Question
I am taking an accounting course and we are studying Municipalities right now. The question I am stuck on is: The Development Charges Act, 1997
I am taking an accounting course and we are studying Municipalities right now. The question I am stuck on is:
The Development Charges Act, 1997 (and accompanying regulations) tightened things up for municipalities - both in relation to revenue raising and reporting requirements. Explain this statement.
I am looking for a report approximately 800-1200 word essay.
Further information can be found at:
Municipal Finance Officers Association of Ontario website, www.mfoa.on.ca, News from MFOA on Development Charges, March 10, 2011.
http://www.e-laws.gov.on.ca/
Development Charges With the rapid urbanization following the Second World War, a number of measures have been introduced in an attempt to have developers assume responsibility for providing or paying for municipal services associated with their new developments. Enforcing this responsibility has been relatively straightforward in the case of those services within the development area, such as sidewalks, streetlights, roads, sanitary sewage, water services, parks, and tree planting. These are normally the direct responsibility of the developer, whose obligations in this respect are set down in a subdivision agreement with the municipality, the existence of which is one of the prerequisites to approval of a subdivision plan. These subdivision agreements protect the municipality from having to absorb the servicing costs of a new development and to pass these on to all taxpayers within its boundaries. For their part, developers expect to recover these costs by including them in the sale price of the lots or homes being developed. So, as with the capital levies discussed above, the ultimate result is to shift the cost burden of the capital expenditures to those who will be directly benefiting. But developments also often give rise to servicing costs beyond their area - as with the need to expand sewage treatment facilities or to enlarge sewers and water lines - and recouping funds from developers to cover these additional costs has been more problematic over the years. Municipalities used to charge lot levies (often called impost fees or capital imposts) on each new lot created by subdivision or severance. By the 1980s, however, decisions by the Ontario Municipal Board and the Courts79 had largely restricted lot levies to offsite \"hard services\" related to a development, not \"soft services\" such as additional fire stations, library expansions, additional police stations, recreational facilities, hospitals, or even additional municipal office space. As a result, municipalities lobbied the province to pass new legislation that would permit a broader range of lot levies extending into the soft services area. The provincial response took the form of the Development Charges Act, 1989. It broadened the scope of development charges but at the price of a more complex and elaborate process. Development charges had to be based on growth-related net capital costs, and there were requirements for public meetings and an appeal to the Ontario Municipal Board. Experience under this legislation over the first half of the 1990s was decidedly mixed, and can 79 See, for example, Re Mills et al and Land Division Committee of the Regional Municipality be briefly summarized as follows: A number of municipalities were not ready with new development charges by the November 1991 deadline set out in the Act, and found themselves without any means of raising revenues from this source. Other municipalities chose not to pass a development charges by-law. Still others completed the necessary studies, determined the amount of development charge that they could justify, and then reduced the charge in line with those found in neighbouring jurisdictions in an attempt to remain competitive in attracting development. Following the June 1995 election, the new Conservative government announced that it was undertaking a review of the development charges legislation, which it felt was contributing to excessively high housing costs. The outcome of that review was the current legislation, the Development Charges Act, 1997. The new Act and its accompanying regulation (O. Reg 82/98) reduce the scope of services for which municipalities may impose development charges by excluding cultural or entertainment facilities (not including libraries), tourism facilities, parkland acquisition, hospitals, waste management services, municipal offices, local municipal roads and other services as prescribed. Municipalities have to fund these exclusions from sources of revenue other than development charges. The legislation also provides that the costs of eligible services, with some notable exceptions, are discounted by 10 percent in the calculation of growth-related net capital costs for purposes of funding from development charges revenues. The exceptions to this discount provision are as follows; water and sewer, roads and related services, fire protection and police protection, works yards and storm water drainage and control systems. For a complete summary of the eligibility of all municipal services, please see Appendix C - Table 4-1, Categories of Municipal Services, extract from the Town of Milton, 2010 Development Charges Background Study, December 6, 2010 (amended June 10, 2011) prepared by Watson and Associates Economists Ltd. The legislation also sets out a number of requirements that provide for greater disclosure and accountability. These include: The authority to prescribe by regulation the disclosure of development charge revenues and expenditures in the annual statement of the Treasurer; The requirement for municipalities to prepare a background study that clarifies the types of services for which they will be imposing development charges and provides detailed information on how the development charges will be calculated; The requirement that this background study be made available to the public when a municipality seeks to pass a development charges by-law; and The requirement that a pamphlet outlining development charges in effect in a municipality must be available to anyone requesting such a document following the adoption of a development charges by-law by a municipality. All development charges by-laws passed under the previous legislation expired no later than August 31, 1999, by which time municipalities had to have in place by-laws passed under the new Act if they wished to obtain revenues from this source. Such revenues are now somewhat smaller as a result of the new Act - given the more limited scope of coverage and the 90 percent limit on cost recovery for all but a few important exceptions among the eligible services. Reducing the municipal revenue yield to stimulate development activity was, of course, a stated objective of the legislation. However, municipalities and their associations continue to press for revisions to the legislation that would remove the 90 percent limit and allow for increased financing of capital expenditures from development charges rather than from increased taxes on all ratepayers in a municipality. The Municipal Finance Officers Association of Ontario are currently building and documenting a case for reforms to the Development Charges Act that will better enable municipalities to recover growth related costs from new development.80 On the other hand, the development community is concerned about the increasing cost of development charges. They are recommending the Province pay a greater share of the cost of municipal infrastructure such as fire stations and libraries and provide more transit funding and the municipalities implement user fees in place of development charges wherever possibleStep by Step Solution
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