Interest charge

The industrial sector is the final piece of Niagara’s development charge puzzle

The draft Niagara Region Development Charges By-law is referred to the next full Regional Council meeting for final approval after the Corporate Services Committee has dealt with some final amendments.

Ahead of Wednesday’s committee meeting, some problematic issues remained – none more than development fees for industrial properties and expansions.

Here are five things you need to know about the process.

1. What is a development charge?

Development charges are one-time fees paid by developers to recover the capital costs of municipal growth. Royalties are fees collected from developers when a building permit is issued. Funds help pay for the cost of infrastructure needed to provide municipal services to new developments, such as roads, public transit, water and sewer infrastructure, community centers and fire and from police.

2. Are there any exceptions?

Some developments are exempt under the Development Charges Act. A fixed formula established by law determines the total development charges that must be collected by a municipality, and the least must be made up from other sources such as your residential property taxes or municipal reserve funds.

3. What was the main conclusion of Wednesday’s meeting?

The committee approved an amendment to defer charges for industrial developments for up to three years from the date the building permit is issued, plus five percent annual interest. The costs can be offset by a subsidy program, which determines the total exemption based on the number of jobs created.

Niagara industry representatives who spoke at the meeting argued that any industrial development royalty would backfire on Niagara, even deferred royalties are tied to employment.

Tim Clutterbuck, representing Valbruna Corp., a steel company with a plant in Welland, said the charges could convince it to build a new forge elsewhere.

“The products they make are primarily for the United States, but they don’t have to. There is no blacksmithing activity at Valbruna in North America. It is an Italian company present in 42 countries around the world, and they choose where to invest. Will they invest in a forge in Canada? They have a processing facility in Fort Wayne, Indiana. Will they choose New York, Illinois, Ohio?

“They were like, ‘We’re going to put people in your area to work, so why would we give you money for that? Why don’t you invest in us? Who benefits from these jobs?

4. Does Niagara compete with other regions for industrial development costs?

George Spezza, director of economic development at Niagara, said yes.

“We’re low on industrial development costs,” Spezza said. “We are below many jurisdictions around us and in the Greater Toronto Area. I understand the reactions we are getting from the industry community. Here, we support our industrial manufacturers in many ways in economic development. They constitute an important sector in the region and face real challenges.

“At the same time, when we talk about making investment decisions, many factors in that process are part of their due diligence, including the tax implications.

“Quality of life counts, logistics, access to transport. As a region, Niagara’s value proposition is very strong, and we will continue to be with the new employment-related rates.

5. What did the advisors have to say?

Barb Butters, Port Colborne Councillor:

“The message was very clear from the presenters – they don’t want it. They don’t want to pay anything, period.

“On the other side of the coin, who gets the difference? It will be the residents of Niagara. It seems to me that as far as the industrial part is concerned, there is a belief that they should be subsidized by the residents because they are more important in the grand scheme of life and deserve it.

“What I struggle with is that these big corporations aren’t going to look favorably on Niagara. It’s too complicated, and they just want to go where it’s simple, straightforward, and they won’t have to pay. But then I hear from Mr. Spezza that we’re competitive, so I’m having a hard time knowing who’s right about that.

Wayne Redekop, Mayor of Fort Erie:

“I don’t want to spend a lot of time creating paperwork for companies that want to make investments and create jobs, which have their own economic benefits.

“I’ve been dealing with development charges for 25 years. The City of Fort Erie has never imposed industrial development charges. There’s a philosophy to it, and I think Tim Clutterbuck articulated it best. We won’t get large-scale investments if we’re in a globally competitive market and can get all kinds of incentives elsewhere.