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June 2004
Newsletter
Developers Again Avoid Paying for Expressways
All along we've been told that the expressway is for growth. It's supposed to attract new industries and jobs to various business parks, and we know it's going to make residential and commercial sprawl development on the east mountain far more lucrative. But the talk about growth changes when it comes to determining who will pay for the project.
Ontario law allows municipalities to collect most of the costs of growth from the houses and businesses that make up that growth, instead of from the existing taxpayers. This is done through development charges. In mid-June city council adopted a revised development charges bylaw - and gave local developers a big break on the expressway costs.
The normal policy charges 95% of the cost of new roads to growth and the other 5% to existing taxpayers. But council has decided that only 44% of the cost of the Linc and the valley expressway should be charged to growth - the same percentage used since 1999.
In addition, the council caved in to developer arguments that some of the expressway costs should be charged to houses built after 2021, even though the city's own calculations show that the valley expressway will be over-capacity by 2019 (and the Linc is already congested).
What all this means is that each new single family house will pay $1625 toward the two expressways, instead of $5380 per house. Local taxpayers will have to fork over the difference.
With 2000 new houses built in Hamilton each year, the expressway-related discounts mean a revenue loss to the city of about $7.5 million a year in each of the next five years.
Other council decisions mean the city will also not be collecting its full share of industrial and commercial development charges for the two expressways. These are supposed to cover a quarter of the cost but under the new bylaw the city will only collect a small fraction of the industrial charges, and will also provide a number of exemptions and/or discounts to new commercial growth.
Deals like this mean that only a tiny portion of the expressway costs will be covered by the developers who benefit from them. The 2004 budget documents show that less than 7% of their costs so far have been paid by development charges.
Provincial subsidies for the expressways aren't recoverable at all through development charges. Those costs are borne entirely by the provincial taxpayer - i.e. us!
Earlier this spring, prominent local developer Aldo DeSantis announced a 3,200 house development predicated on completion of the Red Hill Expressway. DeSantis described the expressway as "the lynchpin" for the new growth in an area of upper Stoney Creek dubbed Meadowlands East. "This is where the growth in the city is going to be for the next 10 to 15 years", DeSantis predicted. "When the entire development is finished - including the commercial development - this project could come close to $1 billion."
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