Developers benefit from residential tax increase

Public subsidies to developers are the reason Kelowna city council approved property tax increases.

To the editor:

Public subsidies to developers are the reason Kelowna city council approved property tax increases on Monday, May 7 (City Unable to Avoid Property Tax Increase, May 8 Capital News).

Kelowna’s 20-Year Servicing Plan can be found at http://www.kelowna.ca/CM/Page1330.aspx. It shows the city plans to spend at least $709 million on new capital projects for roads, parks, sewers, sewage treatment and drinking water systems by 2030 to support the city’s new growth and development.

Of this amount, taxpayers and ratepayers will pay $149.8 million and $59.6 million, respectively.

However, the plan also shows another $365.3 million being levied on new projects. This levy is a development cost charge or DCC. It is jointly funded by developers and the city.

Provincial laws mandate that the city subsidize developer’s DCC rates by at least one per cent for this new road, park, sewer and water infrastructure.

The law also enables the city to provide DCC subsidies of more than one per cent.

As such, Kelowna council has used its discretionary power to approve a 15 per cent subsidy for new roads, eight per cent for new parks and one per cent each for sewer trunk lines, sewage treatment and water supplies.

The plan shows the public subsidy portion of the DCC totals $41.1 million.

By 2030 taxpayers, ratepayers and the public subsidy will total $244.1 million, or 34 per cent, of the capital cost of infrastructure needed by new growth.

Over the next 18 years, the annual public cost is $13.6 million, or $300 for each of Kelowna’s 45,000 residential properties.

Developers are the main beneficiaries of urban growth and giving them a $13.6 million public subsidy each year has not been justified, is not sustainable and burdens residents over the long-term.

A responsible local government beholden to the majority of its taxpayers would conduct an independent and detailed public cost accounting of its subsidy programs, subject the analyses to a rigorous public review and, if needed, completely eliminate this huge subsidy to developers.

 

 

Richard Drinnan,

Kelowna