” said Dr LEE Jong-wook, Director-General, World Health Organization. “Road safety is no accident. We have the knowledge to act now. It is a question of political will,” he added.

The magnitude of this growing global public health crisis, the risk factors that lead to road traffic deaths and injuries and effective ways to prevent them are detailed in the World report on road traffic injury prevention. The report provides governments and other policy-makers, industry, nongovernmental organizations, international agencies and individuals with concrete recommendations to improve road safety."

The motorist death rate has been going down, not by admonishing drivers to be more careful, but mostly through policy and engineering changes:

"This success is attributed to improving the design of vehicles and roads and focusing on legislation, enforcement and sharing of information about the use of seat-belts, helmets, and child restraints and about the dangers of speed and drink-driving."

Unfortunately, the pedestrian death rate has not decreased significantly, but there are also policy and engineering changes that could make a difference.

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By mystoneycreek (registered) - website | Posted October 26, 2011 at 15:45:11 in reply to Comment 70886

The motorist death rate has been going down, not by admonishing drivers to be more careful, but mostly through policy and engineering changes:

"This success is attributed to improving the design of vehicles and roads and focusing on legislation, enforcement and sharing of information about the use of seat-belts, helmets, and child restraints and about the dangers of speed and drink-driving."

Unfortunately, the pedestrian death rate has not decreased significantly, but there are also policy and engineering changes that could make a difference.

I'll tell you what definitely haven't been a factor in reducing the motorist death rate: ongoing training and testing.

Part of the arrogance attached to driving is very much aligned with the 'right, not privilege' notion: 'I passed my test, I'm set for Life!'

Considering what's at stake, this is, to put it bluntly, shite.

We're moving these huge beasts of steel and glass around at speeds most people simply do not appreciate, and there's very little competency out there. Functionality, yes. Competency? No. And the really sad thing is that once tendencies are in place, they get reinforced...even as real skill decreases.

People should be re-trained and retested at least every five years. Being a good driver should be a source of pride, not something we just assume we are because we haven't had an accident. (Yet.)

Alas, we live in a world of sloppiness and ambivalence.

Comment edited by mystoneycreek on 2011-10-26 15:54:42

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By Pxtl (registered) - website | Posted October 26, 2011 at 16:15:29 in reply to Comment 70906

Part of the arrogance attached to driving is very much aligned with the 'right, not privilege' notion: 'I passed my test, I'm set for Life!'

Voting is the province of the elderly. Repeated testing would cost a lot of old folks licenses. Don't expect the government to move on this one.

As much as people look down their noses at the boom of e-bikes on our streets, they're the only thing that makes me hopeful our state of affairs could change. E-bikes provide an alternative to people who are no longer fit to drive and lack the health for a bicycle. Maybe E-trikes would be even more attainable, since they wouldn't even require balance. If somebody can no longer be trusted behind the wheel of a multi-ton vehicle, perhaps they wouldn't maintain such a death-grip on their licenses if they had access to fifty kilos of low-speed electronics.

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By Cityjoe (anonymous) | Posted November 07, 2011 at 01:23:38 in reply to Comment 70910

E bikes & E Trikes sound like a good idea until you get tail gated, or faced down by an arrogant, entitled Right Winger driving a Hummer.
IMHO, vehicles have become the new 'arm's race'. The bigger the vehicle the bigger the Deterrent. The bigger the vehicle, the more likely you are to kill the other driver & passengers, while you & your passengers are unscathed.
(& of course, the bigger & more expensive your vehicle, the more worthy, godly, & wonderful you are in the eyes of your fellow man. The Sun shines out of your headlights.) :D

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By SpaceMonkey (registered) | Posted October 26, 2011 at 18:33:05 in reply to Comment 70910

If someone isn't safe to drive a car, why would one assume they are safe to drive a bike or even a tricycle in traffic? That makes NO sense to me.

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By Pxtl (registered) - website | Posted October 27, 2011 at 10:16:39 in reply to Comment 70915

Because they're mainly risking their own lives. And their top speed is only 40kph. They can't smash into a building. They can't plough through a farmer's market. They can't push a car off the road.

Yes, they could feasibly cause a terrible accident as drivers swerve to avoid them, but they can do that on foot too.

And either way, it's currently legal. E-bikes are legally the same as bicycles. I'm sure this will eventually change, but for now it means anybody can ride an e-bike.

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By Cityjoe (anonymous) | Posted November 07, 2011 at 01:29:36 in reply to Comment 70922

Pxtl, I think it's a bit one sided of you to assume the older folks are always the main cause of accidents.
Can we put the texting teens, the road warriors on their 5th speeding ticket,the tailgaters, the road hogs in vehicles that will barely fit in the traffic lane, & the cell phone chatterboxes who won't 'shut up & drive', into those E Bikes, too?

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By Lucified (anonymous) | Posted October 26, 2011 at 10:18:30

I just pointed out that Don who is against subsidies is always for subsidies for himself and the buses he rides. He wants everybody to pay for him. Why is that an insult? Oh, right I also pointed out that he has a marxist leaning. That is insulting.

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By davidvanbeveren (registered) | Posted October 27, 2011 at 16:30:58 in reply to Comment 70888

Marxist leanings? What article did you read? The argument is inherently fiscally conservative / economically liberal.

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By Pxtl (registered) - website | Posted October 26, 2011 at 15:58:50 in reply to Comment 70888

Personally, I ride the bus from Westdale to Hamilton General. Those buses are generally packed and actually make a profit (no, I can't find the reference for this, but the city has admitted that the main east-west routes like Beeline subsidize the others).

Guess where the money-losing buses run?

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By Cityjoe (anonymous) | Posted November 07, 2011 at 02:10:46 in reply to Comment 70907

The money losers are money losers because they are poorly serviced routes.
If a bus runs not at all in the afternoon, & you work shifts, you won't use that bus.
If you work Sundays, & your bus doesn't, you won't use that bus either.
If you have to sprint across a parking lot in the dark to catch the Last Bus, & a line up at the time clock holds you up a few times & you miss it, chances are you will be driving to work. It's cheaper & more convenient than waiting for a taxi in the cold!
If you can't actually get to Go Service via your public transit, you probably won't use either service. You will just clutter up local roads & the 403.

The old excuse that a certain line isn't profitable is like saying that not enough people are in an area to merit City hydro or water service, so let's just turn it off & see what happens.
You can't judge what could be by providing poor service that acts as a deterrent to potential users.

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By private automobiles (anonymous) | Posted October 26, 2011 at 12:54:30 in reply to Comment 70888

In case you own and drive a car, I thought I might point out that anyone who rides a bus or bike and doesn't drive a car is subsidizing YOU. In other words, it seems like you have it backwards.

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By JP (registered) | Posted October 26, 2011 at 11:52:13

Do policy-makers ever stop to consider that the reason sprawl continues at a rapid pace is because people WANT to live in suburban as opposed to urban environments? It has very little to do with development charges and the like, population growth continues outward from densely developed areas because people want to live in suburban environments.

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By Ryan (registered) - website | Posted October 26, 2011 at 12:14:58 in reply to Comment 70889

That is the baseline assumption of policy makers and the reason why our balance of subsidies is so heavily tilted toward sprawl. The question is: would as many people choose to live in sprawl if we had to pay the real cost of our choices in living arrangement? The evidence from cities that establish urban-friendly policies is that many people want to live in more urban environments, but are deterred from doing so in cities with perverse incentives.

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By Cityjoe (anonymous) | Posted November 07, 2011 at 01:37:45 in reply to Comment 70890

That may change.
Twice in 6 weeks, it has been impossible to get Downtown from the N. W. Burbs (Ancaster +) because of the 403. It has also been impossible to get onto the 403 for those inclined to want to do that sort of thing.

Since lateness is generally frowned upon by employers, maybe people may become aware of the futility of "You Can't Get There From Here!" & move to a saner location?

Trees are nice, but you must keep your job to keep the trees.

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By JP (registered) | Posted October 26, 2011 at 12:40:51 in reply to Comment 70890

I'm going to have to disagree with you Ryan. The province appears to be doing everything it can short of a moratorium on new-home construction to encourage dense development and discourage sprawl. GTA is the condo capital of North America for a reason.

Even if people had to pay the 'real' cost of suburban development, I still believe that the vast majority of them would choose that lifestyle. People aren't deterred from urban environments by perverse incentives. They're deterred by things like noise, crime, congestion and cost of living.

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By Pxtl (registered) - website | Posted October 26, 2011 at 14:21:07 in reply to Comment 70892

GTA's condo boom is a recent backlash against the massive boom in sprawl and the traffic getting worse and worse to the point that the main expressways are unusable, and I still think it had more to do with the market speaking than with government actions.

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By Cityjoe (anonymous) | Posted November 07, 2011 at 01:54:04 in reply to Comment 70898

Agreed, but higher density housing means more people trying to get from point A to B. It means more traffic on roads, & more passengers on public transit..assuming that there there actually is some kind of usable public transit.
(& Hamilton is sadly lacking in public transit, once you are off King & Main Streets!)

To simply build more higher density housing & not address transportation is senseless. To build higher density housing & not address creating good local jobs is also senseless.
High rises & condos can't in themselves solve gridlock.

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By that's fine (anonymous) | Posted October 26, 2011 at 12:56:45 in reply to Comment 70892

If that is truly the case, then we should let them pay for their own lifestyle so that those who don't choose that lifestyle can afford to build the things that they want (such as LRT) rather than continually subsidizing those who want lawns and driveways.

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By thats fine (anonymous) | Posted October 26, 2011 at 13:12:51

There is a strong argument that the suburbs subsidize various city cores. This is a back and forth argument that neither side bothers to acknowledge what they are getting out of the deal but rather just points fingers and demand the other pay the entire freight. You want LRT be aware that the percentage subsidy for that is higher than the subsidy on the road system. They want roads, be aware that in spite of the insanely high taxes on gasoline they too are subsidized. These subsidies really are not coming from property taxes but rather a combination of property/income and sales taxes which heavily slants the equation towards the suburbanites paying a much higher price than the lower city as it stands today. Its really not a simple formula because after having said that the heavily subsidized population better known as those on various social assistance program skew the numbers in Hamilton towards showing the burbs paying more than the core. Much of this can be corrected with the provincial government taking back all responsibility for social services but thats unlikely to happen. Bottom line, EVERYONE is paying too much for government services and nobody is getting a free ride. We need to live within our means and the sooner everyone understands that we then can move forward on how to be equitable, and humane in spending what we have

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By HelpLocalTalents (anonymous) | Posted October 28, 2011 at 13:14:09 in reply to Comment 70895

We also would benefit from the city/government support for local talented and skilled.
Something like to establish a web-sites like "Children apparel made in Canada", etc. Also could help them set up their sites.
People should help themselves with some help from the government.

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By Lucified (anonymous) | Posted October 26, 2011 at 14:14:59

But at the same time I should look at the argument being made and not imagine why someone got a motive, what you call that, so, sorry RTH, me bad. Don actually make good point for some what I dont agree with.

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By Lucified (anonymous) | Posted October 27, 2011 at 10:55:47

The person above is an imposter. I am the Lucified and Don is looking for a subsidy on his bus passes every year. He isn't consistent and somewhat hypocritical.

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By Lucified (anonymous) | Posted October 27, 2011 at 16:56:57 in reply to Comment 70923

No, you lie! Me the real Stupified/Lucified!!

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By Undustrial (registered) - website | Posted October 27, 2011 at 12:58:05 in reply to Comment 70923

Virtually every time I've seen Don for years he's come on a bike, for the record.

I don't know who it is who consistently trolls EVERY post about, by or regarding Don McLean, but like all those decades-old communist references, they really don't seem to know anything about him.

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By bob lee (anonymous) | Posted October 27, 2011 at 14:20:18 in reply to Comment 70924

I'd be interested to know this too. This troll is always there very fast too. Maybe someone has 'don mclean' on some kind of alert so they can tarnish his name whenever it comes up. Or maybe it's Larry Di Ianni? He accused Don back in the day of costing the city a bundle over the Red Hill, and seems to have a lingering grudge:
https://twitter.com/#!/LarryDiIanni/status/107972575862325251

I can also imagine that Larry doesn't have much better to do these days.

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By Mickie (anonymous) | Posted October 28, 2011 at 09:15:24 in reply to Comment 70928

I'm confused as to why a grown adult would troll a site dedicated to issues relating to a city. It's beyond juvenile and really discredits anything, even if it were truth, that the troll was trying to point out. If the intent is to show others its version of the truth, uncover facts people like me and other Hamiltonians don't know, or be a voice or dissension for the "good" of the city - it's been, to quote my niece, an "EPIC FAIL".

Please, grow up. I appreciate differences of opinion but it's near impossible to respect the viewpoints of someone who is so vitriolic and focussed more on ad hominems than the issues at hand.

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By Undustrial (registered) - website | Posted October 27, 2011 at 23:59:52 in reply to Comment 70928

Glad I'm not the only one with DiIanni at the top of his list of suspects. I'd decided not to mention it, but since I'm not the only one, I might as well. The guy has a bit of a reputation for these kinds of shenanigans...

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By seancb (registered) - website | Posted October 27, 2011 at 17:52:23 in reply to Comment 70928

That twitter post is hilarious. How mature! Here it is in case anyone doesn't feel like clicking through:

@LarryDiIanni

I see Don McLean attracted 7 people to his protest ride. A bit underwhelming I'd say!

28 Aug via web

Comment edited by seancb on 2011-10-27 17:52:47

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By ScreamingViking (registered) | Posted October 27, 2011 at 20:06:16

While I agree that there are a whole suite of issues which may support "sprawl" over redevelopment/intensification, there is some logic in McLean's article that doesn't seem to make sense to me.

She notes that small lots subsidize large lots. In Hamilton (and most municipalities) every new single family house faces the same development fees, no matter how much space it occupies.

Ok, that makes sense - a lack of differentiation in development fees is a disincentive to subdivide more lots in a single development.

However:

The mis-pricing gets even worse for commercial and industrial development - even before the huge discounts offered by Hamilton, especially for the latter that meant the new wiener factory got a $3.5 million subsidy from lower DCs.

Development charges are calculated on the floor area of the building so "denser development is discouraged", says Blais, because the more you build, the more you are charged.

"Charging according to a per-square-metre-of-floor-area-built basis is a distinct disincentive to using land more intensively and efficiently."

Is this not an incentive to minimize floor area, and hence (generally) how much land is devoted to the building, which impacts density? Or is the point that the charge is based on the building and not the land it occupies?

One thing that must be considered is the type of industry - for those which are transportation-intensive (such as the Maple Leaf example), the land requirement relative to the floor area of the plant will be very different than for those which do not require as much space for truck movements or outdoor storage. Parking needs should also be considered - for both employees and customers. Development charge schemes should account for these aspects as well.

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By Undustrial (registered) - website | Posted October 28, 2011 at 19:35:16 in reply to Comment 70935

Density = amount of building space per given amount of land.

Development charges = amount of building space.

Hopefully that clears up what's missing from the city's equations.

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By devo (anonymous) | Posted October 28, 2011 at 10:07:44 in reply to Comment 70935

it is a bit unclear. It may relate to the density of the building form. Square footage is total floors of the building, so whether that building is compact and vertical, or sprawling, the charge is the same. You may also be right that the outside land and parking lot aren't included in the area.

The more frustrating thing is the city's ability to discount these charges. There are laws against bonusing in the municipal act, designed to prevent competing cities from using incentives to poach each other's industries, at no good to the larger province. That's exactly what's happening here. But because development charges are under their own statutory scheme that allows rebates, the bonusing happens.

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By A Smith (anonymous) | Posted November 08, 2011 at 22:32:45

According to the 2010 annual report (http://bit.ly/uhGRhS), Hamilton received $16.378M in development charges/subdivider contributions in 2010. Here is a breakdown of fees for other years...

2009 - $23.286M
2008 - $27.987M
2007 - $48.040M
2006 - $31.322M
2005 - $43.709M

It would appear that the city did better using a lower charge than what we have today. Am I missing something?

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