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Grey to encourage rental housing by waiving development charge

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Grey County is going to try to encourage much-needed rental housing development by waiving or deferring its development charges for such projects.

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Several changes proposed by county staff are forecast to cost county coffers an average of $250,000 to $300,000 annually.

These fees are collected to pay for services associated with development, including provision of water, storm sewer, electricity, transit, policing and fire services.

Council formally received a report about the proposed changes Thursday. Final approval and passage of an amended county development charge bylaw and accompanying policy is anticipated Jan. 14. The proposals have already been supported by council in principle.

The average rental vacancy rate typically is below two per cent across Grey County. Ontario’s rate was two per cent in 2019. Anything below the three to four per cent range is not considered healthy.

A September report to council noted employers are saying employees struggle to find affordable housing near work. Newcomers to Canada who are moving to Grey face the same problem, the report said.

Development charge relief is hoped to encourage more rental housing, be it affordable, attainable or more expensive market-rate rents, non-profit housing and additional units in detached dwellings.

A new residential rental project with 10 units would potentially save the developer about $45,000, county planning director Randy Scherzer said in an interview Friday. Developers must sign an agreement that the units remain as rentals, otherwise the development charges must be paid back, with interest.

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These incentives were prompted both because of the obvious need for more housing and as a result of changes to the provincial Development Charge Act, Scherzer said.

The province now requires municipalities to deferral development charges for new rental buildings and non-profit housing until time of occupancy. The county plan would go further — deferring the charges for 20 years and making them no longer payable — if the use remains the same, Scherzer said.

Any new residential developments that qualify for municipal community improvement plans would also qualify for county development charge exemptions.

Grey has policies in its updated Official Plan that encourage more affordable housing and member municipalities are also adjusting their plans to remove policy barriers to that end.

The county by a separate vote agreed to continue its practice of indexing its development charges to the rate of inflation starting Jan. 1.

Among the proposed development charge relief:

  • Exempt new residential rental units with four or more dwelling units.
  • Exempt all non-profit housing that meet certain definitions.
  • Exempt new detached homes with an attached separate dwelling unit.
  • Defer development charges for 20 years on projects not eligible for an exemption, including certain life-lease developments until time of occupancy, and community improvement plan incentivized housing. But if the rentals become condos or changed ownership without county notification first in those years, the development charges must be paid, with interest.
  • Apply redevelopment credits toward conversion of non-residential space to residential units. In the conversion of commercial space into six condo units, county development charges would be $26,082 based on 2020 rates but would pay $9,000.

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