Regina administration is recommending that city council adopt immediate changes to the city’s development charges to spur growth in the city.
City staff say the existing model is flawed and assumed the city would be growing much faster than it actually is.
As a result, the scheduled increase to the charge — to $632,000 per hectare in 2023 — is far too high and is likely to make companies uninterested in development in Regina, administration said.
“What I think the important messages here is that the assumptions in the model aren’t correct,” said Deborah Bryden, Regina’s executive director of city planning and community development, on Wednesday.
At issue are the city’s development charges, which the city uses to fund offsite infrastructure (things like water pipes and roadways) required to support growth.
The charges can include things like servicing agreement fees and development levies. They are adjusted periodically based on Regina’s a cash flow model, which a report heading to council says is actually a “sophisticated Excel spreadsheet.”
The concern from city administration focuses on the Greenfield residential and commercial rate.
Under the current model, that rate would be set at $632,000 per hectare for 2023. However, developers have raised alarms over the high increase to the rate, which sits at $297,000 this year.
“I think the right way to think about development charges is that they’re for the sole purpose … to fund growth-related upgrades needed to support new and more housing in our community,” said Stu Niebergall of the Regina & Region Home Builders’ Association.
City administration is recommending council approve a rate of $319,000 per hectare.
Another issue facing the model is that it will soon run past its debt limit guideline of $60 million. The model’s debt will approach that limit by the end of this year and is projected to increase to $109 million by the end of 2023 before eventually climbing to $400 million.
Staff say that if that happens, the city may need to use tax dollars to help to cover the deficit or even look at debt financing.
Lowering the developer charges for next year is intended to be a stop-gap as the city investigates the issues with its model.
Staff say the change should not come into effect until June 1 if adopted. The city will also need to delay the timing of certain projects in order to ensure the debt does not increase as projected.
As for how this issue occurred, staff said it’s the result of the assumptions made by previous administrations.
That answer that didn’t sit well with Coun. Andrew Stevens.
“So it seems like we’re banking on perpetual growth and so we’re keeping rates low, but doesn’t that just perpetuate the problem we know of that exists?” Stevens said.
The changes have already cleared their first hurdle. On Wednesday, council voted 8-1 in favour, with Stevens being the sole no vote.
City council still needs to approve the changes at a future meeting. It’s currently scheduled to be debated on Wednesday.