Building a house in Whitehorse might cost a bit more beginning this summer.
City council was asked to approve a 40 per cent increase in development cost charges on Monday.
That’s a one-time fee the city levies on all new developments.
The money is used to pay for growth-related infrastructure.
“It’s a pay-it-forward system so that the taxpayer doesn’t get stuck with the bill,” said Robert Fendrick, the city’s director of administrative services.
Since the charges came into effect 17 years ago, they have never been increased.
Under the proposed bylaw change, the amount charged for a new single-family home would be $3,500, up from $2,500 now.
While 40 per cent seems like a big jump, it’s in keeping with the national inflation rate.
Right now there is $3.5 million set aside in the city’s development charge account.
While that account hasn’t been shrinking, it also hasn’t been growing much, said Fendrick.
“What we don’t want to do is fall behind the eight ball too much, which would require a drastic adjustment,” he said. “It’s basically planning for the future, not making up for a shortfall.”
Even with the increase, Whitehorse’s development cost charges would still be significantly lower than other municipalities.
According to the Canadian Mortgage Housing Corporation, the national average for a Canadian city is about $13,000.
Surrey, B.C. topped the list with development cost charges of more than $40,000.
In addition to Whitehorse’s initial 40 per cent hike, the development cost charges would be raised by two per cent every year after that to keep pace with inflation.
However, even with the increase it still might not be enough to pay for the city’s needs, warned Coun. Ranj Pillai.
The new heavy equipment needed for the Whistle Bend subdivision is going to cost the city about $2.3 million.
According to Pillai’s ballpark calculations, the development cost charges on the first two phases of Whistle Bend will only bring in $750,000. And that’s with the 40 per cent hike factored in.
“You can quickly see that even with the jump, it’s not going to be enough to meet our need in the long run,” said Pillai.
This isn’t the first time that the city has considered raising these fees.
“We did bring this to council a few years ago but it followed the sharp increase in land value so council was very sensitive that it might be a bad time for an increase,” said Mike Gau, the city’s manager of planning and development services.
The charges were first introduced in 1995. During the next 10 years, the city’s population was on the decline. That’s no longer the case, added city manager Dennis Shewfelt.
“It’s come to the point now that in order to keep pace with development and expand that heavy equipment fleet, it’s going to be necessary to find another source of funding,” he said.
Whether or not it will be enough, Shewfelt couldn’t say.
“Frankly we’re not sure,” he said. “Our crystal ball is just as foggy as anyone else’s.”
The first and second reading of the bylaw will take place next week, with the third and final reading scheduled for March 12.
If the bylaw is passed, the new charges will go into effect July 1.
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