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IN CONTEXT: Why so many Newmarket developer charges go to recreation

More than half of town's development charge reserves within recreation
2022-04-04-Mulock Property-JQ
The Mulock estate, where Newmarket is planning to develop a new park.

In Context is an occasional feature providing background and further explanation on ongoing issues impacting residents. 

Newmarket is updating its development charge bylaw and maintaining its trend of allocating most developer dollars to parks and recreation projects like Mulock Park, based on historic spending.

The town plans to update its bylaw by June, with a public hearing set for May 9. The rates are not changing much, with roads and water rates staying the same and parks and recreation staying as one of the top pools for development charges fees. 

The charges have faced scrutiny recently by some residents, given their use to fund the $40-million Mulock Park development versus other discretionary use. 

But provincial legislation means that development charges are based on spending in the past decade and cannot be easily reallocated. 

“They have to find some kind of benchmark they can use,” Toronto Metropolitan University school of urban and regional planning professor David Amborski said. “So that municipalities can’t gold plate their services, or have new growth pay for higher order services.” 

Development charges are in place at all municipalities to recover growth-related capital costs for infrastructure like water, roads and libraries. They are governed by the provincial Development Charges Act, which lays out exactly how charges can be used. It also mandates that municipalities base charges on spending in the prior decade. 

The town said it has $29 million in development charge reserves, of which $15 million is for recreation. This is because its last development charge study in 2019 showed high levels of spending in recreation over the preceding decade.

The town spent $4,224-per-capita on recreation and parks between 2009 and 2018, the study said.

Comparatively, library services was $327 per capita, and fire services were $217 per capita. 

However, the town noted that although it is higher than most other categories, recreation is below town-wide engineering, which includes roads and wastewater. The town estimated in 2019 that its next 10 years in that category would cost $94.6 million, compared to $58 million for recreation.

The charges are calculated based on that historic spending, with each development charge split up among the different categories. Recreation gets a larger slice of the pie compared to most other town services. 

“It's basically a user-fee approach to the capital cost of growth,” said Amborski, who resides in Aurora.

Development charges are then put into reserves and cannot be used except for what services the town collects them for. However, Amborski said provincial officials do not necessarily monitor them closely. 

“There’s a lot of slack in that,” he said. “They report every year, but I’m not sure that anybody really looks into the report.” 

Recreation is a significant portion of development charges for Newmarket's neighbours as well. Single and semi-detached residential units have faced a $14,398 charge for recreation and parks in Newmarket since 2019, nearly half of the total $28,902 charge.

Aurora’s 2019 bylaw charges more than $13,500 between indoor and outdoor recreation services for single-detached units, of a $23,844 total.

East Gwillimbury’s 2019 charges set out approximately $17,000 between indoor and outdoor recreation of a $33,885 total cost for single and semi-detached.

The town has assured that most of the Mulock Park cost will come from these gathered development charges. Although they could have allotted the dollars to other areas for recreation and parks, Newmarket Mayor John Taylor has defended the park expense and said recreation elsewhere is not being shortchanged.

The Development Charges Act disallows development charges getting used to acquire land for parks. That meant the town could not use them to purchase the Mulock Estate, which cost approximately $24 millionm in 2018. The town opted for debt financing instead. 

Update coming

Newmarket and York Region are updating their development charge bylaws this year. The town is expecting to adjust the town-wide residential charge upward by one per cent and decrease the non-residential rate by three per cent. 

At the regional level, councillors have discussed adjusting the bylaw to spur different types of housing, with Taylor arguing for increasing the square footage of the small apartments category to get more family-sized units built.

As far as development charges impacting housing prices, Amborski said municipalities need to take care in what they include. 

“You have to be careful about what the impacts might be on housing,” he said. “Some people look at this as simply a tax on a developer … That’s not what development charges are intended to do.”

He argued that one option municipalities could go for is removing water and wastewater from the development charges and instead adding those capital expenses onto the water bill of the end-user. 

He said area-specific development charges are another method to adjust them. Newmarket currently employs this in the northwest area of town, around Upper Canada Mall, which excludes water and wastewater charges. Those are instead provided by the developer directly through planning agreements.

“There are some tools that can be used to make it more fair,” Amborski said