Hamilton to begin ‘gradual phase-out’ of development charge discounts for builders

Hamilton is set to begin a slow phase out of all development charge discounts for some builders in the city. Global News

A bylaw passed by Hamilton politicians on Wednesday is putting an end to discounts for builders across the city amid looming needs for cash to fight a housing crisis and maintain infrastructure.

Mayor Andrea Horwath insists the gradual phase-out responds to local government’s increased responsibilities in building affordable housing, eradicating homelessness, and upkeep of public facilities and roadways.

“We’re trying to strike that balance with our policies around taxation, while at the same time recognizing it’s a hard time for folks. People are really struggling,” said Horwath.

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For decades, developers looking to build a condo project or a storefront have had the option to take discretionary development charge exemptions as an incentive to build in Hamilton.

The exemptions offered relief by softening costs tied to installing water systems and road building.

Under the new legislation, the current 40 per cent discount for residential development will be gradually phased out starting in 2025 via five per cent drops every year until it reaches zero.

Industrial developments, which now see a 37 per cent exemption discount, will also see the five per cent annual reductions starting next year.

Some discounts, like office development, are not changing.

Horwath says the bylaw seeks to “strike a balance” between not wanting to “scare” investment away while at the same time easing the burden exemptions put on taxpayers.

“What we ended up with yesterday is that kind of compromise position, was a gradual phase-out,” she said.

The initial recommendation from city staff called for an expedited phase-out starting in June that would have seen discounts eliminated in and around five years.

However, that rollout will now likely be extended between eight to 10 years.

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Prior to Wednesday’s vote, the president of Hamilton’s Chamber of Commerce (HCOC) urged council to align policy and bylaws to “long-term prosperity and well-being” of the city submitting the legislation might hinder its attractiveness for developers and investors.

“I can’t stress enough our concern during this period of stagnant economic growth that this change will negatively impact Hamilton’s future competitiveness and livability,” the HCOC’s Greg Dunnett said.

In a letter to council, a spokesperson for the West End Builders Association (WE HBA) characterized the exemptions as critical in meeting housing targets and that if it has to happen it be a “slow transition out.”

WE HBA manager of planning Michelle Diplock went on to encourage council discussions toward some sort of grant or incentive program for builders.

“WE HBA can support such a discussion about bringing forward a more robust incentive program in future, provided the proposal adopted by Audit, Finance and Administration Commitee to slowly transition out the existing exemptions is fully approved,” said Diplock.

Horwath admitted the slow transition is something to “be very careful” so as not to disturb the current “boom” the city is experiencing with applications.

“We have to be cognizant of the fact that it’s not just about our policies here in Hamilton, but it’s how they stack up to the competition, if you will, of communities around us,” she said.

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“This is why there were some changes to what initially had come forward by the consultant.”

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