Give us the work, cut us a break, builders tell city
By Jim Donnelly <mailto:jim.donnelly@transcontinental.ca>, Ottawa Business Journal Staff

Sun, Apr 2, 2006 11:00 PM EST

The city said "Go west, young man." And the developers followed. Now, years later, the owners' group that's been given control of infrastructure development for the Kanata West lands (thanks to an official plan amendment that should be ratified at city council by mid-month) could, according to some, reshape the City of Ottawa's often criticized development charge (DC) system. 

Kanata West consists of 1,700 acres flanking Scotiabank Place, home of the Ottawa Senators. In the 1990s it was hyped by the city as a perfect development target close to high tech jobs, brimming with country fresh air and right next door to Senators hockey. 

But despite the allure, there's been no development in three years thanks in part to an ongoing environmental assessment of the Carp River flood plain as directed by the province. The city's dreams have - for now - stalled. 

But the most important impact of the Kanata West project, industry insiders say, may be something completely separate from the laying of foundations. 

Minto Developments vice-president Jack Stirling says the city's current DC system is outdated, and the very need for an owners' group in Kanata West proves it. "It's a way to ensure that all expenses are borne by everybody, and fairly," he says. 

Minto holds around 200 acres in the area. There are 43 landowners within Kanata West, but 10 major companies with deep pockets - including Minto, Richcraft, Tartan and Mattamy - own about 80 per cent of the land. This gives the group more than enough resources to build serious
projects without having to wait for the city to front the infrastructure cash. 

Under the current DC system, Mr. Stirling adds, Minto and other developers must pay fees on suburban developments, only to fund city projects that are irrelevant to them like the footbridge being constructed across the Rideau Canal near the University of Ottawa. 

Taggart Realty Management's Ted Phillips agrees, saying the current system penalizes suburban developers by using revenue from DCs in areas that have little to do with their projects. 

"So you've got us as homebuilders and BOMA paying money towards a facility that's a bridge in the downtown core, that has absolutely nothing to do with suburban growth," he says, although he does point out he feels there's nothing fundamentally wrong with development charges in
general. 

The Kanata West owners' group has worked for about two years identifying the ratio of costs that should be borne by all landowners in Kanata West, and Mr. Stirling says groups like these could save the city, and companies like Minto, millions of dollars in the long run. 

"Under the rules right now, we subdivide a community and we'll set aside a one acre park," he explains. "So we build the streets around that park, we put the curb in on the streets, we put the streetlights up, we sod the boulevard to the property line, and then we just leave the park as it is. 

"The city comes back two or three years later, when they've got the money collected from DCs to build a park, and they break the curb, they drive over the sod we've laid, they usually knock down one or two streetlights, and they're now building a park two or three years after the community has moved in." 

"So we're saying let us build the park, while we're there putting the infrastructure, and don't collect $2,000 for every permit we take out so you can do it."

But Ottawa's manager of development proposals, Grant Lindsay, says the only option other than charging developers is to plunder the tax base. 

"It's always a healthy tension between the city and the development community about what is an appropriate DC rate," he explains. "Because obviously it affects their bottom line. But it comes down to the basic principle that if we don't collect enough to pay for the costs of
growth, then how do you pay for it?" 

Under a new system involving owners' groups, Mr. Stirling says, the city could get out of the responsibility of collecting DCs, and have facilities built sooner and more efficiently. 

This is how it's done when Minto develops in the Greater Toronto Area, Mr. Stirling adds, and it's high time it's done here as well. 

"In lieu of development charges, (developers) pay for capital projects," he explains. "And the win-win is we can build within the time frame we need to, and do them through a more aggressive tendering process that the city may be able to. 

"So we're going to be trying to work with the city to get the DC bylaws changed in the next year or so." 

But city officials, never the development community's bosom buddies, have other ideas. Mr. Lindsay says there are no plans to change the current development charge structure, and that the official plan amendment of last week is a one-off thing. 

"It may ultimately influence the DC bylaw, but not directly," he says. "The DC is still going to be based on rates approved by council, until we go through a review." 

Development charges are reviewed every five years, so for now, builders must keep paying them. 

Kanata Coun. Peggy Feltmate says the advent owners' groups is a good thing, so long as they don't let growth get out of control. and adds that developers will be reimbursed by the city after they've built infrastructure like roads, parks, lampposts or storm drains. 

"It's a mechanism where the money is available ahead of time, and gets paid back to the developers as the building happens," she says. "So from that perspective, it can be a win-win. 

"But the one area we really have to watch is whether things get front-ended, and is it in the city's capacity to meet those commitments," she continues. "So if the work wasn't to be done till 10 years from now (in the official plan), and we're moving it forward now,
chances are the developers is going to want to be paid back sooner. 

"So that's when we end up saying that growth is costing the city."  The first major building application is in full swing, says Mr. Lindsay, from Mattamy Homes. The company submitted an application to put up around 500 single-detached dwellings and about 350 town home units,
roughly 38 units per net residential hectare. 

He says he expects construction to begin by this summer.