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Hamilton’s downtown DC exemptions phasing out

 By Kevin Werner, News Staff

 Hamilton politicians agreed to raise the fees on one of the cornerstones of the city’s downtown redevelopment incentives that are scheduled to take full effect by 2019.

Councillors approved raising the development charge exemption for properties inHamilton’s downtown community improvement project area (CIPA) from the current 90 per cent to 70 per cent over four years.

Under the city’s current CIPA exemption reduction plan developers receive a development charges break of 90 per cent. But beginning in July 2015 the exemption will be lowered by 5 per cent each year beginning in July 2015 when it goes to 85 per cent. The five per cent cut will occur each year until it hits 70 per cent in 2019.

“Times are changing,” said Stoney Creek councillor Brad Clark, who chaired the committee that produced the revised development charges policy for the city. The city’s current DC bylaw ends in July and will be replaced with a new bylaw that will impact developers for the next five years.

Developers have received nearly a 100 per cent exemption from development charges in the city’s core at least since amalgamation under theHamilton’s economic development strategy to encourage growth in the downtown. The policy includes a 90 per cent DC exemption, with the possibility of a 100 per cent savings if the developer “voluntarily contributes dollar for dollar the remaining 10 per cent of development charges to the downtown art reserve.” If the developer makes the contribution then “the remaining 10 per cent is exempted.”  

The CIPA program, established after amalgamation, allowed the city to provide a smorgasbord of funding programs to entice developers to invest in the core. The CIPA area is bounded by Queen Street, Hunter, Victoria and Cannon. Since 2011 the CIPA program has been expanded to include other downtowns within the city, includingMountHope.Hamiltonhas received, based on the economic impact on the downtown through the CIPA DC exemptions, an increase of just over $3.1 million in annual taxes through developments that have taken advantage of the program.

The DC exemption change was part of the city’s new development charges bylaw that was finalized by politicians at the government issues committee meeting June 4.Hamilton’s DCs, once one of the lowest in the province, will be set to increase in July when the current bylaw expires. Single family homes will jump by $6,888 per unit to $34,983, with DCs also rising on townhouses, apartment units, residential facilities, and industrial.

Downtown councillors Jason Farr and Brian McHattie were both hesitant to agree to the policy change. McHattie wanted a report by staff providing the justification for what he believed is a significant change in policy. McHattie even indicated he would only support the change to downtown development charge increase if the staff report was provided first.

“There is a real lack of accountability and transparency” by staff, said McHattie. “We don’t have the rationale.”

Clarksaid that reducing the DC exemptions in the downtown was an idea that councillors had originally asked staff to consider.

“Staff only did what we asked them to (do),” saidClark. “I don’t like the (secrecy) inference.”

McHattie later curtailed his earlier harsh comments, after some colleagues indicated he was only defending the program because of his mayoral ambitions. He agreed to support the recommendation, but still insisted that a report be conducted. Politicians will vote on the issue at their June 11 council meeting.

“We have to take the politics out of this,” he said. “I’m simply asking for information. This is not a capital P. I’m not (trying) to make hay.”

 City staff told politicians the CIPA development charge exemption policy was eventually to be removed, or at least changed.

“The intent was never to keep it forever,” said Joe Spiler, manager of capital budgets.

He said the decision to phase-out the DC exemption was based upon conversations with internal staff, and discussions with the development community over the last few years.

“There has been a fair amount of development occurring (in the downtown),” said City Manager Chris Murray. “It was not a question of if it was (changed) but when the draw down would begin.”

Mayor Bob Bratina, who ran for council in 2004 based on revitalizing the downtown after media reports had identified the area as “rotting in the core,” said removing a portion of the DC exemption shows how the downtown has flourished over the last decade.

“This is an evolutionary” process, he said.

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